Nothing disrupts category inertia like a recession

Sometimes recessions and hardships are where challenger brands are made; Nick Geoghegan of eatbigfish explains how in The WARC Guide.

This month, The WARC Guide looks at marketing in the COVID-19 recession, including the way such crises can be a game-changer for organisations that think and act purposefully and intentionally. (Subscribers can read The WARC Guide to marketing in the COVID-19 recession in full here.)

Back in 2008, for example, the global financial crisis was the making of Netflix. “How can we all be a little more Netflix and a little less Blockbuster as we sail into this storm?” Geoghegan asks.

Well one way is to be already pushing the boundaries. In twenty years of studying challengers, eatbigfish has found one thing in common among challenger brands, no matter the size, shape or category: “they have an obsession with changing the category in their image. They want to push the category forwards, whatever they deem ‘forwards’ to be.”

Netflix, with its economic subscription model and no late fees, was doing that as rival Blockbuster slowly pivoted from its DVD rental business to the new digital reality; the collapse of Lehman Brothers was arguably the crucial factor that catapulted the new kid on the block past its established rival.

Incumbents are often successful because they are big, dominant and hard to push around, Geoghegan notes, and consumer behaviors and patterns play into the market leader’s hands, often because that is exactly how they have trained consumers to act.

But in a recession, “suddenly, everything is up for grabs. Consumer behaviors change almost overnight. Items that were once competitive assets suddenly become liabilities. The time becomes right for new ideas and new thinking.”

And that is where we are now, as marketers attempt to understand which of the new consumer behaviors engendered by lockdowns – media consumption, shopping etc – will continue as governments seek to open up economies again.

“While incumbents and the brands that mimic them flounder, treading water in the hopes that things go back to normal, challengers know that this is an opportunity to change the category forever,” says Geoghegan.

“Will we head back to our old ways of doing things, or will we have learned new behaviors along the way that new challengers use to their advantage?”

The WARC Guide is a compilation of fresh new research and expert guidance with WARC’s editorial teams in New York, London, Singapore and Shanghai pulling in the best new thinking globally. It also showcases the best on WARC – case studies, best practice and data sourced from across the platform.

Sourced from WARC