Brand Disruption: Be the Disruptor or Be Defeated

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Disruption happens. In the world of brands, standing still is not an option. Recent events at Whole Foods Market have reminded us that brands are living entities. While every brand has a different lifespan, as with all living things, youth fades and the peak of health simply cannot last forever — brand disruption, time for a complete overhaul?

 

Average Company Lifespan

Image via Innospan

 

The average life of a company is a fraction of the 60+ years it realised following World War II, and it has been growing significantly shorter and shorter, now closing in on just 10 years which makes regular health checks even more critical to your brand’s survival.

 

“Change before you have to.”

Jack Welch

(Former chairman and CEO of General Electric, 1981-2001, during which time the company’s value rose 4,000%.)

 

In the 2016 book, “Simplify: How the Best Businesses in the World Succeed,” the foreword opens with “…it is inevitable that sooner or later, someone will come along and revolutionise your industry…The good ol’ boys club rarely sees the outsiders coming until it’s too late.”

 

Related: The Power of Disruptor Brands and Challenger Brands

 

According to St. Gallen University in Switzerland, the basic business model is quite simple; it must provide answers to four questions. The answers will change — and must change — over time, or the brand will not survive.

 

 

Business Model

Image via St. Gallen University

Whole Foods: A Case Study in Brand Disruption

Whole Foods Market tells the story of their own modest first operation in Austin, Texas. “The original Whole Foods Market opened in 1980 with a staff of only 19 people. It was an immediate success. At the time, there were less than half a dozen natural food supermarkets in the United States.”[1]

 

Actually, Whole Food’s success story wasn’t at all an organic one. Growth came about in large part due to mergers and acquisitions in the USA, Canada, and United Kingdom. In effect, while Whole Foods disrupted traditional grocers, it was in the process of disrupting potential competitors within its own niche of natural, healthy, and organic foods. Over four decades, it certainly did grow. There are currently 87,000 employees and 466 Whole Foods Market stores.[2]

 

Now Amazon, the giant online shopping service which disrupted retail, is about to disrupt grocery, which had disrupted natural foods. In June 2017, Amazon filed a bid to acquire Whole Foods Market for $13.7 billion in cash.[3]

 

What happened?

 

Just a few years earlier in 2013, an ABC-TV news report heaped praise upon Whole Foods Market as “the grocer of the 21st century.” The interview with co-founder John Mackey mentioned “cult-like devotion,” saying “the place just looks delicious,” and “if you squint, the produce department resembles an edible Monet…”

 

 

 

 

However, things can certainly change fast in fast-moving consumer goods, right? Whole Foods lost almost half its value between October 2013 and July 2014.[4]

 

Related: Rebrand or Refresh? That is the Question

When Whole Foods Lost its Way

By 2015, it was apparent to all that trouble was brewing at Whole Foods. The “Whole Paycheck” moniker struck a chord…and it stuck. In addition:

  • Customers took note when a massive overpricing scandal was revealed and settled for $500,000.
  • Whole Foods received a warning letter from the Food and Drug Administration for a variety of hygiene problems at a food preparation facility.
  • New York City Department of Consumer Affairs accused Whole Foods of systematic overcharging for prepackaged foods, calling it the worst case of mislabeling they had ever seen.
  • Whole Foods apologised, but it was perceived as a weak apology, and the overpricing wasn’t easily shrugged off by consumers.
  • Online food delivery had taken off and customers were shopping elsewhere where prices were lower.

Related: How to Manage, Survive, and Thrive

 

 

 

 

Earlier this year, a Barclays analyst issued a report estimating that Whole Foods lost as many as 14 million customers over the previous six quarters. “The magnitude of the traffic declines…is staggering. As most retailers know — once traffic has been lost, those patterns rarely reverse,”[5] said the bank.

 

Reportedly Whole Foods didn’t listen and learn. This week, an American financial news service reported that a basket of eight everyday food items purchased at Whole Foods cost $38.29; at Walmart, $19.86; and at Kroger, $16.58.[6]

 

Whole Foods pivoted somewhat in 2016, launching its own new, cheaper chain; but the change was too little, too late.

 

 

Whole Foods Market Traffic

Image via WFM Traffic Comps, Barclays

Enter: Home Grocery Delivery On Demand

Look at the Whole Foods Market website home page. It mentions grocery delivery but doesn’t give it any emphasis.

 

Whole Foods Market Home Page

Image via Whole Foods Market

 

Perhaps the grocery store was not seeing the potential in home delivery…potential that Amazon surely does? Whole Foods must have been aware of this, as they purchased an equity stake in Instacart[7], Internet-based delivery service — but not until 2016.[8]

 

 

Grocery Delivery Truck

Image via Ken, flickr 2.0

 

While Amazon / Whole Foods observers are saying that the logistics of perishable home grocery delivery (within two hours, please) are a nightmare,[9] let us recall milk truck deliveries. They certainly managed just fine without the benefit of high-tech.

 

Grocery shopping is a massive time waster. Driving to the grocery store, dealing with the parking, navigating the aisles, queuing up to pay, and lugging it all back home. However, the solution couldn’t be worth $13.7 billion — or could it?

 

Rather than internet-based home delivery of groceries, could the Amazon deal actually be about data acquisition? Or prime real estate that Whole Foods has cherry picked over the years? Or all of the above?

 

Only Jeff Bezos is likely to know which industrie(s) Amazon is about to disrupt.

Grocery Industry is Disrupted

Meantime, the planets are colliding in the home delivery business. Online groceries generated more than $15 billion in sales last year, which represented big growth but also represented a tiny fraction of the $1 trillion grocery market, according to Forrester Research.[10]

Disrupting Brand Disruption

Watch: “How Blue Apron Became a $3 Billion Company in 5 Years” by delivering pre-proportioned ingredients to customers’ doorsteps for around $10 a meal.

