Many might not know that SMEs are considered the backbone to Malaysia’s economy. Y.B. Tan Sri Muhyiddin Yassin, Minister of International Trade and Industry Malaysia in a speech recently, said 99.2% of business establishments in Malaysia are SMEs. Hence, the power of SMEs as the economic driving force can not be denied. Sadly, Malaysia, SMEs which is historically strong and competitive in the production or manufacturing arena, had been focusing on production and sales only or satisfied being just an Original Equipment Manufacturing (OEM) where margins are thin and have to rely on volume game.
The tides these days, however, have changed. The world is becoming smaller with the proliferation of the Internet. While in yesteryears, one can secure good profit margins from domestic market alone, it is no longer the same today and in the near future. Moving offshore and exporting their products and services to the regional and international market is no longer a choice nor a luxury but a necessity for business continuity. But how does one penetrate into the regional and international markets? The fear of not being known in the overseas market is one of the most common concerns of SMEs. While most would be happy to brand themselves, many have reservations due to the misperception of branding itself and the cost involved.
Good news and bad news
First and foremost, the good news is more and more SMEs have begun to realise the benefits of establishing its own brand. Companies like Lewre, Bonia, Pensonic and PADINI have done well in their branding efforts since their early.. years. They are now respected brands regionally, if not global. The sad news is, these are only a handful out of the 99.2%. Can you name 10 popular local SME brands in 20 seconds? I doubt so! Even if they have started their own brand, it still does not mean that they are into branding and are able to distinguish themselves from competitors.
Brand vs Branding
A brand is a good as a symbol or logo without any meaning or association if no effort is taken to nurture and develop it. Branding involves formulation of strategies and proactive actions to enhance the value of brand equity and to differentiate one from the others. With branding, companies have higher probability to reap the ‘benefits of product and service retention, increase purchase intention, premium pricing, loyalty, lower marketing expenses in the long term and many more. Yet, many SMEs are still reluctant to adopt branding as key business strategy. Why?
Why SMEs don’t brand?
Among the key reasons many SMEs are not proactively branding themselves is the perception that branding is for big companies only. They can’t see immediate returns in sales, equate branding to advertising and that they need d to invest millions of ringgit. Such a mindset hinders SMEs from using branding to gain competitiveness in this global economy.
Branding is for everyone
The fact is every company be it a start-up or MNC needs branding. Just like us as an individual in a community. We brand ourselves in certain ways to get attention and to associate with others. For example, we brand ourselves as a friendly colleague, professional executive, football regardless of who we are and what our age is. If you are a small SME, you can brand yourself with certain values distinctiveness and positioning which at a minimum, can differentiate you from being just a commodity. The market will remember you better and will more likely able to associate with you, your company and your products or services.
Short term gain or long tern profit
A common thought that comes to the mind of a SME when asked to invest in branding is the return on investment. “If I invest RM10,000 in branding now but there is no guarantee in getting additional RM50,000 sales in next few months, why brand?” A valid and an important concern, certainly. After all, we are here for business. It all depends on whether the company is looking for short term gain or long term profit. When we brand, we will be able to differentiate ourselves from competitors, be able to differentiate ourselves from competitors, be more relevant to customers, increase trust and confidence level and an opportunity to be a global brand competing in the international market. All these benefits will translate to long term sales and continuous growth to the company.
Brand investment is not only about advertising and money
Branding has been commonly regarded as an expensive exercise. MNCs can spend hundreds of million dollars every year on advertising alone. Can SMEs afford such a huge investment? Should SMEs follow the brand strategies of MNCs? Not necessarily. First of all, a successful brand campaign for a company might not be a successful brand campaign for another as very unique in nature. We need to look into our internal resources and capabilities to match it with external opportunities relevant to our brand. Secondly, advertisement is just one of the key elements of branding.
Customer relationship management, internal brand culture, superior products and corporate efficiency are parts of branding too. These initiatives do not demand high investment and some do not come with any price tag. For a start, determining corporate brand culture and inculcating it to all team members can be the most important branding strategy that comes with the least cost. It is the branding effort that matters most.
This is the first of a 3 part series on Branding SMEs. Watch out for the next article where the writer will elaborate more on how to source funds to carry out branding activities. Mr. Yap Keng Teck is the founder & Principal Consultant of Bizphere Brand & Marketing Services¬