|
Should a small company use branding as a part of its competitive strategy? I will point to some factors that imply that brands with a small geographic market have a good chance to steal market share from the gigantic, global brands. If I ask you to think about a brand, one which you consider to be a strong brand, the probability that this would be a global brand is pretty high. In rankings of the strongest or the most valuable, it is inevitably global brands that we tend to measure. But the most important thing from a small brands perspective is to be strong in its own defined market. However, I will not define an exact size of this market to which these thoughts can be applied. My main implication is that a smaller brand has an opportunity to serve its customers in a more flexible and creative way than its greater counterparts. This applies particularly to small brands that tend to have closer connections to its customers than big, global brands. My belief is that many of these small brands have a chance to get stronger if they can overcome their inferiority complex with bigger brands and start to make their brands more clear and focused, and build their brand in new and exiting ways. A definition of branding.
My definition of branding comes from the idea that the winner in a competitive situation is the product or service, that customers experience as the best choice. The keyword is experience. When a customer is about to make a choice of buying something he/she weighs up several factors against each other to determine what constitutes the most ideal experience. These factors are partly the capacity and performance of the product or service, in other words how well it works in comparison to what the customer is expecting. But it also covers the brand's ability to satisfy more of the customer's needs, be it cultural, psychological, social, etc. These intangible assets are what you want to (and are potentially able to) influence through branding. Creating an association with a visual trigger makes it easier for the customer to identify the product which he feels satisfies his needs in the best and in the most exciting way. Branding demands a lot of money
Considering that the strongest and most valuable brands seem to be global, it is easy to come to the conclusion that the only businesses that are able to build strong brands are big, multinational companies. It is assumed that branding always costs a lot of money, since it can only be done through advertising and media. And a big investment in media takes a lot of money. Yes, big investments in media do take a lot of money. But no, brand building is not done solely through advertising and media. This is a misconception that in many cases, lead small brands to think that they have to focus on product and price. You can think of it this way, global brands are forced to invest heavily in media due to their lack of ability to be present locally everywhere, which simply would be even more expensive.
The paradox of this situation is that customers may feel closer to global brands than the smaller brands that they are often physically closer to. The big brands tend to invest in TV-commercials and activities on the web, for example, which brings their brands into their customers homes. You can not get much closer than that. Or can you?
It is like David's fight against Goliath, with the difference that most people no longer only want to see David as the winner. Even though it seems like it is a human characteristic to support the smaller and weaker, we now know Goliath so much better than David. We know what Goliath stands for, what he believes in, and what he wants to accomplish. What do smaller brands do?
Small companies with local and regional markets seem to have accepted global brands' dominance over their customers and live by the convention that branding costs too much money - they are left to compete with product offerings and price. Even though they have realized their opportunity to offer personal service, it is seldom you come across companies that manage to do so in a unique or exciting way. Therefore they do not appear to be able to counter the pull of big brands and the credibility they offer. This seems to be a general phenomenon, no matter if it is a consumer or B2B market. The small brand's opportunity
What then can small brands do to increase their profitability, or even survive, in their struggle against the global brands? I think they have a great opportunity to create a compelling experience with the customer which would reassure them that the smaller brands is the better choice. After all, branding is nothing new, it has always been crucial for anyone who wants to sell something to gain credibility. But small companies need to understand this tool in order to control and strengthen their credibility, and also to better understand the strengths and weaknesses of the bigger brands. You do not build a strong brand only through advertising and media, it is the collected, overall experience that makes a strong brand. This experience is influenced by all encounters you have with a brand: how the salesperson acts, how other personnel interact with you, your service, packaging, public relations, and contributions to the community, etc, etc. There may even be ways to interact with your customers that has yet to be invented. The bottom line is to what degree you manage to satisfy those needs that you have promised to satisfy. One of the problems big brands have to deal with is how to deliver what their advertising has promised. It is difficult for big companies to have complete control over the whole experience through the distribution channel. There are of course exceptions, but overall, most big brands are dependent upon subcontractors when it comes to the distribution channel. The consequences of this are that they have to deal with the channel as more of a distribution channel than a communications channel. Apple computer is a good example of a strong, global brand which recently found themselves forced to expand their brand experience by opening Apple branded stores. Earlier they were dependent upon the goodwill of the computer dealers to promote Macintosh Apples computer brand. This move to branded outlets is probably expensive, and for the time being is limited to the North American market. McDonalds is also a good example of a brand who tries hard to push the brand experience down to the local restaurants. But McDonalds is also an example of how difficult it is to manage the experience over time. How many times have you waited a lot longer for your hamburger than what you have come to expect? How many times have you felt that the young person behind the counter really would like to be somewhere else, and therefore not being able to perform the service you expect? Naturally, McDonalds deals with these kinds of problems, and over all manage to handle them very well. But it shows how hard it is for a big company to be consistent, despite seeming control of its distribution channels and an extensive internal education program. It is afterall a very simple product - a hamburger. But if it is difficult for a big brand to be consistent, there is something that is even more difficult, namely to be flexible and creative. You do not easily change direction with a tanker that has gained speed.
