Revenge of the challenger brands

 

Revenge of the challenger brands

Strategy

Soumick Nag /  September 18, 2010, 20:09 IST

 

New-age challenger brands are not intimidated by the gigantic force of the number one brand. They are also becoming a firm believer of the fact that “marketing/statistical truth can be adjusted”.

And the good news is that they are becoming a strong force to reckon with. A perfect storm of marketing upheaval is gathering in the market place. The rise and rise of the rest (challenger brands) is a fascinating and exciting story.

Breakaway brands are not playing the pricing game, rather they are discovering new points of differentiation. Their strategies are built on idea-led differentiation: Offering customers something that will resolve their (human) conflicts.

Breakaway brands’ ultimate assignment is to serve customers’ real desire and to communicate their stability. The goal of breakaway brands is owning the market, not just to sell the product. In theory, sometimes owning a market means expanding it; during other times, narrowing it. Breakaway brands have managed to do both in efforts to create and own a market. Trade-offs are critical for crafting strategic manifesto. They create the need for strategic options, and deliberately limit what a brand offers.

Strategy is not theology. The only way to make sensible strategic choices in this realm is to weigh investments and returns. And, most importantly, breakaway brands are evolving as human desires evolve every hour.

Consider any industry; you will witness how challenger brands are now becoming the rulemakers, and how market-leading brands are becoming ruletakers.

Avis’ legendary advertising slogan, “We try harder”, is passé. Here, we are not talking about regional jewels that had succeeded to gain the initial momentum but have not been able to sustain the success. They started well, but they were not able to sustain their strategic edge. The empire struck back, and they vanished.

Once upon a time, price flanking was an extremely popular strategic breakthrough in India. Also, it was a great entry strategy for newcomers. But in an era of strategic uncertainty, leaders have also started playing the pricing game. As a result, the empathy at the bottomline is missing. “Do the new” is no more limited to the parlance of advertising; it has become the buzzword in the strategic boardroom.

In new-age marketing warfare, market leader’s counter attack is inevitable. The empire will strike back with vengeance:

 

 

• It will pamper customers

   

• Damage your profit

   

• Quagmire distribution channels

   

• Launch flankers

   

• Create chaos in the market place

  Market leaders have also started behaving like a guerrilla fighter. Last year, when a new telecom brand launched its service with innovative “pay per second” plan, market leader Airtel responded with the same scheme within 60 days. So market leaders are also becoming agile, and avoiding the trap of strategic inertia. The economic foundation of corporate imperialism is wavering.

‘The Post-Goliath marketing World’ is not a story about market leaders’ fall, but instead about the rise of ‘the challenger brands’. Brands like Micromax, Yamaha FZ16 and Bajaj Discover have been catching up to the ‘brand power’ of Nokia, Pulsar and Hero Honda Splendor in their respective categories. Innovation and growth from the challenger brands have been somewhat surprising, and have left market leaders’ marketing manifesto in the dust.

A marketing renaissance is taking place, and the rise of breakaway brands has started influencing the marketing behaviour of others. And, as a result, the size of the category is growing at a rapid pace. After the meteoric success of Micromax, the mobile-handset market has become a shopping mall. All mobile marketers are spending heavily in brand-building. The leaders’ mystique of invincibility is weakening, while a strategic infiltration is taking place. The key to success does not lie in numbers but in their strategic mindset.

The new-age mantra for the challenger brands is: “Reinvent your strategic mindset”.

Which aspects of the category have not been adequately served? Breakaway brands are looking for gaps in the market, which is distinctly different from the traditional mindset. They are looking at the gaps closely against market leaders’ strategic positioning. The operative strategy here is to look for opportunities that suffice the customers’ ever-expanding desires.

If we separate the facts from the fads, it reveals that breakaway brands are building solid marketing towers brick by brick!

 

Micromax is selling 1.5 million mobile phones per month

 

Bajaj Discover is selling 1, 14,000 motorcycles per month

 

Yamaha FZ16 is selling 8,000 motorcycles per month

Breakaway brands don’t look back. When they suffer from a failure, they know how to get over it quickly. They don’t reinvent the wheel. They don’t cogitate. They are incapable of being discouraged.

