do you Need a fighter brand?

In marketing, a “fighter brand” is a lower priced offering launched by a company to take on, and ideally take out, specific competitors that are attempting to underprice them. Unlike traditional brands that are designed with target consumers in mind, fighter brands are created specifically to combat competition threatening to take market share away from a company's main (premium) brand. Properly executed, a fighter brand fends off low-cost rivals while allowing a company’s premium brand to stay above the fray. But the long list of failed fighter brands shows how hard they are to pull off.

QUESTIONS

Will it cannibalize the premium offering?
Will it succeed to fend off the competition?
Will it be profitable?
Does it appeal to the price-conscious segment?
How much management time will it consume?

Use of a fighter brand is one of the oldest strategies in branding, tracing its history to cigarette marketing in the 19th century. The strategy is most often used in difficult economic times. As customers trade down to lower priced offers because of economic constraints, many managers at mid-tier and premium brands are faced with a classic strategic conundrum: should they tackle the threat head-on and reduce existing prices, knowing it will reduce profits and potentially “commodify” the brand? Or should they maintain prices, hope for better times to return, and in the meantime lose customers who may never come back? With both alternatives often equally unpalatable, many companies choose the third option of launching a fighter brand.

SUCCESSES

SMH GROUP with SWATCH (multiple premium brands)
STRAUMANN covering the entire pricing spectrum for dental implants (multi brand strategy)
P&G with LUV (premium brand: PAMPERS).
PHILIP MORRIS with BOND STREET (premium brand: MARLBORO)

FAILURES

KODAK (failure FUNTIME which led to the cannibalization of its premium branded products due to unclear positioning).

MERCK (lost the patent protection of blockbuster ZOCOR – introducing ZOCOR MSD at a 15% discount – 30 generic products by the competition were offered at 90% discount and took over the market within a short period).

GENERAL MOTORS failed with its value segment brand SATURN intended to fight TOYOTA and HONDA in the US (each SATURN car lost USD 3’000.- per unit)

CONCLUSION

A manager will probably never encounter a strategy as tempting or potentially ruinous as a fighter brand. Cannibalization of the existing premium brand must be carefully considered, making sure that the value equation between the two brands is suitably distinct in the mind of the customer. It is crucial to make sure that the fighter brand is competitive enough to damage the enemy and profitable enough to continue to do so over the long haul. Strategic implications concerning resources should be considered carefully in a period when focus and investment are crucial.