Leadership brands lose their allure as marketers take up the challenge

Andrew Baxter, Senior Adviser, Customer, Brand & Marketing Advisory

A generation ago marketers wanted to work only on leadership brands. There was an inherent pride in working with and learning from the best, from the market leader. Marketing graduates fought to be placed at Gillette, Colgate, Foster’s, McDonald’s, Nike and Coca-Cola. And there was a strong set of tried and true marketing strategies and tactics to manage leadership brands.

But today’s generation of marketers has clamoured to work on challenger brands following the success of companies such as Virgin, Red Bull and Aldi. And it’s been to the detriment of true leadership brands; those fundamental skills required for managing leadership brands have slowly been forgotten as the focus has shifted to the skills required for managing challenger brands.

This wave of challenger brand popularity can be traced back to one of the first books written on the subject – Adam Morgan’s Eating the Big Fish: How challenger brands can compete against brand leaders, published in 1999. It quickly became marketing’s shiny new toy, with practitioners drawn to it much as they have been to digital and technology today.

Advertising agencies in particular loved the opportunity that challenger brands provided. It often led to more memorable and creative campaigns. Think the long list of great VW commercials, Nando’s ads and Compare the Market’s meerkat campaigns. Some marketers and agencies even started to try to turn some leadership brands into challenger brands, arguably going against every lesson in how to manage a strong leadership brand.

Today there are many books and articles discussing how to manage challenger brands, but there are few to be found around managing leadership brands. One of the timeless books on leadership brands is Marketing Warfare, written almost 30 years ago by Al Ries and Jack Trout. Their view is that marketing is a very competitive field, and that the warfare analogy is very relevant. Some aspects of the analogy are more obvious – maintaining your position, covering your opposition’s moves and winning ground from your opposition. But the major lesson from Ries and Trout is that “the biggest mistake marketing people make is failing to appreciate the strength of a defensive position”.

It is often said that the best defensive teams win in sport. Ries and Trout say it is no different with brands. Once you’re the market leader in a defined space, you have more resources at your disposal than your competitor. You can afford the best talent and do more marketing to maintain your leadership position in consumers’ minds. You can put more effort into making your product or service better. You can flank your main product by introducing a similar one, before your competitors get the chance. You can even acquire a competitor. All to press home your advantage and defend your position.

Leadership brands, like all leaders, behave in a certain way. They know what they stand for. For example, Walmart, Officeworks and Bunnings stand for everyday low prices. They make strong decisions, have integrity, are confident and fulfil expectations. They are visionary and focused and have strong values.

Leadership brands such as Kleenex, Glad Wrap and Nespresso also often define and represent the category. The best of these brands remain customer-focused and continue to innovate regularly. IBM and Microsoft are two such brands, regularly innovating and even changing their strategic focus along the way, all the while continuing to behave as the leadership brands that they are.

The great leadership brands have also tolerated their major competitors, to a degree. The theory is that it is always better to promote the category as a whole, in turn increasing the total size of it, while ideally maintaining your leading share. The cola wars, the supermarket wars and the beer wars were three examples of this.

The other benefit of successfully maintaining brand leadership is that new customers are more likely to be drawn toward the credibility of the market leader. And for brands tempted to become complacent rather than defending their leadership position, there are strong reminders why not to follow that path – Kodak and Nokia being just two examples.

As marketing continues its rapid evolution, it is more important than ever that CEOs and boards hold their teams to account around the fundamentals of marketing, as much as they do for the exciting implications of what’s new.

Over two decades we have seen a drift of marketing talent towards the allure of challenger brand marketing at the expense of managing leadership brands. And it’s no wonder that some of our leading brands have failed to deliver in that time.

One thought on “Leadership brands lose their allure as marketers take up the challenge

  1. Thanks Andrew – delighted you have joined our talented CBMA team. I like the insight into ‘failing to appreciate the strength of a defensive position’ – we have so many areas at KPMG that we are the market leaders in, and sometimes we should double down to further reinforce our position, rather than investing in the next new emerging area in a very separate area. Particularly relevant in the areas of acquisitions, alliances, acquiring additional capabilities and investing in thought leadership.

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