5.1       Introduction

5.2       Defining branding

5.3       Brand management

5.4       Brand strategies

5.5       Designing the brand

5.6       Brand building activities

5.7       Conclusion

References

 

“We didn’t want anything green or anything with cows and guess what we finally choose…”

René van der Veen, founder of organic dairy Zuivelrijck.

 

 

 

 

 

 

5.1       Introduction

It has been mentioned before, SMEs lack the resources, and also often the expertise, their larger counterparts have; in 2021 the Pepsico company spent $3.5 billion on advertising alone and is said to have spent $31 million on three minutes’ worth of advertising during the US Super Bowl in 2020 (a TV show on advertising with an American Football game during the breaks 😉). On the other hand, large companies started small once. Oracle Corporation, founded in 1977 as Software Development Laboratories, had a revenue of more than $ 40 billion and a net income of approximately $ 13.7 billion in 2021.

In this chapter we will find that branding is an integral part of being in business. Some firms are aware of this and use their brand strategy as the centre of their organisational strategy. Other firms, unaware of the potential of branding, stick to a more functional approach: the product not the brand is central in their offering. We will distinguish between branding, brand management, brand communication, brand strategies, and brand communication strategies.

5.2       Defining branding

To brand cattle has been a way to recognize one farmer’s cow from another’s. Especially when people share a pasture, it might come in handy to know if they are milking their own cow or their neighbor’s. Not to think of what would happen if one would sell somebody else’s cow!? Basically, nothing has changed between the agricultural age and today’s business age. Products and services can be made recognizable through branding. The simplest way to define a brand is as “a symbol serving to distinguish the products and services of one company to another” (Kapferer 1997 in Ahonen 2008: 1).

McDonald’s iconic arched ‘M’ or Nike’s swoosh are two well-known brand symbols; but names, colours, sounds etc. also serve to distinguish companies from each other. A more formal definition used to describe a brand is “a name, term, sign, symbol, design, or a combination of these, that identifies the products or services of one seller or group of sellers and differentiates them from those of the competitors” (Kotler and Armstrong 2012: 255).

The brand makes the product or service stand out from the mass. It is due to the brand that customers perceive the offering to have unique features that make it different, next to the price or the functional performance of the offering. For most SMEs, next to a product or service, it’s the owner of the business and his employees who make the difference. The business owner is the main spokesperson when communicating about the business and the company’s brands (Centeno 2012: 259; Mitchell, Hutchinson & Bishop 2011: 169; Spence & Essoussi 2010: 1050). Due to the fact that the business owner is an active part of many, if not all, of the business communication, one could say that he is the brand to the customers. This means that the behaviour and communication of the business owner (and his employees) are part of the brand too, so not just the name and logo of a company’s product. Branding within an SME becomes all activities “to create and maintain a favourable image and consequently a favourable reputation for the company as a whole by sending signals to all stakeholders and by managing behaviour, communication, and symbolism” (Einwiller and Will 2002, in Ahonen 2008: 2).

Both the arched ‘M’ and the swoosh are corporate brands, and also the small company Software Development Laboratories understood that the main product a firm offers should serve as a flagship for the whole company. Some companies offer more branded products than just the ones whose corporate names they bear; Nike also owns Converse and Hurley[1], Oracle owns Mantas Inc. and Sotas Inc.[2] and PepsiCo. owns a whole range of brands, both drink and food related. One brand stands out though and is used as corporate brand. It seems SMEs should combine resources and use only one brand, the brand known by customers as the company brand.

5.3       Brand management

Brand oriented firms place emphasis on branding first and build the rest of the organisational strategy around the brand (Wong & Merrilees 2005: 156). Brand oriented firms have a performance advantage compared to their competitors (Berthon, Ewing & Napoli 2008: 40). Wong and Merrilees describe three types of firms based on their brand orientation: firms with a minimalist, an embryonic, and an integrated brand orientation. The more focus a firm places on branding, the higher the distinctiveness of the brand and the better the brand performance. The brand performance is measured in both financial and in marketing terms; a firm with a more integrated brand orientation not only grows more or has more profits, it also has a higher level of “brand awareness, product or service quality, repeat patronage and brand image; and strategic features like the achievement of competitive advantage over their competitors, evaluation of their overall marketing strategy and the building of a solid reputation” than firms that focus less on branding (Wong & Merrilees 2005: 158).

The management of a brand is all about finding out which customers a firm serves and why they prefer and buy this offering, then determining the distinctiveness in order to position the offering and/or business apart from the competition, allocating the (still limited) resources and then auditing the results of the brand (building activities).

Brand-focused SMEs focus on specific brand management practices. The firm’s brand must deliver benefits to the customers that they truly desire and it has to keep “in touch” with the customers and the market. This means that the person responsible for the brand understands what the brand means to the customers. Next, a full repertoire of marketing activities is used to empower the brand and these activities are used in a consistent manner. Also, when a firm has more than one brand these brands must fit into a logical portfolio in order not to blur customers’ perspectives on the different brands. Finally, the firm understands that brands must be given appropriate financial and non-financial support, not for the short run but also for a longer period of time (Berthon, Ewing & Napoli 2008: 40).

