BRANDING

Rajiv Badlani  

BRANDING: SIZE REALLY DOESN'T MATTER

Newspapers like The Economic Times sometimes don't know the awesome power they wield.

When its written in The Eco Times it becomes gospel.

Here's a story of how a chance comment in The Eco Times became an issue in some kids' minds.

In this note I hope to dispel the myth that branding is an expensive exercise and that only large companies can build successful brands.

I believe that a seriously committed small company or individual can build a brand as effectively as a megacorp can.

 

 

 

 

 

 

A while ago, the folks at NIFT (National Institute of Fashion Technology) asked me to sit on a jury to evaluate the work of their graduating class. One of the questions I asked the students was what they dreamt of achieving in the futureÖ 

Three students said theyíd love to build and own their own brands, but quickly added ďthat, of course, is impossible. It costs 15 crores to build a brand.Ē They had picked up this figure from an article in a major newspaper.  

That is just not true. It really made me sad to see their dreams being compromised by someone writing on a subject he or she doesn't know enough about.

You can build a brand. Yes, you.
I am writing this to tell everyone with a dream that you can aspire to build a brand.

It is as feasible for a small, new business to start building a brand name as it is for a large multinational. The passionate entrepreneur actually has many advantages over his larger competitor.

Unfortunately the concept of branding has come to be associated with big expenditure Ė not affordable by small/new businesses. This comes from the mistaken belief that branding is the same thing as advertising.

This isnít so. Advertising is a tool that assists in the process of branding but is no means the only or the most important, or even an essential tool.

Branding doesn't equal advertising
Branding isnít expensive, advertising is.

Not only can brands be created without advertising, they can be created with almost no dedicated expenditure at all. Every small entrepreneur can aspire to create and grow a major brand. In fact, that's how most of todayís mega-brands started.

This isn't a theory. See how the biggies started
Look at history. Think of some of the biggest international brands Ė Coke, Levis, Liptonís, for example. Each started very small and became very strong local brands in their cities before they went out and captured the world.

They started with an innovative and good product offering, built enormous goodwill amongst their first customers and leveraged that goodwill to grow into larger markets.

Their expansion was almost always driven by recommendations from existing customers to their friends. This very goodwill caused geographical expansion to take place.

When their local successes allowed them to start looking outwards, they began to use advertising to speed up the process of creating awareness in newer markets .

Branding is actually quite easy
Here is a simple formula for any small, new business to begin the journey to becoming an international mega-brand:

  1. Make a great product or service
  2. Present it attractively to a small audience
  3. Earn their goodwill and admiration; they themselves will bring you new custom
  4. Remember that recommendation carries a hundred times the weight of advertising
  5. Keep fulfilling and bettering the expectations of your core customer group, and your fame and brand will grow
  6. When this has allowed you to earn enough to advertise, do so to expand your market. Often, you will not even need to. The goodwill you have earned will bring expansion opportunities to your doorstep.

Large companies have huge overheads. So when they launch a new product they have to produce a large result very quickly to justify their investment.

Thatís why they need advertising to achieve awareness and trial very quickly. They donít have a choice.

As a small player you actually have an advantage
But if you are fortunate enough to have the luxury of time, and if your overheads arenít killing you, you donít need to be in such a tearing hurry. You can afford to start slow and earn the respect of a few consumers who will go on to become your brand ambassadors.

Learning is a process that involves making mistakes. That is a luxury big companies often don't have. You do. Be honest and transparent and treat your customers with respect and you'll be amazed to discover how much they will tolerate and forgive you for.

Examine the last 10 purchases you made, particularly the more expensive and critical things or services you bought. How many of those choices were driven by advertising? And how many were driven by a friend's positive comments?

But it is critical to understand what it means
When you peel away all the jargon, a brand is only a word and/or a symbol that is recognised by people to indicate the availability of a particular product or service from a particular vendor.

What really matters is how much liking, respect and trust that name connotes. The value of a brand is measured by the number of customers who are likely to come back to buy it again. This denotes how much future business that name can generate.