 

 

 

An impressive story…until the disruptor became disrupted by the Amazon / Whole Foods deal. “It was terrible timing for Blue Apron. Many potential investors quickly identified the possibility of more competition in the food-delivery industry and ran the other way,” reported Business Insider.[11]

 

Blue Apron gives us another example of how dramatic, dynamic, disruptive shifts can occur overnight for brands. The meals delivery startup was anticipating its own juicy IPO with a valuation of $3 billion in June 2017. Two weeks after the Amazon / Whole Foods surprise takeover announcement, Blue Apron’s valuation was slashed by more than one-third to $1.9 billion and shares opened flat at $10, down from an anticipated pre-IPO $17.

 

A group of large grocers: Walmart, Dollar General, SuperValu, Target, Costco, and Kroger (a.k.a. WDSTCK) — lost $24 billion in market value in the week following the Whole Foods deal.[12]

 

Following this Amazon filed a trademark for a meal kit service of its own knocking Blue Apron even harder — time to cook up a new highly innovative disruptive brand strategy!

 

 

Building Brands: Disruption is Ideation to the Nth Degree

Challenger brands have an important role to play by offering a superior product and satisfying customers. But not every challenger brand is a disruptor. And not every disruptor needs to tackle a huge industry sector. It all begins with an idea that clicks.

 

In 2010, Dollar Shave Club was aimed at a niche pain in men’s grooming — the high price of razor blades.

 

In San Francisco in 2007, Airbnb was born from the idea of two roommates sharing their air mattress and breakfast with out-of-town convention delegates to make a few bucks.

 

In Austin in 1980, Whole Foods Market was aimed at consumers of natural health foods — a very tiny niche.

 

In 2009, Uber realised that possession of a smartphone — but not a car — was central to the shared economy concept. Uber is currently at the top of the leaderboard for the world’s unicorns, that is, private startup companies with a $1-plus billion valuation.[13]

  • Industries that have stopped innovating are prime for disruption.
  • Market complacency is a telltale sign of a sector that’s ready for disruption.
  • Services where customers voice frustration are prime for disruption.

Related: How Do Challenger Brands Become Market Leaders?

 

“Something can be better, cheaper, and more convenient without being disruptive. The distinction, the one that people constantly miss, is that real disruption is almost impossible to see until it’s too late because the technology or business is so different from what already exists.”

Business Insider

In Silicon Valley, disruption is a buzzword. Examples of consumer brands litter the landscape, from travel, transport and accommodation to retailing and genetic testing — populating a rich list as well as the brand graveyard. For example, these remarkable stories have played out within just a few short years.

Related: 10 Branding Tips From Silicon Valley on How to Be a Successful Startup Brand

 

 

BrandIndustry & IdeaResult
Dollar Shave ClubMen’s grooming. Home delivery of inexpensive razors and blades via membership club.

 

Successful exit. Sold to Gillette (Unilever) for $1   billion within 5 years.
AirbnbHotels and travel. Changing how people think about accommodation via online listings at tariffs set by private hosts.Backed by $2.5 billion in venture capital, still private, profitable. Operating in 65,000 cities, 191 countries.
Uber

 

Public transportation, taxis, limousines. Rides on demand.$66 billion valuation, still private, yet to make a profit. Co-founder and CEO fired after investigation into its corporate culture.
TheranosBlood testing. Devices to automate and miniaturise blood tests using microscopic amounts.From $4.5 billion to $0, a saga of controversy, allegations, failed lab inspections. Founder sanctioned.

Ripe for Brand Disruption

In services, tech, consumer goods, and lifestyle, entrepreneurs are asking questions like these:

  • What deep consumer frustrations are really behind the shocking behaviour we’re seeing in economy class on some of the world’s major airlines?
  • Why has the cost of college more than doubled in 30 years and significantly outpaced inflation…and what can be done about it?
  • What industries will the capabilities of 3D-printing disrupt first?
  • When will we have a tiny battery that lasts?
  • Can we develop a solution for non-invasive blood sugar level testing?
  • What are the solutions for childcare and dual income, full-time working parents?

 

Are you feeling vulnerable in your sector? Are you equipped to make the requisite innovation and change to ensure your brand’s future relevance and success? Is it time to give your brand a health check to identify not only areas of strength and weakness but most importantly where the opportunities for potential innovation and growth exist.

 

 

 

 

If you want direction giving your brand a health check then take a look at our brand audit programme called the Auditing Analysis Accelerator™. This online course takes you through all the key steps you need to consider in giving your brand a health check. It enables you to identify areas of strength, weakness and pinpoint new opportunities for innovation and growth. You can watch a free course preview here.

 

Alternatively, if you want in-person professional direction with experienced expertise or would like us to conduct your brand audit for you and would like to discuss the process and working with us then drop us a line to [email protected] or give us a call T: +353 1 8322724 (GMT hours 9:00-17:00). We’d be delighted to talk with you.

 

 

 

Brand Audit Health Check

Audit your brand now so you can identify where to innovate and ensure your brand is not disrupted!

 

You can watch your free brand audit preview here

 

So the questions in 2017 are;

  • What industries need a top-to-bottom brand shakeup?
  • What markets are ripe for brand disruption?
  • What big problems are waiting to be solved?
  • Where are the opportunities to fix what’s broken?
  • Can you identify opportunities in your niche or in your community?
  • Is it time to leverage a brand audit to help you identify strengths, weaknesses and areas for innovation and growth?

