Challenger Brands: What it Takes to Compete and Challenge an Entire Industry

From coverups that blend in and hide your wounds, to bold and bright patterns that stand out as marks of courage, Welly is a challenger brand, aiming for the top of the market without chasing the competition. And they’re not the only ones.

While a leading brand can become complacent with its status, the challenger brand is driven by a unique mindset and an entrepreneurial spirit. Driven by big ambitions to upset market conventions, they set themselves apart regardless of whatever constraints or resources are present.

Attitude isn’t everything though. While it plays a big part in who these brands are, they still need a solid product and solid branding that can hold up to their ambitions. Take Warby Parker, for instance. The eyewear industry has been monopolized by a small handful of companies with over-inflated prices. Warby Parker was “founded with a rebellious spirit and a lofty objective,” to dramatically change how people buy eyewear. This was done by creating stylish pieces at affordable prices with seamless customer experiences.

Truly, the hard seltzer brand from the Boston Beer Company entered the category early on. Still, it faced a saturated market as more and more beverage companies sought to capitalize on the trend. But Boston Beer Company understood that chasing the competition, creating copycat products, or outspending on marketing wasn’t the way to win. By maintaining their entrepreneurial spirit, Truly has continually innovated with their product: introducing new flavors of hard seltzer, a higher ABV seltzer, and iced tea and punch, that keep pushing the limits of the seltzer category to capture more market share.

Challenger brands can also connect to their target markets on an emotional level by telling stories that resonate with them and create loyal relationships. Attaching stories to a brand’s products can turn customers into an audience, and an audience into a community. The most engaging community members become brand ambassadors who generously spread a brand’s message and reputation wider.

Enter: Peloton, the exercise bike that is so much more. Peloton understands the challenges of getting to a fitness studio or even having access to a local gym. They bring the workout to their customers by making fitness at home convenient through virtual classes that connect them to a worldwide community of other passionate riders. It’s this creation and fostering of community that has been the big win for Peloton, especially during the pandemic when fitness studios were shut down.

While a leading brand is an expert at “the game,” the challenger brand redefines the game to play by its own rules. They don’t necessarily take on competitors head-to-head, they take on a whole industry to position themselves as something entirely different. In doing so, they can also influence and elevate the industry they set out to change.

Have a look at Tesla. Ignoring all the traditional conventions, the still young automaker leads the push toward electric vehicles. It has also accelerated the push for more carmakers to adopt EVs in their lineup, some of which have committed to going all-electric in the near future.

And how can you talk about Tesla without talking cryptocurrency, Elon Musk’s financial “plaything?” Bitcoin, the meme-inspired Dogecoin, and other crypto are in a class all on their own, challenging the very idea of government-issued centralized currency. As popularity increases and crypto rises to astronomical highs, it can no longer be ignored. Crypto has changed the rules on asset exchange, and the industry has followed, with many traditional financial institutions adding crypto to their investment portfolio.

While a leading brand works for profit, some challenger brands work toward a bigger cause, connecting business needs with a social impact and mission-driven purpose. Taking a stand on important social issues, empowering a better world, fighting for just causes… more and more brands are vocalizing their beliefs and becoming social enterprises.

The popular One for One business model was spearheaded by Toms, the brand known for its classic canvas shoe. For every pair of shoes purchased, Toms would donate a pair to people in a developing country. Not only did it differentiate the brand in a saturated market, it gave consumers another reason to support the mission of the company. Several others have adopted a similar model, including Warby Parker distributing prescription glasses to over 50 countries, and Bombas, the apparel brand donating an item for every item purchased to support the homeless community.

Everlane’s mission is all about “Radical Transparency.” An ethical and sustainable supply chain, products and materials made from recycled content, and eliminated waste and energy reduction are just some of the ways they communicate their mission and behaviors through their product development. Their story and mission are an integral part of the brand and are always the leading message. Reminding customers of a brand’s origin story can help build a deeper connection to the challenger brand and its support of a social cause.

• No matter the industry – first-aid, fitness, or fizzy drinks – an opportunity exists to challenge the status quo and deliver something truly unique to consumers.
• With an entrepreneurial drive, a challenger brand is strategic about taking on the industry, making in-roads by noticing a white space in the category, or a weakness in the competition.
• With a bigger purpose and social impact at their core, challenger brands are connecting to a community that shares in their beliefs and becomes advocates for the brand.

Challenging an industry, or taking on a leading competitor, is no easy feat. It takes a unique mindset, an ability to connect with an audience on a different level, and a desire to have a bigger purpose beyond just selling products. Whether you’re a challenger brand, startup brand, or an established brand, it’s never too late to think about your next move with a challenger brand mindset.