Branding: Is it relevant for SMEs?

Jan 9, 2009 | News & Updates, Singapore, SME

Lawrence Chong, the Director for Strategy Development of Consulus Cato Partners, was recently interviewed about the importance of branding to small and medium enterprises. Excerpts from the following interview was published in The Business Times on 30 December 2008.

Q: What to you are some of the key myths associated with branding?

During the last 5 years, a number of the myths that used to plague branding have largely faded away. This is due to intense promotion of branding to local companies by the government and the many seminars which cover the subject. As a result, we do have an increasingly educated group of business leaders who believe in its importance and its role in enhancing competitiveness. However myths seldom die away completely and they are as follows:

Myth 1: Good branding equates to good advertising

One lingering myth concerning branding has been the misconception that its all about building an image. Therefore, it has unfortunately been associated with outside-in activities such as advertising and marketing. But if you were to go behind the scenes of any great or emerging brand and ask the founders, the staff and the customers, you will soon realise that the people and how the organisation is run are why some brands will shape our future and others will fade to the background of history.

Myth 2: Branding is only for those with spare cash

The next favourite myth is that branding is only possible when the company has resources to spare. However, what SMEs do not realise is that bad branding is costing them a lot of potential sales everyday. When people do not understand what your brand stands for or if your messages are not really practiced by frontliners, how can it aid in sustainable business growth? We just had an incident whereby a local retailer would like us to help them enter into the Dubai market. We struggled hard to explain that they really need to improve on the overall presentation or else no one will meet them. We sent it to our office there and true enough, our office there told us that the company does not look credible enough and since the competition is stiff, there was no way anyone would look at the company.

So the difference is whether their current branding efforts are effective, as in, does it help to drive business growth? It is really hard to imagine that Amazon would succeed the way it did if it did not factor in great customer service to build a differentiated brand or whether Facebook would actually succeed if they did not pay attention to building a truly unique user experience.

Q: Do you think branding is relevant for SMEs? Even under the current economic conditions? Please give your reasons

This will probably be the worst recession the world has seen in decades. For many, these are indeed challenging times, but for some, this is a moment of opportunity. I think businesses in general have begun to take a more long-term approach ever since the 1997 crisis, followed by 9/11 and Sars. Many companies have given up on the notion of a sustained period of prosperity. The many enlightened business leaders who understand that branding is not advertising but a much longer term effort will continue with it. We conduct a regular workshop series for SCCCI called the Brandbridge programme, and even in these times we are still getting a lot of enquiries on strategic branding. So business leaders do understand the strategic importance of branding, they might request for a revision on fees, but as I said, the enlightened ones will carry on. They might cut back on advertising, but if they are committed to sustainable change then they’d rather have the strategic brand exercise now and be ready when times are better again. Besides, competition never sleeps.

The other reason is, of course, effective branding is just more sensible. In downtimes, when people are more cautious about spending, they go with familiar brands. People are more risk averse, so the question is how are you reassuring them? Some things remain the same whether you are in good times or bad. “I have so many options, why should I buy from you?” The role of branding is to clarify the offering and tip the decision in your favor.

Q: Do you think SMEs in Singapore are leveraging on branding enough? Why do you say so?

I think if you asked me five years ago, I would have said no. But the times have changed due to a few factors.

Factor 1: It’s a different generation

A new generation of sons and daughters are taking over from our first and second generation of business leaders. They are well-educated and understand the importance of strategic branding to differentiate themselves by transforming the company. When I say strategic branding, it means these leaders know that strategic branding is more sustainable and it requires them to align the business model to the brand promise, redesign their processes to match the experience, realign their company culture to live out the brand promise, ensure the right people gets in and focus on customer relations through an engaging design experience rather than just building awareness. Compared to five years ago, today we get calls from businesses asking for transformational branding exercises. The main questions today are all about clarifying job scope and not why we need to do this or that.

Factor 2: Regional competition has began to leverage on branding, too

I think the other reason is regional competition. As local firms expand overseas, they are beginning to realise that their regional counterparts are becoming more and more sophisticated and savvy in their branding efforts and succeeding. It is not surprising to find Chinese or Indian companies becoming more global and more sophisticated in their brand presentations and in getting their messages across. It is also not surprising to see these companies putting a lot of emphasis in inculcating a unique work ethic to ensure that they really live out the brand promise. So this pushes local companies to transform to catch up with the competition.

Factor 3: The positive role of the government in raising awareness and providing relevant support

The third factor is the positive role of the Singapore government. Various government agencies such as Spring Singapore, IE Singapore and IPOS have been very holistic in their promotion of the role of branding in enhancing competitiveness. The grants provided by the government has become increasingly relevant as it demands that local companies ensure that branding efforts extends to the entire organisation instead of being just a facial makeover. All these factors have led more SMEs to reevaluate if their branding efforts have been holistic and effective enough. I think in the past some SMEs can get away by using grants for marketing or short-term makeovers, but that’s not possible now.

