The article delves into the introduction of Fighter Brands, exploring the intricacies of their strategic development. It goes further to analyze real client cases, shedding light on the practical applications of fighter brand strategies.
During economic downturns or market saturation, companies with premium brands face a dilemma: cut prices and risk profit loss or maintain prices and risk losing market share. One solution is introducing a fighter brand—a discounted version of the premium offering—to compete with lowpriced rivals, safeguard market share, and protect premium products. Unlike a multi-brand strategy, which diversifies market segments and revenue streams, a fighter brand focuses on protecting premium offerings and countering specific competitors.
Several notable fighter brand strategies have shaped industry practices. For instance, Intel introduced Celeron in the 1990s to challenge AMD’s budget-friendly line and bolster its dominance in the computer chip market. Apple responded to fierce competition in the mid-range smartphone market by unveiling the SE brand, aiming to stay ahead of rivals like Samsung. Qantas launched Jetstar to counter Virgin Blue’s low-cost model, prioritizing profitable routes and reinvesting earnings to strengthen its brand differentiation from Jetstar.
While fighter brands offer tempting solutions, they come with significant challenges in introduction and maintenance. Failures such as United Airlines’ “Ted” and GM’s Saturn exemplify the complexities and risks involved. For instance, Ted, launched by United Airlines in 2003 to compete in the budget-friendly air travel market, failed due to misalignment with the parent company’s premium image, resulting in
higher prices than competitors. Similarly, Saturn, introduced by GM in response to the rise of affordable Japanese cars, faced financial challenges from the outset due to high operating costs and pricing issues.
The real-life examples emphasize the need for meticulous assessment of factors such as user expectations, production costs, competitive pricing, and managerial attention in launching fighter brands, which forms most of the know-how of fighter brands today.
Apart from what we already knew, our work with fighter brands posed us with questions that we realized were the make or break for any fighter brand strategy –
- Should the company even launch a fighter brand?
- What should be the optimal positioning for the fighter brand? And how can synergies be established with the mothership (main brand)?
- Should the association between the mothership and the fighter brand be common knowledge? And if so, to what extent?
To address these questions, we’ll examine some client cases, including a recent success story in India – Zudio:
- A MENA premium food player faced market saturation and fierce competition. Introducing a fighter brand allowed them to boost volume and maintain competitiveness by leveraging economies of scope and scale.
- A leading juice maker in MENA had a fighter brand dedicated to basic juice mixes, serving as a testing ground for premium products.
- A premium electrical and digital building infrastructures company in India that acquired a smaller player to operate as a fighter brand, targeting price-conscious consumers.
- Trent, part of the Tata Group, introduced ZUDIO to cater to value-conscious consumers alongside its premium brand Westside.
Q1. Should the company even launch a fighter brand?
The TATA Group responded to the demand for affordable apparel in tier-2 to tier-4 cities by introducing Zudio, a fighter brand, after finding it challenging to adapt their premium brand “Westside” due to its urban focus and higher price range. Similarly, a prominent premium foods player in the MENA region faced saturated markets and increased competition, prompting the introduction of a fighter brand to boost volume and maintain competitiveness. Fighter brands are crucial when needing to undercut rivals or meet growing demand without compromising the premium brand’s value, as seen in the case of Zudio catering to a lower tier of the fashion-conscious segment.
Q2. How can the fighter brand be optimally positioned and synergized with the main brand?
Precise positioning and synergy establishment are vital for a fighter brand’s success. Zudio, for instance, strategically priced its products below INR 1,000, complementing Westside’s higher range and tapping into a value-conscious demographic while preventing cannibalization. Similarly, in the food player case, the fighter brand competes directly with rivals, aligning pricing to mitigate cannibalization and leveraging the premium brand’s distribution network for economies of scale. Likewise, the leading juice maker employed its fighter brand for market testing and feedback collection, ensuring superior quality while achieving economies of scope. In all cases, such strategic manoeuvres prevented cannibalization and harnessed synergies for enhanced success.
Q3. How much should the link between the main brand and the fighter brand be publicized?
In the Zudio case, maintaining distance from Westside kept the shared parent company undisclosed to most consumers. Similarly, in the food scenario, the fighter brand was kept separate to avoid cannibalization. However, in the case of a leading electrical and digital building infrastructures in India, initially keeping the fighter brand at arm’s length proved challenging due to its lack of brand recognition. Aligning it with the premium brand enhanced its perceived value, illustrating the varied approaches companies take in associating fighter brands with the main brand. When it comes to association with the main brand, there isn’t a one-size-fits-all strategy. It is at the discretion of companies to choose their approach.
In conclusion, companies must tailor their strategies based on market dynamics, consumer preferences, and organizational capabilities to maximize the strategic value and long-term viability of fighter brand initiatives. The decision to launch a fighter brand and its subsequent association with the main brand demand meticulous consideration, with no universal approach applicable across all scenarios. Consequently, both the mothership and the fighter brand can reap the benefits from precise positioning and synergies between fighter and premium brands, contributing to market competitiveness and operational efficiencies.
Sai Thanneru
Sai Thanneru is a strategy consultant with over two years of experience in the consumer foods sector, demonstrating expertise in driving strategic initiatives and implementing transformative changes to enhance operational efficiency and profitability. Prior to consulting, Sai worked in the ERP sector, leading ERP implementation projects with precision and ensuring seamless integration.
Email: sai.thanneru@consultavalon.com
Akanksha Kaul
Akanksha Kaul is a strategy consultant with a passion for crafting exceptional customer experiences. She has collaborated with both B2C and B2B clients on projects designed to enhance customer journeys. She also holds a strong interest in branding and has previously leveraged this to contribute to GTM initiatives for renowned consumer brands.
Email: akanksha.kaul@consutlavalon.com
