http://www.smallbusinessinstitute.biz A B S T R A C T Keywords: Journal of Small Business Strategy 2020, Vol. 30, No. 02, 93-105 ISSN: 1081-8510 (Print) 2380-1751 (Online) ©Copyright 2020 Small Business Institute® w w w. j s b s . o rg While recognizing the marketing potential of a company’s underdog status, existing research on underdog businesses has typically fo- cused on how to effectively communicate about the underdog story. This study departs from prior research by formulating a theoretical framework to guide managers on systematically building and strengthening the underdog consumption experience as well as commu- nicating about it. Recent research on motivational bases of consumers’ underdog affection shows that drivers for underdog affection are much more than empathy and they also include feelings of dissatisfaction with dominant industry players, need for market balance maintenance, desire to be different and need for unique consumption experiences, admiration for perseverance, hope for hard-earned triumphs, and extension of oneself also as an underdog. Guided by the contingency framework of strategic decision-making, we apply the above notable findings to key areas of a company’s marketing strategy, specifically translating the motivational bases identified in existing research into pertinent company actions, which will in turn generate rewarding customer benefits. By formulating a series of innovative perspectives to guide underdog businesses on building as well as selling a compelling underdog consumption experience, this current article represents a significant addition to past research on underdog businesses. Introduction 1Manning School of Business, University of Massachusetts Lowell, Pulichino Tong Business Center Suite 228, One University Avenue, Lowell, MA 01854, USA, tao_gao@uml.edu 2Meehan School of Business, Stonehill College, 320 Washington Street, Easton, MA 02357, USA, lmcginnis@stonehill.edu Building a compelling underdog consumption experience Business underdogs, Underdog consumption experience, Underdog affection, Underdog effect, Marketing strategy, Customer experience, Small business, Entrepreneurship. APA Citation Information: Gao, T. & McGinnis, L. P. (2020). Building a compelling underdog consumption experience. Journal of Small Business Strategy, 30(2), 93-105. In the last decade, business scholars and industry ob- servers alike have paid increasing attention to the market- ing potential of the underdog status. Though still limited in scope, existing research has yielded many insights on the meaning of business underdogs and drivers of consumers’ underdog support behavior. It is suggested that consumers associate underdogs with two primary attributes: lack of re- sources and perseverance (Kim et al., 2008; McGinnis & Gentry, 2009; Paharia et al., 2011; Vandello et al., 2007). The type of businesses most often associated with the notion of business underdogs is small businesses, many of which are struggling to survive in the age of increased industry concentration and globalization. Compared to in- dustry giants, small businesses have limited market power, limited customer bases, limited resources, difficulties in exploiting market opportunities, and less business manage- ment experiences, among other competitive disadvantages (Joshi & Anand 2018; McCartan-Quinn & Carson, 2003). In retail, Walmart is often noted in the business press as the top dog, while local stores are often placed as its antithesis (Runyan & Droge, 2008; Sobel & Dean, 2008) and are often recognized as underdogs. As one author particularly notes, the entry of Walmart into a community is often followed by closures of some nearby local retail establishments (Ficano, 2013). Past research shows that consumers often hold favor- able sentiments toward businesses possessing underdog traits and being an underdog might be an advantage, and even be a motivation for some parties to promote their dis- advantages (Gladwell, 2013; Vandello, et al., 2007). For example, McGinnis et al. (2017) note that on average, the consumers they surveyed demonstrate a high degree of un- derdog affection, or the emotional attachment held by con- sumers toward underdog business entities, at 4.94 on a scale of 1 to 7 (with 7 being the highest). When compared with Tao Gao1, Lee Phillip McGinnis2 http://www.smallbusinessinstitute.biz http://www.jsbs.org 94 T. Gao & L. P. McGinnis Journal of Small Business Strategy / Vol. 30, No. 2 (2020) / 93-105 consumers’ shopping activities in local stores, which are often considered a prime example of underdog businesses, consumers’ underdog affection shows extra potential that local businesses can utilize to build their competitive ad- vantages over national chains. Specifically, while the av- erage underdog affection level is 4.94, the average level of local store shopping is at 4.19 (with 7 being the highest in both scales). Importantly, underdog affection helps ex- plain a large portion of the variance in consumers’ under- dog support behavior, highlighting the value of understand- ing, promoting, and using underdog affection in increasing consumers’ underdog support behavior (McGinnis et al., 2017). Given the significant evidence linking consumers’ underdog affection to underdog support in commerce, not utilizing the marketing potential of a firm’s underdog status would possibly constitute a waste of opportunities, espe- cially as many small businesses are struggling to find a way to survive amid the competition from corporate giants and economic disruptions. Recognizing the favorable consumer sentiments around business underdogs, scholars and experts in this growing research field have naturally emphasized how companies could communicate about their underdog status to the po- tential customers (Paharia et al., 2011; Keinan et al., 2010; McGinnis et al., 2017; Jun et al., 2015). Yet, while com- municating about a company’s current underdog status is indeed important, drawing on recent research findings about key motivational factors for consumers’ underdog affection in commerce (McGinnis et al., 2017), we urge companies to most importantly turn attention to building a fuller, richer, and more compelling underdog consumption experience. In turn, this more enriched underdog consumption experience should be more precisely marketed with a corresponding underdog communications strategy to a select target market who are ready to convert their existing underdog affection into patronage actions. Conceptual Framework on Underdog Consumption Experience Two primary theoretical perspectives helped inform McGinnis et al. (2017) in their conceptual development of the motivational basis of consumers’ underdog affection: the self-oriented perspective and the other-oriented per- spective. The self-oriented perspective proposes that what motivates consumers to form underdog affection is the pres- ence of certain congruity, relevance, or consistency between what the consumer represents and what the underdog enti- ties represent. The other-oriented perspective suggests the existence of motivational factors representing concerns for other people or the society at large. In terms of what factors make consumers more underdog affectionate, McGinnis et al. (2017) note that under the self-oriented perspective, commerce