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Thursday, September 19, 2019

Eating the Big Fish
by Adam Morgan, New York: John Wiley & Sons, 1999

The 8 Credos of Challenger Brands are:

1. Break with Your Immediate Past.
2. Build a Lighthouse Identity.
3. Assume Thought Leadership of the Category.
4. Create Symbols of Reevaluation.
5. Sacrifice.
6. Overcommit.
7. Use Advertising and Publicity as a High-Leverage Asset.
8. Become Ideas-Centered, Rather Than Consumer-Centered.


In 1996-1997 the international advertising agency TBWA commissioned a piece of research among their own customers - their existing and potential client base - to look at the principal marketing challenges the saw facing them over the next five years…they spoke of their having to confront and overcome entirely new kinds of marketing problems - types of problems that simply had not existed 5-10 years earlier:

1. Certain markets had moved for the first time beyond maturity to overcapacity. Even though the category was growing, the number of products and brands continuing to be introduced each year in surplus to natural demand meant that each individual brand was having to increase demand to maintain per-store sales. Quick service restaurants in the United States, for example, is increasing distribution beyond natural capacity at such a rate that each restaurant will naturally see an approximately 5% decline in year-on-year sales if consumer interest in the brand simply remains at the same level.

2. Overcapacity meant there was not enough food to go around. To make their numbers, the bigger fish started preying more aggressively on the smaller fish. They have already reduced costs, reduced head count, and pushed distribution just about as far as it can go. They have exploited global resourcing, search and reapply, panregional marketing efficiencies - and discovered the limits in the level of returns they will yield: continuous reduction in operating expenses as a percentage of sales is impossible now unless their sales go up. And those sales have got to come from someone else: the shareholder has to eat.

So the brand leaders turn on the smaller fry. We see Gallo, for instance, in court charged with imitating a little too closely with their Turning Leaf brand the minor success enjoyed by a fringe player in a market that Gallo dominates. We see Coca-Cola, unable to dominate Pepsi in Venezuela the way it did in the rest of Latin America, simply buying Pepsi's Venezuelan bottler and putting the world's number two out of business in that country overnight. In the summer of the same year, 1996, that same brand leader, Coca-Cola, offered the franchisees of McDonald's restaurants four digit bonuses if they dropped Dr. Pepper in favor of selling solely Coca-Cola's own products. Merely buying back the franchisee loyalty cost Dr. Pepper's parent, Cadbury, $6 million.

3. And as well as turning their attention downward, the Big Fish turned them outward. The clients we spoke to faced entirely new kinds of competition - the brand leader from another category attempting to enter as a second-rank contender from the flank. One footwear manufacturer in Europe pointed out that their five key competitors hadn't even existed 10 years ago. Baskin-Robbins spoke about the impact of McDonald's selling frozen yogurt and desserts had had on the casual walk across the road for ice cream after a cheeseburger.

4. As the big players moved downward, the retailers moved upward. Marketers in the research felt the ambitions of the retailer in their market were impacting much more dramatically on their own marketing requirements. Gaining market share from branded rivals was no longer enough - the retailer they depended on required them to also grow the entire market if they wished to retain quality distribution. Private labels flourished in certain countries, in some, retailers had become considerable players in categories like financial services.


When you look at the collective implications of these four marketing problems taken together - and add the velocity at which the marketers we spoke to felt they were occurring - the simple conclusion is surely this: in the future, the middle ground will be an increasingly dangerous place to live. To allow yourself to continue to be just another second-rank brand is, by default, to put yourself into the mouth of the Big Fish and wait for the jaws to close. Caught in the new food chain between the new hunger of the brand leader, the speculative sharks from other categories, and the crocodile smile on the face of our retailer, the only path to medium- and long-term health is rapid growth. We are not necessarily seeking to be number one; there is a perfectly healthy living to be made as number two or three in our market (or large market sector). But to be one of those brands, we have to put some air between ourselves and the competition. We cannot be just another middle-market player; we have to be a strong number two. And we can't get there by behaving like a smaller version of the Big Fish.


The true dynamic of the Big Fish is actually worse than we can imagine. For it is not just that brand leaders are bigger and enjoy proportionately greater benefits; the evidence we are going to consider suggest that the superiority of their advantage increases almost exponentially the larger they get. (page 7)

The Law of Increasing Returns
The easiest way to illustrate this difference is to map out the brand-consumer relationship into three stages (albeit rather crude ones) and look at the relative performances of the brand leader at each stage relative to a second- or lower-ranked brand in the same category.

Stage One: Consumer Awareness
First, awareness. Who does our target think about first? People rarely buy an unfamiliar brand…The assumption marketers generally make is that the relationship between "top of mind awareness" (brand comes to mind first) and "spontaneous awareness" (aware of brand without prompting) is linear when the relationship is actually quasi-exponential. A rise in "top of mind" produces a multiple rise in "spontaneous."

Stage Two: Shopping
Share of voice compared to share of footfall is the same for everyone except the brand leader, who enjoys a much higher footfall even when supported by relatively low voice.

