How can challenger brands in sport use smart positioning to take on the established leaders in the category?
There’s a lot to be said for being a challenger brand. When your brand isn’t the number one or two in the market, it can give you some freedom to do things differently and be a bit disruptive. Smaller brands can also often be more agile; quicker to react and get things done in a tactical sense.
But there are obvious downsides. Size, scale (and the marketing budgets that go with that) give the big brands a huge advantage, simply by being more mentally and physically ‘available’. Byron Sharp gets into the advantages of that in ‘How Brands Grow’.
This is especially true in the world of sports brands, where Nike and adidas are miles ahead of the pack in global revenue terms.
(Source: BusinessChief)
This gives those two brands a massive advantage through the ability to have their products constantly being worn and endorsed by the very best athletes in the world. The cost of entry here is vast: Nike spent $4.3bn on marketing in the last 12 months.
Almost anywhere you choose to look in sport, you will see the swoosh or the three stripes being worn by the best teams and athletes, with high-quality marketing campaigns to match.
How to compete?
So how can the smaller brands hope to compete in this market?
Positioning has to be a big part of the answer. It’s impossible to compete head-on with Nike and adidas across multiple sports (not to mention the fashion and lifestyle side of things) so a clear, focused positioning is essential.
You have to decide where in this market you really want to compete, who your target customer is, and how you can differentiate from the big brands.
Specialisation
Specialisation is one route: positioning a smaller brand as a specialist in a single sport vs. the multi-brand approach of the big boys.
When I worked at Umbro many years ago, we leaned into our ‘football specialist’ positioning and tried to use the size of Nike and adidas against them. If you spend time making tennis skirts and basketball shoes, can you really also be making the best football gear?
Lululemon, in 4th place on that revenue chart above, grew rapidly through a clear focus on being an ‘active lifestyle’ brand, aimed at women who wanted to look good during their yoga class or workout, and who wanted to wear the same gear for the rest of the day. They exploited an area that Nike, adidas and others weren’t paying proper attention to.
(Image: Lululemon.com)
Interestingly, in the last couple of years Lululemon has expanded into tennis and even golf, in the quest for growth, and to move into the men’s market. There’s always a danger that moves like this eat away at the core positioning and leave room for another brand to move in. Watch this space.
The premium route?
Going for a premium positioning is another viable option for a challenger brand. While Nike and adidas do have strong premium-end products, their sheer scale means you’ll also see plenty of lower-end stuff out there.
Castore emerged a few years ago positioned as “Premium Performance Sportswear” with a vision “to build Castore into the number one premium sportswear brand in the world”.
(Image: Castore.com)
While tiny in comparison with the big brands, Castore has exploited this positioning well and was recently valued at almost £1bn.
Castore has recently moved into striking more team partnerships in football, F1, cricket and rugby. Supplying team kits isn’t easy, and there is a question of whether the brand can maintain that premium positioning while also leveraging these partnerships across multiple sports.
Demographic positioning
From day one, Gymshark had a very clear specialisation as a performance brand to be worn in the gym, but it was also squarely targeted at a young, 16-24 demographic.
This demographic positioning was reflected in product design, pricing, brand voice, narrative and the channels used to promote and sell the product (100% digital, with heavy use of Instagram and young brand ambassadors, in its early days).
(Image: Instagram/@gymshark)
By knowing exactly who it was targeting and how it wanted those consumers to think about its brand, Gymshark was able to grow rapidly and build up a very loyal following, in a space that the likes of Nike and adidas had lacked a real focus on. From a garage-based start up in 2012, it was valued at $1.45bn just eight years later.
Strategic focus always wins
Unless you have extraordinarily deep pockets, taking on the biggest and most established brands in your market head-on, just isn’t going to work.
But, with the right strategic focus around what the brand is and who it’s for (and with a positioning that reflects those choices) it is possible to carve out a successful niche, and grow that into a very lucrative business.