If there is a vegetable vendor you are prepared to travel a distance to buy from, a hairdresser you will not deviate from, a restaurant whose sambhar no one else can match, these are important brands in your mind. As meaningful to you as Colgate and Coke and Mercedes and Rolex.

The entire branding transaction is complete here. There is a name that you associate with some qualities that you appreciate enough to keep going back to that entity even if others offer the same products or services. The assurance that you will go back again is value that can be measured in hard cash!

How much value does it denote? There are many ways of measuring the value of brands but all of them are based on the assurance of future business because of the goodwill earned in the past or present.

Branding is only for expensive stuff?
Many people (particularly advertising and marketing people in lesser developed markets) assume that being able to command a higher price is a sign of a successful brand. I donít agree with this point of view. Branding is not about prices at all Ė it is about the value that you, as a consumer, perceive that you derive from the transaction. You are the sole determinant of what you consider an appropriate price to pay for it.

Let us say youíve been going to a hairdresser you are very satisfied with and he raises his prices by 10%. Would you shift? I imagine this will really depend on how much value you perceive you are getting from this guy. There are some customers who will happily accept a raise of 100% while some may not even tolerate a 1% rise. It isnít about the extra money he wants, it all about what you perceive his value to be.

I hope I have succeeded in making the point that brands are not just packaged goods from large companies. A brand is a relationship; an accumulation of goodwill that leads to a future sale.

So, when a small entrepreneur enters a new business, it is completely legitimate for him to want to build a brand.

Branding is critical for the small guy.
In fact, it is the only way a small new business can survive.

If he doesnít have branding in mind, chances are he will focus only on selling cheaper. This is a mistake many small entrepreneurs make Ė thinking a lower price is an unbeatable sales story. It isnít. The pricing battle is one that has no winners. Very large companies can afford to play predatory pricing games, but the small guy who tries it usually ends up committing hara-kiri.

Price v/s Value
I know a guy who decided he would sell the cheapest jeans in Gujarat. He actually believed he would sell lakhs of jeans and that his product would drive all the others from the market. I told him he was nuts, but that didnít seem to phase him. Its now been more than 10 years and he barely sells (with great difficulty) a few hundred units a month.

Why? His jeans are awful value. His quality is poor and his work is careless. He assumes that because he is selling cheap his customers will tolerate the junk he delivers. He still hasnít realized a low price doesnít substitute value. He is the cheapest, but his jeans are very poor value even at that price.

Donít get me wrong. Pricing is important, but it isnít the only value you should seek to deliver. Someone is paying you money in return for some satisfaction he or she wants, and when you take their money, it is your responsibility to deliver the best value you can. This isnít achieved only through high cost inputs. As a manufacturer I have discovered the cost of making an excellent product and a lousy one isnít really very different. Care and honesty donít cost that much money, but they do demand commitment, honesty and discipline.

Brands represent safety
If you live in a city like Mumbai or Delhi where you have many clothing export companies, you see many export surplus garments being sold in small shops and on the pavements.

Many people who find them attractive still prefer to buy branded merchandise from reputed stores, because they are uncertain about how well these incredibly cheap clothes will behave when washed and stuff.

But you know who buys them? Folks like me who know enough about fabrics and sewing to have no such uncertainties. I know enough about the subject to evaluate quality without looking at the brand name. Many of my favourite clothes were bought off the pavements. But I can know only about one subject. If it came to food, for example, I'd feel safer buying a known brand.

It is important to understand that this is branding' primary function - to reassure the customer that his money is not being spent on a risky proposition.

The key word for a successful brand is not fame, but trust. Of course both feed each other, but trust is the more important element.

Size isnít the issue and neither is advertising. What matters is being very clear about who your consumer is, being very sensitive to what exactly sheís looking or and doing your utmost to make sure she gets that, and oodles more. Keep doing that, and youíll soon have a brand. Do you need a lot of market research to establish that? It helps to research, but your gut-feel as a consumer yourself will tell you what you would have considered value and if you are honest with yourself, this in itself tells you a lot. Keep talking to your consumers, listen hard and read between the lines and you will know plenty to work with.

