Brand building crucial for SMES to reach next level

Not enough companies embrace value of marketing

“As larger corporations scale back on marketing, the landscape opens up for nimble players to establish a footprint.” Claudian Navin Stanislaus

IN the vibrant economic landscape of Malaysia, small and medium enterprises (SMES) are vital to the nation’s growth, contributing almost 40% to the nation’s gross domestic product (GDP), and making up nearly 50% of total employment.

Yet, on the fringes of a recent ministerial dialogue with industry leaders, a crucial question was raised, about the disproportionate focus on risk mitigation and operational efficiency in support provided for the SME sector, rather than on more pivotal revenue enhancing strategies.

It strikes at the heart of a fundamental challenge for SMES. Sustainable growth after all isn’t merely about cost reduction, but also about creating distinguishable value and establishing a resonant presence in the marketplace.

In terms of branding, it does somewhat reflect the depth of reluctance within the SME community to embrace brand building as a strategic avenue for growth.

Shedding light into the scenario of branding among SMES, Malaysian Advertisers Association (MAA) president Claudian Navin Stanislaus says: “In my regular conversation with business leaders in the sector, I’ve come to recognise a common thread.

“There’s a universal admiration for SME businesses that have successfully evolved into recognisable brands and transcended beyond their territorial boundaries. Yet, many doubt the feasibility of replicating such success in their own businesses.

“For some, the allure of a quick fix through price discounting overshadows the potential long-term benefits of brand investment. “

This hesitance, he tells Starbizweek , is further fuelled by various reasons. These include the daunting prospects of navigating the complexities of a brand strategy with limited resources, or the memory of some ill-advised previous forays into brand building that returned some flashy visuals but no quantifiable business strategies or outcomes.

However, he says the strategic importance of businesses transforming into brands is ever more critical in an era marked by economic uncertainty and the risk of commoditisation in a fiercely competitive marketplace.

For SMES especially, Navin says crafting a strong and unique brand can serve as a protective barrier against unpredictable changes in the market. Beyond recognisability amid the clutter, it can cultivate customer trust and loyalty that enhances resilience, he adds.

MAA currently has over 1,600 members including SMES via its affiliate members programme.

So, why are many Malaysian SMES still slow to make that transition from a transactional business into a brand?

To this end, Navin says branding is often seen as a high-cost, high-risk endeavour, suited only for corporates with deep pockets. However, he says strategic brand positioning, focused on authenticity and a deep understanding of the target audience, can yield substantial returns even with modest investments.

In times of economic uncertainty, he says the risk of commoditisation looms large, with businesses facing diminishing returns. It is precisely in these challenging times that the power of a strong brand becomes most evident, he notes.

“Brands that have invested in building their identity and connecting with their audience during such time have historically proven their ability to not just navigate economic downturns more smoothly, but thriving even when consumer spending tightens.

“As larger corporations scale back on marketing, the landscape opens up for nimble players to establish a footprint, not only across Asean but also in safeguarding their home turf against regional encroachments,” Navin notes.

On another note, he says the essence of brand building is far more than mere logos or taglines. It’s about strategically navigating regional expansion and local-market defence, about crafting stories that resonate deeply with audiences, highlighting the unique offerings and values of a business, he adds.

He says this strategic narrative building fosters deep-rooted connections and loyalty, driving sustainable growth.

Moreover, Navin says brand building is not an isolated endeavour but one that should be integrated with other growth initiatives like product innovation and operational efficiencies. He says this holistic approach positions SMES as market leaders, adept at steering through uncertainties and capitalising on growth opportunities.

“Here, the concept of Asian Brand Alchemy, or the intrinsic Asianness, emerges as a potent principle for Malaysian SMES. Embracing this principle means leveraging the rich tapestry of Asian values, aesthetics, and sensibilities to craft brands that resonate on a deeper level with both regional and global audiences.

“This unique branding perspective is not merely an add-on but a strategic imperative, enabling SMES to differentiate themselves in a crowded marketplace by tapping into the shared cultural heritage and values of the Asean community,” he points out.

What is then needed to ensure that brands see the “light”? Navin says there are variable pieces to this puzzle that need to be aligned.

Reiterating his explanation earlier, he says it is critical for SMES to realise that brand building is not about a logo, catchy tagline, or well-designed marketing material. And certainly not about the flashy advertising campaigns either, he notes.

That is often the biggest misstep, as many SMES either rush into such initiatives, or are convinced to invest in it, on the misconception that these alone will build their brand and ensure they reap the benefits of branding.

Brand building, therefore, should not be viewed merely as a marketing expense but as a critical investment in the business’ resilience.

Navin says: “It is crucial that the efforts taken actually resonate with customers’ expectations for the business, service or product.

“While a strong brand acts as a differentiator when products or services become interchangeable in the eyes of the consumer, seeing beyond this immediate potential opens doors to new markets, fosters customer advocacy, and creates a sustainable competitive advantage.

“This necessitates a commitment to understanding the market, investing in customer relationships, and consistently delivering on the brand promise.

“When effectively executed it can enable SMES to command premium pricing, not as a matter of cost, but value perception, thereby protecting margins and sustaining growth even when economic winds are unfavourable.”

The fixation that branding is exclusive to consumer-centric business is another fallacy, as all businesses benefit from having these relationships with their customers, whether they are direct consumers, or other businesses, he adds.

Sadly, he says SMES often do not have access to expertise that is readily available in the industry, and instead tend to rely on the advice and opinions of those within their reach or immediate circles. He says this can often be a handicap, but more devastatingly a waste of resources.

This is where the next alignment is needed, he says. In this regard, it calls for established agencies and vendors in the SME space to realise that for their own survival or growth, the existing pool of brands has to constantly be expanding, and the biggest potential pool of these are lying dormant or trying to find its way in the SME sector.

Navin adds: “There should be a concerted effort to provide more affordable solutions and be more approachable for this sector to entice them enough to show its worth, rather than leaving them to their devices or less scrupulous practitioners who often lure them with empty promises, delivering none, and further disillusioning SMES on the impact and effectiveness of brand building.”

He points out that for any such effort to work, customers must be reached, and this is where a realignment is required from the media owners’ side too.

Rather than looking solely on transaction offering to sell, he says local media owners should focus on their strengths to work towards programmes that specifically enable SMES to make that transition to brands.

“This does not have to be open ended, which would neither be in the media owners interest, but rather to work on the ‘domino effect’ of programmes that are focused on selected candidates from various sectors and effectively using their channels to provide a form of ‘proof of concept’, that others in these sectors can emulate.

“Where this could possibly work is by supporting the media owners with grants for such programmes to offset the cost that SMES might be hesitant to invest otherwise, but with clear and transparent processes that ensure that the money is not used for something else,” Navin says.

At the same time, he says there should preferably be an actionable joint governmental and industry study, on steps that can be taken to reduce the transactional cost of investing in brand building.

He says this should be looked at strictly as a short-term effort to encourage the SMES own investments in such long-term initiatives, that will not only ensure the fluidity of the marketing industry support sector but will more importantly provide an alternative path for local SMES to position themselves for expansion beyond these shores.