Is Branding worth the effort for Small Companies?

How much effort should small businesses put it to branding?

Many small businesses talk about branding!   But what do they really mean by branding?

Brand

A brand is a collection of your symbols, images and even customer experiences. Consider the MacDonalds bill board advertisements:

A simple billboard with the Mac Donalds logo and the words “Loving It”

The advertising says nothing about price, products or locations, rather as a billboard advertisement in it own right it is really serving as a prompt to your memory.

Why Brand and is it Worth It?

Major Corporations have invested heavily in branding over many decades, for a number of reasons such as ability to charge a higher price, that it will carry them through tough times or that it makes customers more loyal.  But is this true?

Brand Translates to a Price Premium?

Brand marketing has really been the foray of the major corporations. In some ways brand marketing was meant to translate to customers being prepared to pay a price premium. But consider this:

Would you pay a 20 to 30% price premium to buy a known brand plasma TV from a reputable well known branded store? Or would you buy an unknown brand from another store who offered roughly the same specifications and warranty, for 20-30%?

Despite what most people say face to face, the reality is most people will buy the second one.

The real truth is that the power of brands has been declining for some time as has the ability to charge a price premium without significantly losing sales or market share.  For more inforomation one good book to read is The Wisdom of Crowds by James Surowiecki.

Brands as Insurance in Tough Times?

Previously Corporations traditionally invested heavily in their brands, as a form of insurance to carry them through when tough times, what the Nokia CEO Jorma Ollila, called mis-steps. [1]  However as Nokia also found out, it is insurance than no longer guarantees results.  Nokia estimated brand value in 2002, was $30bn, next year (2003) failed to produced want customers wanted and so Nokia lost $6bn in brand equity. [2]

Brands Build Customer Loyalty

Building brands meant focusing on building customer loyalty. However Jean-Noel Kapferer, Professor of Marketing at HEC Paris, Graduate School of Management makes the point that marketers have sort the holy grail of customer loyalty by restricting their choices [3].  The problem is customers are no longer loyal.

customers .. more fickle than ever, established brands are vulnerable and new ones have a real chance of succeeding….. Consumers are continually looking for a better deal, opening the doors for companies to introduce a raft of new products.

Brand as an Asset

Yes if you were bigger, then the power of your brand can add to the intangible asset value  of your company. That is the premium a company is prepare to pay above you actual earning multiple. However intangible asset values have received some short to medium term collateral damage from the Global Economic Crisis.   The effect of this collateral damage will be to contribute to a further short to medium term erosion of the power of brands.

So Where to Focus your Brand Marketing Efforts

There is one discrete little phrase in the opening definition of a brand used in this post “customer experiences”.  For small businesses this is the real key – for this is where sales leads come from through satisfied customers word of mouth.  Sales leads are the life blood of small business and primary purpose of small business marketing.

Keeping Your Promise

I have heard it said (not sure by who) that “your brand is your promise kept”.

For Small business I think this is the best way to look at a brand.  For example if your differentiation in the market is your service, rather than the products you offer, then your promise (brand) is going to built around your service offering.  You want your customers to experience that service positively and then have them share through word of mouth their endorsement or validation of your promise.

Such positive word of mouth in small communities or within industry sectors spreads.  Especially so these days with Social Media.  The converse holds true as well, dont keep you promise and you can guarantee the word will spread.

So therefore in terms of brand marketing, the real expenditure should be on your systems, processes and people to make sure that they all assist in ensuring that they deliver the brand promise that you have made.   Hence the question becomes only one that you can answer – should your priority of expenditure be in to high end brand logo’s, brand advertising  or in to your people, processes and systems needed tosupport your promise?   Only you and your resource capacity can answer that question.

Consider Social Media as Your Major Marketing Channel

Social Media has been said to be the great brand leveller.  Why because traditional media advertising effectiveness was directly related to how big your marketing budget.  Social media is not the case, marketing effectiveness on Social media is dependent not on your budget (well not to a great degree) but more on how well you engage with your customers/ prospects.

Brands have a disadvantage on Social Media of their own creation.  Brands have put their brand value on balance sheets – its an asset.  Brands perceive Social Media as a risk, they are cautious – have a need to “control” the marketing.  The problem is social media is not controllable by the brands it is controlled by the consumer.

There is only one way to control your brand on Social Media

Consistently deliver your promise – each and everytime.

Where to Focus Your Brand Marketing

It is simple deliver what you say you are going to do!  To this make sure that your people, your business processes and systems enable you to deliver the promise.  If you are an equipment rental or hire company then our business software certainly will help.

If you do this then people will spread the word as they have always done.  Given the growth of Social Media “the word” can now be spread faster and wider than ever before – both good and bad!

References

[1]Surowiecki, J. The Decline of Brands, published in www.wired.com/wired/archive/12.11/brands_pr.html

James Surowiecki is the author of “The Wisdom of Crowds”

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