Underdog Branding: Why Underdogs Win in Recessions

By Neeru Paharia, Anat Keinan, and Jill Avery

In response to difficult economic and social realities, firms can successfully both inspire, and increase their appeal to consumers by strategically using underdog branding.

In recent years, underdog stories have captured the hearts and imagination of consumers around the world. Underdogs have been winning at the Oscars, on book store shelves, and in the polls. Underdog characters have been the champions in Oscar-winning movies such as Slumdog Millionaire, and blockbuster books such as J. K. Rowling’s Harry Potter, leading to billions of dollars in sales. In the 2008 U.S. presidential election both candidates, Barack Obama and John McCain, positioned themselves as underdogs to gain the support of voters. Politician Nick Clegg used the same strategy in 2010, claiming to be the British “Obama.” Underdog candidates have been the favorites of reality television show audiences such as Susan Boyle on Britain’s Got Talent, and the favorite teams in sporting events such as the 2010 World Cup and the 2008 Olympics.

Research in consumer behavior has only recently begun to look at how this “underdog effect” can be strategically applied to brands, but some brands, such as Virgin, have been using underdog narratives in their brand positioning for years. Virgin’s underdog brand biography begins with the personal biography of its charismatic founder, Richard Branson. Branson, who struggled with dyslexia and dropped out of school, started his business career with little going for him. However, Branson aimed high, claiming “My interest in life comes from setting myself huge, apparently unachievable challenges and trying to rise above them…from the perspective of wanting to live life to the full, I felt that I had to attempt it.” As he worked to build his branded empire, Branson took on some of the world’s largest brands, like British Airways and Coca-Cola, competing against them with much smaller marketing budgets and resources. His strategy became his brand, “What does the name Virgin mean? We are a company that likes to take on the giants. In too many businesses, these giants have had things their own way. We are going to have fun competing with them.” In Germany, Audi and Kia tout themselves as the “herausforderer,” the challenger who comes to the fight with less resources but more heart than the market leaders.

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