Overall, in terms of leveraging on branding, its definitely a step in the right direction. Nowadays you get even smaller SMEs and start-ups who are taking this approach to build their brands. This trend will enhance our Singapore brand at the global level, since you tend to associate successful companies with the country of origin. Till now, if you were to ask which brands are associated with the Singapore story, you will probably hear mentions of SIA, Tiger beer, Temasek and Creative. But we need more SMEs to become global brands so that people will think of Singapore in new and surprising ways. I have hope for our future. I think in the next decade, you will see a lot of promising Singaporean brands succeeding internationally and shaping the world. And the reason they can is because of the leadership and the way they are shaping their organisations. A new era is coming for corporate Singapore, as we move away from government-led entrepreneurship and towards entrepreneurship which rose from the grassroots.

Q: Is it possible to give some examples of SMEs that have successfully tapped on branding to either turn around their companies/propel themselves to a top position in the industry? What did they do right?

One of the greatest joys in working for SMEs, as compared to MNCs or public-service organisations, is the possibility of witnessing their growth through the years and the kind of change that can happen when you work with the right leadership. One SME experience which has given us a lot of joy is FotoHub Holdings, Singapore’s only one-stop digital imaging company. When you meet someone like Vincent, FotoHub’s CEO, who has the vision to shape his industry in a new way, you know they are on to something great. We began the journey with them in 2004 and this year they have just entered Enterprise 50 at 28th place. Not bad for a company whom many might discount because they were in what people might consider a sunset industry. While others are shutting down their imaging labs, they were expanding. They have become innovative leaders in many aspects of the imaging business.

There are several factors to why strategic branding worked for Fotohub:

Enlightened leadership – It’s much easier when we work with leadership that is clear about where they want to go. Vincent and his partners had a clear ambition to be the leading imaging company by transforming the way the imaging business is currently done. In this case, their branding efforts became more sustainable, as they were guided by a clear vision and able leadership. Even with a lot of organisational changes and challenges in the industry, they did not waiver.

Belief in people – Vincent shared our belief that branding is not sustainable without a mindset shift. This part of the work is the most difficult and time consuming. In fact it is still ongoing. But Vincent’s belief in this gave us time to work with his team on a broad brand culture alignment programme. Through workshops, policy changes, brand culture activities, a more united and engaged corporate culture emerged.

Commitment to institutionalization – Vincent, Eric and Pang, the three business owners shared the belief that processes and frameworks are critical to sustaining change. As part of this change, we worked to allow a team of able managers to rise up and form middle management. It worked because Vincent and the rest of the management had faith in their people and gave them space to grow and learn from their mistakes. This is extremely rare in SMEs. FotoHub is also very willing to invest in processes, which is why they were the first to obtain ISO certification.

Appreciation of the role of design – The FotoHub people were also willing to use fresh approaches in design to stand out. They were committed to creating a unique identity which belongs to them. I remember when, after the strategic brand review, we presented the new identities and design experiences, they chose the edgiest one which had the most edge. This is very much in line with FotoHub’s way of thinking. They have always been very willing to adopt new ideas to sustain their competitive edge. The fact that they were the first to venture into digital archiving by bringing in the latest machines from Europe even before they secured the business shows their edge.

Customer-centered – FotoHub understood that customer service is integral to creating a good brand experience. We just completed a new customer service programme for them, and it was really an enjoyable experience. It is not difficult to get the staff involved in the programme and share its goals. Their english might not be good, but everyone makes a genuine effort to improve.

Of course, they have a long way to go, but what’s reassuring is that there are these kind of SMEs in our midst, showing that there is much hope for Singapore Inc 2.0

Q: What about pitfalls? Can you name some of the pitfalls that SMEs have encountered while embarking on branding strategies?

Some of the pitfalls that SMEs might face are as follows:

Lack of clarity in outcomes leading to mismatched expectations – As branding is a strategic exercise, it is best, before you even engage a consultant, to sit down and think about the outcomes you want from the exercise. Unlike marketing, which might be linked to promoting a particular product or service, a strategic branding exercise will affect the entire organisation and shape the growth of your company. When outcomes are clearly defined, SMEs will then find it easier to commit time, resources and manpower. Some branding exercises stopped halfway because the businesses failed to define what they really wanted, and problems emerged. They might not have needed branding at all. It could be that they just wanted an advertising campaign. So really think through what you want out of a branding exercise, because this will shape your company’s future.