Stage Three: Purchase and Loyalty
Brand "Double Jeopardy" observed and modeled for over 35 years across a variety of markets and cultures, where the brand leader enjoys high penetration and buyers that buy brand more often.

The Consequence: Profitability
What, of course, all this leads up to is brand leaders making more damn money that we do…which all serves to widen the discrepancy between the chips the brand leader has at their disposal and the pile we have to play with. And, as we have seen, each of their chips seems to win them twice as much as ours.

Which is one of the reasons why so many Brand Leaders are exactly the same brands that were market leaders 60 years ago.

What the Law of Increasing Returns means is that we have to swim considerably harder than the brand leader just to remain in the same place. Up to now this has largely translated itself into conversations about relevance and focus; decisions about communication strategy and customer targeting.

But what if staying where we are in the future will not be enough? What if profitable survival in our category requires the achievement of rapid growth, in a probably static market, in the face of three new kinds of competition? Knowing that to follow the model of the brand leader is to help them increase their market advantage?

It would mean that we would need to abandon conservatism and incrementalism and start thinking like a Challenger just to survive healthily. It would mean we would have to behave and think about the way we marketed ourselves in a completely different kind of way. Find a different way of thinking about our goals and strategic objectives. Require, in fact, a different kind of decision-making process altogether.

Facing the Law of Increasing Returns, number-two brands are going to need to deal in altogether more potent currencies: those of curiosity, desire, and reevaluation. To succeed, they are going to have to create an emotional identification, a strength of belief in the brand, a sense that we are one to watch or explore - active expressions of choice and loyalty that will make someone walk by the big, convenient facings of the brand leader and lean down to pick out the little blue can at the side. As a second-rank brand, we don't just want to create desire, we want to create intensity of desire. Harley-Davidson's legendarily loyal customers, for instance, are not putting their trust in the brand's motorcycle engineering - they can buy a higher-performance bike at a highly competitive price - nor are they people who appear to be desperately in need of reassurance or simplification. They buy one because they want to feel Bad. And no other bike in the world lets you feel Bad like a Harley.

And what this demands is a different kind of marketing altogether, a different approach. We will come to see that is will demand a change, in fact, not just in strategy but in the attitude that precedes that strategy and the behavior that follows. Fundamental to each decision taken and each way of thinking will be the concept of Mechanical Advantage - the physical principle describing a machine that manages to create greater output from the same or lesser input. Getting more results, in short, from less resource. Not only is this going to be the framework for our entire way of thinking, but it is also going to be the brief for the way we rethink the internal working structure, processes, and behavior of the company and people behind the brand.

And at the heart of Mechanical Advantage in marketing - its currency, in fact - are ideas.

The Consumer Isn't
If Consumerism was a brand, we would say that the person on the street has developed significantly different usage, attitudes, and behavior toward that brand over the last three decades - and yet the vocabulary we still use to talk about it remains essentially unchanged. The old underlying structure and concepts that we still refer to implicitly every time we use words like consumer and audience and category are thus now left fundamentally flawed. These we concepts, after all, coined at the beginning of the packaged goods mass market, when families watched television together and being a consumer meant something because - certainly in the United States - consumerism was embraced by the general public as a healthy sign of being a part of, or aspiring to, the middle class. But although our vocabulary fails to acknowledge it, the world is very different today. Consider what has happened to just those three basic concepts - audience, consumer, and category - over the last 30 years.

The Audience Isn't
Much has been written about consumer's sense of stress today, to the point of it becoming a cliché. But the fact that is has become a cliché should not blind us to the fact that it is profoundly true and is having considerable effect on the way that consumers interact with marketing activities, communications and ideas. One of the most important shifts that has resulted from our point of view is the relationship that people are looking from in the media they use.

In a 1994 poll, 94% of all American adults stated that a primary use of their free time was to recuperate from work. If true, this is one of the most important pieces of marketing data to have emerged in recent years, and it describes a profound shift in the way consumers use one of the principle marketing tools at our disposal, namely television. It implies that there has been a profound shift in our society, from a work/leisure society (i.e., one that self-consciously divides itself between two basic types of activity, work or leisure) to one that divides its time between three: a work/recuperation/leisure society.

Why is this important to us? Because recuperation is a very different thing from leisure. You use recuperation time in a different way, looking for different kinds of experiences. The figure following shows how television has subsumed all other activities as a recuperative activity over recent years.

Note how significantly the gap has widened. Now, one might argue that in a stressed world, television has subsumed all other activities precisely because it is not an activity - it is passive, a "vegging out." But it is more than this - if we think of it as active recuperation. Of those who saw recuperation as a primary function of their leisure time, 75% did not even classify watching television as leisure. For them, it has become necessary therapy.

What activities are the one that you usually enjoy or look forward to during a day?