Peter Drucker once defined “intellectual integrity” as “having the ability to see the world as it is, not as you want it to be.” This ability is the hallmark of the new-age breakaway brands.

This article explores the strategic mindset of breakaway brands. The pillars of strategic mindset

Strategic patience: “I see only one move ahead, but it is always the correct one”: José Raúl Capablanca, a Cuban chess player and world champion.

If you study the history of regional super brands, you will find that they were impatient. An in-depth study of their behaviour will reveal an unprecedented strategic lesson.

“A repeatedly changed strategy is as bad as strategic stupidity”

Strategic patience is all about devising and maintaining a sharply stated and consistent strategy. It begins with a simple idea proposition that’s rooted in deep, clear knowledge about your brand’s target customers and a realistic evolution of your own strengths.

Peaceful coexistence than an audacious marketing move is the primary goal of strategic patience. It’s no longer the 1990s’ popular judo strategy (rapid movement, flexibility and leverage); it’s all about investing for the future. It’s no more disrupting, dismantling and defeating the market leader’s planted weaknesses. However, it has become a process of a linear, yet steady progress.

Marketing is not a 100-metre race any longer! It’s become a marathon race. You need to have the agility of Lionel Messi, and at the same time the calm and composed nature of Gary Kasparov. It’s not about exploiting the leader’s weaknesses. It has become a game of chess — a game of nurturing one’s own strengths. The middle game has become immensely critical than the endgame.

Bobby Fischer-like aggression is no more the trend. However, Anatoly Karpov is the new trend. The number two, three or four brands chronologically are no more acting like a generic or traditional number two or three brand. They are creating new rules of engagement.

The number two or three brands have started seeing themselves as challengers to the traditional, heritage-dominated balance of power in the market place.

Case study: Micromax
The rise of Micromax is a fascinating story. It’s a killer breakaway brand. Since its inception Micromax has been practising a disciplined strategic creativity. Micromax’s breakthrough idea proposition wasn’t ‘dual SIM’ mobile phone but to launch the product in the northern (Tier-1 and Tier-2 towns) market. The inevitable move would have been launching the same in the urban market. It’s not product innovation that has paid off; rather it’s the selection of the market which was a strategic breakthrough. Micromax could have flooded the market with its unique ‘value-added’ mobile phones but it has practised strategic patience. Now, it has started exhibiting its comprehensive product pipeline. Interestingly, Micromax’s strategic initiatives are comprehensive in nature.

Micromax would have launched its marketing campaign with a celebrity but the mobile marketer waited for the right time to accentuate its strategic thrust. It is ruthlessly following the thumb rule of strategic discipline — “clear about what not to do”. Its strategies as well as tactics demonstrate that marketing warfare is a game of strategic choices. It has mastered when to pull the trigger on and when to pull it back, and it knows how to battle.

Targeting human beings not customers
Breakaway brands are like the second life of big brands: Internally developed and externally decent, (in contrary, all brands that are market leaders are externally manufactured and internally underdeveloped). They are charismatic yet down-to-earth, and the consumers proudly say “Yup! This brand is like me”. The brand next-door kind of imagery has been helping breakaway brands to win the consumers’ mindspace. With India’s Goldilocks economy, Indian consumers are trading up, and the affordability index is at an all-time high. They are willing to pay extra for value-added services. Here, we are not talking about telecom VAS, but about game-changing value addition.
 

ARCHETYPE OF THE COMMUTER
Also known as	Common man, a regular guy, a family man loaded with responsibilities, fuel conscious, a mere commuter, the realist, Mr practical, office goer
Aspirational qualities	Realism, empathy, authentic and lack of pretense, no frills, responsibility, mediocrity, style
Enemy	Rebel, power, standing out, chaos, mistakes that provoke punishment (traffic signal)
Beliefs/behaviour	Speed limit is 40km/hr, commute from point A to point B, my bike is my personal transport, reliance

 

The thumb rules of targeting human beings not customers

Understanding human behavior and the social fabric of the society,

 

Capture the imagination of the mass,

 

Solve human conflicts.