underdog affection is positively influenced by consumers’ underdog orientation, need for uniqueness, nos- talgia proneness, and hope and is negatively impacted by their materialism level. Under the other-oriented perspec- tive, balance maintenance, top dog antipathy, and empathic concern positively influence underdog affection (see Table 1 for the definitions of these motivational drivers). Therefore, drivers for consumers’ underdog affection are much more than empathy, and they also include desire for more selec- tions, urge to be different, admiration for perseverance and hope for hard-earned triumphs, extension of oneself also as an underdog, and feelings of dissatisfaction with dominant industry players. In this article, we advocate a holistic, communications plus underdog marketing strategy where the underdog spirit would inspire and transform several key components of a company’s marketing strategy. While existing research on underdog businesses typically focuses on how to effective- ly communicate the underdog story, in a major departure from prior research, this study emphasizes systematic ways of building and strengthening the underdog consumption experience as well as communicating and selling it. Specifi- cally, we demonstrate how the research findings on motiva- tional bases for consumers’ underdog affection in McGinnis et al. (2017) help inform a company’s design of a broader, richer, and more compelling underdog consumption expe- rience, touching on product, pricing, communication, dis- tribution, target marketing, and positioning decisions. By applying the conceptual model and empirical findings from McGinnis et al. (2017) to key areas of a company’s mar- keting strategy, we develop a conceptual framework (see Table 2) that drives our formulation of a series of highly innovative perspectives to potentially guide managers of likely underdog businesses on building as well as selling a compelling underdog consumption experience. The guiding logics underpinning our conceptual framework relating the motivational bases for underdog af- fection to underdog marketing strategy are the contingency perspective of strategic decision-making (Chandler, 1962) and the market orientation theory (Narver & Slater, 1990; Jaworski & Kholi, 1993). According to contingency strate- gic decisions theory, a company’s strategic decisions should conform to important internal and external situational fac- tors for it to reach optimal performance. Applying such a logic to our research context, for a company’s buying and usage experience to qualify as a compelling underdog con- sumption experience, it should match the customers’ pri- mary notations about underdog businesses and reflect the motivational bases underlying their underdog affection. Ac- 95 T. Gao & L. P. McGinnis Journal of Small Business Strategy / Vol. 30, No. 2 (2020) / 93-105 Table 1 Underdog affection drivers and their definitions Underdog Affection Drivers Definitions Underdog Orientation The extent to which one feels he or she is an underdog in life’s pursuits, measured in the context of everyday life and not in any specific context such as sports, business, or career (McGinnis et al., 2017) Need for Uniqueness Need to engage in creative counter-conformity choices, unpopular counter-conformi- ty choices, and choices that reflect avoidance of similarity to others (Tian & McKen- zie, 2001). Empathic Concern Sensitivity to another’s experiences and a dispositional tendency to experience the emotional reaction of warmth, compassion, and concern for others (Davis, 1983) Hope A positively valenced emotion evoked in response to uncertain but possible goal-con- gruent outcomes, driving people to accomplish challenging tasks and to be resourceful in doing so (Goleman, 1995; MacInnis & de Mello, 2005) Nostalgia A longing for the past and a general preference toward objects that were more “com- mon” when a person was younger (Holbrook & Schindler, 1991) Balance Maintenance The extent to which people desire to hold the powers in society in check, such that no entity in society (i.e., government, business, or individual) has too much power, thereby allowing freedom of choice (McGinnis & Gentry, 2009) Top Dog Antipathy A personality trait or disposition in which a person dislikes the top dog or advantaged entity (McGinnis et al., 2017) Materialism A value that guides consumer choices, consisting of (1) the belief that acquisition is essential for happiness, (2) the tendency to judge one’s and others’ success based on their possessions, and (3) the centrality of possessions in one’s life (Richins & Daw- son, 1992). cording to the market orientation theory, the integration of a customer orientation and a competitor orientation is needed for a company to formulate a winning marketing strategy (Narver & Slater, 1990). Our research approach specifically considers what makes underdog companies unique in the eyes of the target customers in relation to the competition (their top dog counterparts) and combine these perspectives into the design of an underdog marketing strategy. Past research suggests that consumers associate disad- vantaged competitive positions and perseverance as two de- fining elements of underdogs (Kim et al., 2008; McGinnis & Gentry, 2009; Paharia et al., 2011; Vandello et al., 2007). Although companies fitting with the underdog status neces- sarily face some major competitive disadvantages against dominant industry players in areas such as resources, scale and scope of business operations, market share, customer base, and name recognition (McCartan-Quinn & Carson, 2003), they should also demonstrate persistence and deter- mination despite all the challenges in order to truly benefit from the underdog business status. We extensively link each of the motivational bases for consumers’ underdog affection to the key aspects of the company’s marketing strategy. In developing our propositions on the scope and content of the underdog consumption experience, we further consider the certain competitive advantages that smaller businesses or brands do have over their industry leading counterparts, in the areas of flexibility, connections with the local commu- nity, entrepreneurial spirit, and ability to add variety to mar- ket choices (Lumpkin & Dess, 1996; Parnell et al., 2015; Wiklund & Shepherd, 2005). In the following sections, we summarize the key propositions from our current, manage- rially focused study and will use examples to illustrate their relevance. Underdog Product Strategy As consumers show affection toward underdogs be- cause of the eight motivational factors noted in McGinnis et al. (2017), companies should understand the key implica- tion of each driver in their product and service design con- siderations. In Column 2 of Table 2, we list the key product development implications of the motivational drivers and will describe them in greater detail below. The key message is that a company’s product decisions should tap into con- sumers’ need for uniqueness and their sentiments of nostal- gia, hope, balance maintenance, materialism, and even top 96 T. Gao & L. P. McGinnis Journal of Small Business Strategy / Vol. 30, No. 2 (20120 / 93-105 Table 2 A conceptual framework on matching underdog affection drivers with underdog marketing