Go big, be consistent: Capturing the full value of your brand
It's a hard game pitching products into big retailers and encouraging consumers to see the extra value in a premium product.
Victoria Business School brand experts Dr Michelle Renton (School of Marketing and International Business) and Associate Professor Urs Daellenbach (School of Management) say investing in your brand and sticking to its values are the keys to making it work. The following is an abridged version of an article based on their research, originally published in New Zealand Business, June 2016.
Small to medium enterprises (SMEs) in the food and beverage industry recognise the importance of branding. But relatively few seem able to capture the full value of their brand.
Our recent research sought to better understand the way New Zealand SMEs in the food and beverage sector develop their brands, especially in the face of external pressures from the retail and supermarket sector.
We found that to get the full value from branding, SMEs needed to do two key things: go big on branding, and give the brand the consistent support it needs.
We also found that SMEs that do this are laying the foundations for increased sales.
SMEs typically have entrepreneurial origins, and are often characterised by creativity, unconventionality and nimbleness in their decision-making. There are benefits from having this flexible approach, but SMEs may inadvertently trade off better success in creating and capturing value from their brands.
For SMEs seeking to build high brand awareness and a positive brand image, their efforts may ultimately suffer when changeable decision-making leads to inconsistency in branding. When brand strategies are not written down, neglected altogether; or branding is unsupported or under-resourced, the flexibility that entrepreneurs value may take focus away from developing their brand.
This is especially evident in industries such as food and beverage manufacture where the value chain involves small and emerging organisations supplying large and powerful retailers. Often for these smaller companies, focus on the brand ends up taking second place to generating cash-flow.
Why does one breakfast cereal seem more ethical than others?
In contrast, SMEs that carve out a strong brand strategy consistently focus on building extensive brand awareness and positive consumer perceptions. To do this, they spend time and resources communicating the distinct meanings of their brand to well-chosen target markets and ensure their customers can differentiate between their product and that of their competitors.
Firms that succeed at this ensure their target customers know what they are buying when they purchase the brand. This can seem somewhat diffuse within a category of functionally similar products.
For example, why does one breakfast cereal seem more ethical than others, or one brand of orange juice more fun than another? After all, there's nothing inherently ethical about breakfast cereal or fun about orange juice, so what will set one SME in these categories apart from others?
The answer is well-crafted clear brand meaning. Brand meaning describes what the brand stands for and is what promotes one product to be perceived as different from others. It's these meanings that inscribe in the consumer a sense of value.
Our research finds that entrepreneurs and marketers who focus on and support their brands with sufficient resources over time are better able to communicate a clear, well thought out brand meaning consistently. When this happens, brand awareness and positive brand image typically grow quickly, which is the starting point for increased sales.
Of course this approach comes with a price tag. Resourcing and supporting brands and brand strategies require a central strategic focus on the brand, support from the top level down and clear managerial responsibility, all of which can be difficult for cash-poor SMEs, particularly those that are small and emerging start ups.
These strategies also require a more formal approach than many SMEs may not be used to. However, our research suggests that for organisations willing to write down their strategy, follow it, and support it with resources and clear lines of managerial responsibility, a focus on brand strategy can bring real value, in both domestic and export markets.
Challenges that SMEs face when trying to put their brand strategies in place
Unfortunately, SMEs face further challenges when trying to put their brand strategies in place. Supermarkets and major retailers may believe that the financial risks of stocking branded products outweigh the benefits, particularly when branded lines offered by small SMEs don't meet their stringent performance targets.
In export markets, control over the brand is often further diminished when distributors are used. For many small and emerging companies, their branded lines end up taking second place to their needs for generating cash flow, regardless of whether they were working domestically or in international markets.
These pressures steer the company's focus away from brand strategy and can result in diluted resourcing and less support from senior managers necessary to building the brand. This limits the development and communication of a clear brand meaning, making it difficult for customers to distinguish between generic and branded lines.
And when consumers don't have a clear idea of what a brand means for them, they are unable to see why it is better or even different from alternatives, let alone why it should command a higher price point.
In these circumstances, the positive pull on consumer demand that results from high consumer expectations about the brand decreases. This diminishes its value to both consumers and category managers in supermarkets and because of lower sales, the company as well.
SMEs need to remember that despite potentially conflicting pressures, they shouldn't lose focus on their brand strategy. Success and sales are more likely if they go big on branding, create clear brand meaning, and then support it and communicate it effectively to consumers.
By creating consumer value through brands, value accrues to distributors and category managers, and eventually SMEs can reap the rewards from harnessing the full power of their brand.