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Billion-Dollar Underdogs

New research shows that consumers identify with and choose brands they see as the underdog.

Americans love the underdog whether it’s in sports, in history or political campaigns — and in the brands they buy.

That’s right, Samuel Adams beer, Ben and Jerry’s and Google — at least the old Google — all belong right up there with the Alamo, David, and Lance Armstrong … well, the Lance we hoped wasn’t juiced.

Neeru Paharia of Harvard University, Anat Keinan of the Harvard Business School, Jill Avery of the Simmons School of Management and Juliet B. Schor of Boston College demonstrate how consumers personally identify with underdog brands.

Many Americans idealize the start-from-scratch-and-work-out-of-your-garage company that hits it big through hard work. Such bootstrapping firms have, or create for themselves, their own unique biography consisting of humble origins, a lack of resources and a noble, determined struggle against the odds.

And if you somehow missed a company’s romanticized narrative, it’s often right on the label. The Nantucket Nectars bottle reads, “We started Nantucket Nectars with only a blender and a dream…,”while Clif Bar’s wrapper reports, “In 1990, I lived in a garage with my dog, skis, climbing gear, bicycle and two trumpets …”

They’re by no means alone; the list of companies that advertise their underdog start is extensive and include HP, Snapple and Pabst Blue Ribbon — companies that now are more likely to require a parking structure than a garage.

Drawing on more than 1,400 participants from university labs and national online surveys, the researchers found the underdog tale universally rests on two essential components: external disadvantage, and passion and determination. Research results show ranking high in passion and high in external disadvantage defined the underdog while a firm low in both categories was a top dog.

Participants were given company profiles and then asked about their level of identification with the company and intent to purchase from them. On a scale out of four, the average identification level with the underdog was 3.6 while the top dog was 2.8. This connection instills brand loyalty and determines your next 7-11 selection. Without priming, 73 percent choose the underdog brand. With priming (imagine right before you choose a product you watch a snippet of Lord of the Rings when the hobbit, Frodo, attempts to return the One Ring to the fiery gates of Mordor, against all odds), 89 percent went with the underdog brand.

The team also saw that the underdog brand biography effect was “greater for consumers who strongly self-identify as underdogs, stronger when consumers are purchasing for themselves rather than others and stronger in cultures where underdog narratives are part of the national identity.” Plus, to a segment of the population, the “underground” — presumably where one finds “underdogs” — certainly has more cachet, while those achieving a clear lead — think Microsoft, Wal-Mart or Starbucks — often see a sort of consumer schadenfreude set in when they stumble.

In addition, after testing American consumers against those in Singapore, the Harvard team believes the effect is stronger in more individualist cultures with prominent underdog legends where there is a stronger sense of self as opposed to more collectivist cultures such as those in East Asia.

As the researchers point out, “being an underdog brand can be a matter of consumer perception rather than a market reality.”

Apple, certainly no longer an underdog ($222 billion market capitalization), routinely depicts itself as the embattled (and cooler) No. 2 to Microsoft, though it is in fact now No. 1. Apple’s public relations department went so far as to construct a garage-centric creation myth around the company’s origins, claiming it began in a garage when in reality operations moved to the garage after the bedroom, an even humbler venue, got too small. (Somewhere along the line the garage specifically became the arbitrary trademark and cornerstone of the true start-up).

Beyond the against-the-odds heroes Americans idolize (Rocky Balboa, Harry Potter, 300 Spartans), the everyday consumer sees himself as an underdog “regardless of [his or her] demographic or psychographic characteristics.” Despite the U.S.’s top-dog standing, a disproportionate amount of Americans view themselves this way. The researchers conducted a pilot study that concluded, on average, participants see themselves to be greater underdogs than they perceive their friends, others of their ethnicity, social class or country of origin.

With such a pervasive mentality, Americans “react positively when they see the underdog aspects of their own lives being reflected in branded products.”

This line of thought runs smack against another pervasive consumer attitude: Previous research finds that people look to associate with successful winners, a “basking in reflected glory” effect, implying that consumers should prefer top-dog brands since they are the predicted victors in the market. “America’s most popular …” or “America’s leading brand …” has appears in more than one advertising campaign, after all.

Other research suggests people choose brands that reflect their actual or desired identities and avoid brands that are incongruous with who they are or would like to be; such findings support the plucky underdog or resplendent champ.

At least according to this team, the consumer-favored “underdog,” via a marketing strategy appealing to its long-lost past, is now typically leader of the pack.