 

Figure 5.1 – the brand management process

5.4       Brand strategies

Firms use different brand strategies in order to build and manage the brand, to gain market share and sales growth, but also to diminish (business) risks. These strategies are very much similar to the strategies of large organisations and include brand building strategies and diversification strategies (Kotler & Armstrong 2012: 274; Spence & Essoussi 2010: 1045). One of the brand building strategies used by SMEs focuses on developing other product lines using the same brand name; Zuivelrijck developed other organic dairy products using the same brand name.

Diversifying the number of brands is a strategy used by SMEs to diminish the risks of having only one brand. SMEs can choose to develop or acquire other brands, to obtain licence agreements to distribute other brands or to produce products for third parties (private brands).

5.5       Designing the brand

After the brand strategy has been defined, SMEs need to design the brand and plan the activities that will be used to build the brand (Bresciani & Eppler 2010: 362). Designing a brand starts with finding a name. Not only does the name have to be easy to remember, have an Internet domain but also be legally available for use. Starting a new computer company called Apple is not allowed, though calling it Banana might. Still, even a company like Apple can get into trouble with a name: a Brazilian firm had registered the iPhone brand before Apple did and so customers can choose between an Apple iPhone and a Gradiente iPhone (see picture 5.1).

Picture 5.1  – a different iPhone[3]

Names can be descriptive, suggestive or just simply made up. Made up names are names nobody knows and can associate to a product or service (yet). When Google started no one knew what it was but now the noun has even become a verb and almost everyone knows what “to google” means. Descriptive names on the other hand are the names that are somewhat generic and therefore easily recognizable for customers but at the same time these names are difficult to protect. Also, one of the problems with descriptive names is the fact that they do not really make the offering stand out.

Somewhere in between the generic and the unique names are the so-called suggestive names. Like descriptive names, suggestive names make the firm’s offering easily recognizable for customers but in a more creative manner[4]. Names like Groupon (online coupons), Silk (soy milk), Blackboard (electronic learning environment), EasyJet (easy, low-cost airline company) and Zuivelrijck (zuivelrijk in Dutch means “full of milk”, zuivelrijck with a “ck” adds a classical touch to the word and suddenly it becomes “a dairy domain”). Suggestive names are favoured when creating a new brand name because it is easier to protect and also easier to use when expanding into new product categories than descriptive names. These names are also easier (and cheaper) to communicate and educate customers about than newly made up names like Yahoo!, Exxon or Novartis.

Next to a name a brand often also has a logo, this is a sign and/or a symbol, to distinguish the offering to other products or services. Like coming up with a name, the design of a logo is not that easy. The trick is to have a logo that is distinctive yet recognizable for customers. A logo should be protectable, too.

5.6       Brand building activities

Marketing is the same as “creating awareness” and “communication” for most business owners[5].  The basic reason firms brand an offering is to communicate its ownership, and by doing this they communicate the value that the business owner believes the offering has for potential customers. The visibility of the ownership does not automatically mean that all customers will perceive this value and hold a preference for the offering or even be willing to pay a higher price for it.  All the same, the only way a business can create an additional value compared to the competitors’ offerings is by making sure the customers can distinguish between the competitive offerings in the marketplace.

In table 5.1 different brand communication activities are summed up as used by business owners. SME brand communication activities fall in all three marketing communication categories although not all activities are used by all SMEs; relatively few SMEs can afford to use mass media outlets like national TV stations and newspapers. The use of local media, even TV stations and newspapers targeted at cities, seems to act as a bridge between the communication on a large scale and that on a more focused scale. Even so, not many SMEs choose TV or even radio to communicate with their customers.

Interactional marketing

“close and personal communication”

Transactional marketing

“mass (personal) communication”

E-marketing

“e-communications”

Door-to-door/ face-to-face

Networking events

Word-of-mouth

Trade fair attendance

Trial events for public

In-store presentations

Friendly staff

Sales though the telephone

Training and seminars

Resellers

Personal:

Public relations

Mailings

 

Non-personal:

Advertising with flyers

Advertising in folders

Sponsoring

Advertising with banners/ posters on streets or in shops

TV commercials

Radio commercials (national)

Membership cards

Radio commercials (local)

Social media

Website

Google Ads

Table 5.1 – marketing communication activities (based on order of times mentioned)[6]

The ten most used brand communication activities are summed up in table 5.2. The results of the non-helped recall clearly show that the (relatively) cheap communication alternatives – the use of social media and websites – are most popular. Both were mentioned by 26 of the 84 business owners. Next, the interactional marketing activities are mentioned. And finally, traditional mass marketing (advertising) is done in different ways; newspapers, flyers, and ad folders but also public relations and sponsoring, score high too.