 

 

[1] http://www.wholefoodsmarket.com/company-info/whole-foods-market-history

[2] http://media.wholefoodsmarket.com

[3] http://media.wholefoodsmarket.com/news/amazon-to-acquire-whole-foods-market

[4] http://www.slate.com/blogs/moneybox/2015/02/11/whole_foods_q1_2015_sales_jump_as_wfm_prices_fall_and_customers_return.html

[5] https://www.inc.com/chris-matyszczyk/whole-foods-is-in-a-whole-heap-of-trouble-and-the-reason-why-is-surprising.html

[6] https://www.thestreet.com/slideshow/14185249/1/38-vs-20-groceries-comparison-shows-why-amazon-must-slash-whole-foods-prices-to-beat-walmart.html

[7] https://www.instacart.com

[8] https://www.thestreet.com/story/14194711/1/one-key-challenge-may-hold-back-amazon-and-whole-foods-back-from-crushing-the-grocery-store-industry.html?puc=yahoo&cm_ven=YAHOO&yptr=yahoo

[9] http://fortune.com/2014/04/04/next-up-for-disruption-the-grocery-business

[10] Ibid.

[11] http://www.businessinsider.com/blue-apron-ipo-public-company-amazon-stock-price-2017-6

[12] ibid.

[13] https://techcrunch.com/unicorn-leaderboard

What Brands Can Learn From Political Campaigns

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The races for 10 Downing Street and the White House highlight universal lessons in brand strategy for keen observers. As a brand, there’s none more emotive and powerful than a prime minister or president of the United States.

 

The time period available in politics for building a party platform, selecting leaders, and creating a campaign is much shorter, and consequently more intense, compared to all other arenas of brand building.

 

Nonetheless, just like the smallest of brands, the candidates must build that essential emotional bond whether through shaking hands, kissing babies or connecting with consumers at every single touchpoint in a way that’s relevant to them to earn every single vote. As students of brand marketing, the highly focused, condensed time frame and intense process of building a brand to attract voters — similarly to gaining customers — is rich in takeaways for businesses of any size.

 

Barack-Obama-Justin-Trudeau-600px

US President Barack Obama and Prime Minister Justin Trudeau – (Public Domain)

 

Brand Vision: Differentiation is Everything in Brand Strategy

How many times have you heard someone say, “I’m not voting…all politicians are the same.” Political campaigns remind us that clear brand differentiation is key if you are to capture your audience’s attention, imagination and support. In politics that vision is policy; in branding that vision can be whatever you choose…as long as it’s undeniably clear, relevant to your primary audience and expressed in easy to understand language that resonates with them.

 

Hillary-Clinton

Image via hillaryclinton.com

 

Explain your brand vision. Paint a picture of what the world could look like and how others can be part of that when they buy into the vision of your brand. This must be a really bright North Star that shines for your audience and attracts word-of-mouth referral time after time.

 

Listen as US President Franklin Delano Roosevelt delineates four essential human freedoms. FDR’s “Four Freedoms” speech leaves no question regarding the nation’s vision, “attainable in our own time and generation,” on the eve of US involvement in World War II.

 

 

Listen as John F. Kennedy takes just 30 seconds to articulate his vision in the 1961 inaugural address, speaking first to Americans and then to fellow citizens of the world.

 

 

 

Healthy Brand Competition

 

In sales training, we’re taught to emphasize benefits; trashing the competition is not the right approach. Some politicians are known to be terrible at this. Instead of articulating an optimistic vision, candidates often tell you how lousy the incumbent and/or the competition is. Arguably some consider Donald Trump to be the champion of insults — a skill he developed on reality television and honed in debates — which doesn’t always translate so well in real life.

 

 

To get out the vote, that political position must be communicated across all stakeholders: volunteer voter registration workers, doorbell ringers, call centres, college campus activists, hundreds of regional election headquarters, social media gurus, data experts, staffers, media and the public. To gain customers, that brand message must be reflected at every touchpoint and resonate with current buyers, prospective buyers, suppliers, vendors, distributors, every employee, shareholders, investors, and the CEO.

 

In the absence of articulating and sharing a compelling brand message, disinterest develops, or even cynicism and mistrust. In politics, this translates into divisiveness, fear, insecurity — and a landslide for the opposition. For a brand, it means that reputation suffers and sales decline.

 

You Are Your Brand

The brand called YOU is a multi-layered lesson we can learn (both good and bad practices) by watching the political stage during an election cycle. Certainly, public opinion can be influenced by the packaging: takeaways like Hillary Clinton’s pantsuits and Donald Trump’s unique hairstyle make an indelible mark, as with any brand.

 

Meryl-Streep-as-Donald-Trump-New-York

Meryl Streep as Donald Trump – (@simply_the_best_ms on Instagram)

 

Also, brand marketers can observe how politicians use tone of voice, choice of words, truthfulness, authenticity, facts, listening skills, presentation style, distribution channels, frequency, inspirational metaphors, storytelling, consistency or lack of it, and more to make connections and grow audience. On occasion, they provide examples of what NOT to do.

 

 

 

Everyone involved has a chance to be a brand that is worthy of notice via its most important asset: People. Motivated, enthusiastic, hard working, smiling, clever and talented people make all the difference.

Know Your Brand’s Target Audience

Skills and insight go into knowing and understanding your target audience so you can speak their language, tap into their attitudes and values, and build a simple, strong compelling message that they find irresistible. That magnetism factor is a really important part of successful brand building. It’s one of the critical tools used for mapping out your different customer types in what we call Purchaser Personas.