strategies Underdog Affection Drivers Product Price Communication Distribution (& Supply Chain) Targeting Positioning and Branding Underdog Orientation Consumers show affection towards underdogs as they see themselves in these firms. Create an underdog worthy experience. Demonstrate that despite disadvantages, the product is as good as those from top dogs. Treat customers with respect and honor when it comes to setting price and contractual terms. Adequately promote the underdog status. Draw connection between product and target’s self-percep- tions of being an underdog. “Like you, our product…” Form ties with other un- derdog businesses and or- ganizations such as local distributors and suppliers. Target customers that con- sider themselves under- dogs and collect data on discover their underdog identities. Highlight the persistence despite all challenges. Draw connections to prime fellow feelings and pro- mote self-relevance benefit. Need for Uniqueness Customers show affection towards underdogs as they see these companies as where to get unique consumption expe- riences. Create unique products, ones that could compete on quality with top dogs. Amplify experience with uni- que services. Offer individual attention and fle- xibility in pricing and broader con- tractual terms, despite inability to compete on price level. Focus less on price and promote experience uniqueness. Highlight uniqueness of expe- rience in various aspects. Show that your firm is devoted to rela- tionships with customers and that this product is not consumed by the mainstream. Source unique materials. Choose unique locations. Demonstrate that national firms do not carry same products or use same su- pply sources. Target customers who like unique experiences, espe- cially those who like pro- ducts from small, obscure locations. While limited resources make you naturally different from top dogs, try to be different on your own terms as well. Focus on how you went in the other direction despite pressures. Empathic Concern Consumers who care more about others show more under- dog affection. Acknowledge your plight as the underdog, but respect ca- ring customers and give them an experience matching or exceeding their care for you. Reciprocate care to customers. Stress that your high price is a natu- ral result of lacking top dogs’ scales and resources. Be transparent with costs but highlight unique, compe- lling experiences. Show that consumers’ efforts mat- ter in keeping your brand alive but focus much more than your need for help. Address all other motiva- tional bases for consumers’ under- dog affection as well. Focus on local suppliers, especially those that might be missing selling opportu- nities due to lack of know- ledge, technology, cost ad- vantage, etc. Target customers who show higher empathic concern. Target those who generally understand the plight of others. Do not highlight your need for help. Highlight how you have overcome adversities and have even been there for others. Hope People yearn for hope when they show affection to under- dogs. The product and the way the experience is created should show perseverance and inspi- re hope and admiration. Do not insist on rigid pricing and contractual policies and show con- fidence in giving pricing flexibility and service accommodations. Use encouraging messages to ins- pire hope and admiration. Show your overcoming odds despite difficulties (like consumers’ own underdog orientation). Store or office decorations are encouraging. Office spirits are upbeat. Have long-term view to rela- tionship investments. Target customers who appreciate more hopeful competitive conducts and performance from small businesses. Work hard and extra carefully with the limited resources. Exude hope and courage amid daily challen- ges. Nostalgia People form affection toward underdogs due to their nostalgia and the relevance of underdog firms to that sentiment. Add local content and build connections to traditions. Be active in local efforts at crea- ting new traditions. Show old-fashioned care to custo- mers. Demonstrate roll-back prices, explicitly indicating years as they resonate with consumers. Highlight locally relevant expe- riences that would tie consumers back to the way things were. Try to present the focal company as a part of the local history. Choose store locations that reflect local traditions. Find and target customers who are prone to be nostal- gic, which could cut across age cohorts. Position the company as an un- dying presentation or a spokes- person of a beloved local tradition and good old values and lifestyles. Balance Maintenance Customers show affection for underdogs as they care about balances in market power. Allow customers to try some- thing different and diversify their supplier bases. Indicate that offerings offset power held by major players. Downplay importance of price and stress the product uniqueness, which customers may appreciate for balan- ce maintenance and risk diversifica- tion concerns. Focus on and highlight your abi- lity to help customers diversify their supplier base or consumption experiences. Dare to reach out to cus- tomers of even dominant companies and make your -self available as a viable market alternative. Find and target customers who care about power ba- lance and need more choi- ces, either for idealistic or practical reasons. Present the company as a viable option for buyers looking for new experiences or broadening their supplier base. Top Dog Antipathy Customers show affection for underdogs as a way to demons- trate their distain or dissatisfac- tion with top dogs. Some buyers could be wai- ting for new purchase options especially from small firms due to dissatisfaction with top dogs disdain for them. Price will be less of a concern when customer patronage is moti- vated by resentment of big players. Downplay the importance of price level and stress product uniqueness that could rival top dogs. Speak to customers’ animosi- ty toward big, monopoly-type players in the market. Do try to add substance and credence to the value of underdog positioning and communication. Stay away from top dogs or their close partners. Avoid major brands and major stores for distribution. Find and target customers who show dissatisfac- tion with top and leading brands, either for idealistic or practical reasons. Present the firm as a viable option for buyers dissatisfied with domi- nant offerings. Bigger brands should downplay success or position as market lea- der to avoid negative reactions. Materialism Highly materialistic consumers have low underdog affection. Do not invest in building sta- tus symbols. Focus instead on the unique and one-of-a-kind product or experience. Avoid mentioning high price as a way to build exclusive customer status. Promote high and unique quality products as an enjoyable experien- ce that could help reduce the un- derdog’s inability to meet materia- listic needs. Communicate about experience and resulting status that only few can attain. Disassociate with suppliers or distributors viewed as traditional status symbols. Use data to help identify higher versus lower mate- rialism customers. Do not compete or sell underdog experience as a materialist expe- rience. Highlight unique expe- riences. 