Simon Callender
Simon Callender 12 April 2019

The Battle of the Brands: How Established Brands Can Step Up to Their Challengers

Established brands were products of the Industrial Age, and became masters of it. But in the Information Age, the rules have changed.

Barriers to entry are now much lower. Via the major ecommerce platforms, the internet has democratised market access. Equally, digital and social media have created new, more affordable advertising channels.

Even more importantly, a series of attitudinal shifts has fuelled the rise of challenger brands. A growing scepticism about the established order, an increased appetite for experimentation and new experiences, and a re-set of consumer priorities, with greater emphasis on brand integrity and purpose, are all having an impact.

Where consumers lead, retail follows. Combined with a business requirement to simplify their in-store assortment, buyers in traditional retail are questioning the role within category of many established brands.

Both consumers and retailers, then, are ready for change. This creates the ideal environment for challenger brands, and they’re exploiting these opportunities very effectively.

To succeed, established brands should consider learning from Challengers, re-inventing themselves around a point of conviction and turning that conviction into new behaviours and actions.

Re-Discover Your Conviction and Purpose

In order to establish the current state of play when it comes to challenger brands and the impact they are having, we polled 1,000 consumers (people who had recently switched from an established brand to a Challenger) across eight categories – food, soft drinks, alcohol, household products, healthcare, toiletries, beauty and grooming.

Across all categories the impact of Challengers on the rise is being felt. For brands looking to face up to these contenders, reframing of brand architecture is an area to be considered. What comes through loud and clear from our research is that challenger brands are resonating due to their freedom to zero in on emerging consumer needs. 

Whereas Challengers start with a clean sheet of paper, established brands often bring with them a lot of history. This history can be a strength, as it adds to brand trust and conviction, but where it no longer aligns with new consumer priorities it can be a hindrance. In these instances, brands should signal change by confronting consumer’s existing perceptions.

Storydo as Well as Storytell

It’s equally important to ‘story do’ as well as story tell. Established brands are expert storytellers.  But consumers now look for more than stories; they know that actions speak louder than words. Out of necessity, challengers typically build their stories from the ground up. Established brands need to demonstrate their new-found conviction by doing the same, thereby giving people new reasons to re-engage and re-discover the brand.

Let Go of the Narrative

The time has come for established brands to think about letting go of the narrative. Whilst closely managed tools such as brand books, rigorous guidelines and entrenched vocabularies still have value, they are increasingly less effective in a highly networked world. Brands should now look at evolving their approach and opening up their narrative. Having provided the right stimulus, they would benefit from letting consumers shape and develop the story at their own pace and in their own language, to ensure hyper-relevance and engagement.

Established brands must consider behaving differently now if they are going to survive into the long term. Fortunately, the Challengers are providing them with a clear path to follow.

5 Clear Steps to Help Established Brands Win

  1. Safeguarding product reputation is vital. Established brands are under extreme pressure to keep prices down. Whilst enhanced price competitiveness is desirable, it cannot come at the cost of diminished product quality or reduced sizing. Brands shouldn’t sacrifice equity they have taken years to build.
  2. Prioritise insight-driven NPD. This is more important than ever. Not only does it bring news to the brand and the category, it blocks off spaces that Challengers could seek to occupy.
  3. Become a fast follower. Scale advantages can be leveraged in new ways. Whereas Challengers must demonstrate the courage of their convictions and seek to do one thing brilliantly, established brands can trial many ideas simultaneously.
  4. Embrace cannibalisation. It is much better to cannibalise yourself than to become someone else’s prey. Whilst it might fly in the face of traditional BigCorp logic, this may be the best way for established brands to re-energise themselves and cut off the Challengers’ oxygen supply.
  5. Dig deep for authentic truths. Challenger products have an integrity about them; they are physical manifestations of the brand’s conviction. To compete, established brands need to work ever harder to identify compelling and credible product stories.

The Rules of the Game Have Changed

Across every category we examined, people are switching to challenger brands in significant numbers. This switch is likely to be permanent - most people intend to stick with the challenger brand post-purchase. Of those who do not, more intend to try another Challenger rather than revert to the established brand they used to buy.

Challengers are delivering to expectations - we found little evidence that consumers are missing the “performance premium” historically associated with established brands. Higher consideration favours challenger brands - the more shoppers are invested in their purchase, the more probable it is that they’ll find a reason to try a Challenger.

People recognise and respond positively to the Challenger mindset – it appears Challengers are establishing meaningful points of difference at the emotional level – particularly amongst younger consumers.    

Today, even the longest established and most famous FMCG brands are under intense pressure. The rise of the challenger brands is one of the most important issues they are facing, and it needs to be addressed as a matter of urgency. Fortunately, they have left a clear trail of breadcrumbs for established brands to follow.

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