In fact it’s one of the key elements in our brand building programme called the Personality Profile Performer™. You can’t attract the attention of your ideal audience and sustain their interest if you don’t know them intimately — their needs, wants, loves, hates and aspirations. Every business has a minimum of two and up to twenty different customer Purchaser Personas which provide the critical insights and direction for how your brand can speak to your customers — winning their hearts and minds on their terms — so you can grow your business.

 

PPP-eProduct-Promise-Promo-800x700px

 

The mechanisms of polling, precincts and predicting are complicated. We leave that to the experts. Nonetheless, you’ll hear news commentary about politicians of all political persuasions “appealing to their base” and/or “broadening the base.”

 

As in branding, the articulation of mission, values, and promise are essential. Communication with target audiences to understand their likes and dislikes is the first step, however talking to the base over and over doesn’t bring in a single new vote. Brand expansion while maintaining brand loyalty with a core audience is the name of the game in politics as in retailing and other customer verticals.

Brand Messaging Cannot be Overrated

The importance of driving powerful brand impact is what Donald Trump might call “H-U-U-U-G-E” because connecting at a deep emotional level moves people strategically and emotionally. The intensity of the brand message is what makes it stand out; the authenticity of the brand message is what makes it stick.

 

How you communicate with your audience and what message you bring is what keeps audiences loyal and strengthens bonds. As with any branding strategy, placement, delivery, frequency and tone of voice matter. It’s so easy to turn people off with too much noise and overexposure.

 

In America, where the election process rolls out over two years and intensifies as election day draws nearer, this skill must be managed and sustained over weeks and months, just like a brand must do in the broader marketplace.

 

Donald-Trump

Image via donaldjtrump.com

 

Brand Storytelling Matters

It is critical to stay true to your brand’s DNA and not get lost, unglued, or disconnected. We’re conditioned that way. When a child asks you to read their favourite bedtime story, they’re anticipating the same story with the same ending.

Politicians are famous for the brand disaster known as a flip-flop on issues, and it can cost an election or tank sales. Whether in the political arena or in branding, there’s simply no room for inconsistent storytelling. It kills believability and trust.

 

 

The big why behind the brand story challenges us to build stories that promote something for the greater good. With vision, we can create and communicate a loveable brand, or a sustainable brand, or a socially responsible brand, or a caring, charitable brand…just like building a personality that people will vote for.

Sub-Branding Opportunities and Risks

Sometimes brands create sub-brands to serve expansion goals, as in Coors and Coors Light or American Express and the American Express Gold and Platinum Card. The risk is that sub-brands can detract from core brands, using precious time, energy and resources. Secondly, the sub-brand reputation reflects on its parent brand; the overall customer message can become diluted or compromised.

To minimise or eliminate risks, we recommend taking professional branding advice if you’re considering sub-branding to avoid costly mistakes. Planning your brand structures in the form of new or additional related or unrelated products or services, also known as brand architecture, is a critical part of the strategic planning and brand building process. We’ve seen this play out recently on the political world stage. Brand expansion must be taken seriously to protect core brand values. However, adding Alaska Governor Sarah Palin to John McCain’s 2008 ticket diluted the brand.

 

 

When Hillary Clinton undertook a six-month vice presidential vetting process, the selection was received quite differently to when Britain’s new Prime Minister Theresa May selected dropout candidate Boris Johnson as foreign secretary in an overnight surprise. The former London mayor’s brand image is reportedly lacking in the required decorum associated with such an important role according to other world leaders.

 

“My chances of being PM are about as good as the chances of finding Elvis on Mars, or my being reincarnated as an olive.” – Boris Johnson [1]

 

 

The Appeal of Disruptor Brands

What did brand managers learn from Bernie Sanders during the 14-month lead up to the Democratic Convention, when the challenger was the Millennials’ poster boy, a lovable white-haired grandfather, small-town Vermont Senator?

  • It takes time and resources — generally a year or so — for any challenger brand to successfully disrupt.

 

  • A clearly and passionately articulated brand vision should be communicated over and over again.

 

  • This candidate’s storytelling remained on message (since his youth), establishing strong authenticity, trust and delivering no surprises.

 

  • Bernie Sanders successfully reached a broad audience through brand activation and personal engagement. While pre-imposed deadlines brought his campaign to an end, the branding strategy was successful.

 

  • Watch what happens when a little bird lands on Bernie Sanders’ podium during a speech. The crowd goes crazy and the candidate turns the moment into an articulation of his vision, “No more wars.”

 

 

 

Consider these questions:

  • Is your brand vision well developed and clearly communicated?

 

  • Have you shared your brand vision with all stakeholders?

 

 

 

  • Is your brand story clearly articulated across multiple customer touchpoints?

 

  • Are you considering sub-branding as a strategy for brand expansion?

 

 

 

[1] http://www.telegraph.co.uk/news/politics/london-mayor-election/mayor-of-london/10909094/Boris-Johnsons-top-50-quotes.html

 

How Do Challenger Brands Become Market Leaders?

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In Silicon Valley, startups reaching a valuation of $1 billion are known as unicorns because they’re considered so rare. As of April 2016, there are 165 such privately-owned companies from Airbnb to ZocDoc,[1] a number which might suggest to the casual observer that the unicorn isn’t quite so rare after all.

However, “Failure is the norm,” according to Shikhar Ghosh, a senior lecturer at Harvard Business School and expert on entrepreneurship. Among the many millions[2] of global startups annually and within the broader, competitive marketplace, survival — and success — are exceptional.

 

Great Companies Also Fail

Twenty years ago, another Harvard Business School professor published “The Innovator’s Dilemma” to explore what makes well-managed, top tier companies fail.

