Scientists call it the \u201cUnderdog Effect\u201d and commoners know it as the story of David and Goliath. Human history is replete with stories in which the little guy beats the big bad guy \u2014 these feature in literature, arts, religion, film and politics. Underdogs have always been loved, and their achievements seem fantastic in the face of seemingly insurmountable difficulties.\nThe just-concluded Rio Olympics brought forward some fascinating underdog stories. For example, Joseph Schooling beat his idol, Michael Phelps, at swimming and Monica Puig from Puerto Rico won a gold medal by beating world No. 2 Angelique Kerber in tennis.\nIn the big bad world of business, there have been countless underdog stories, where scrappy startups with limited resources have taken on multinational Goliaths and have gone on to achieve stupendous success.\nCase in point: Google and Apple. Regardless of the fact that both companies are market-dominating giants today, they still leverage their histories as scrappy startups.\nIn her landmark research paper \u201cThe Underdog Effect \u2014 the Marketing of Disadvantage and Determination Through Brand Biography,\u201d Neeru Paharia says that customers have a bias toward companies that have underdog biographies, even if they're now big companies. Her paper dissects human psychology to present three compelling reasons for our love of underdogs: external disadvantage, passion and determination, and individualist culture.\nExternal disadvantage\nPeople identify with underdog narratives because they've had failures in their own lives. If it were up to us, we would successfully tackle every challenge we face in life. And yet life isn't fair, and each one of us feels disadvantaged at one time or another.\nThe story of how Steve Jobs and Steve Wozniak founded Apple is the perfect amalgam of how underdogs persisted and created a successful company in the face of external disadvantage. When Jobs wanted money for his venture, a bank refused a loan. And Atari, where Jobs worked, wanted cash for the components it sold to him.\nWhen consumers are led to believe that the company succeeded against numerous external disadvantages, they identify with the company\u2019s disadvantaged position and root for it.\nThe self-congruity hypothesis suggests that people will desire and choose brands that reflect their self-concepts. And since more people consider themselves to be underdogs, they will have more affinity toward an underdog brand.\nPassion and determination\nUnderdogs usually have fewer resources and privileges, but that doesn't stop them from competing against the top dogs. Their disadvantaged position does not deter them, and they compensate for it with perseverance and determination.\nAgain Apple\u2019s story reinforces the importance of this factor. When Apple made the Apple 1, its first computer, it was up against the likes of Xerox, a veritable behemoth, whose concept was taken by Jobs and Wozniak to create their own personal computer.\nAlso, Apple had taken up arms against another giant in the making, Microsoft, with whom Apple had a bitter legal battle. But Apple didn't take it lying down and came up trumps.\nIndividualist culture\nAnother major reason for our love for the underdog is our \u201cindividualist\u201d attitude. For Americans, and many other western civilizations, achieving something comes from pushing oneself ahead of others. American culture and history are full of underdog achievers around which the typical \u201cAmerican Dream\u201d is built.\nIn folklore (read, popular media), an American always considers himself as \u201cstanding alone, not expecting anything from anybody, and imagining that his destiny is in his hands.\u201d The importance of the underdog narrative to American culture is probably the biggest reason why it is so attractive to us.\nThe success of 'underdog brand biographies'\nToday, more and more companies are authoring their own underdog narratives and aren\u2019t waiting for the customers to infer their underdog status. Marketing campaigns, website content, blogs etc. are used to communicate this narrative to customers.\nThese narratives emphasize the humble beginnings of the company and the perseverance, dedication and fortitude of its founders against prevailing disadvantages. Such stories can elicit a range of consumer feelings like the identification of authenticity and heritage.\nThe advent and popularity of social media has only made this dissemination easy for companies. Being an underdog brand, as Paharia notes, is more a \u201cmatter of consumer perception rather than a market reality.\u201d\n\u201cUnderdog biographies do have a positive impact on buying intentions of customers. It is not how the marketers perceive their audience \u2014 educated, living in above-average socio-economic conditions \u2014 but the internal selves that the consumers create for themselves that help them connect to the underdog narrative of the brand,\u201d says\u00a0Wenjie Li, CEO of Firmoo, an online optical store, itself an underdog in a world of Ray Bans and Warby Parkers.\nConsumers are smart. They can see the truth behind the rhetoric. They can intuitively identify true underdogs in business. And when they do, if the brand\u2019s values resonate with theirs, they become loyal followers.\nTo be loved and respected, an underdog cannot simply rest on its underdog label (hello, Google). It has to create innovative products or services that can compete with existing industry offerings.\nSuccessful underdog companies will not compete on features. They will compete by creating products that align with your perception and personal definition of a better product. We all love underdogs!