How to start a challenger brand

Challenger brands are disruptive. They can be the second biggest in a market or the twenty-second biggest; what's important is that they are the underdog and the innovator.

It's not just small companies who operate as challenger brands. In its efforts to diversify, Google has disrupted many markets and challenged many big names.

However, entrepreneurs without such backing may find taking on the big brands a scary prospect. Here are some tips if you're launching the next challenger brand.

Care about what you're selling. If you don't, why should anyone else?

Passion has never been more important than when challenging another brand. In the bid to win market share and gain loyalty, you must have a complete belief in what separates your product from the competition. People love to take sides on any argument and there will always be customers looking to find an alternative to the conventional project.

We all know people who defend Apple, even when no one is arguing against them. This is a testament to their branding and it's what your passion will achieve. Do you think Steve Jobs ever questioned whether his project was the best on the market?

Know who you're challenging and their weaknesses.

There's no big business in the world without a weakness. Whether it's a lack of connection with individual customers, an absence of identity in certain regions or an ageing image, the shortcomings will be there.

The most common flaw in a big brand is dissatisfied customers who will be people looking to move away from their current supplier. It's your job to show them why they should.

Be emotive, use your position.

When starting a brand, great opportunities lie in presenting yourself as David to a market leader's Goliath. Never be afraid to advertise your product as new and let customers know it's something different in a mature market.

Use yourself as a front for the company. If you want to know what a personal and fresh approach can do for a disruptive business, look at Richard Branson's Virgin.

Get backing and move quickly.

Challenger brands require high levels of financial backing but investors will put money into precise business plans if they can disrupt a market. Once you have your backing, you need to move quickly. Other entrepreneurs will be looking to challenge the same name as you and competition in the challenger market is fierce.

While exposing weaknesses in the established brand and capitalising on them, be prepared for others to do the same to you. Challenger brands rely on aggressive action rather than unique ingenuity so markets are generally very saturated and competition will be tough.

Be wary when relying on lower prices.

Companies who have a hold on their market enjoy abnormal profits, but don't believe simply using a lower price will destabilise their position. The big names will almost always reduce their prices at the drop-of-a-hat to defend their position and they will be able to advertise to large markets with ease.

You can't just offer people the same product at a lower price. You have to show them why they should pay money for your product rather than someone else's.

However, there may be markets with the specific requirements to allow a low price strategy. Jamie Murray Wells found the profits being made by opticians to be ridiculous and launched Glasses Direct to capture loyalty through aggressive advertising, low prices and online retail.

Know your markets better than the big names do.

International companies can't capitalise on the entirety of their possible audience. As a small business, find the regions and segments of consumers which aren't being targeted.

Taking your brand to those who aren't loyal to the big name is the easiest way to gain momentum and once you have a customer base, you can challenge another brand on their own grounds.

Swatch became one of the biggest suppliers of watches around the world when Ernst Thomke recognised the established brands in Switzerland had lost sight of the entry level market into wrist watches.

If you can change the market beyond recognition.

What did Google do to Yahoo and Yellow Pages? What did Skype do to every telecommunications giant?

They didn't just offer a slightly different service. They offered a far better service which was very different to what was available and they took customers and the entire market with them.

Not every challenger brand will be able to do it but if you can change things for the better, you'll be rewarded with brand loyalty and soon, you'll be facing challenges of your own.

Check out the story of thedogsdoodahs.com, an online greeting card supplier that has challenged industry leaders Moonpig.

Smarta Formations 

You can set up a challenger brand as a limited company with Smarta - we offer a company registration service powered by the National Business Register.  You can search for available names then register a business name, or set up a company and/or register a trademark with us. You will receive a professional binder with all your official documents via post within 3-days.

Smarta Formations is the quickest and easiest way for you to register your limited company. All the hard work is handled for you. 

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