Can Brands Help SMEs Withstand Adversity In The Market?

by Kim Faulkner 17 June 2016

The Singapore Business Federation recently moderated the business outlook among Small Medium Enterprises (SMEs) further for the third consecutive quarter in 2015, reflecting the uncertainty in the global economy and the local business environment.

While business sentiments remain muted in the new quarter as SMEs cautiously keep tabs on the industry and their bottom lines, an important facet of businesses remains grossly underestimated – branding and the power of brands.

As it was observed during the Asian financial crisis in 1997, the dot-com collapse in 2000, the global financial crisis in 2008, and now in the current economic slowdown, the necessity of a resilient brand is more pertinent than ever in helping them tide through challenging times.

It is for certain that there are more home-grown brands in 2015 than there were two decades ago, however, many SMEs still overlook or at best, underestimate this integral aspect of their business.

In the midst of such challenging times, the question for the large majority of SMEs is, “Can their brands help them to withstand adversity in the market?”

 

PURPOSE AND STRENGTH OF BRANDING

During the Asian financial crisis, when small and medium companies were desperately in need of an injection of funds, I looked at the number of Asian brands that were acquired by global firms. The number was dispiritingly low, with the Indonesian bottled water brand being one of the few Asian brands to be acquired during this period. In this instance by Danone.

The unfortunate conclusion was that even when the value of the underlying businesses were discounted, their brands were not valuable enough to be acquired or saved.

Brand reputation should be sustained during difficult times because it contributes to share-holder value in tangible and intangible ways.

Tangibly, by being able to command brand loyalty, SMEs can sustain the promise of future earnings and attract business investment because of the equity and reputation the brand commands in the marketplace. Acquisition by a business with the ambition, distribution, and funds can unlock the brand’s potential further. 

Intangibly, investors, employees and customers simply care enough to want the brand to survive and will sustain it with their loyal support and custom.

 

THE STATE OF SME BRANDS TODAY

Many SMEs tend to be largely opportunistic in their approach to business. They develop their brand primarily to identify the product or service rather than as a manifestation of strategy.

This treatment of regarding a brand as a “window dressing” rather than a strategic tool is a common mistake of many SMEs where they see branding as good to have, but not vital.

The other mistake is to think about branding in terms of an advertising or marketing campaign, whereas if branding is strategic, then the brand has to be manifested in the operations and customer delivery.

If the brand is “the promise of an experience” then that experience has be articulated not just in marketing communications but in actual service delivery, product development, distribution and HR practices.

I believe, and it has been proven, that great brands create differentiation for the business in a cluttered and competitive marketplace. Whether fighting for a share of the consumer wallet or for investment, the brand helps the company stand out amidst the throng.

It is this differentiation that is the key to brand survival in a commoditising marketplace where margins are thin.

 

TRAITS OF A SUCCESSFUL SME BRAND

Over the course of my time as a brand consultant, I have worked with a number of successful SME brands (who were just emerging with growth potential then. Brands such as Osim, Frasers Services Residences, Kinderland, and Challenger Technologies were some of the ones that come mind. These brands have gone on to grow despite market downturns. Some common traits
of a successful SME brand are as follows:

The successful brand is differentiated as a brand and not just in terms of product or service. The whole customer experience and brand promise is distinctive and therefore cannot be replaced by another brand offering the same product or service. The brand is credible because it is built on real competence, not just clever advertising. It is relevant because it ensures that products and services stay true to the brand ethos; and most importantly, the brand has emotional resonance – which is another way of saying, people really like it and feel emotionally attached to it.

All these traits contribute to brand loyalty. Ultimately, the key proposition for SMEs to focus on their brand and building it is to cultivate loyalty amongst its employees, shareholders, partners and customers.

 

SO HOW CAN SMES LEVERAGE ON THEIR BRAND TO TIDE THEM THROUGH ADVERSITY?

Firstly, SMEs need to recognise the need to build the brand internally and not just externally. 

If the brand is not aligned with the culture, corporate behaviour and practices of the company, then marketing or communication about the company, products or services becomes a superficial function.

If the brand is the “promise of an experience” then the delivery of that experience in good and bad times is at the crux of building a brand of value.

Secondly, SMEs need to see that brand relationship is an emotional connection with stakeholders, customers and the general public. It is for this reason that some perfectly competent companies are not able to leverage the growth opportunities or withstand adversity as well as other equally competent companies.

Their brand lacks the resonance and emotional connection of competitors because when the chips are down, people vote with the hearts.

Thirdly, SMEs should gain better understanding and insight of their brand (or brands) and examine the relevance and longevity of value proposition to determine how they should bring the brand forward.

They should recognise that the brand is not there just to identify the product or service, but is an articulation of the company’s “reason to exist” and its wider purpose in supplying that product or service.

This gives the brand longevity because it acts as a guiding principle for the decisions that the organisation needs to take in product development, product delivery, people management, customer service and other aspects of its operations.

Many of Activiste’s clients have come to us in adversity and strengthened the brand in hard times, so that they are well positioned to reap the returns when the market turns around, rather than get left behind or obsolete. The few that stand out for us are previously “failed” Indonesian bank brands like Danamon and Bank BTPN, who are today respected brands and desirable businesses in their own right; or established local B2B brands whom we were privileged to work with to take the businesses to the next level such as Perswood, MAJ Aviation, Boardroom to weather the ups and downs of business cycles, and still grow.

ABOUT THE AUTHOR

Kim has over 30 years of branding, marketing and design experience in Asia and has lectured and written extensively on the subject of branding, strategy development, marketing and design across the region.