What Kind of Brand Are You?
Let’s start with a framework that posits three kinds of brands found in virtually all commercial product and service categories: Leadership brands, Challenger brands, and “Other” brands.
Leadership brands are exactly what the word “leader” implies – they are the top brand in a given category, and usually lead in most if not all relevant measures: tops in market awareness, market share, revenues, profits, stock valuation, reputation. It’s good to be on top, as the benefits of leadership tend to be positive and reinforcing; it’s good to be King.
Since our focus is brand positioning, we care greatly about the following benefits that Leadership brands typically enjoy:
Leaders have gained the ability (the privilege) to speak with authority in their categories: with this authority they can define the debate on what’s important in the category, can set the rules for this debate, and, critically, can say things that a Challenger cannot.
Because of that authority, Leadership brands speak with self-assurance and confidence, which only reinforces their authority; again, it’s good to be King. (And the “best” Leaders are so self-confident that they are charismatic, a velvet glove for the brute force that all Leaders can bring to bear.)
In the end, we (the buyer, the customer) have a high degree of comfort with the Leader brand, as it is familiar to us, and trustworthy.
In short, we may say that Leadership brands exude authority; are confident, even charismatic when they speak and act; and have earned our trust.
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If the Leadership brand is well-known to all, a Challenger brand is likely struggling to even get on the radar screen: everyone knows the tallest mountain in the world, and the first man to step on the moon, but most of us have to scramble to Google to find the second tallest mountain (K2), or the second man to walk on the moon (Buzz Aldrin). Even the top challengers can fade from sight in the shadow of the leader.
But Challenger brands exist for a reason, and that is to show that the King actually has no clothes. To achieve this the following must hold:
A Challenger must have the ambition to go after a Leader. “Well, of course the Challenger will be ambitious,” you might offer, “ambition is a given.” Perhaps, but we are talking here about the real in-the-gut, burning desire, down to my last gasping breath ambition; this is “want to” at its fullest.
If a Challenger does have the ambition, it must also have the energy, and in most cases the aggressiveness necessary to take on the Leader, to challenge the authority of the leader. Taking on the Leader, in virtually any category, is not for the faint of heart. And it’s not just energy and aggressiveness; it also requires the commitment of the necessary resources, time and money. (If “ambition” is the “want,” we can say that “commitment of energy and resources” is the “will.”)
So if a viable Challenger has the necessary “want” and “will” then it must also definitely have “the goods.” Remember, the Leader gets to set the rules and frame the debate, so a successful Challenger must seek to shift the debate, essentially moving the debate to a new playing field with different rules, a field on which the Challenger can have an advantage. Of course, it’s easier said than done to shift the debate; the Challenger must have at least one of the following, and it’s better to have two or three:
Demonstrably better quality (broadly defined) than the Leader.
Demonstrably better value than the Leader.
“New” in the form of category innovation that can disrupt the Leader’s protocol(s).
In sum, we are saying that a Challenger brand must have the necessary ambition to claw its way past a Leader; must have the required energy, aggression and willingness to commit the resources of time, treasure and sweat, and must have a product or service with measurably better quality, value or innovation on which to build an argument; to shift the debate to a new set of key factors that can disrupt a category and effectively battle a leader for awareness, share, sales, profits and reputation.
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“Other” brands – when Jack Welch became CEO at General Electric in 1981 he famously decreed that GE would only participate in industries in which it had a number 1 or number 2 competitive position – basically keeping either the Leader or top Challenger in each category – and selling off all of the “other” brands that were in positions number 3 or lower.
Of course many of these other brands were nonetheless solid businesses, with good products, sales and profits, just not counted in the top two brands in their respective categories, and thus not part of Welch’s business strategy going forward.
Now, our relevant question is this: even though these “other” brands didn’t suit Welch, aren’t they still Challenger brands by definition?
The simple answer is “no.” Let’s look at what an “other” brand is and is not:
It’s not a Leader brand, although perhaps it once was and has lost its way.
It’s also not a Challenger brand if it lacks the ambition and/or the energy and/or the willingness to commit the resources necessary to challenge the leader; an “other” brand may simply not be up to what it takes to challenge, whereas a true Challenger brand will absolutely revel in what it takes to mount an assault on the Leader.
Not all is necessarily lost for these “other” brands, however, because with good products and good customer service to a profitable niche, these other brands can be a nice, even very lucrative business for its owners and employees; they may never really grow, however, and certainly in the long run will be in danger of obsolescence.
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What this means for a company’s Brand Positioning
Let us spell out what perhaps is obvious: it is critical to understand the kind of brand you are, or aspire to be. Knowing this will:
Clarify your competitive posture: a Leader; a true Challenger; content to be a number 3 (i.e. Other brand).
Guide you in setting important goals – revenue and/or market share; customer trial, preference and loyalty – that reflect your Leadership status, or aspirations as a Challenger.
Provide a template for the tone and manner of your relationships and communications with customers.
If you are Leader brand – your positioning must be one that first, takes full advantage of your lead position, and second, anticipates where the critical challenges will likely come from . . .
If you aspire to (truly) Challenge the leader (and stay ahead of any other challengers) in your market niche, you must know where your brand is today in the customer’s mind, and develop brand positioning that will get you to where you legitimately can fight for leadership . . .
If you are an “Other” brand, you (like a challenger) must also make an honest self-appraisal of your current brand and business positioning, set realistic future goals, and make sure your future brand positioning will support those goals. You may not be challenging the #1 and #2’s, but you need to figure out your profitable path going forward . . .