Clayton M. Christensen, named the world’s most influential business thinker by Thinkers50 in 2011[3], determined that, “Great companies can fail ― not because they do anything wrong, but because they do everything right. Meeting customers’ current needs leads firms to reject breakthrough innovations ― ’disruptive technologies’ that create the products and opportunities of the future.”

 

Challenging the Status Quo

A challenger brand attacks the market leader(s) by offering a superior product or service…and by satisfying the customer.

From Silicon Roundabout to Silicon Valley to Silicon Wadi, everyone with a good idea has dreams of becoming the next Gates, Jobs, or Zuckerberg.

Chances are slim indeed for quantity to morph into quality. GEM, the Global Entrepreneurship Monitor, puts the estimate of new companies born each year at 100 million. Of these, half won’t last five years and few will crack through $1 million in yearly billings.[4]

Nevertheless, challenger brands enter vastly different verticals at widely varying moments in the life cycle of that segment’s status quo. Even with a brand new idea, such as online social networking, The Facebook, as it was originally called, was a challenger brand in 2003.

Remember Friendster? Philanthropist Sean Parker, first president of Facebook says of Friendster, “That’s a classic case of where a company just blew it. And MySpace is another case. Facebook had no chance to win; it should not have won the market…the only reason we won was the gross incompetence of MySpace…”

 

 

By definition, new contenders are less risk averse, more nimble, and entering their field with lower costs. As Parker points out, established brands must keep a sharply focused view over the shoulder at all times.

However, if a rear view mirror were enough to make it big, we’d see hundreds of thousands of unicorns grazing in virtual startup meadows. Instead, books by hundreds of prize-winning thinkers address and re-address the magic formula for a challenger brand to become a market leader.

Consider how these fundamentals of branding play out on the Challenger Brand Stage.

 

Five Golden Rules for Challenger Brands

  • Influence: Be convinced — and convincing
  • Connect: Clearly state your value proposition — authentically
  • Communicate: Learn from mistakes — both yours and others
  • Innovate: Listen to customers — and keep looking over your shoulder

 

Are you struggling with how to make your brand highly visible, different, distinctive memorable and loveable? Take a look at the Personality Profile Performer™ Programme. It’s a step-by-step process to make your brand No.1 in your target market — especially if you’re a challenger.

 

Personality-Profile-Performer-Offer-16-6-2016

 

Challenger Brand Case Studies

Natural Foods and Groceries – Whole Foods Versus Everybody

Founded in Austin, Texas in 1980, one small store and four owners decided the natural food industry was ready for a supermarket format. Today, the market leader in organic and natural foods has 440 locations in North America and the UK, with fiscal year 2015 total sales of $15.4 billion, up 8 percent year-on-year. Over 5 percent of total net profits goes to charities.

 

Whole-Foods-Original-Store

Image via www.wholefoodsmarket.com

 

Whole Foods is no stranger to connecting with customers and other branding fundamentals. Their fourth quarter earnings report states, “There has never been a time where customers have had more interest in what they eat, where it comes from and who’s growing it. Our company mission, commitment to transparency, and culture of innovation are more relevant than ever, and we see tremendous growth potential as food consciousness continues to evolve.”

 

 

 

 

How focused is Whole Foods on looking over their shoulder? “We recognize the need to move faster and go deeper to rebuild traffic and sales and create a solid foundation for long-term profitable growth and are taking the necessary steps to better communicate our differentiation, improve our value perception, and fundamentally evolve our business.”

 

Whole-Foods-Mission-and-Values-800px

Image via www.wholefoodsmarket.com

 

 

Team Communications – Slack Versus Email

Have you ever heard anyone say how much they absolutely love email? It just doesn’t happen. Yet, customers are passionate about Slack.

 

Slack-Logo-CMYK-800px

Image via www.slack.com

 

 

“I love Slack. I really, really do. So much so I would call it an addiction at this point,” wrote Dave Teare, founder of Canadian-based 1Password, the secure password app that started as a two person company 10 years ago and grew to over 60 people. Using Slack as the internal communications channel, Teare says, “As a company we’ve never felt more connected. The notifications are to die for. They are simply amazing and fun to receive.”

 

 

 

 

The cloud-based software developed in summer 2013 is meant to reduce or eliminate workplace email. About 8,000 customers signed up within 24 hours of launch and in 2015, Slack passed one million daily active users. The Financial Times wrote that Slack was the first business technology to cross from business to personal use since Microsoft Office and the BlackBerry.

Several months ago, the free messaging app lit up the tech press when it raised funds at a $1.2 billion valuation. Well, try $2.8 billion now, and still growing.

“Better than truffles,” and “in love with a service” are the kind of comments you’ll find when you visit the Wall of Love to find out what happy customers are saying. Take the tour. Slack clearly states the value proposition, “A new kind of messaging…what’s different about Slack…and no more email.”

 

On-demand Transportation – Lyft Versus Uber

Ride-sharing conducted on smartphones has shaken up the taxi and limousine business in urban centers all over the world. Passengers request a ride on a mobile app and get connected to a nearby driver, displaying profile, name, headshot, vehicle make and model of their car, and estimated arrival time. No payment transaction is needed, as payments are automated.

In some cities, competing brands exist in the massive transportation industry. Uber and Lyft are chief among these. Uber has spread to 58 countries, Lyft is available in 200+ US cities.

Despite being the challenger brand, Lyft expected to reach $1 billion in gross annual revenue in 2015, up from $130 million, the company’s co-founder told Reuters. Uber’s gross bookings were projected to hit $10.84 billion in 2015, rising to $26.12 billion in 2016.[5]

 

Lyft_company_culture

Image via www.rideshare.com

 

Each service offers a different ride experience, including casual, shared, disabled, limousine. All offer a deeply personal solution to a problem: getting from A to B affordably, safely, reliably and on-demand.