Choosing the right consultant – Unfortunately many advertising or marketing companies nowadays claim they do branding since it is quite trendy to do so. It is hard for SMEs to tell if some of these companies are really in the business of branding or if it is just an additional service. SMEs need to keep the following points in mind when choosing a strategic branding company:

a) Current staff need to consist of business consultants and creative designers. It is a very different experience when the creative work is outsourced, because it will not really connect with the strategy. It makes a big difference in the outcome.
b) Majority of their current business should be strategic branding and not advertising or design services. This will ensure that they will be focused on you and pay attention to executing the project well.
c) Ask to review how they have developed a brand from business research towards implementation. This will give you a clue on how they interpret strategy and how relevant it is for business.
d) Strength in implementation is very important. Because most SMEs are lacking in the right talents, they are really looking for a brand consultancy to implement a lot of these plans.

e) They should have experience in organisational development, which is the most difficult part of the entire strategic branding exercise. Ask them how they would handle different organisational challenges.

Q: Branding is often associated with advertising. And since SMEs have limited resources, they probably can’t have big advertising and promotional budgets or afford an in-house brand specialist. What are their options?

It is exciting to have the possibilities that we have today. There are definitely lots of ways beyond advertising to build a brand. The following are some possible ideas which will require commitment and consistency but not much resources:

1) Maximise word-of-mouth from the inside-out

In the case of SMEs, the CEO must be the one driving the brand strategy. CEOs must clearly communicate what the brand is all about to the staff. It is much easier at the SME level to ensure that every team member is aligned to the vision and promise of the brand. This is important, because your own people should be your greatest brand advocates. If your admin or even your support person isn’t really that excited about your brand, how can you get your customers to be your advocates? For this idea, only time and effort is needed.

2) Personal email, no spam please

What is great about being an SME is that you have time to build personal relationships with the customers. Personal emails to ask how they are and to share what’s up with your business require dedication. The more you remember about each customer, the higher your chances of securing a recurrent sale. I find it interesting that people like to engage in email marketing strategies but forget that at the very heart of brand building is fostering human relationships.

3) Website, update it please

It is interesting to note that there are companies with websites that are not part of the branding efforts. At a basic level, companies should aim to have simpler websites that allow them to update easily. Even a blog will work much better for a smaller SME, since you are using existing platforms that will not cost much. The most important thing is having good and updated content on the website. With regular updates, you will find that it becomes easier for people to find you when they search for relevant services.

Find creative ways to present your products. You might want to upload a video of how your product works, upload it to Youtube and embed it on your website. How about showing pictures of your company’s latest event and using them as a talking point? The possibilities are endless. With people preferring convenience, a good website actually helps a lot. Nowadays, after you hand over your namecard, the first thing that people will check is your website.

4) Strategic use of advertising resources

As an SME, you can always look for ways to leverage on partners for advertising purposes. For example, it is good to update suppliers on your marketing plans and gain their confidence. This will in turn lead to their supporting you with funds for your marketing campaigns.

And if you really need to do advertising, try to check with your customers first if they even read the publications where you want to place your ad or whether the banner that you have set up at the corner of a street will make a difference. Doing a little market research will not hurt, but realising that your advertising efforts did not make a difference will definitely hurt.

5) Public Relations – start early

One of the most effective means for SMEs to raise awareness is through public relations. Start early by building a relationship with the media via short press releases on significant company activities, such as new partnerships or product launches. You tend to get better results for press releases when they involve either a more credible brand or the government. Sometimes, if your industry is niche and you are the flavour of the month, you do get featured in a big way. The idea is to start early to let the press know about you.

6) Design – keep it sweet and simple

If you are really short in terms of resources, keep your marketing materials and advertisements sweet and simple in terms of design. I am often surprised to see marketing materials that appear like they are meant to confuse you instead of simply catching your attention. It is amazing how people try to say so much within a small space.

Q: Any other trends you notice about branding among SMEs.

1. Rise of the socially-responsible brands

There has been a rise in the number of brand owners who believe in living out their social responsibilities. I believe this is an important evolution of our SMEs. It is heartening to meet these CEOs who believe that their business can make a difference, too. When they are guided by a higher purpose, it allows them to be more strategic in outlook and less reactive to short-term challenges. This trend is also extending itself across the board with many local companies interested in a socially-responsible approach.

2. More start-ups taking up branding

The other thing is more and more start-ups are talking about branding at the start of their businesses. This happens with the younger entrepreneurs who are highly educated and who are aggressive in pursuing hyper growth. This group knows what they want and have very niche technological products or services. They know a good brand can make a huge difference, as they seek further investments.

3. Foreign entrepreneurs see branding as a means to regionalise from Singapore

The next trend we see are foreign entrepreneurs who have come to Singapore to use it as a platform to launch their brands. They like the stability of our political entity, the pro-business climate and the accessibility to markets. They are interested in global expansion and therefore appreciate the dimension of branding.

4. Increased role of the internet in branding

The final trend is the increased awareness of the role of the internet in brand-building efforts. Many SMEs are becoming more open to trying different online approaches towards building their brands. We did a workshop for online branding, and it was a full house with over 70 participants when we had originally intended it for only 45.

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