SMEs can become a big brand

COVER STORY/ MARKETING & BRANDING

In a world where large businesses attract attention due to their sheer size, small- and medium-sized businesses often struggle to make their presence felt. Here are tips from experts to help you do so.

From a time when your work was strongly believed to be your best method to sell yourself, the industry has come a long way as the thinking has shifted to "one must not only do excellent work but also be known to be doing excellent work". The process of being 'known', however, is limited by a variety of factors, principal among them being the size of the business.

In a world where large businesses attract attention thanks to their sheer size, small and medium size businesses are often seen struggling to make their presence felt. Branding and marketing has become relevant to the Indian small and medium enterprise (SME) sector today as it was never before.

Today's market trend shows that it is not only a buyers' market but one has to even sustain stiff global competition. The old days of just selling a product have long past. This need of the hour is very well understood by most of SMEs. In fact, the efforts on marketing activities with specific focus and independent budgets, seen nowadays, prove this statement.

In a fast globalising economic environment, SMEs have to reconstitute their role and modus operandi. The enlightened ones among the SMEs realised this three or five years ago. Those among them who have or had the financial wherewithal to engage in branding have already engaged themselves in it, opines Shirish Sahasrabuddhe, former Additional Director General, Mahratta Chamber of Commerce, Industry and Agriculture (MCCIA).

Agrees Kishor Desai, Managing Director, Kishor Pumps: "Branding and marketing in the real sense are certainly relevant for any successful business, irrespective of the size of business. In fact, strong and powerful brand image is the key to successful business. We come across so many organisations wherein business houses / SMEs strive hard to establish their brand in the market and later on maintain and improve the image constantly."

Your brand defines your size

Being small may point at different sizes and scales of operations according to different business segments. The Indian financial system defines a small scale unit as one that has investment of up to Rs 1 crore in plant and machinery. There can be other yardsticks of defining what is small or medium, but going by the global norms, industries with annual revenues up to Rs 300 crore can be considered as small and medium.

Again, a small or medium business in terms of revenue can be a large one going by the 'brand' it has developed. A case in point could be Liberty Shoes. This Rs 270 crore company is small if looked from the revenue perspective, yet is today the second largest brand of footwear in India, after Bata.

What, however, is important is that the small and medium industry sector "� which is the largest generator of employment after agriculture "� is responsible for a huge 80 per cent to 90 per cent of the industrial activity. Interestingly, this is the case not just in India but anywhere in the world. SME sector is thus the backbone of all industrial activity.

Sahasrabuddhe would like to categorise this sector into three 'crusts'. Though he has based his classification with reference to the automotives sector (which anyway makes up a huge portion of the world's SME game), the logic applies across industries. The upper crust, he says, consists of those who have their own products. Many of them produce even for exports markets.

Why bother with branding?

• A strong brand influences the purchasing decisions of customers
• Branding builds name recognition for your company or product and helps articulate your business values.
• In a commodity market "� where features and benefits are virtually indistinguishable "� a strong brand helps create a set of expectations about your products without customers even knowing the specifics of product features.
• Branding creates trust and an emotional attachment to your product or service.
• A strong brand signals that you want to build customer loyalty, not just sell a product.
• Branding impresses your business's identity upon potential customers, not necessarily to capture an immediate sale, but rather to build a lasting impression of you and your products.

Courtesy: Heidi Stewart, marketing team leader at the National B2B Centre, established to help and advise SMEs.

Branding for these players is an absolute must. The middle crust "� those who make assemblies or sub-assemblies for Original Equipment Manufacturers(OEMs). Some of them are big enough to be able to sell these under brand names. Among them, auto components manufacturers are today having a field day. The lower crust: providers of components and services.

These are the ones who are generally unable to muster resources to undertake any branding effort. "Such categories have been and will always be there. What is significant is the recent trend to move up the ladder," Sahasrabuddhe stresses.