 

Uber-style-popularity

Image via www.rideshare.com

 

Uber started as a luxury car service with the motto, “everyone’s private driver,” and they take a higher percentage from the drivers, too. In a Lyft car, passengers fisty-bump (it’s an insider gesture) with the driver and sit in the front seat. The touchy-feely brand has the motto, “your friend with a car.”

 

Lyft-vs-Uber-Brand-Comparison

Image via www.rideshare.com

 

The ramifications of the taxi and limousine disrupt are potentially far-reaching. Observers are watching to see whether the post-IPO Uber Technologies Inc. [UBER.UL] and privately-owned Lyft carve out different strategic areas within each brand. For Lyft, possibly impacting commuter habits across America[6] and for Uber, competing with Google to upset the entire automobile industry with driverless cars.

 

Men’s Shaving – Dollar Shave Club Versus Gillette

Since the dawn of the 20th century, shaving for gentlemen has been dominated by the safety razor from Procter & Gamble’s Gillette, a brand valued at $20.5 billion, accounting for 70 percent of the global market.

Yet, the in-store shopping experience is not entirely customer friendly with packaging which can be somewhat challenging for the less nimble fingered and complicated blade choices, all of which are typically locked behind glass cases due to their higher prices.

 

Dollar-Shave-Club-800px

Image via www.dollarshaveclub.com

 

Dollar Shave Club focused on that reportedly unappealing customer experience, encouraging consumers to join a home delivery scheme to “Shave Time. Shave Money.” The Guardian reports that “Dollar Shave Club’s sales have steadily increased since its launch, from $4m in 2012 to a projection of between $140m and $150m this year, with 2.4 million users.”

 

Dollar-Shave-Delivery-Box-700px

Image via www.dollarshaveclub.com

 

Watch Michael Durbin, the Venice, Californian-based former improv comic present his vision in a YouTube video that prompted 12,000 orders in a two-day span after it was released in 2012 and has now enjoyed 22 million views.

 

 

 

 

  • Which of these challenger brand case studies do you find most compelling and why?
  • Can you think of an industry that’s a prime target for a challenger brand?
  • Do you agree that building a sound brand strategy begins with research: knowing what customers need — not what you think they need?
  • As a challenger brand, can you carve out a very unique niche to own and defend? 
  • In what ways do you think a challenger brand should market itself differently from market leaders with larger resources?

 

You may also like:

• The Power of Disruptor and Challenger Brands

• The Profit Power of Cult Brands, Why and How to Create One

• Brand Profiling: How Brand Performance and Purpose are Inextricably Linked

• Rebranding Strategy: Why Your Rebrand Must Embrace Storytelling  

• Brand Profiling: How to Use Emotion to Make Your Brand More Profitable

• Brand Revitalisation and Relaunch: The do’s and don’ts of doing it successfully!

• Brand CSR: The Business Case for Successful Branding and Social Good
Personality-Profile-Performer-Offer-16-6-2016

 

[1] http://techcrunch.com/unicorn-leaderboard
[2] Gem-2015-2016-global-report-110416-1460370041.pdf
[3] http://thinkers50.com/t50-awards/awards-2011
[4] https://www.allbusiness.com/million-dollar-startup-secrets-16694845-1.html
[5] http://www.reuters.com/article/us-lyft-runrate-exclusive-idUSKCN0T621K20151117#7j71Oao6sDUYoY7r.99
[6] http://www.nytimes.com/2014/08/07/technology/personaltech/lyft-tries-to-coax-commuters-to-leave-their-cars.html

The Power of Disruptor Brands and Challenger Brands

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These days, it’s all about disruption. In tiny Davos, Switzerland, “The Fourth Industrial Revolution” was the central theme of the 2016 World Economic Forum, designed to engage thought leaders to prepare us for the “next big thing.”

The proposition is that we are on the cusp of a new era fundamentally changing the way we work and live. Vast technological changes brought on by digitalization are disrupting conventional business practices and social norms, states the economic forum founder, Professor Klaus Schwab, in his essay published by the Council on Foreign Affairs.[1]

      Quotes From World Economic Forum 2016

Image via www.weforum.org

Enter Innovator Brands

A 2015 survey by Brand Keys on behalf of Business Performance Innovation (BPI) Network indicates that household brand names are being replaced by innovative game changers, and they’re gaining respect with mainstream consumers. “Nimble startups compete with legacy enterprises,” say 98 percent of those asked and “the disruption is severe,” indicate 37 percent. Furthermore, there is a “distinct correlation” between perceived innovation and a company’s bottom line results, according to the study.[2]

Start Up Innovation Infographic 600px

Image via www.bpinetwork.org

Challenger Versus Disruptor Brands

The terms challenger brand and disruptor brand are not interchangeable. Challenger brands bring innovation, enhancements, new pricing, or other tweaks (diet soda, dishwasher tablets, boy and girl nappies) to an existing marketplace.

Disruptors enter a marketplace and completely set heads spinning. When eBay appeared, for example, it was difficult for many people to accept paying online in advance for an item from a stranger and simply trusting it would arrive in the post. When email gained traction, traditional mail service was rattled and companies were required to re-define legalities in their terms and conditions. And when Airbnb was introduced, the hotel industry was more than mildly shocked; cities are still attempting to define tax issues.

