Five Steps to Ensure Success.
Fighter brands can be tempting, but their history is a discouraging roll-call of failed campaigns that inflicted little damage on targeted competitors and resulted, instead, in significant collateral losses for the company that launched them.
By Mark Ritson
It's an increasingly common dilemma for CMOs with brands in the middle or top end of the market. Should you tackle the threat head-on and reduce existing prices on your premium brand, knowing it will reduce profits and potentially damage brand equity? Or should you maintain prices, hope for better times to return, and in the meantime lose sales from customers and support from your CEO? With both of these alternatives often proving equally unpalatable, many marketers have decided on a third option: launching a fighter brand.
It's one of the oldest strategies in branding. Unlike traditional brands that are designed with a set of target consumers in mind, fighter brands are specifically created to combat low-price competitors that threaten to steal market share away from a company's premium brand. When fighter brands work, they not only defeat low-priced competitors, they also open up new markets for companies to pursue. My research into fighter brands reveals five key strategic steps you should take to ensure your fighter brand will emerge victorious.
The first step is to ask yourself if a fighter brand is really what your organization needs. Can you afford to spend precious resources on a new, low-priced brand at a time when perhaps you should focus investment and management attention on your existing portfolio of brands? Too often companies must embark on significant cost-cutting and re-pricing strategies for their premium brands after acknowledging that their respective fighter brand strategies have failed. These crucial strategic transformations are usually delayed for years while organizations conceive, execute and finally retract their fighter brands. Start your fighter-brand campaign by questioning whether you even need one in the first place.
If you decide to launch, the second step is to prevent cannibalization. Most fighter brands are created explicitly to win back customers who have switched to a lower-priced rival. Unfortunately, once deployed, many have an annoying tendency to also acquire customers from a company's own premium offering. The best fighter brand strategies, like Procter & Gamble's use of Luvs in the diaper category, not only factor in the degree to which the brand will steal from its sister brand, they also include strategies to minimize the amount of cannibalization incurred. P&G specifically removed innovative features from Luvs and invested heavily in premium brand Pampers to ensure that they attacked their respective competitors more than they fought with each other.
Third, create a fighter brand strong enough to bury the competition.
Fear of cannibalization often leads companies to overprotect their
premium brands at the expense of the combative potential of their
fighter brand. Make sure you market-test your fighter brand, and be
prepared to recalibrate its price and performance so it finds the sweet
spot between cannibalizing your premium brand and failing to damage
Fourth, give your fighter brand a sustainable business model. While a fighter brand is designed to attack a low-price rival, it also has to do so profitably, or it won't maintain those attacks long enough to eventually defeat its enemy. This was the key mistake General Motors made with Saturn, which successfully stole market share from Toyota and Honda, but incurred huge operating costs. With GM losing $3,000 for every Saturn car it sold, the company was forced to cut production costs. In turn, Saturn lost its edge, and Japanese imports resumed their domination of the U.S. market. (...)
The final step to fighter-brand success is early and frequent consumer focus. Normally, a successful brand has its genesis in the recognition of an unmet consumer need. But fighter brands originate with a competitor and the strategic success it has achieved, or threatens to achieve, against your organization. The DNA of a fighter brand is therefore potentially flawed from the very outset: It is derived from company deficiencies and competitor strengths, not a focus on consumers. To avoid a potentially fatal competitor orientation, apply the same degree of consumer focus for a fighter brand as you would any other launch.
These are only a few excerpts. Read the full article here.
Originally published in Advertising Age CMO Strategy, October 13, 2009Mark Ritson is a visiting associate professor of marketing at MIT Sloan School of Management. His article Should You Launch a Fighter Brand? appears in the October issue of Harvard Business Review.