If you are a brand which doesn't have the budgets of your main competitors, or you are challenging the conventions of a sector with limited marketing funds, you need to act and advertise differently. A recent research report codified this into the concept of gaining 'relative advantage'. It found challenger brands can grow faster by doing some things differently - to create that relative advantage. In this article we highlight ways to gain that advantage.

Explaining ‘Relative Advantage’ and the levers small brands can use to challenge category leaders. Defying category norms and applying Relative Advantage media behaviours could be a way for challengers to chart their own course to brand growth, free from the gravity of rules that were never intended for them

·       ‘Relative Advantage’ refers to finding opportunities in media and communications that competitors have overlooked in order to grow.

·       Studies revealed over 200 cases from 2010 to 2022 to identify how ‘Relative Advantage’ techniques work in practice.

·       Relative Advantage cases showed a 15% uplift in very large brand effects, such as brand awareness, differentiation and trust.

Takeaways

Relative Advantage cases display at least one of seven behaviours, e.g. targeting an audience

underserved by the rest of the category, or activating at an unconventional time of day.

Despite Relative Advantage’s focus on defying category conventions, demonstrating differentiated brand behaviours does not negatively impact perceptions of trust and esteem.

Relative Advantage cases on average are 9% more likely to generate at least one very large business effect, e.g. sales, market share, customer acquisition or profit.

For all the new and emergent technologies and media channels over the past 20 years, the body of empirical evidence for how brands grow has remained largely and broadly consistent.

Without wishing to split hairs, we know brands grow by reaching all category buyers over a long time period, that excess share of voice yields share-of-market gains, that more media channels generate a media multiplier effect, and that, ultimately, brand size is the greatest driver of effectiveness.

There’s just one small problem with these rules of growth: they tend to lock out challenger brands from applying them. Brands that do not have the resources to disproportionately outshout the competition, or to invest in reaching broad audiences over a sustained period of time across multiple channels, are destined to remain small. Logic dictates that challengers will never outgrow their media budget, as their media budget is a function

of scale.

We therefore need to find different levers for challenger brands to pull in order to compete with larger brands in their category, who apply these rules not only to grow further, but as a means to build a moat around their business. When brands can’t outspend the competition they need to outsmart them. Relative Advantage is a term we apply to finding opportunities in media and communications that competitors have overlooked in order to grow. Not so much a rewriting of the rules of growth, but a reframing.

For example, growing reach amongst previously neglected audiences, maximising share of voice in under-utilised channels, or finding unique spaces in culture to grow salience and identifying new category entry points. To understand the efficacy of such a strategy for growth, we studied the IPA Databank to find brand case studies that applied Relative Advantage principles to their work.

How the study worked

Analysing over 200 cases from 2010 to 2022, we identified 55 cases that displayed Relative Advantage behaviours (the sample), and a further 181 that didn’t (control). All cases that fell into the ‘strong brand’ and ‘small brand’ categories within the databank were analysed, meaning cases from the ‘market leader’ and ‘niche’ brand categories were omitted for bias.

Specifically, we defined Relative Advantage cases as displaying at least one of the following seven behaviours:

1. Targeting an audience underserved by the rest of the category

2. Using media channels otherwise atypically used in the category

3. Activating in a season or time of year departing from category norms, or identifying a new, untested seasonal entry point

4. Activating at an unconventional time of day to the rest of the category

5. Creating social currency by doing things to get talked about in ways the rest of the category have not

6. Generating thought leadership by asking fresh and dynamic questions of category conventions

7. Identifying new distribution channels to reach consumers neglected by competitors

In the Relative Advantage cases we identified, the analysis demonstrated why this should be particularly relevant to challenger brands. More than half of the cases (56%) reported a small market share compared to only 27% of the control group. The majority of the cases were mainstream brands, with 52% having a mid-market positioning and 27% premium.

Furthermore, these cases were operating in tough market conditions with 65% in declining, stagnant or low growth categories. For both Relative Advantage cases and the control group, 71% of the cases were brand-building focused, 29% activation.

Relative Advantage yields very large brand effects

Overall, Relative Advantage cases showed a 15% uplift in very large brand effects. Brand effects consist of seven brand metrics such as brand awareness, differentiation, trust and quality perceptions. Furthermore, Relative Advantage is 21% more likely to generate 2 or more of these very large brand effects.

Specifically, Relative Advantage is proven to demonstrate very large brand effects for the metrics that really matter for challenger brands. They are 60% more likely to have a very large effect on awareness, 17% more likely on differentiation and 22% more likely for commitment (loyalty), suggesting a longer-term benefit to the brand and the business.

Despite Relative Advantage fundamentally being about defying category conventions, demonstrating differentiated brand behaviours does not negatively impact brand perceptions of trust and esteem (quality). In fact, the opposite can be observed: Relative Advantage cases significantly outperform the control for large and very large brand effects on both these factors.

Credit: Bountiful Cow