How big can your brand be? Well, imagine if you start with just 50 customers, who are thrilled and recommend you to 3 friends each, and this recommendation cycle continuesÖ do some calculationsÖthis quickly leads to very large numbers.

Sounds silly? See http://www.badlani.com/bags/customers.htm -these nice folks do refer their friends, and their comments being here does influence other people.

What happens when you want to buy a big ticket item? They can blast zillions of dollars worth of advertising at you and most of the time one negative remark from a friend nullifies it. Works both ways. Zero advertising. Friend raving about your product. You're likely to buy aren't you?

When your customers come back and recommend you to their friends, you are on your way. Earning and accumulating goodwill is the name of the game.

What's love got to do with it? Everything.
With this understood as being the critical factor, you will appreciate that it is often easier for a small entrepreneur to understand his customers than for a large, emotionally less involved organisation. Because he is closer to them.

Yes, I am simplifying things a bit. Branding does involve specialist skills, but if you are earning and retaining goodwill you are way ahead of the game and will soon be able to afford to bring in the branding inputs you need (not an advertising agency. That comes later, if at all).

There are many folks like me who do offer expertise. It is available, and neednít cost much at all. There is also a lot of reading material available completely free of cost, written by people who have learned their lessons on the ground. If you do your homework, you will soon know enough to do a very good job yourself. Bring experts in when you can afford them. At the beginning, follow the basics and you will have a good chance of succeeding.

So, when I next go to a jury at the NIFT, Iím going to carry a copy of this note to tell all those bright-eyed youngsters ďDonít be intimidated by what you read in the papers. Its been written by people who donít know the subject. Iíve done it, built a brand from scratch with no money at all. So can youĒ.

Its bright-eyed youngsters whose dreams build great nations. If reading this article encourages just one person to start dreaming again, I think I will have achieved something wonderful.

But haven't the big guys done everything?
Nowhere near it. There are some things they do that you can't match. But there are some things you can do that they can't. How can an employee of a large corporation where he is one of 27,000 people hope to match the passion of a group of 5 friends who are determined to conquer the world? A great deal of branding is to do with passion, with that mad drive only individuals and close knit groups can have.

Innovate. Play. Have the courage to follow your convictions. All the answers havenít been discovered yet. Your gut-feel is important and you must listen to it.

Did General Motors do Microsoft or Google? They had all the money in the world and lots of talented people, and a couple of geeks in a garage could do what they couldn't have dreamt of. So dream, good buddy. If you gut tells you there's another mother lode around the next corner, there probably is.

But maybe its not around the corner you think it is. Success isn't being right all the time. Success is about being right more often than you are wrong. You have to fail to be able to succeed. If you don't take risks, how will you fail?

But that doesnít mean being different just for the sake of being different.

I know this guy who wanted to follow the Nirma example and build a mega detergent soap brand. But he decided to be different in a rather irrelevant manner. Instead of the traditional blue he decided to make a dark brown soap. It bombed. Speculate why by asking yourself whether youíd like to buy a dark brown detergent soap. He could have done some inexpensive trials and research amongst maybe just 50 friends and avoided an expensive mistake. Maybe he would have discovered a meaningful way to differentiate himself. But for him to think outside the box was absolutely correct. You do, however, need to verify how much value people perceive in your innovations. Find an effective and relevant differentiator and you have a great advantage.

Email me your views
If you are looking for some free guidance, go ahead and ask. If I can, I'll be happy to help free of charge. If I get the impression you'd benefit more from paying and getting me to work in a dedicated manner on your project I'll tell you.

These are my opinions based on my experiences till date. Life continues to surprise and teach me new stuff so they can change. You don't have to agree with them. I'd be very happy to hear points of view that differ.

Rajiv Badlani
rajiv@badlani.com
http://www.badlani.com