  Deliveroo Airbnb 600px

Image via www.preweek.com

A Shift to the Customer Interface

The battle for today’s customer is occurring in the digital interface between product and consumer. As Tom Goodwin, senior vice president of strategy and innovation at Havas Media, explains, “Uber, the world’s largest taxi company, owns no vehicles. Facebook, the world’s most popular media owner, creates no content. Alibaba, the most valuable retailer, has no inventory. And Airbnb, the world’s largest accommodation provider, owns no real estate. Something interesting is happening.”[3]

 Tech Company Hierarchy

Image via www.reddit.com

These companies fill a connector space between product and people. These brands are the jam in the sandwich between the customer and the business. Furthermore, Goodwin points out that this new breed of interface companies (Uber, YouTube, Airbnb, Snapchat, Twitter, WhatsApp, Facebook, Google) are the fastest-growing in history. All of them began as challenger brands.

 

What is a Challenger Brand?

From the original biblical tale, best-selling author Malcolm Gladwell borrows a title, “David and Goliath: Underdogs, Misfits, and the Art of Battling Giants,” reminding us that compelling storytelling has long been at the heart of a challenge. In brand marketing today, some famous challenges fall into the hero/underdog sort (Coke vs. Pepsi, Avis vs. Hertz; McDonalds vs. Burger King); others make into it a three-way contest, or even a Big Four fight (Tesco, ASDA, Sainsbury, Morrison’s).

Still other challenger brands enter a crowded category or endeavour to maintain challenger momentum once it starts to fade. Enter the game changers, disrupting the status quo by creating altogether new categories (Match.com, Uber, Airbnb), thus far a hallmark of 21st century disruptor brands.

In discussing the rise of the challenger brand, CMO of Adobe points out, “Essentially, the heart of a challenger brand is the passion, process, and tools they use to create and magnify customer advocacy.” Reflect on those overnight queues snaking around the Apple Store in anticipation of new product releases. “The heart of challenger brands’ success is their ability to turn emotion and affinity into a customer acquisition machine.”[4]

Purpose = Purchase = Profitability

    Apple Store Lines 600px

Image via Rob DiCaterino, Flickr CC2.0

Challenger brand experts Adam Morgan and Mark Holden wrote a book on the subject, “Overthrow: Ten Ways to Tell a Challenger Story,” (with all profits going to UNICEF). In it, they list 10 types that represent the challenger brand state-of-mind. These brief descriptions may help you evaluate and identify your own brand’s personality, purpose and positioning.

  • The Irreverent Maverick

Shock and awe counts more than playing by the rules. This challenger type is big on attitude and best have a big budget for flashy PR, interactive sales tactics and legal advisors. Think Red Bull.

  • The Missionary

The core message is critical for this brand which identifies a need to do something better. The authors suggest. “Think of Al-Jazeera looking to ‘redress the balance’ in media coverage of the Middle East.

  • The Next Generation

Daring to call out the market leader as being old fashioned, this challenger seeks to position itself as very much here and now, totally relevant to today’s cultural trends. Emirates Airline, Euro Star and GoPro are examples.

  • The Democratiser

Sharing great design, catwalk looks and labels is the function of this challenger brand. Often seen in retailing, the purpose is to challenge elitist brands. The right influencers are often part of the equation to deliver street cred. Think H&M.

  • The Real and Human Challenger

Using people as a company resource, this brand breathes life into a dead category, fires up consumers’ imaginations. In the UK, Innocent (little tasty drinks), are those guys who drive around in those cow camouflage vehicles or Hungry Grassy Vans.

  • The Enlightened Zagger

Less fashionable is fine for brands that swim against the tide and challenge conventional wisdom. A brand challenge from Camper shoes mixed it up by suggesting that we walk, rather than run.

  • The Visionary

Big, bold and beautiful is the vision — but never boring. A visionary challenge brings a higher purpose and an emotional connection to the brand, Lady Gaga comes to mind.

  • The Game Changer

An entry into a category that’s unlike anything consumers have seen before is a game changer. The designers think outside the box. Steve Jobs brought game changers to categories from personal computing to phones, cameras and music.

  • The People’s Champion

This brand’s founder/CEO may act as the people’s champion, suggesting the public suffers an inferior service or product from everyone else in a category. The people’s champion puts a friendly face to the shakeup, using humour like Virgin boss Sir Richard Branson.

  • The Feisty Underdog

Here’s the David versus Goliath story in all its storytelling glory. It’s us versus them in the style of Avis Car Rental which adopted the slogan “We try harder. We’re #2,” a unique tagline that garnered empathy during its 50-year run.

 

  

  

Examples of Successful Challenger Brands

What do eggless mayonnaise, furniture in a box, bagless vacuum cleaners and fashionable spectacles have in common with driverless electric cars and return rockets for colonizing Mars? From aspirational to mainstream and from ideation to manufacture, challenger brands can change the world. Once a brand does achieve commercial success, a new set of opportunities comes into play in order to stay fresh edgy, and relevant, maintaining a challenger brand mentality as a bigger brand player.

1. Hampton Creek

Josh Tetrick, founder of this plant-based food maker, believes that industrialized egg and meat production is unsustainable. Hamptons Creek’s leading product, Just Mayo, is an egg-free spread that’s about making foods with less water, land, and carbon emissions. This is a brand that proves the business case for CSR and social responsibility.

