Thinking Like a Challenger Helps Create New Consumer Value – by David Blyth, CEO / founder of Delta Victor Bravo (representing eatbigfish in Africa)
eatbigfish Africa
We use challenger thinking to create and refresh brands, turbo-charge innovation and build strong cultures.
When it comes to creating and managing the value perceptions of our brands, marketers tend to put effort into innovation or enhancements to deliver more features or added functional benefits to consumers. However, when we get stuck because we are faced with constraints and therefore don’t have anything new to offer, many of us use price as a short-cut to drive value that moves volume to keep up in the competitive fray. Before ending up at the ‘equity eroding’ pricing door, there is opportunity to open many other ‘equity building’ doors that don’t depend on tangible product or service-level changes. Challenger Mindset is the means to this end. Before we get to this, there are some important considerations that frame the marketing conversation about the term ‘value’ in a marketing context.
Marketing aims to create business value
At its core, marketing aims to create business value through revenue growth and ultimately profitability. But driving value perceptions should not be limited to promotional mechanisms, rather it should be about delivering a proposition that includes both tangible and intangible components.
The framework below reminds us that the marketer’s role extends far beyond the Promotional ‘P’ in the ‘4Ps.’ The challenge is for marketers to step up, contribute to the total value proposition, and bring commercial acumen that is emboldened with strategic and conceptual thinking to the table
Value isn’t just about price
Undoubtedly influenced by pricing segmentation labels like ‘Value Brand’, the term ‘price’ is often conflated with ‘value’. If a brand has positive equity, the word ‘value’ should never be used interchangeably with ‘price’. The positive equity a brand holds should enable us to manage perceptions and actively influence pricing strategy.?
Value is a moving target
Perceptions of value are dynamic, influenced by both internal and external factors. Keeping a handle on these factors is crucial. Unfortunately, it’s becoming increasingly uncommon to find marketing teams that actively track and respond to the variables shaping consumer perceptions and so they miss the opportunity to create and sustain business value over time.
Short-term fixes that undermine value
We are often asked to do more with less, which can be a consequence of not proving the value marketing activities bring back to the business.?This added pressure affects how brands go to market, often at the expense of brand-building efforts. This can take the shape of:
These actions might improve margins in the short term, but they risk damaging brand equity over time.
The job to be done - build sustainable demand
Our role as marketers is to create sustainable demand that leads to revenue growth and profitability, not to manipulate price for short-term effect. Kantar modelling tells us that brands with higher equity - those offering meaningful differentiation - tend to be less sensitive to price changes. As global Heineken CEO Dolf van den Brink says, “Brand power today is pricing power tomorrow,” (Marketing Week - 31 Jul 2023).??
Knowing how to cultivate sustainable demand and price inelasticity is a critical skill that requires collaboration across functions, including R&D, innovation, business case modelling, product and value proposition development, distribution, experience, and pricing strategy - the whole brand ambit if you like.
Most importantly, this requires confidence in our approach and engagement with the business to get everyone onboard. One of the best ways to garner support in relooking the value equation, is through a Challenger Mindset.??
The new value a Challenger Mindset can bring??
Many organisations become locked into a way of competing that is based on relative one-upmanship – and in the value discussion, that is often about relative price (obviously the extent of this differs by category). A Challenger Mindset helps organisations move beyond incremental improvements and rethink value entirely. Here’s how:?
A. Embrace intelligent naivety
A key aspect of the Challenger Mindset is asking upstream questions about why the category behaves or delivers as it does. This pushes us to clearly define the problem, specify the core business we should be in, and frees us up to explore all possibilities for the category, allowing us to break with the past and bring about new progress. For example, Netflix founder Reed Hastings asked himself, "Why can't my entertainment options be like my gym membership?" This led to the introduction of 'all-you-can-watch' deals in an on-demand format for a fixed fee, removing all the complexity from video rental. Netflix created new value by questioning single-title rentals and introducing a fixed fee for unlimited entertainment.
B. Pick a fight with the right problem
By clearly defining what we want to challenge we can focus on expediting change. It could be a dimension or quality of the competition, a fundamental driver of the category, the broader culture surrounding it, or something else entirely. Our goal should be to remove obstacles to progress, making things better for consumers. For example, Richard Branson, with no experience in aviation, decided to start an airline called Virgin Atlantic using money made in the music industry. He challenged British Airways' complacency by emphasising how the past was not just ordinary, but poor value. Virgin Atlantic created new value by inserting glamour and therefore new emotion into the flying experience.
C. See constraints as opportunities
To do this, we must ask better, more propelling questions. A propelling question combines a Big Ambition with a Significant Constraint, ensuring our inquiry is grounded rather than 'blue sky.' Asking more propelling questions opens the door to more "We Can If" answers. For example: How do we scale research into Alzheimer’s without costly face-to-face consultations? We can if we turn it into a game. The results: Sea Hero Quest, a multi-award-winning citizen science project with a world leading normative benchmark of 4.3m people to assess against.?Alzheimer’s Research delivered new value by finding a way to affordably scale the reach of its research endeavours.
D. Sacrifice and Overcommit
Focusing on fewer bigger and more important things obviously creates new value but the biggest mistake is that we say we’re going to focus and then don’t subtract. To truly focus we need to stop doing certain things and this involves uncomfortable sacrifice. If we truly understand our consumers, we will know what really counts and we’ll stop doing the things that don’t know matter how ego-fulfilling they might be. For example: Citizen M, a hotel for the cost conscious lifestyle traveller knew that its target market were people that ‘Take the train but drink champagne’ and so took the picture of a 5-star hotel room and put a red line through all of the things their target market did not care for in the room. They then doubled down on the comfort of the bed, a fantastic shower, excellent technology and brilliant design. Citizen M created new value by overcommitting on the essentials they knew were critical to their market.?
E. Anchor value in core beliefs
Our perspective as a Challenger should focus on change that drives progress for the category, making it compelling because it is meaningful and 'relatively different.' We also need to project this point of view to the world and embrace how we pursue it through one of four agendas:
For example, Tony’s Chocolonely is a brand on a mission to end exploitation in cocoa (forced labour, child labour, and deforestation) and the unfair distribution of value and power in the chocolate industry worldwide. Their chocolate bar is unequally divided to stand for this belief, and they have built their entire business around it with a roadmap, sourcing principles, and an invitation for broad participation to drive change. Tony’s Chocoloney created new value by making ethics an important decision-making criterion in the category.
Summing up the value discussion
Creating value should be about much more than pricing. It’s about shifting consumer decision-making criteria toward something that truly matters - something consumers might not even realise they need yet. By applying the Challenger Mindset, brands can rethink their approach to value, craft compelling promises, and then deliver on those promises in ways they know will resonate deeply with their audiences.
There’s a world of opportunity waiting for marketers who are brave enough to challenge the norm, redefine value, and create longer lasting and positive brand impact.
References
2.??? https://www.kantar.com/inspiration/brands/can-marketers-affect-consumer-sensitivity-to-price-changes
5.??? https://www.eatbigfish.com/our-thinking - The Challenger Playbooks