97 T. Gao & L. P. McGinnis Journal of Small Business Strategy / Vol. 30, No. 2 (2020) / 93-105 dog antipathy. And companies should design their products in such a way as to honor the consumers’ concern for their less privileged market statuses and recognize their consum- ers’ own underdog identities. At the core of the underdog consumption experi- ence should lie a serious underdog attitude, which should help guide the design and provision of the underdog prod- uct usage experience. Underdog companies should seek to develop and demonstrate their toughness in persistent fight- ing despite facing numerous external disadvantages and attempt to create a unique, rewarding customer experience out of limited resources. When faced with overwhelming adversities (Williams Jr. et al., 2018), it could be tempting for some companies to resort to a practice of using low- er quality materials and subpar processes to produce lower quality products and services (McCartan-Quinn & Carson, 2003). As it is often hard for the consumers to accurately judge the quality of the products and services, these compa- nies might often be able to complete the sale of such prod- ucts and services especially to first-time customers. True underdog companies, however, should work earnestly and honorably in sourcing and production to generate a truly competent consumption experience worthy of the trust and concerns consumers have for them due to their underdog status. While many customers’ patronage behaviors to under- dog businesses may be partially motivated by a sense of concern and care for struggling companies, the focal com- panies should aim at doing much more than simply display- ing their competitive plight and needs for help but will re- spect the caring customers and try to give them a reciprocal, total consumption experience matching their care for them. In response to the customers’ sentiments for hope from see- ing underdog companies successfully compete, both the product and the way the experience is created should show perseverance and inspire hope and admiration, and demon- strate that no matter what happens, the product and brand experience will prevail (Averill et al., 2012). In terms of the actual product experience, companies need to try hard to create an underdog-worthy product ex- perience by offering unique products and services rivaling those of major industry players, tailored to local needs and individual customers’ preferences, and connected to local or industry traditions. For example, local liquor stores can emphasize the uniqueness of their craft beer from local mi- crobreweries or niche wines from local wineries, selections that national chains do not stock. Relative to large companies, small firms can be consid- erably more creative, innovative, adaptive, and closer to the market (McCartan-Quinn & Carson, 2003), and such char- acteristics of small businesses, when combined with their deep focus on a particular target market, may lead to unique abilities to design, produce, and deliver tailored products to their customers. Thus, underdog businesses with modest resources should seek to develop some unique proprietary abilities to read and meet their customers’ needs. This prac- tice is clearly illustrated in the case of the century-old small department store of E.A. Davis in Wellesley, MA. Although numerous shopping options exist on nearby Newbury Street in Boston and in the Natick Mall, this small store boasts a loyal clientele, largely owing to its profound proprietary ability to precisely understand the unique needs of its core customers and present just about the right merchandise as- sortments needed by their core customers - nothing more, nothing less (Allen, 2012). Another example is the small regional retailer of Tradepost Entertainment based in To- peka, Kansas. This store has a unique business model of selling good quality pre-owned entertainment merchandise at greatly competitive prices. They also seek to build unique business relationships with their customers by encourag- ing the customers to sell back their own used products to the store. Founded in 1998 as a seller of pre-owned CDs, DVDs, games and game systems, the company has further evolved its business model with the changing industry envi- ronment by phasing out CDs and introducing vinyl records and customized apparel, among adopting other innovative merchandise development practices. Another area where underdog companies are posi- tioned to establish critical competitive advantages over corporate giants is in the provision of high quality, per- sonalized services to their customers to complement their core product or service experience. A case in point is small Connecticut-based department store called Mitchell Stores, which has earned a reputation for providing exceptional service to its customers and investing into long-term client relationships (Mitchell, 2003). In particular response to the importance of nostalgia in underpinning consumers’ affec- tions toward business underdogs, companies should try to instill long-cherished local contents in their product or ser- vice experience, build connections to local traditions, and be active in local efforts at creating new traditions. Tradepost Entertainment, for example, holds regular events promoting local musicians’ products and performances. Another ex- ample is the Silver Elephant of Bellefontaine, OH., which sells vintage and antique upholstery, benefiting from the owner’s educational background in interior design and her unique perspectives in bridging old-fashioned merchandise with modern-day usage situations (Duff, 2017). As Burling- ham (2016) notes, successful underdog companies tend to cultivate intimate relationships with customers, based on personal contacts and mutual commitments, and often boast intimate relationships with the local city, town, or county. 98 T. Gao & L. P. McGinnis Journal of Small Business Strategy / Vol. 30, No. 2 (2020) / 93-105 One major driver for consumers’ underdog affection is the sense of balance maintenance in the economy (McGin- nis et al., 2017). While some customers can be relatively satisfied with their consumption experiences with national suppliers, they might nevertheless appreciate the opportuni- ty to try something different or to help diversify their suppli- er bases and balance their dependence on big vendors. It is thus important for underdog companies to make an earnest effort at introducing new and compelling choices to such customers to help them balance the market power and di- versify their supply sources vis-à-vis dominant companies. This unique opportunity may exist for underdog compa- nies in both the B2C and B2B markets. One case in point is AMD’s recent resurgence as a relevant semi-conductor chips maker and its introduction of several new products that have been readily embraced by Microsoft, Amazon AWS, and Baidu (Google of China) (Bray, 2017). In anoth- er example, while independent musicians lack the influence and resources of large record companies (Gao et al., 2009), recent research (MIDIA 2019) shows a significant increase in the collective revenue generated by independent artists in 2018. Two key reasons for this success are the independent musicians’ access to advanced technological resources to distribute their music and their ability to create unique