Ganesh Natarajan, Deputy Chairman and Managing director at Zensar Technologies says considering the competitive business environment today, branding and marketing for SMEs has become extremely important since SMEs have to contend in terms of brand recognition and recall with other established giants.

"Yes, SMEs do undertake serious branding and marketing efforts. The efforts tend to be more focused, concentrated and streamlined rather than continuous onslaught of media activity since they work under budget constraints."

Activity defines needs

Marketing and branding needs of SMEs differ according to the activity they are engaged in. A consumer products company, for example, has to resort to marketing. Needs of the new economy companies are different, yet they can't do away with the basic marketing process.

Says Shirish Kanitkar of Jopasana Software & Systems, "It has been commented by many customers and industry peers alike that SMEs do great work but the world does not seem to know about it. This is especially true of companies in Pune which do high-end engineering work but few are aware. In this context, marketing would play a significant role.

Kanitkar however admits many SMEs "� specially in the context of IT "� are service oriented organisations. Branding would play a limited role in merely establishing the identity of the organization. Marketing can play a significant part only if specific positioning in the areas of operation are contemplated. Market research is essentially addressed through allied opportunities that arise from talking with customers, prospects and the network.

So what are the choices? Here again the options vary according to the nature of businesses. Anupam Bansal, director at Liberty Shoes Limited says he has to consider advertising seriously as the company is in a mass products business.

"We spend about 10 per cent of our earnings on advertising, and also invest in promotions, co-branding and similar channels," he explains.

Exhibitions and trade shows

All in the mass products business however can't think of traditional advertising as a means of their marketing and branding efforts. Most tend to take exhibitions and trade shows seriously.

Vikas Paranjape, partner, Jyotsna Prakashan, who publish high quality hobby books for children, finds exhibitions extremely important. "There are like-minded people around which opens up many opportunities for working together, regionally or segment wise, and the prospective customer is there to address to," he points out.

Not surprisingly, Paranjape is present with his stall in every major book fair that is held in India and is poised to make a mark on the world scene by participating in the forthcoming Buch Messe at Frankfurt, Germany. Ranjit Moray, whose Universal Construction Machinery makes a slew of machines for the building sector, echoes Paranjape's sentiments.

Says he, "this is a great opportunity to attract the customer's attention. Any amount of advertising wouldn't make it possible to meet so many people directly interested in what you are manufacturing."

In fact his participation in a construction industry show in Germany opened many opportunities for him and today his company earns about 10 per cent of its Rs 100 crore revenue from exports.

Trade fairs are relevant for the demand side as well. Those responsible for vendor development are always on the look out for newer parties, products and business relationships.

Arvind Goyal, Vice President, Force Motors Limited who oversees the company's entire sourcing activity says, "Visiting industry exhibitions is a major activity for us. It is at these places that we get to know new parties who can offer us what we want, more efficiently and economically."

What about niche play?

The concept is perhaps the most relevant for SME sector. According to Rajendra Kankaria, Managing Director Uma Precision "� an auto components company "� it is extremely relevant to be in a small yet strong niche.

Being close to the customer, constant contact and customer satisfaction and trust play a crucial role in the survival of a small-sized unit, Kankaria says.

"In these days of very large scale manufacturing, it is the niche players with capability to scale up quantities as demanded will survive."

"Niche play brings focus and lets you know where is the market potential. In that prospect base, you have to do marketing/branding and prove to the potential customer you mean business and are planning to be in the game for long. If you cut corners, you may tend to create to an image of Fly by Night Operator in the mind of customer," says Deepak Shikarpur, director and CEO, Autoline Dimensions Software Services.

Vishwas Mahajan, CEO of project software developer Compulink Systems Limited says, "If you are a niche player or if you are a B2B niche player it would relegate branding to secondary importance because you have a very defined target market place and you have a solution that meets the requirements of that marketplace. This narrow focus itself creates its own marketing or branding. So traditional branding may get relegated to secondary position.

