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Even Underdogs Have Their Days: Research from Assistant Professor Neeru Paharia

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Georgetown McDonough marketing professor Neeru Paharia’s research pits underdogs versus top dogs in a struggle for consumer attention

By Bob Woods
 

Everybody cheers for the underdog. Whether it’s David versus Goliath, Rocky versus Apollo Creed, or Luke Skywalker versus Darth Vader, bringing down the top dog has been etched into sports lore and mythology alike.

But while that scenario plays well throughout popular culture, what about in the dog-eat-dog world of business competition? Does portraying your brand or company as the bootstrap underdog help you knock off the well-heeled megacorp? That’s the premise posed in a pair of research projects conducted by Neeru Paharia, an assistant professor of marketing at Georgetown’s McDonough School of Business.

“Underdogs have an obstacle in their way, and they rise to the occasion,” Paharia says, summing up her hypothesis surrounding the definition of the underdog. “We tested whether that can be used in a marketing context. In companies that have underdog biographies, can they gain favor with consumers because consumers might identify with them?”

Companies can, her results found. But how they do so can be complicated.

THE UNDERDOG BIOGRAPHY
Paharia’s first inkling around this dogged pursuit arose almost accidentally when she was a Ph.D. student at -Harvard Business School in 2008.

“I told a friend that I always felt like I was an underdog, and she said she felt the same way,” she recalls. Fascinated by the notion, Paharia wondered if it came from comparing her grad-student self to professors in the marketing department. Yet, conversely, she realized that “in the larger scheme of life, I’m more of a top dog, going to an elite school and coming from a wealthy country. So why do I feel like an underdog?”

That incongruity inspired her first study, “The Underdog Effect: The Marketing of Disadvantage and Determination through Brand Biography,” the results of which were published in 2011 in the Journal of Consumer Research. The study — a collaborative effort with Anat Keinan, Jakurski Family Associate Professor of Business Administration at Harvard Business School; Jill Avery, senior lecturer of business administration at Harvard Business School; and Juliet Schor, professor of sociology at Boston College — introduced the concept of the “underdog brand biography,” a marketing trend in which companies intentionally play up their humble beginnings and struggles against the odds.

“We identified two main attributes of an underdog,” Paharia reports. “One is an external disadvantage — some challenge that they have to overcome — and the second is passion and determination to overcome that challenge.” Underdog narratives might be effective marketing tools, they then theorized, because consumers react positively when they see the underdog aspects of their own lives reflected in branded products. “We wanted to test whether this was an effective strategy, and whether it was because people identify with underdogs.”

The study cited Clif Bar, the Emeryville, California, maker of energy bars and drinks, as an example of an exceptional underdog brand biography.

“In 1990, I lived in a garage with my dog, my skis, climbing gear, bicycle, and two trumpets.” That’s the message on product wrappers. Company founder and owner Gary Erickson harks back to his meager existence before an “epiphany” struck him while on a 175-mile bike ride and gnawing on “other” energy bars until “I couldn’t take another bite.” Two years later, “after countless hours in Mom’s kitchen, Clif Bar became a reality.” Not to be parentally outdone, Dad lent his name, Clifford, to the private enterprise, which Entrepreneur magazine claimed had a reported $340 million in revenues in 2013, making it a successful venture, but hardly a top dog in that year’s $6.8 billion market for food bars, according to the market research firm, Packaged Facts.

A number of friends would speak disdainfully toward Starbucks and glowingly about independent cafes around. It just seemed odd to me.”
—Neeru Paharia, Assistant Professor of Marketing

Another example: “One cold winter night, Tom and Tom began mixing juice in a blender. The following summer they sold it off their boat. People loved it! They decided to call it Nantucket Nectars.” So goes the underdog narrative on the website for the beverage company launched in 1990 by Tom First and Tom Scott, Brown University graduates who moved to Nantucket and got into “new age” juice mixology. Consumers may or may not have identified with their inauspicious beginnings, but competing against such behemoths as Coca-Cola and Tropicana, Nantucket Nectars’ sales rose to $60 million by 1997, the year Ocean Spray purchased 80 percent of the company for $70 million. Cadbury Schweppes took over in 2002, and that entity has since morphed into Dr Pepper Snapple Group, the $6-billion Plano, Texas-based beverage conglomerate that counts Nantucket Nectars among its stable of 35 brands.

Despite now residing inside a cushy top-dog house, Nantucket Nectars clings to its underdog narrative, another phenomenon noted in Paharia’s research. “A lot of companies, even when they’ve become much bigger, will refer back to their origins as a way to maintain that underdog perception,” she says. Consider the born-in-a-garage backstories still told by multinational giants such as Google, Apple, Amazon, HP, and Nike.

Rags to riches aside, the study found, consumers continue buying into inspirational Horatio Alger tales. “People who see themselves as underdogs are much more likely to prefer underdog brands,” she says. “Similarly, when people are buying things for themselves, they’re more likely to choose an underdog product than if they’re buying it for someone else.”

