What is branding? An introduction to the world of branding.

by | Jan 19, 2023

Branding is a game usually played by the top clubs. But branding also lends itself to medium-sized companies because digitalisation democratises communication and costs.

What does branding mean?

Branding is the strategic development of a brand identity. Branding aims to use communication and marketing to create an independent image that is differentiated from the competition. Through branding, brands are specifically ascribed characteristics anchored in consumers’ minds.

The brand is a promise and a carrier of emotions.

For branding to work, the brand promise must be kept continuously. After all, the brand promises quality and service. In addition, branding creates an emotional connection by binding people to living environments and lifestyles. Because by acquiring a brand, we tell ourselves who we are and where we belong.

Corporate communications in transition?

Around 99% of Austrian and German companies are SMEs. Medium-sized companies generate 35% of the total turnover in Germany, and around 87% of Austrian SMEs have fewer than ten employees. The revolution in corporate communications driven by digitalization is affecting these small companies, as they suddenly have to assert themselves against competitors in global markets. Today, consumers buy B2C when and where they want.

But buyers in the B2B sector also make purchasing decisions beyond regional borders and personal agreements. This means that entirely new skills are required of SMEs in communication. Whereas buying used to be handled personally by clerks and “the boss,” today, impersonal and digital sales channels bring new challenges.

Why is branding valuable for SMEs?

Communication of SMEs can be built strategically. Through branding, they can position themselves and their offerings in front of a broad audience. They become more visible online to new target groups and can revitalise cooled relationships. For example, in labour shortages, they become more visible and attractive to new professionals and employees as they emotionally connect with their company.

How does branding work for SMEs?

Compared to corporations, SMEs have a fraction of communication resources. Accordingly, the branding mechanisms must be adapted to this field of activity. But it is not even necessary to be present 360 degrees on all channels. It is much more important to know who you are, what you are saying and in which measures you invest. Then branding for SMEs works almost by itself.

As the basis of the brand narrative, this creates unique opportunities for SMEs and family businesses. They almost always have a great story. This needs to be worked out and told correctly. The values and vision of an SME are often very close because products and services are offered and created with conviction, passion and energy. In addition, they usually know their customers very well.

What does branding cost for mid-sized companies?

Branding is part of marketing and is often placed within the marketing budget. However, how much is reserved for marketing each year depends on the business model and the market.

In the manufacturing industry, the average value of the costs for marketing measures in Germany is around 3% of the annual turnover. In the service sector, it is slightly higher at around 10%. Brands that base their business model on marketing, such as Red Bull, will likely use multiple percentages.

It should be noted that communication and branding must be carried out on an ongoing basis. Otherwise, it will lead nowhere. Therefore, it makes sense to set up the budget so that continuous development is possible yearly.

Return of Investment? Does branding pay off for SMEs?

In 2007, the British Design Council published the following: Every £100 investment in design generated a £225 turnover. A straightforward calculation.

The truth is that investments in design and communication are not as easy to calculate as, for example, investments in new machines.

Perhaps more interestingly, the same report found that companies that see design as an integral part are less likely to differentiate themselves from competitors on price. In addition, branding creates loyal buyers who provide security. Trust relationships within production chains and the company’s workforce are strengthened, and so on.

The added values that branding can provide for an SME are diverse and should be understood as such in addition to the financial gain. Branding for SMBs has never been so easy and inexpensive, provided a well-prepared strategy is behind it.

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