Milind Ajgaonkar, Vice President -Marketing at auto components maker Bagla Group, however differs. "Today there is nothing called niche in big or small enterprises or businesses. It is world of relentless competition. The customer is much more mature today. No gimmicks or empty rhetoric can hold your position in market for long. If your customer's experience of you doesn't match up to your rhetoric, then branding becomes counter productive. One needs to be aware about the end customer and make efforts to understand and reach out to him," he insists.

Soft promotion

In addition to the niche play and niche participation is the idea of soft promotion, popularly known as "below the line" initiatives. These would include looking for opportunities to participate as speaker in business seminars and conferences, or holding events or competition for students who will use your product as a means to get an entry into the event.

Below the line initiatives do help, says Mahajan. "In our experience we found that below the line initiatives actually generate more than proportionate amount of branding and marketing impact. So they are definitely important."

How to build a Brand

Investing in your brand is investing in your company's future. Here's how you can start:

Conduct an external brand assessment Identify and compare the key players in the same industry sector as your business. Define the key messages used by your competitors. And discover how does your business stands out.

Conduct an internal brand assessment Survey your team to identify the corporate strengths, perceptions, corporate culture and shared values as they see them. Analyse the message gaps between internal and external assessments.

Identify the core essence of your business This is the DNA that runs through your business, distinct from your competitors (how you do things, what you want your customer to feel, not what you do).

Develop brand pillars For your brand to be successful, there needs to be intellectual and emotional alignment with your target audiences. Brand pillars are those vital factors (usually expressed as three distinct qualities) that support the core essence of your business.

Create a vision statement Using the brand essence and brand pillars, write a statement that defines the future aspirations of your business and the goals required to achieve your vision. The vision statement articulates what bus ness you are in and how you add value.

Create a new brand If your brand name is tired, undifferentiated and no longer confers competitive advantage, then why not change it? Re-invetion can breathe new life into a progressive, modern business and a shared sense of ownership. Effective brand names will evoke your brand promise and personality and be consistent with the core essence of your business.

Develop a corporate identity Whether you change your company's name or not, a well thought out new corporate identity (logo) design can make a difference. When applied consistently, a professionally designed identity pos tions your brand in the right way and creates lasting, positive associations.

Protect your brand Having created and developed your brand it is critical that you are in the best possible position to defend it. Key areas to consider include trade marking names, designs and logos, copyright of key information, registering domain names, licensing and renewals.

Live the brand Successful brand strategies and marketing communications plans project the desired image at all touch points with the customer. Every action by every member of your team has to reinforce, support or enhance the brand. A great brand is one that lives its values day-in and day-out.

Benchmark customer satisfaction and performance A customer survey benchmarks how far you have come in meeting your brand promises (ranked between 1 and 10). This is used to benchmark customer attitudes, perceptions and satisfaction as well as testing the validity of your future marketing messages and campaigns.

According to Shikarpur, what also makes sense is to form alliances with like minded collaborative business partners who also address some business areas of your prospect base. Since the partner doesn't compete with you but collaboration helps you to share marketing costs SME's should look at forming alliances, he advises.

Communication channels such as PR can also be of help for the SMEs in a significant way. Mahajan however says communication has to be looked at very holistically. It is much more than traditional advertising.

"In fact I would say that the traditional advertising only helps marginally. The communication package has to involve combination including marketing and branding, below the line initiatives and very targeted or specific marketing as far as the SMEs are concerned."

Ganesh Natarajan supports this line saying promotions, events and public relations (PR) are extremely helpful for SMEs, since advertising today has become extremely competitive and innovative methods such as these help create a larger recall value and recognition which help in building the image desired.

But funds may be inadequate

In spite of the rather general consensus about the need for marketing and branding for SMEs, the discussion is marked by the lack of their financial muscle. Paucity of funds for engaging in the exercise of branding can in fact restrict the progress of units that are otherwise very good in their business.

