Everything I learned about second-place advantage from marketing a challenger brand

According to Kantar; 18 of the top 20 most chosen brands are in decline. Unsurprisingly, with the world just a *tad* on fire, we’re all not buying from our favorite brands as frequently. In fact, out of the top 50 brands in the UK, only 18 of them enjoyed growth in 2022. So, what are people popping in their baskets instead?

McKinsey tells us that since 2016, only 25% of the growth of consumer product goods (CPG) has been driven by leading brands, meaning that the non-leading brands are driving the biggest growth. The challenger brands. The brands that sit in second place and below - are punching in the market. Rarely have we seen brands with less share, and less spend, gain ground like they are now. Perhaps, as trust falls in bigger business, being a small fish may be the thing that is giving challenger brands a second-place advantage.

Let’s look at situations where one brand has a significant lead in market share over the rest.

Think of Gillette having over 70%+ of the share in razors. Or Durex, having over 80%+ of condoms. What about Wrigleys, with their hefty 90%+ share of gum.

When there is one giant in the category, thinking proudly as a number two (no matter what your current position is) can often be the key to success. As was penned in the classic, 22 immutable laws of marketing: “if you’re shooting for second place, your strategy is determined by the leader.” They weren’t wrong.

Much like the ‘Eat Big Fish’ (and others) have taught, it’s at this point in marketing when there can be a tendency to reach for the references of (the great) but very direct way of taking on the big player. Think; Oatly calling out Milk. Brewdog, with their punk attitude. Or Aldi going after certain premium competitor and their caterpillar cakes. This works for some brands. But it doesn’t work for all.

Not to fret though. Perhaps, there is another way to approach the second-place mindset. One that doesn’t need to be about directly challenging the leader.

Leaning on the wisdom of Richard Rumelt, it starts with looking at the problem correctly. When analyzing the competition, we sometimes tend to look at the category equally - pulling out the codes and conventions and forming insights at a market level.

But not all competition is equal. Especially if one brand has 80% of people’s attention. That one brand will set the category conventions or at least the majority of them. You’re going against loyalty and habit, not just broad conventions.

And here is where it gets fun. You can go all Sun Tzu, Art of War on it. Because if David versus Goliath has taught us anything, it is that for every strength, there is a weakness. It is just about finding it and turning it to your advantage.

For The Or’s recent work for Harry’s (the weird one with the satsuma), we knew we wanted to shave a share off the category leader; they’d spoken about being the ‘best’ and had developed years of comms centered around ‘perfect man.’ But looking at the evolving culture around us, there was a space to be more every day. To not overpromise or over-innovate, keeping it real.

Rather than focus on the vision of overt masculinity established by the market leader, we researched to discover the characteristics of modern men. And the modern man wants to not only look good but feel good too. For us, it wasn’t about ‘beating’ the competition at all, but instead offering a different outlook that would make the overlooked feel seen and heard. It’s only once you understand the whole picture, then it’s time to look at yourself and ask what you can be best at - and for us, and Harry’s, we’d found it.

Generally, smaller brands are built to serve an unmet need or a gap in the market that isn’t being served. If they’ve survived enough to need a brand strategy, they probably have a genuine point of view, based on a broad need that people have. A real need, which, if there was a solution, people will choose over the biggest player in the market every time. So, focus on that. If they’ve proved their product can get customers already based on the proposition, that’s your starting line. Enjoy the race.

Challenger brands often find success in the customer-centric, not the commercial. Success can be found by looking for a strategy that is about serving people, not beating the competition. You should set your sights higher than “being number one in the category” and choose something that’s about making an impact differently.

In this respect, it’s about building a brand strategy around a goal that will affect the whole business, rather than focusing on a message about your competition. Nike famously started with an ambition of ‘crushing Adidas.’ Yet, they pivoted to own their position of ‘making everyone an athlete’ and beat Adidas regardless. The lesson to be learned here is to start a conversation with people, not with the competition.

Similarly, when it comes to the second-place advantage, it’s clear the recipe to success is different. And at a time when the planet is on the decline, and our purse strings are tighter, challenger brands are filling a gap left open by market leaders who are struggling to evolve fast enough to meet consumer demand. So, next time you’re fighting for a place in the shopping basket; don’t chase the big fish. Look at the fish you already have, establish your purpose, know your place within the sector, and importantly, listen to your audience. Then who knows? One day you might be the one living it large at the top – loved and envied by many.

In the words of Logan Roy, “You make your reality. And once you’ve done it, apparently, everyone’s of the opinion it was all so fucking obvious.”

Sarah Oberman, strategy partner and co-founder at The Or.