Since 1985, 100cc motorcycles are built on specific ingredients…dull looking, lean and analog metre. It is also known as “commuter motorcycle”.
 

THE DISCOVER ARCHETYPE
Also known as	Explorer, cool dude, first jobber, young professional
Aspirational qualities	Style, ambitious, 200 per cent life, imaginative
Enemy	Boredom, conformist, compromise
Beliefs/behaviour	Who says I can’t flaunt my bike?

 

Case study: Bajaj Discover
In 2009, Bajaj launched its game-changing breakaway brand called “Discover 100cc”. It’s a 100cc motorcycle with loaded features. It is bigger than regular 100cc motorcycles, loaded with GRS (a feature which is available with the market leaders’ 150cc offerings), equipped with a digital metre (plus more mileage than the market leader,) and its stylish look appealed to the youth as well. Discover resolves a basic human conflict: “I want to flaunt my motorcycle but I can’t afford a 150cc motorcycle”.

Unlike the market leaders, the number two, three or four brands are more humane in nature. They are more product-benefit-led than image-led. They don’t talk to SEC A ...SEC B or SEC C …or urban or rural customers. They talk to human beings. Their sole purpose is to fulfil human aspiration.

They do always try to resolve human conflicts not consumer dissonance (the leader’s playing field is to minimise consumer dissonance).To human beings they are not fiction; they are non-fiction. They are not a dream but reality and approachable too. They are not consumer insight driven; rather they are human-conflict driven.

Prepared to counter the ‘counterattack’
As Gary Kasparov has said: “You also have to make yourself comfortable in the enemy’s territory. If you can convince your enemy that you’re comfortable on its ground, then you can often trick it into moving into your own territory.”

In the 2010 FIFA World Cup, Germany was playing like a dream. They were like Erwin Rommel’s 7th Panzer Division; lightning-fast counterattack and razor sharp finish. Like Rommel, the young German soccer team was also not able to sustain its dream run. They were halted by Spain’s “Physical chess”; in the first 30 minutes, Spain whistled the Jabulani all around the park at a mesmerising pace: forward, sideways, backward, forward, sideways, and backward.

To survive you must avoid the market leader’s guillotine.

The thumb rules of strategic patience

Market building exercise: Provides power to customers and induce trails.

Decency in image-building exercise: Sacrifice the temptation of “igniting the leader’s ego”.

Balance your ups and downs: Avoid drastic decisions.

Since its inception Pulsar was the undisputed leader of the premium motorcycle segment in India. From “Definitely Male” to “Pulsar Mania” campaigns, the market leader has demonstrated the power of its two wheels. In 2008, Pulsar’s courageous odyssey was put to a halt by a breakaway brand, Yamaha FZ16. FZ16 was priced higher than Pulsar 150cc, and was loaded with advanced features. It was a classic technological leapfrog strategy.
 

Brands	Idea proposition in practice
FZ16	First to feature tubeless tyres both in the front and the rear. 140 mm wide rear tyre is the largest rear tyre, not just for its segment but for any production motorcycle in India
FZ s	India’s first sport edition
Fazer	India’s first tourer bike

 

Pulsar is born to lead. Being an aggressive brand, Pulsar counter attacked Yamaha FZ16 with two flankers: Refreshed version of Pulsar 150cc and Pulsar 220cc F1 (the fastest Indian). FZ16 was expected to be such a daring move by Pulsar, and it neutralised Pulsar’s competitive edge via micro segmentation of the market. FZ-S and Fazer was Yamaha’s answer to Pulsar’s counterattack. Instead of getting into Pulsar’s ‘acceleration trap’, Yamaha expanded its brand horizon into the sport segment and created a new segment called “Weekend tour”.

FZ 16’s idea proposition: Bring in ‘newness’ to every possible aspect of product features

FZ16 has shattered Pulsar’s morale and its quick response completely kept Pulsar off balance in its own turf.
 

Model  Name	Market positioning	Price  positioning	Competition
FZ16	For the volume segment in  the 150cc+ category	65,000	Pulsar 150
FZS	Sportier version of FZ 16;  aesthetic differentiation	67,000	Pulsar