Small companies and small brands have a great opportunity to take advantage of the giant's weaknesses. In small companies there is the opposite situation from big companies. Small companies have flat organisations, the decision making process should be a lot easier and they are physically close to the market they wish to attract. Yes, small companies may have less money to spend on large media, but due to their small size, the possibility exists to create an intimate, unique and potentially a more exciting experience for their customers. In a small organisation it should be much easier to manage and perform a consistent branding strategy.
The possibility lies not in thinking big, but to think further. A small company has an opportunity to stop saying "if we only had money we would communicate in large media", and make better use of existing channels to create an expressive experience for its customers. Creative Sales Promotion - an underestimated experience
A concrete suggestion to small companies and small brands is to examine their sales promotion. When you are short on money, the risk is that you focus too much on short term sales. When the battle against big brands already feels lost, it all becomes a struggle of taking what you can, often by putting the focus on price. As small companies seldom have the resources to create long term cost advantages, they are forced to a profitability level way below the market leading brands. The risk is to focus on cash flow generation and short term sales to the detriment of delivering on the ambition to create satisfied and loyal customers. The internet does not make the situation any better, where it is becoming increasingly easier to find undifferentiated, cheap products and brands, naturally an attractive place for those who are always looking for the lowest price. For those small companies and brands who wish to explore the possibility of using branding as a part of their competitive strength, I suggest that the sales channel, or the sales force, is a good place to start. This is where you are already in contact with your customers and the sales people are often in crying need of better support. Since the big brands have to invest considerable time and effort to "push down" the brand experience through the distribution channel, and may not be giving sales promotion top priority, this is the perfect place to create unique experiences. Also, among advertising agencies, sales promotion has not been as fancy to work with as TV-commercials or other large media. Why do we not see more of small brands?
Business after business that we see, are dominated by a few market leaders, and these are often globally active brands. The smaller brands with a narrower geographic market are left to fight for the bits and pieces that are left over. Some even see a moral dilemma in the dominance of the big brands, not least after the release of the book No Logo by Naomi Klein. But from a small brand's perspective this is more of a profitability problem. So why are there so few small brands that act with a clear differentiation strategy and make themselves heard and liked? Surely, there are as many explanations as there are brands and there are differences from nation to nation. In Sweden for example we have something which is commonly referred to as "the law of Jante". This nationwide convention means "you shall not consider yourself to be somebody". Although this concept has over recent years lost its hold on the Swedish mind, it still sets its mark on Swedish society. To differentiate yourself, to make a stand, is therefore something that probably feels awkward and strange. In a small organisation, there are a few people who are able to shape and stand by the identity of the brand and communicate its aspiration. This makes it much more difficult to "hide", than if you are part of a bigger organisation. Many small companies are founded and run by entrepreneurs who are often mainly focused on a product or a service in which they saw a potential in the first place. Unfortunately this makes it difficult for them to think that marketing could be something else than solely that product or service. When the big brand comes along and satisfies more of the consumer's needs, other than the functional needs that the product or service satisfies, the competitive strength of the small brand becomes rather weak. The will to invest in a small brand may be connected to small companies will to grow. If that is the case, maybe we can learn something from a licentiate thesis written by Henrik Barth at Luleå University, Sweden. In order to write the thesis "Barriers to growth in small firms" Barth interviewed 1.240 small companies in Sweden, Finland, Belgium and Ireland about what they see as the main hindrances for innovation. Although the results differ between the countries the conclusion is that a company has problems to grow above the size where the CEO no longer can manage everything by himself. Lack of knowledge about organisational issues makes it hard to create an organisation that is able to grow. Also the lack of knowledge in other areas and the difficulty in attracting competent employees makes it even more difficult. The challenge for small businesses then are great - but maybe the most potent opportunity lies in thinking big and creating a brand experience that dwarfs global brands!
|
