An introduction to the world of branding

by | Jan 19, 2023

Find out how medium-sized companies can benefit from branding. Discover the advantages of modern communication.

What does branding mean?

Branding refers to the strategic development of a brand identity. The aim of branding is to establish a distinct and clearly differentiated brand image through communication and marketing efforts. Branding intentionally associates characteristics with the brand, which become ingrained in consumers’ minds.

The brand as a promise and carrier of emotions.

For branding to be successful, the brand promise must be consistently upheld. The brand promises quality and service. Moreover, branding establishes an emotional connection by associating people with specific lifestyles and experiences. When we purchase a brand, we also define who we are and where we belong.

Corporate communications in transition?

About 99% of Austrian and German companies are SMEs (Small and Medium-sized Enterprises). The midsize sector contributes around 35% of the total revenue in Germany, and approximately 87% of Austrian SMEs have fewer than 10 employees. The digital revolution has a significant impact on corporate communication, particularly affecting these small businesses that suddenly have to compete against rivals in global markets. Nowadays, consumers in the B2C sector buy whenever and wherever they want.

Moreover, B2B buyers are making decisions beyond regional boundaries and personal arrangements. This requires entirely new communication skills for SMEs. In the past, purchasing was often handled personally by clerks or the “boss,” but now impersonal and digital sales channels present new challenges.

Why is branding valuable for SMEs?

Small and medium-sized enterprises (SMEs) can also strategically develop their communication and branding. Through branding, they can showcase themselves and their offerings to a wide audience. They become more visible online to new target groups and can rekindle cooled relationships. In times of a shortage of skilled workers, they become more visible and appealing to new professionals and employees, as they also seek to establish an emotional connection with the company.

How does branding work for SMEs?

Compared to large corporations, SMEs have only a fraction of communication resources. Therefore, branding mechanisms need to be adapted to this situation. It’s also not necessary to be present on all channels. What’s more important is knowing who you are, what story you’re telling, and where you’re investing your efforts. With these fundamentals in place, branding for SMEs can almost work effortlessly.

SMEs and family-owned businesses often have a unique opportunity to tell their brand story. They frequently possess a compelling story that needs to be brought out and effectively narrated. The values and visions of an SME are often closely aligned, as products and services are offered with conviction, passion, and energy. Moreover, they have a deep understanding of their customers.

What does branding cost for mid-sized companies?

Branding is a part of marketing and is often funded from the marketing budget. Annual marketing expenses can vary depending on the business model and market.

In the manufacturing sector, the average marketing costs in Germany amount to around 3% of the annual revenue. In the service sector, they are slightly higher, at about 10%. Companies whose business model heavily relies on marketing, such as Red Bull, likely invest a significantly higher percentage.

It’s important to note that communication and branding need to be consistently maintained to have a lasting impact. Therefore, it makes sense to allocate the budget in a way that allows for continuous development from year to year.

Return on Investment: Lohnt sich Branding für KMUs?

A publication from the British Design Council in 2007 states that every £100 invested in design generates £225 in revenue. A remarkably simple calculation.

The truth is, however, that investments in design and communication cannot be calculated as straightforwardly as investments in new machinery, for example.

Indeed, it’s interesting to note that the same report highlights that companies that consider design as an integral part need to differentiate themselves less based on price from competitors. Additionally, branding leads to loyal customers that provide security. Trust relationships within the supply chain and with the workforce are strengthened, and so on.

The benefits that branding can offer to SMEs are diverse and should be considered beyond just financial gains. Branding for SMEs has never been easier and more cost-effective, provided there is a well-prepared strategy behind it.