7 March 2023

The Power of the Underdog: How Challenger Brands Are Making Their Mark

by Elizabeth Breslin

Let’s start with a question. What do Square, Slack and Zoom have in common? Granted, there could be numerous responses to this question, but one thing is abundantly clear when you tell stories of who they are and what they can do. Each brand has ignited change within its sector and its world to transform the space it occupies in its favour. Take Zoom for example, which emerged and transformed communication and collaboration practices during the Covid-19 pandemic, while taking on sectoral Goliaths such as Google, Microsoft and Cisco. Zoom made its mark so much that it became one of the Oxford Dictionary’s most influential words and one of the most prevalent eponyms of 2020. Not bad for a brand that was relatively unknown prior to 2020.  

What makes a brand a challenger? 

Challenger brands can be start-ups or established brands that disrupt the market by challenging the status quo. Typically characterised by their bold and unapologetic approach, challenger brands play havoc in the market by addressing unmet needs and adopting an unwavering customer-centric mindset. In today’s competitive and borderless market environment, the competition can be fierce. It can be tough for new brands to establish a presence. Yet this is where challenger brands feel most at home, as they revel in the unexpected, breaking through the noise of their category to make an impact as they carve out unique and unfilled spaces. At their core, challenger brands focus on knowing what to challenge, rather than focusing purely on the who. Think of Oatly, who has become a recognised challenger to the dairy category – finding unique and valuable market space as a dairy alternative. 

Lessons learnt from challenger brands 

In our work with some leading challenger brands, we’ve learnt several lessons about how these brands set themselves apart to create a distinctive space within their categories. This list does not intend to be exhaustive, but it does intend to illustrate how these brands think and act differently from more established brands.

  1. An ambition to push the status quo: Challenger brands look to challenge the status quo and push boundaries in their favour. With their fingers on the pulse of customer insight, they identify areas where the market is lacking to create a differentiated brand, product or service with compelling value propositions to fill unmet consumer needs. Putting creativity, focus, and determination at the centre of their practices assists them in pushing the boundaries of their categories, allowing them to optimise their chances of success and demand-led growth.  
  2. A customer-first mindset: Challenger brands put the customer experience at the forefront of everything they do, ensuring that they are always delivering high-quality products and services. When a brand is customer-centric, customers feel valued and appreciated, creating a likelihood of stronger customer advocacy, which is a crucial component for brands looking to establish themselves in a crowded market.
  3. An innovative-driven culture: Challenger brands are always looking for new and innovative ways to do things better. They are not afraid to try new technologies, processes, or approaches, and they are always looking for ways to improve their products and services. Embracing an innovative mindset for improvements – both large and small – can help them to stay ahead of the competition and can allow them to defend their unique position in their category. 
  4. A strong, unique culture at their core: Challenger brands typically have a strong and unique culture that sets them apart from their competitors. This culture is rooted in their values, purpose and beliefs. They are not confined by industry constraints, are focused on asking questions, and are open to change – allowing them to see opportunities where others don’t.

All brands need to be distinctive, and all customers need a choice. Challenger brands provide both; challenging the norms of their category by providing choices to customers which were previously uncatered to. We can learn a lot from how challengers operate, whether that’s their ability to tap into customer-led insight, their innovation process or their strong unique culture. While more established brands in their categories may not fit their moulds, we can learn a lot from challengers and their success.