mu- sic at their pace to the diverse preferences of music lovers (Daniels, 2019). Furthermore, small businesses should pay attention to the supplier diversity and preferential procure- ment programs employed by large companies and govern- ment agencies and use them to gain market access (Shelton & Minniti, 2018). Another notable driver for consumers’ underdog af- fection is their outright resentment against top companies in the industry (Zavestoski, 2002). Some customers are perhaps already dissatisfied with the dominant companies based on their failing past consumption experiences, while others possess feelings of disdain against the top dogs due to ideological reasons and would opt for doing business with smaller players by default. As such, some buyers may be waiting for new purchase options to appear, especially from smaller players. One interesting finding by McGinnis et al. (2017) is about the close relationship between con- sumers’ top dog antipathy and their need for uniqueness in the cluster analysis on construct associations. It is possible that consumers may view their separation from and de- nouncement of dominant businesses (such as Walmart) as a way to establish their uniqueness as a consumer and citizen. Although not all consumers holding resentment towards dominant businesses will necessarily show such feelings publicly, some might to claim their uniqueness. Underdog Pricing Strategy In this section, we relate the motivational drivers for underdog affection to a company’s pricing strategy. As con- sumers show affection toward underdogs because of these factors, companies should understand the key implication of each driver in their pricing decisions. In Column 3 of Table 2, we list the key pricing implications of the motiva- tional drivers and will describe them in greater detail be- low. In terms of price, while it is often hard for underdog companies to compete with big players on price levels due to a lack of operational scale economy and buying power (Carson et al., 1998), they can seek to beat the giants on flexibility and old-fashioned customer care with regards to both pricing itself and a broader range of contractual terms. Though pricing information is readily known to consum- ers, what are less known to them are true product quality levels, their cost levels, and relative prices compared with the competition. Small businesses or brands often need to charge higher prices due to higher costs, narrower scope, and lack of bargaining power in sourcing negotiations (Mc- Cartan-Quinn & Carson, 2003). Some small companies may automatically charge unreasonably high price levels because of their higher costs, and even others may compro- mise product quality by choosing lower quality materials and ingredients or following subpar production processes (Azmat & Samaratunge, 2009). True underdog companies, however, should work earnestly to produce competent qual- ity products and treat customers with respect and honor, like honorable underdogs would do, when it comes to setting prices and contractual terms. As some customers come to underdog companies for different product or service experiences, these companies may cite their unique experiences as a way to lower the im- portance of price in the customers’ decision-making. And they might want to be ready to offer individual attention and flexibility in pricing and broader contractual terms, despite the inability to compete on price level. In order to better present the higher prices on their products and ser- vices as underdogs, companies should try to get the buyers to appreciate the fact that such high prices are natural re- sults of their lacking top dogs’ scales and resources (Paige & Littrell, 2002). Rather than trying to compete on price or go as far as attempting to compromise product quality, they should be very explicit and transparent with their cost levels and their reflections on price. In this regard, while some consumers may shop at the underdog companies out of empathic concern without expecting extraordinary things in return, the companies themselves should still reciprocate such care with appreciation and authenticity in dealing with the customers. 99 T. Gao & L. P. McGinnis Journal of Small Business Strategy / Vol. 30, No. 2 (2020) / 93-105 At the same time, underdog companies may want to complement their cost-themed messages with an assurance of unique, compelling products and services. For example, a local fashion boutique can use customized, unique offerings such as customized jewelry to help avoid price competition. Because some customers may also be shopping at underdog businesses out of balance maintenance concerns or resent- ments towards dominant businesses (Darden & Reynolds, 1971), a genuine effort at downplaying price importance and stressing uniqueness of product and experience could be well received by the customers, especially as they have risk-diversification concerns. An additional notable driver for consumers’ under- dog affection is hope, a positive emotional response to uncertainty events (MacInnis & de Mello, 2005), where a future-orientation and a long-term perspective are inte- gral about what positive outcomes could be achieved in an uncertain situation. Thus, underdog companies should de- velop and demonstrate a long-term perspective in setting prices and reacting to customers’ pricing concerns. Instead of insisting on rigid pricing and contractual policies, for example, they can demonstrate confidence in giving some pricing flexibility and service accommodations even as a struggling underdog. Any pricing concessions or accommo- dations should be viewed as early-stage investments into long-term relationships with customers and the customers may pay back with added brand loyalty. Underdog Communication Strategy In this section, we relate the motivational drivers for underdog affection to a company’s communications strate- gy. As consumers show affection toward underdogs because of these motivational factors, companies should understand the key implication of each driver in their communications decisions. In Column 4 of Table 2, we list the key commu- nications implications of the motivational drivers and will describe them in greater detail below. The key message is that a company’s communications messages should address consumers’ need for uniqueness, their own underdog orien- tation, and their sentiments of empathic concern, nostalgia, hope, balance maintenance, materialism, and top dog an- tipathy. While small business and brands are perceived to have limited resources and a relatively weak position in the mar- ket, prior research (Paharia et al., 2011) suggests that an un- derdog brand narrative might favorably influence custom- ers’ perceptions and behaviors towards small businesses. This observation translates to an underdog effect which is achieved through a brand biography describing a compa- ny’s humble beginnings, its hopes and dreams, as well as its struggles in facing external challenges, including stronger, more established competitors. We posit that underdog companies should adopt a multi-pronged communication approach where the right and fitting message about a compelling underdog consump- tion experience is conveyed to the right audience. Although it may be tempting for underdog