Magazine article Marketing

Attack as a Form of Defence

Magazine article Marketing

Attack as a Form of Defence

Article excerpt

Can a fighter brand really put paid to the challenge of lower-priced rivals, asks Mark Ritson.

When Jill Little, merchandise and marketing director at John Lewis, recently announced that the retailer was to introduce a value range, it was widely seen as a smart move.

The homeware products line has been specifically designed to help John Lewis defend its 'Never knowingly undersold' slogan against supermarkets that have moved into its territory.

At the launch, Little said the value range would be 'benchmarked' continually against Tesco's own-brand products to ensure it remained competitive.

Targeting the competition

John Lewis may or may not be aware of it, but it has just rolled out a fighter brand - a lower-priced offering introduced by a company to take on specific competitors. It is one of the oldest strategies in branding, and one that is making a reappearance during these tough economic times.

Brands like John Lewis, which typically occupy middle price points, are experiencing tough conditions as the recession forces their customers to trade down to lower-priced offers from the likes of Tesco.

Managers such as Little are then faced with a classic strategic conundrum: should they tackle the threat head-on and reduce existing prices in-store, knowing it will reduce profits and perhaps cheapen the brand? Or should they maintain prices, hope for better times to return, and, in the meantime, lose customers who may never come back? Offered two equally unpalatable alternatives, John Lewis has, like many companies, decided on a third option, and launched a fighter brand.

Fighter brands are created to combat a competitor that is threatening to steal market share away from a company's main brand. When the strategy works, the fighter brand not only beats the low-priced competitor, but also opens up a fresh potential market.

Intel Celeron is a case in point. In spite of the success of its Pentium chips, Intel faced a major threat from competitors like AMD's K6 chips, which were cheaper and better-placed to serve the emerging low-cost PC market. Intel wanted to protect the brand equity and price premium of its Pentium product at the same time as stopping others gaining a foothold in the lower end of the market. So it created Celeron as a cheaper, less powerful version of its Pentium chip to keep AMD out.

Intel's 80% share of the global PC market is testament to the potential of a successful fighter brand to help restrict competitors and open up additional segments of the market.

Unfortunately, for every triumph like Intel Celeron, there are many more cases of failure. According to my research, all fighter brand strategies are subject to strategic hazards that a marketer must negotiate to achieve success. …

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