   Hampton Creek Just Mayo 600px

Image via www.hamptoncreek.com

Since 2011, Tetrick has attracted funding from 12 billionaire investors, including Bill Gates, and shot to the top of several lists of innovative companies shaping the future of food.[5] The Guardian reports that Silicon Valley investors are pouring “serious cash into ersatz animal products. Their goal is to transform the food system the same way Apple changed how we use phones, or Google changed the way we find information.”[6]

2. IKEA

With 373 stores in 47 countries, no one would call Ikea a small company. Yet, it was born as a challenger concept in the back woods of Sweden in the 1940s: inexpensive flat-packed furniture for self-assembly, sold via a catalogue and warehouse showroom.[7] By remaining functional, simple, and design-led, Ikea has managed a harmonious marriage built on durable pillars of inexpensive, yet decent quality. Partnering with UNICEF among three dozen other NGOs and IGOs, IKEA Foundation[8] is considered the world’s largest charitable foundation, with an estimated net worth of $36 billion.

 Ikea Unicef Soft Toy Thank You

Image via www.ikeafoundation.org

3. Warby Parker

Four business school grads asked: Why is eyewear so costly? With US $2,500 in seed money from their university, they founded Warby Parker[9] in 2010, shaking up the supply chain dominated by one company. The challenger brand designs and manufactures fashionable spectacles in-house and provides eyewear via its innovative e-commerce site. The Home Try-On program comes with a free no-questions-asked return policy at a fraction of the price. For every pair of eyeglasses that’s sold, Warby Parker donates the funds to donate one pair to charity, currently over one million pairs of glasses.[10] CSR or Corporate Social Responsibility sits at the heart of this very compelling brand. The company is currently valued at US $1.2 billion.

4. Dyson

A few years ago, nobody (except James Dyson) imagined a vacuum cleaner without a vacuum cleaner bag that could operate by centrifugal force. Dyson worked for five years experimenting on 5,179 prototypes before taking a product to the marketplace. With research and design at its core, Dyson machines now include hand dryers, lighting and air treatments that are available in 65 countries. More than 1,000 engineers continually work on inventions.[11] The James Dyson Foundation sponsors design engineering students with scholarships and awards in the UK, USA and Japan.[12]

 James Dyson Dyson School Of Design Engineering

Image via www.jamesdysonfoundation.co.uk

5. Tesla Motors

Inventor, engineer and investor, self-made billionaire Elon Musk has a stable of disruptive products across multiple industries. From artificial intelligence to solar power to reusable rockets for space exploration, Tesla Motors electric cars are Musk’s best-known challenger brand. His entire stable of companies exist to contribute to Musk’s overarching vision: protecting Earth and humankind via sustainable energy sources and reducing the risk of human extinction by becoming a multi-planetary species. “Really pay attention to negative feedback,” is one of this entrepreneur’s top tips. Next up? “I really want to go to Mars,” says Musk, “It’s a fixer-upper of a planet.”[13]

A View from the Challenger Brand Grave

No stranger to failure, Steve Jobs said in his 2005 Stanford University commencement speech, “You have to trust in something — your gut, destiny, life, karma, whatever. This approach has never let me down, and it has made all the difference in my life.”[14]

And for challenger brands which do reach their goal, they must innovate, innovate, innovate. Success has a great way of dulling the keen edge of ambition; challenger brands can reach a comfort zone of complacency and constant change is the only answer.

Questions to consider

• Are you clear on the differences between a challenger brand and the need for a rebranding?

  

• Is your brand focused on a well-defined purpose?

  

• Have you figured out what you’re challenging and crafted a story that explains why?

  

• Do you have a fresh, imaginative, and stimulating idea, product or service, that you’re now ready to develop using brand profiling which provides your roadmap for bringing it life — making it distinctive, different and memorable so your primary audience can’t resist it?

  

• Do you have the ambitious challenger brand mentality? Are you a risk-taker at heart?

  

• Does your challenger brand represent a positive value for consumers?

  

• Do you have the conviction that your brand is something that will leave the world better off? Are you ready to leave an amazing legacy that changes peoples’ lives, and makes them better forever?

 

 

You may also like:

   

Brand Profiling: How Brand Performance and Purpose are Inextricably Linked

 

Rebranding Strategy: Why Your Rebrand Must Embrace Storytelling  

 

The Profit Power of Cult Brands, Why and How to Create One

 

Brand Profiling: How to Use Emotion to Make Your Brand More Profitable

 

Brand Audits: 10 Things Successful Brand Owners and Managers Must Know  

 

Brand Revitalisation and Relaunch: The do’s and don’ts of doing it successfully!

 

Brand CSR: The Business Case for Successful Branding and Social Good

 

Co-Branding: 13 Tips for Growing Your Brand Through Strategic Partnerships

 

 

[1] https://www.foreignaffairs.com/articles/2015-12-12/fourth-industrial-revolution

[2] http://www.bpinetwork.org/thought-leadership/views-commentary/395/new_digital_disruptors_that_gratify_and_excite_consumers_eclipse_tech_brand_incumbents_in_innovation_rankings

[3] http://techcrunch.com/2015/03/03/in-the-age-of-disintermediation-the-battle-is-all-for-the-customer-interface/#.wp0rsdo:0sCd

[4] http://www.cmo.com/articles/2013/12/3/rise_of_the_challeng.html

[5] https://www.facebook.com/hamptoncreek/info/?tab=page_info

[6] https://www.theguardian.com/science/2014/feb/14/silicon-valley-hack-food-industry

[7] http://www.ikea.com/ms/en_GB/about_ikea/our_business_idea/index.html

[8] http://www.ikeafoundation.org

[9] https://www.warbyparker.com/history

[10] https://www.warbyparker.com/buy-a-pair-give-a-pair

[11] http://www.dyson.com/community/aboutdyson.aspx

[12] http://www.jamesdysonfoundation.com

[13] https://www.youtube.com/watch?v=gV6hP9wpMW8

[14] http://news.stanford.edu/news/2005/june15/jobs-061505.html