companies to highlight their needs for help in communication messages, it is more important for them to highlight their persistent endeavors as underdogs with limited resources, noting the dominant counterparts when appropriate, which would inspire hope and admiration much beyond mere sympathy solicitations. Underdog companies should work hard and extra carefully with the limited resources they have and seek to set an ex- ample on how underdog businesses could sustain and exude hope and courage amid daily challenges. They should also promote their unique, customized, and flexible product of- ferings, with relevance to community or industry traditions when appropriate, and highlight their strong devotions to the unique and evolving needs of a more limited clientele. As consumers who see themselves as underdogs tend to have greater underdog affection, companies should more prominently promote the underdog status in brand messages and draw connections between the company’s products and the target customers’ self-perceptions of being an underdog. The following lead phrase could be used to this effect: “Like you, our store has had to face challenges in resources, scale, ….” Furthermore, underdog companies may want to frame their unique underdog consumption experience in various aspects as reflections of their care and devotion to relation- ships with the target customers and even use it as a way to appeal to highly materialistic consumers who may value distinct consumption experiences (Chan et al., 2015). As consumers with high levels of nostalgia may dis- play more underdog affection, underdog companies can use media sources, events, and images that may remind cus- tomers of the joint heritages of the town and the business. In this regard, inviting loyal, generations-old customers to help advocate for the business may prove an effective strat- egy for connecting with nostalgic consumers. In general, underdog companies should highlight locally relevant ex- periences that would tie consumers back to the way things were and try to present the focal company as a part of the local history (Miller & Kean, 1998). In business to business marketing, salespeople can draw on old connections with the purchasing manager and other members of the buying team and cite past relationships between two companies to help bring back memories of joint experiences. In such in- stances, age and common past experiences would become a major competitive advantage in selling (Holbrook, 1993; Burlingham, 2016). 100 T. Gao & L. P. McGinnis Journal of Small Business Strategy / Vol. 30, No. 2 (2020) / 93-105 In relating to customers who value great balance in the marketplace, underdog companies should more forcefully highlight their unique abilities to help customers diversify their supplier base with competent consumption experienc- es. Paharia et al. (2011) suggest the importance of building complete underdog biographies in trying to capitalize on the underdog marketing potential, for example, by being more salient and even showing human beings in their stories to be more effective among idealistic consumers, among those who believe power needs to be distributed equally. It may therefore benefit local business owners to position them- selves more conspicuously against the titans of industry to demonstrate power discrepancies. Signs of marketers lean- ing toward this mechanism are evident in an American Ex- press campaign supporting a “small business” Saturday the day after Black Friday (Americanexpress.com, 2017), even though this promotion was sponsored by a major company. Underdog retailers, in particular, should consider their unique cost situations and leading reasons for consumers’ shopping behaviors in deciding on their sales promotion strategies. While small stores might be tempted to slash pric- es ‘Black Friday-style’, they should refrain from doing so and recognize that deep discounting works most effectively for major retailers like Walmart and Target. Consumers may come to underdog businesses for a different reason - to sup- port local businesses as a good cause (Leadem, 2016). Underdog Channel and Supply Strategy In this section, we relate the motivational drivers for underdog affection to a company’s channel and supply chain strategy. As consumers show affection toward underdogs because of these factors, companies should understand the key implication of each driver in their channel decisions. In Column 5 of Table 2, we list the key channel implications of the motivational drivers and will describe them in greater detail below. A company’s channel and supply chain strate- gies deal with issues such as what raw materials to source, from which vendors to purchase, which channels to use to distribute the products, where to locate the stores as retail- ers, and with which other companies to potentially partner in conducting distribution and purchasing activities (Kotler & Armstrong, 2016). In the interest of building unique, lo- cally relevant product and service experiences to target cus- tomers, underdog companies are encouraged to try to elicit feelings of uniqueness in collaborating with local producers, offering products that are not only more unique but perhaps fresher and more indigenous to the local area. Additionally, local channels mean that money stays in the local commu- nity as well instead of headquarters out-of-state (De Clercq et al., 2015). Establishing these partnerships and conveying them to customers could help the companies capitalize on consumers’ desire to maintain balance in the economy and diversify their shopping choices. Local retailers that design or source unique products may enjoy higher gross margins from eliminating middlemen and avoiding direct price com- petition (Jordan, 2013). Shamsuzzoha et al. (2013) suggest that one important way for small companies to stay com- petitive against large companies is to establish and manage dynamic and non-hierarchical networks to better respond to market opportunities, ensuring a quick response with unique products with competitive prices and high product quality. Underdog companies may also build partnerships with other underdog businesses to help bolster their collective images as fighting underdogs. Underdog stores would work together with neighboring shops to give shoppers more reasons to visit. An assorted group of local businesses in Downtown Sioux Falls, South Dakota, for example, offers a number of deals and free samples throughout the town (Leadem, 2016), encouraging shoppers to experience a day of sales events and explore the downtown. In relation to consumers’ nostalgia sentiments, underdog retailers should carefully choose store locations that reflect local traditions, such as in the downtown area or near a local landmark, and actively participate in locally relevant events and festivals. Finally, while consumers may choose to patronize underdog businesses themselves for empathic concern considerations, underdog companies should seek to extend such care to lo- cal suppliers, especially those that might be missing selling opportunities due to lack of knowledge, technology, and cost advantages (Sequeira et al., 2018). In the Retail Superstars book (Whalin, 2009), the au- thor underscores the role of unique community connections as an effective strategy for independent retailers in their competition with national chains. Blankson et al. (2018) also note the importance of social capital, the resources (e.g., trust, norms, and networks) inherent in social relations and that a key component of social capital is a culture of reciprocity, compromise, and pluralistic relationships. Pari- da et al. (2017) further find that small and start-up firms in high-tech industries often engage in networking to over- come resource, knowledge, and competence constraints in creative, innovation-based competition, and to make the most of their relationship building efforts, small companies may particularly need to acquire network capability, or the ability to manage and gain benefits from external relation- ships. When small businesses work together, they will in- crease their collective appeal to the consumers as a destina- tion for a diverse set of underdog shopping experiences (cf. Sequeira et al., 2018). 