Rank Category Marketing communication activity Times mentioned (non-helped response)
1

2

3

4

5

6

7

8

9

10

digital marketing

digital marketing

close and personal communication

close and personal communication

close and personal communication

mass personal communication

mass personal communication

mass personal communication

mass personal communication

mass personal communication

Social media

Website

Door-to-door/ face-to-face

Networking events

Word-of-mouth

Advertising in newspapers

Advertising with flyers

Advertising in folders

Public relations

Sponsoring

26

26

19

17

17

15

15

13

10

9

Table 5.2 – marketing communication activities ranked by times mentioned[7]

5.7       Conclusion

Branding is part of what SMEs should be doing. Not all firms realize this and focus on offering the best product or service they can. Firms that choose a more brand-focused strategy often outperform their non-branding counterparts. This is partly due to the fact that brands distinguish the offering from other offerings in the market and make it easy for customers to find, recognize and remember the (branded) offering. Not only are the customers willing to pay a higher price but they also more easily repurchase the offering.

Brand building takes three steps. First the firm (or business owner) must determine the brand strategy it will follow, next the actual brand (name, term, sign, symbol, design, or a combination of these) must be designed and finally the firm must undertake the brand communication strategies.

References

Ahonen, M. (2008). Branding – does it even exist among SMEs? Proceedings of the 16th Nordic Conference on Small Business Research, May 21st – 23rd, Tallinn, Estonia.

Berthon, P., M.T. Ewing & J. Napoli (2008). Brand management in small to medium-sized enterprises. Journal of Small Business Management. Vol. 46(1), p. 27 – 45.

Bresciani, S. & M.J. Eppler (2010). Brand new ventures? Insights on start-ups’ branding practices. Journal of Product & Brand Management. Vol. 19(5), p. 356 – 366.

Centeno, E. & S. Hart (2012). The use of communication activities in the development of small to medium-sized enterprise brands. Marketing Intelligence & Planning. Vol. 30(2), p. 250 – 265.

Kotler, P. & G. Armstrong (2012). Principles of Marketing, Global Edition 14e. Harlow: Pearson Education Ltd.

Krake, B.G.J.M. (2005). Successful brand management in SMEs: a new theory and practical hints. Journal of Product & Brand Management. Vol. 14(4), p. 228 – 238.

Mitchell, R., K. Hutchinson & S. Bishop (2012). Interpretation of the retail brand: an SME perspective. International Journal of Retail &Distribution Management. Vol. 40(2), p. 157 – 175.

Pelton, E. (2012). Why suggestive brand names are the best. http://www.erikpelton.com/2012/02/24/why-suggestive-brand-names-are-the-best/; retrieved 01/4/2013: 4:25PM)

Spence, M. & L.H. Essoussi (2010). SME brand building and management: an exploratory study. European Journal of Marketing. Vol. 44(7/8), p. 1037 – 1054.

Wong, Y.W. & B. Merrilees (2005). A brand orientation tpology for SMEs: a case research approach. Journal of Product & Brand Management. Vol. 14(3), p. 155 – 162.

 

Internet resources:

Gradiente iPhone: http://appleinsider.com/articles/13/02/13/apple-loses-exclusive-iphone-trademark-rights-in-brazil; retrieved 01/4/2013; 9.04PM

Nike: http://nikeinc.com/pages/our-portfolio-of-brands; retrieved 22/3/2013; 11.58AM.

Oracle: http://www.oracle.com/us/industries/financial-services/financial-results-subsidiaries-167911.html; retrieved 22/3/2013; 11.59AM.

Pepsico: https://variety.com/2021/tv/news/super-bowl-commercials-pepsi-soda-halftime-show-weeknd-1234881117/ and https://www.pepsico.com/docs/album/annual-reports/pepsico-inc-2021-annual-report.pdf?sfvrsn=fc90bdd6_3

Zuivelrijck: http://www.brandnew.nl/nl/48/werk/zuivelrijck/; retrieved 02/4/2013; 8.58AM

 

[1] http://nikeinc.com/pages/our-portfolio-of-brands; retrieved 22/3/2013; 11.58AM.

[2] http://www.oracle.com/us/industries/financial-services/financial-results-subsidiaries-167911.html; retrieved 22/3/2013; 11.59AM

[3] Picture source: http://appleinsider.com/articles/13/02/13/apple-loses-exclusive-iphone-trademark-rights-in-brazil; retrieved 01/4/2013; 9.04PM

[4] http://www.erikpelton.com/2012/02/24/why-suggestive-brand-names-are-the-best/; retrieved 01/4/2013; 4:25PM

[5] Meer, P.O. van der and L. Rietvelt (working paper)

[6] Centeno 2010: 255; Meer, P.O. van der & L. Rietvelt (working paper).

[7]Meer, P.O. van der & L. Rietvelt (working paper).