Sep 27, 2008

Mktg - Brands must be build with PR

Arcopol Chauduri

StrategiCom, a global brand consultancy, was founded in 2003 on the belief that for a business-to-business (B2B) provider, it was more important to have a strong brand than a business-to-customer (B2C) firm as B2B purchases involved more risk and are pricier.Wilson Chew, chief executive officer and principal consultant, Strategicom, leads a team of over 110 consultants and analysts spread across the globe, consulting small and medium enterprises. In India, B2B transactions have a steady rhythm, despite a global slowdown. And it’s this factor that has encouraged him to launch in India. “The timing couldn’t have been better,” Chew told DNA Money’s Arcopol Chaudhuri during his visit to Mumbai recently. Excerpts from the interview:

Why have you decided to launch StrategiCom in India?

The current economic atmosphere looks worrisome for businesses...Our decision to launch in India has got more to do with our own global growth. India is a unique economy, where the business-to-business (B2B) community runs at a good rhythm despite all the noise about a global slowdown. It shows that the Indian market is dynamic. We are in the process of opening an office in Mumbai and I think it couldn’t have happened at a better time.

What is the difference in the approach to branding a B2C company vis-a-vis a B2B firm?

The main difference is in the consumption behaviour. The fast moving consumer goods (FMCG) space sees fast-moving consumption. However, it’s slower in the luxury segment. In the B2B space, buying behaviour is generally vigorous across sectors since the per-contract transaction is of a higher value. For B2B firms, corporate branding is based on strength in the relationship between businesses, positive word-of-mouth, core competencies and credibility. Our key focus area is on positioning and differentiation.

What are the challenges that SMEs face when it comes to positioning and differentiation?

We’ve observed that for similar products, the battle is fought on pricing. Actually, there’s nothing wrong with cost-competitive pricing as long as the marketplace creates demand for it. But finding a cheaper alternative is not always a good idea because, with multiple players in the market, there will be competition always at any price point. Today, it’s about choosing the space the company wants to be in. To make this possible, brand strategy and business strategy cannot be mutually exclusive. They need to be formulated in sync.

Traditionally, it’s the large corporates that have been roping in branding consultants. Have SMEs taken branding seriously?

Are there any obstacles your consultants face in convincing clients?Well, in the kind of markets we operate in, most businesses are family-run enterprises. So, these firms, in the first 15-20 years of their existence, start chasing every business opportunity. When they reach a certain scale and size, they can no longer do that. Also, the costs increase as employees, technology and products increase and diversify. These present new challenges too, as new cost structures come in. So, internal processes also have to transform and brand building becomes inevitable. This is the reason why I say that branding is not about generating external-to-inward perspectives. In fact, if internal branding is not in place, then it will do more harm than good to the organisation. There are companies that we consulted where the reality of trying to achieve a brand strategy was not being accepted. The thought of suddenly transforming and modernising is somehow not acceptable to some.Your approach excludes advertising, which is a key branding tool.

How difficult does it become then, considering SMEs don’t spend on advertising anyway?

I think that the principle of branding and principles of marketing (of which advertising is a part) are two exclusive concepts. Business schools will tell you that marketing is a social science. Pure scientists will tell you that branding is a psychological science. But the two must go hand-in-hand. Branding, essentially, is about positioning and differentiation. Marketing is about tools we use to build awareness and relationships. I’m a great advocate of the fact that brands need to be built with public relations and sustained with advertising.

It’s strange you say that, because if you look back to the 1980s (after Marlboro Friday happened) Nike, Adidas built brands purely through advertising...

Maybe you’re right. But I’m referring to B2B brands here — they have been traditionally different than B2C brands. Even if you look at the top 1000 brands listed by Fortune or Forbes or any other organisation, consumer brands don’t make up for more than 20% of the list. In fact, its B2B brands such as General Electric, 3M, Intel, Suzlon, etc that make up for more than 800 of the list.

If you were a branding consultant to Lehman Brothers, a firm facing the consequences of the global economic downturn, what will be your advice to it?

(Laughs) Lehman (or companies similar to it) needs to go back to what made it successful in the first place. That’s where its strength lies. Brand building happens when you are focussed in what you do. Think about it. Traditionally, it’s the housing finance companies and co-operative societies that have been funding sources for mortgage loans. Never the banks. Who would have thought that banks that are global financial services would expose themselves in such a manner? Tata is a global brand, because it has stuck to its core competencies. General Electric spent the first 65 years of its existence creating things it was immensely good at making — light bulbs. Brands like Reliance, which are just a few decades old and are diversifying into so many businesses, will have to identify and stick to their core competencies.

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