101 T. Gao & L. P. McGinnis Journal of Small Business Strategy / Vol. 30, No. 2 (2020) / 93-105 Underdog Target Marketing Strategy Next, we draw implications from the motivational bases for underdog affection and use them to help inform a company’s target marketing decisions. As consumers show affection toward underdogs because of certain motivational drivers, companies should understand the key implication of each driver in their target marketing decisions. In Col- umn 6 of Table 2, we list the key targeting implications of the motivational drivers and will describe them in greater detail below. Importantly, companies should note that not all consumers display high underdog affection and they need to target their underdog marketing strategy to those consumers who are most likely to demonstrate high levels of affection and support towards business underdogs. In terms of target marketing strategy, underdog com- panies should first seek to collect more data about their cur- rent and potential customers and, when data allows, seg- ment them according to their underdog affection levels and salience of specific, actionable motivational bases. Then, based on the findings of McGinnis et al. (2017), we suggest that underdog businesses target customers who are more responsive to their marketing efforts. That is, they should try to identify and reach out to those customers who have higher levels of empathy and appreciation for the plights of others in their surroundings, who identify themselves as un- derdogs, who earnestly search for unique product and ser- vice experiences, who are more attentive to daily struggles of small business underdogs and may particularly enjoy seeing them succeed in their pursuits, and who may have certain nostalgic associations with the company and local community (Miller & Kim, 1999). They should also try to identify and target customers who care more about balance in market power and appreciate more product and supplier choices, either for idealistic or practical (e.g., dependence balance or risk assurance) reasons, who demonstrate dissat- isfaction with top and leading brands and may even show resentment toward dominant players in the industry, and who are less materialistic about their shopping and con- sumption activities. Sharp targeting is particularly important given the very limited resources and inability of underdog companies to offer wide ranging product and service selections to appeal to broader markets (Miller & Le Breton-Miller, 2017). Bet- ter targeting will allow them the opportunity to focus their resources to generate maximally possible returns to their resource expenditures. Underdog Positioning Strategy In this section, we link the motivational drivers for underdog affection to a company’s positioning strategy. In Column 7 of Table 2, we list the key positioning implica- tions of the motivational drivers and will describe them in greater detail below. In terms of positioning strategy, under- dog companies need to clearly articulate and invest wisely into creating a compelling value proposition for their cho- sen target market. They should carefully evaluate the com- petitive situation and their internal resources and seek to identify and deliver some unique ways of adding value to the target market. Having a clear positioning strategy is par- ticularly important as underdog companies need to achieve satisfying returns to their often-limited resources (Joshi & Anand, 2018; Parnell et al., 2015). The minimal room for error dictates a sharp focus by these companies (Williams Jr. et al., 2018), and clear positioning constitutes a signifi- cant step toward achieving market and financial success as an underdog business (Parnell et al., 2015). While resource limitations make small businesses naturally different from the top dogs, underdog businesses should try to build a unique organizational identity on their own terms as well and attempt to differ from other under- dogs at the same time (Joshi & Anand, 2018). In seeking to create unique value experiences for the customers, they should analyze the specific needs of the customers and iden- tify opportunities that may not require substantial resourc- es but could still allow them to add considerable value to the customers. One possibility is to position the company as an undying presentation or a spokesperson of a beloved local tradition and good old values and lifestyles in the lo- cal community. Another approach is to present the company as a viable alternative option for buyers looking for new experiences or broadening their supplier base, especially to potential customers dissatisfied with dominant offerings. Generally speaking, underdog companies should re- frain from positioning the underdog experience as a ma- terialist consumption activity because highly materialistic customers interested in pursuing status symbols from con- sumption activities tend to shy away from underdog looka- likes (Kleine et al., 1993). Yet, an opportunity might exist for underdog companies to highlight their one-of-a-kind consumption experience to customers who do display great materialism (Chan et al., 2015). And in communicating about the company’s positioning strategy, underdog brands can not only tout their humble beginnings, origin, and re- source limitations, they should also more importantly stress their diligent efforts at improving customer experience de- spite all the challenges. 