Advertising or promotion, marketing efforts whether below or above the line, will all cost money which SMEs can't afford to spend. So what's the way to break this jinx? Institutional help? Soft loans for brand development?

Not much can be said here as there are hardly any scheme with banks or financial institutions. With the interest shown by venture capitalists in the new economy technology companies, the situation is better for them, but this funding is not very common or easy to come by.

Kanitkar observes, "NASSCOM as an industry representative body does provide help to some extent in areas of marketing. But very little help is currently available for SMEs for product ventures. I think there is a significant network of industry experts, institutions, forums around Pune as a city for advice on both technology as well as business issues. Funding continues to remain a bottleneck for SMEs that are product based and most certainly an issue for those that provide only services."

Banks and industry associations can help

Of course, industry associations and government organisations like SIDBI do help in terms of creating platforms such as conferences where SMEs can join and network.

ICICI Bank, for instance, has created a forum called the SME Dialogue that attempts to highlight the various issues concerning SMEs. The initiative involves holding of sessions on specific industries at locations where the particular industry has a strong base.

The principal idea behind the effort is to facilitate a networking platform for SMEs and create awareness about the best practices relevant for the industry concerned.

Incidentally, the lowering of airfares has worked as an incentive for SME players since they can have a closer interaction with an existing or prospective customer by meeting him/her personally more often. The Internet too has worked greatly in favour of SMEs as the medium is found extremely effective in extending B2B communication.

An important aspect of this discussion is the manpower. Sahasrabuddhe points out that the SMEs have a major issue about retaining people. More so about the marketing people who are expensive to hire and difficult to retain. It is here that the professional associations can play a role.

Opines Ganesh Natarajan "Associations such as these constantly support initiatives from the SMEs and provide the required platform for SMEs for networking and brand building. We at Zensar have also been constantly working with the CII, MCCIA and Nasscom for various collaborations and events. In addition to these, international associations too have been welcoming and we have been associated with them too for some international events."

Surely the progress to future for SMEs is not easy, given the complex and ticklish problems they have to wade through. Yet the wave of quality consciousness has gripped them all and their product or services will soon tend to make them financially stronger. It is only then that the sector, the foundation on which the big businesses can thrive will be able to sustain its marketing needs, if not really make a splash.

Specialisation is the key: Forbes

Naushad Forbes, Director, Forbes Marshall Group

There are some industries which simply do not lend themselves to being small. You cannot be an small and medium-sized (SME) auto manufacturer or a small soft-drinks firm. And indeed, the years since 1991 have seen the disappearance of SME liquor firms, SME auto firms (both Hindustan Motors and Premier were SMEs, if you compare them with any kind of global scale!), SME TV manufacturers and SME computer hardware firms (few today buy assembled PCs.

Why would you when you can buy a cheap unit from HP and Lenovo!). The opening up of the economy swept away all of this, and this is only a positive development. So choosing what business one is in, is the absolute key choice any firm can make.

Modularity and Specialisation
Where one firm previously did everything "� design, manufacture, marketing "� and made its own components, the last two decades have seen increased specialisation as firms have focused on one or a few modules of the entire supply chain.

So while the auto industry has consolidated into a few giant global firms, one has also seen the rise of component manufacturers (some of whom have become giants in their own specialised businesses) or design firms that do things which the auto firms previously did in-house.

The last few years have seen some Indian firms go from being small firms totally focussed on the Indian market, to leading global players. Each transition has seen the firm specialise on a specific market, even niche, or choose to exploit a specific module in the industry supply chain.

So Hindustan Inks went from making chemicals in general to just printing inks "� went from making general textiles to only doing home furnishings, BKT went from making general tyres to only making tyres for speciality vehicles, and Bharat Forge went from making any forging to forgings for the commercial vehicle industry alone.

All are enjoy leading global market shares, and have profit margins that outclass any other firm in the industry anywhere in the world. All also are now so well known in their fields, that marketing's key challenge becomes a task of reinforcing reputation instead of entering markets.