Watching Television
Checking the Mail
Going to Sleep
Taking Shower/Bath
Getting in the House
Making Love

*Not Asked
Source: Roper 1997

Look at yourself. Exhaustion is, in every sense, a great leveler. At a very profound level the consumer is yourself on a Thursday night after a tough four days. What kind of advertising do you want to watch? The answer, of course, is none at all. At nine o'clock on a Thursday night, all you want to do is escape a little. Relax. Eat peanuts and scratch your stomach.

Why is this important to us? Because recuperation is a very different thing from leisure. You use recuperation time in a different way, looking for different kinds of experiences. The figure following shows how television has subsumed all other activities as a recuperative activity over recent years.

It is not simply a question of boredom thresholds or tolerance levels decreasing - even in serious relationships (with a local divorce rate running at 68%, one county in the Midwest is considering compulsory prenuptial counseling before granting a marriage license). It is a question of the pace at which we live profoundly impacting quite basic levels of human need. We live in a world in which 10 years ago the average American said they have six close friends; today they say they only have four. We live in a world in which companies are monitoring the amount of bathroom tissue that is used to demonstrate that people go to the bathroom less often when they are working more intensely. So if man, a social animal with physical needs, is cutting down on both those basic requirements in order to get through the day, what slack are they going to cut us marketers? In this context, when their prime evening motivation is recuperation and escape, advertisers have moved beyond being clutter. They are no longer in the communication business, they are in a new kind of business altogether: The Nuisance Business.

Which means that the audience is not an audience. To call them an audience presupposes they are listening. In fact, we, the brand, are merely one of the three or four acts that are on stage simultaneously, each vying for the attention of the potential audience. Children, conversation with one's partner, food, magazines - video research of the consumer "watching" television shows that they are anything but a captive audience, even when the programming is on. One study suggested that 23% of U.S. golf programming plays to an empty room. And their attention to advertising is getting even more selective. (figure 2.2)

Figure 2.2

Adult evening viewers able to name a brand or product advertised in show just seen: no prompt.

Can't Name Any %
Can Name %
Name in Other Show%
Source: Newspaper Advertising Bureau

And this in turn, of course, is because they pay even less attention to the advertising than they do to some of the programming. (figure 2.3)

Figure 2.3

Viewer's response to commercial break

Stimulated channel change
Muted commercial
Ignored commercial
Alternating attention
Attended to commercial
Source: American Academy of Advertising

Audience, then, although it is a word that is used almost interchangeably to refer to our target, is fundamentally flawed. Our target is not an audience, for that would presuppose they were watching or listening. While it may have more usefully described our target at the beginning of the intersection of mass marketing and television (and even that is arguable), it certainly does not do so now. The audience isn't.

The Consumer Isn't
Implicit in the idea of a consumer is someone who is engaged in an activity - namely consuming. Basking in this, as marketers we eagerly add rational information for them to absorb and inform themselves with our packaging, brochures, in-store material, and direct mail. Don't put it in the body copy, we say, confidently - we'll get our consumers to pick it up in the nutritional information.

In fact, consumption of anything other than the product itself is passive at best, and with very rare exceptions, it is centered around the actual moment of purchase or use - people don't have the energy or inclination to be continuously engaged with regard to a product. They are simply using your product and getting on with their lives. In most cases, the smaller the interaction - the less they have to react - the better. There is evidence to suggest that people want less nutritional claims, less choice, less information to have to deal with in the things they buy every day.

Jack in the Box, ran a focus group on some new in-store material talking about product improvements. In the groups, people responded well to the tent cards and posters - the were seen as informative and attention-worthy. Jack in the Box then mocked up one of their restaurants with the new promotional material and did the test again on actual visitors to the restaurant when those visitors exited the restaurant. In this second piece of research, most of the consumers interviewed had no idea what we were talking about. What in-store posters? They asked. Tent cards? Were we sure? These consumers had just come in for a burger and fries, they didn't know that they were supposed to read the wall as well.

Why the inconsistency? The first case assumed that the Jack in the Box eater was a consumer - and respondents played the game accordingly in the focus groups. The second case treated them like people who bought fast food at Jack in the Box - and the limitations of the concept of "consumer" became apparent.


Although within each market there is an interrelated collection of such complacencies and habits, one will be the most important, because it will be the central departure point for many other accompanying attitudes. Let us call this the dominant consumer complacency. For a brand that is late to relaunch, for instance, the dominant complacency may be the weak opinion the consumer has of their product (for example, Harley-Davidson or Jack in the Box). It may be the consumer's view of the category that is the dominant complacency that has to be overcome (perhaps cigars, or high-fat categories, or certain luxury categories like fur). Conversely, for a brand launching into markets that are established but successful, the dominant complacency may be how the consumer views the existing establishment player in the market (a nation's view of its own national carrier in the airline market for instance). A Challenger cannot hope to pick all these locks at the same time; instead, it has to identify the dominant consumer complacency that it has to turn. These are the principal barriers to a Challenger achieving momentum, and they must be broken. And at the same time, the Challenger must use the breaking of them to assert who it is: it must build the Lighthouse Identity (our second credo). (page 108)