102 T. Gao & L. P. McGinnis Journal of Small Business Strategy / Vol. 30, No. 2 (2020) / 93-105 Implications and Conclusion An increasing number of business studies have ex- amined the underdog phenomenon in recent years (Keinan et al., 2010; McGinnis et al., 2017; McGinnis & Gentry, 2009; Paharia et al., 2014; Paharia et al., 2014; Paharia et al., 2011). Yet, while these studies have generated important insights about the presence and antecedents of consumers’ underdog attitudes and affections, they have not undertak- en a systematic investigation of the underdog consumption experience concept. And while some articles in the business press and the research literature on small and local busi- nesses have hinted at ways of better competing as business underdogs (Burlingham, 2016; Cochran, 2001; Gladwell, 2013; Headd & Kirchhoff, 2009; Leadem, 2016), the cov- erage of the underdog marketing topic in such outlets has been limited and again often non-systematic. The research findings and managerial implications discussed in prior un- derdog studies have generally centered around the need and potential for pertinent companies to communicate about their existing underdog status, rather than advising them on how to build and enrich the underdog consumption experi- ence itself. In view of the above limitations of prior research, we dedicate our current study to a primarily managerial au- dience, seeking to offer a series of coherent, systematic, relatively complete, and innovative perspectives on how underdog business entities can effectively and efficient- ly build and sell a broader, richer underdog consumption experience to the pertinent target markets. Such a holis- tic treatment of the underdog marketing strategy concept is significantly broader in both scope and depth than what has been achieved in prior communication-themed research in the underdog marketing field (e.g., Keinan et al., 2010; Paharia et al., 2014). Following the tenets of the contin- gency perspective of strategic decision-making (Chandler, 1962) and the market orientation theory (Narver & Slater, 1990; Jaworski & Kholi, 1993), we advance suggestions to managers in underdog businesses on how to build and sell a rich underdog consumption experience based on recent empirical findings on the motivational bases of consumers’ underdog affection (McGinnis et al., 2017). By integrating the conceptual model and empirical findings on motiva- tional bases of consumers’ underdog affection (McGinnis et al., 2017) with key areas of a company’s marketing strat- egy, we follow a structured process (Motivational Bases –> Company Actions –> Customer Benefits) to generate novel propositions on building as well as selling a compelling un- derdog consumption experience. Though our current article was primarily inspired by McGinnis et al. (2017), it goes significantly beyond the managerial implications discussed in that study. The ideas presented in our current study thus represent a major departure and significant addition to past research that typically focuses on how to effectively com- municate the underdog story to the marketplace, rather than building and strengthening it as well. Our research is also suggestive of relevant directions future research on under- dog marketing, such as on collecting data to link companies’ provision of a complete underdog consumption experience to their market and financial performance outcomes. Broad- ly speaking, we advocate for a conscientious, systematic strategic planning approach to the formulation and imple- mentation of a holistic underdog marketing strategy. Never- theless, owners and managers at small businesses should be prepared to sense, respond to, and cope with any unexpect- ed situations arising from their underdog marketing strategy (cf. Chia & Holt, 2006; Ng & Al-Shaghroud, 2018). Managerial Implications Our research findings could potentially benefit many types of underdog business entities, in various market con- texts. To fit consumers’ general notions of underdog busi- nesses, for a company to qualify as an underdog business, it would typically face some major competitive disadvantages against dominant industry players in areas such as resourc- es, scale and scope of business operations, market share, customer base, and name recognition. According to some authors, an entity may gain underdog affection irrespective of its size and market dominance, if the right heartstrings are tugged and the correct facilitating conditions are in place (Kim et al., 2008; McGinnis & Gentry, 2009; Paharia et al., 2011). It is particularly important to note that being a small or local business does not mean that consumers will auto- matically view them as underdog businesses. As research has shown, consumers judge a company’s underdog status using two primary considerations: (1) their lack of resourc- es and competitive advantages and (2) their perseverance (McGinnis & Gentry, 2009; Vandello et al., 2007). To ma- terially benefit from the underdog business status, however, the company should also be able to demonstrate to the target market their persistence despite all the odds against their survival and growth. The key managerial takeaways from our research can be summarized as follows. First, companies must start their efforts at creating a superior underdog consumption experi- ence by developing a serious underdog attitude. Underdog companies should demonstrate their toughness in persistent fighting despite facing numerous internal and external chal- lenges and attempt to create a unique, rewarding custom- er experience out of the limited resources. Given their re- source and market position limitations, maintaining a sharp 103 T. Gao & L. P. McGinnis Journal of Small Business Strategy / Vol. 30, No. 2 (2020) / 93-105 focus and giving the utmost dedication to the core needs of a particular target market are often essential for the success of underdog firms. And they must avoid making strategic mistakes, quickly learn from any mistakes made, and seek to optimize the performance impacts of their marketing decisions. Second, in terms of product strategy, underdog companies should try hard to create an underdog worthy product experience by offering unique products and ser- vices rivaling those of major players, tailored to local needs and individual customers’ needs, and linked to local or in- dustry traditions. Once a compelling product experience is achieved, many customers could be ready to purchase from the underdog company for both the unique products and op- portunities to diversify their supplier base or consumption experiences. Third, in terms of pricing strategy, while it is hard for underdog brands to compete with big players on price levels due to a lack of operational scale economy and purchasing bargaining power, they should seek to beat the giants on flexibility and old-fashioned customer care with regards to both pricing itself and a broader range of contrac- tual terms. Having customized, unique product offerings should further help underdog firms avoid price competition. Fourth, underdog companies should adopt a multi-pronged communication strategy where the right and fitting message about a compelling underdog consumption experience is conveyed to the right audience. They are advised to high- light their perseverance as fighting underdogs, mentioning their dominant counterparts when appropriate, that would inspire hope and admiration from the consumers. They should also promote their unique, customized, and flexible product offerings, with relevance to community or industry traditions when appropriate, and highlight their strong de- votions to the unique and evolving needs of a more limited clientele. Fifth, in terms of distribution and supply chain strategy, the company may want to build partnerships with other underdog businesses to help bolster their collective images as fighting underdogs. Sixth, in terms of target mar- keting strategy, the company should seek to collect more data about their current and potential customers and seg- ment them according to their underdog affection levels and salience of specific, actionable motivational bases. 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