Intriguingly, demographics, including race, gender, and income levels, do not seem to affect these outcomes, Paharia says. “These effects were robust across a variety of demographic factors.”

COFFEE CLASH
The next step in Paharia’s research came when she noticed a growing resentment toward Starbucks — a notorious top dog — in the San Francisco Bay Area, where she lived in 2009.

“A number of friends would speak disdainfully toward Starbucks and glowingly about any independent cafe around,” she says. “It just seemed odd to me.”

So much so that it spurred her to examine how the underdog factor plays into marketplace competition and lessons that companies might learn in that regard. The resulting study, “Positioning Brands Against Large Competitors to Increase Sales,” was published last December in the Journal of Marketing Research.

Paharia teamed again with colleagues Keinan and Avery to explore how underdog companies, by focusing on a competitive threat from top dog competitors — such as their size and close proximity — rather than hiding it, can actually help brands rather than harming them. Ultimately, the study finds, support for small brands goes up when they’re faced with a competitive threat from large brands.
Several top-dog brands, real and fictional, were included in the study, yet Starbucks offered a prime example. “If you look at Starbucks in the middle of nowhere, you may like it more, but if it’s next door to a local café, now it looks like a top dog and the little café looks like an underdog, and your view is totally going to change,” Paharia says in explaining the findings.

Because of that, she continues, companies need to think about what their relationship is with consumers as well as where they sit among other companies and their position in the marketplace, at least in terms of what customers perceive. “If you’re a large company, like a Starbucks, should you move in next door to a small, local café? Probably not. I would suggest maybe moving to another location where the competition isn’t as salient.

“But if you’re a small local café, should you move next door to a Starbucks or hide that?” Paharia adds. “Ignoring the fact that you’re an underdog can only hurt you. It’s going to help you more if you highlight the fact that you have large competitors trying to beat you, but you’re still going for it. That changes the thought process for consumers.”

We traditionally voice our social views, liberal or conservative, at the voting booth. It feels like there’s a shift going on, where we’re doing this more in the marketplace now. We’re voting with our dollars.”
—Neeru Paharia, Assistant Professor of Marketing

An interesting extension in all this, she suggests, is consumer behavior that transcends a brand’s quality or price. “Now they’re not just looking at you as a product, as a cup of coffee or a bookstore, but within this kind of political battle,” she explains. “Then they want to pick a side and have a vote in the competition, choosing which one they want to support. It’s meaningful and goes beyond just the product. Does it resonate with your values?”

In other words, ideology seems to be working its way into consumers’ attitudes toward companies and brands, an area that Paharia says she would like to examine in future research. “I’m fascinated with the idea of people wanting to help or support companies in the marketplace,” she says. “It’s almost like a political act.”

She’ll look at examples of consumers either boycotting or “buycotting” companies based on their personal feelings about contentious social issues, such as gun rights or healthcare reform. In November 2009, John Mackey, the CEO of Whole Foods, wrote an op-ed piece for The Wall Street Journal that outlined his problems with Obama-care. That was before Congress passed the law, and arguments for and against raged. Within days, Mackey’s views sparked a boycott of Whole Foods by liberal customers. In response, conservative opponents of Obamacare countered with buycotts. Mackey issued an apology for using “fascism” and other objectionable language, but maintained his opposition. The impact on sales wasn’t reported, although some observers wondered whether the buycotters, many of them new to Whole Foods, might in fact boost revenues.

A similar for-or-against public battle erupted during the summer of 2013, when gun-rights advocates showed up at a Starbucks in Newtown, Connecticut — the town where 26 school children and teachers were gunned down several months earlier — defiantly toting arms. The action reignited the national debate over gun laws, as well as consumer choices whether to go into Starbucks or not. Company CEO Howard Schultz defused the situation by issuing a statement highlighted by a “respectful request that customers no longer bring firearms into our stores or outdoor seating areas.”

“We traditionally voice our social views, liberal or conservative, at the voting booth,” Paharia observes. “It feels like there’s a shift going on, where we’re doing this more in the marketplace now. We’re voting with our dollars.” How that affects companies and consumers, especially as another presidential cycle unfolds over the next two years, could provide her with plenty of fodder for related research.
In the meantime, Paharia’s previous studies offer compelling lessons in the marketplace and beyond. “Don’t ever underestimate the power of positioning yourself as an underdog, both as a company but also as an individual,” she says, using a job interview as an example for the latter. “You can position yourself as an underdog. Talk about how you had some obstacle in your way and overcame it. People will like you more.”

Her advice to marketers? “Large companies should be careful not to be seen as too much of a top dog or a bully,” Paharia says. “You don’t want the perception that you’re trying to run small businesses out of town. So don’t move in next door to them, and find other ways to minimize that association. For small brands, it’s not a bad idea to have large, powerful competitors. That could help you.”

You see, ultimately Luke needed Darth Vader.

 

Published in Georgetown Business magazine, Spring 2015