We live in a world that is dominated by brands and in which the need to build a strong brand is increasingly important.
A strong brand is the single most powerful and unifying statement that embodies an organisation’s culture and values and once well established, can create incremental value and inspire better business performance.
Unfortunately, the importance of branding is often undervalued, particularly among SME’s and their leaders. There are certain fundamental beliefs that SMEs often have about branding which demotes it to be the last item on their checklist.
Here we explore some of them:
Branding is for large organisations
As is obvious, most SMEs prefer to focus on perfecting their product and service strategies first and focus investment in areas of the business that will deliver an immediate return. Prohibitive media costs and the bombardment of big campaigns by big brands only shine a spotlight on their scarce resources. This means that the long-term benefits of brand building are often over shadowed by short-term marketing and sales activation. However, research suggests that a strong brand will capture, on average, three times the sales volume and be four times as likely as weak brands to grow in the following 12 months.
Branding is an expensive exercise
There is a common belief that branding involves significant capital investment. Those were the days of traditional media. Fortunately in today’s digital era, brands can and are often built on limited resources. Digital solutions are multiple and better targeted to audiences, giving your brand high visibility at a fraction of the cost of newspaper and television advertising. Also, entrepreneurs are nimble, quick on their feet and are therefore able to strategically use ‘out of the box thinking’ to break through the clutter at lower costs.
“We know our customers and vice versa, so we don’t need branding”:
A possible cover-up for lack of budgets, this is often the biggest hurdle given that growth comes from attracting new, unknown customers and not just from the existing customer base. If you are not out there as a brand, there is no way someone can know about you.
“We would rather invest our limited resources in our product and other critical areas of the business”:
Very often, it is the day to day survival that occupies the time for most business owners leaving branding at the bottom of the strategy chain. Entrepreneurs need to realise that branding is also a critical part of the business building process.
Branding activation is becoming much more cost effective and easy to deliver with the rise of digital tools. The most important thing is to build a robust platform from which the business can articulate the business strategy and engage with its different audience groups.
Branding builds bigger, better business
SMEs should shift their mind-sets and make branding an integral part of their business plan rather than an afterthought. It should emerge, grow and evolve along with the business. If it does, the company will see a significant difference in the impact it creates. Research highlights that a business with a strong brand will far out-perform the average business in terms of shareholder returns and deliver more value for your investment.
Building the business and sustaining growth
Growing the business with limited access to capital and resources can prove to be challenging. Branding helps in creating demand for products and services, resulting in faster sales. Even for B2B businesses, branding creates recognition, reputation and trust resulting in better conversions.
Evidence highlights that a strong brand will drive much stronger sales growth over periods of 6+ months than the temporary uplifts driven from by short-term sales activation with 58% of the sales impact of all marketing communications activity being delivered in the long-term.
Expanding from local to national to international
The majority of SME’s have a desire to grow and aim for bigger glory. The struggle to expand into national and international markets can be long and tedious. Branding helps in creating awareness and acceptance for products and services across borders, resulting in a faster adoption and better sales performance.
Attracting the right talent
Great brands are trusted, they cushion their stakeholders in security. Increasingly, people want to work for brands that they can entrust their career with and align their own culture and aspirations to, often to the extent that they would willingly compromise on a higher salary for better prospects with a smaller or lesser-established brand. This enables SMEs to attract and retain quality talent at lower costs.
Getting a premium for products/services
As Warren Buffet once said;
“If you’ve got the power to raise prices without losing business to a competitor, you’ve got a very good business. And if you have to have a prayer session before raising the price by a tenth of a cent, then you’ve got a terrible business. I’ve been in both, and I know the difference.”
People are willing to pay a premium for an enhanced, consistent brand experience. A business with a strong brand will command a 13% price premium over weak brands, and 6% above the average brand.
SMEs need to build and manage their brands with the same urgency as their balance sheets. Investment in brand is investment in long term business success. Brands project power, they are a key differentiator in a world saturated with products and services and enable businesses to charge a price premium.
SMEs should consider an optimum split in investment between brand-building and sales activation that is on average: 60% brand-building / 40% activation. Invest less than 60% in brand activity and the brand equity required to generate future sales will not accumulate.
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