You would think the choice a simple one.
The economists, the analysts and the marketing gurus all agree on one thing: In a commercial world, which grows more competitive by the day, the onus on a business is to brand its goods or services in order to successfully make its pitch to the marketplace. So to brand or not to brand is not the question.
But for the small or medium sized enterprise, whilst the question is easily answered, the decision to brand may not be so readily made. Of course, the business wants to speak more clearly to its customers. Of course, it wants to flex its muscles and to grow. But as any child can tell you, growth is a risky business. The decision to brand sets off a whole series of chain reactions for a business and brings not only opportunities and rewards but its own set of challenges and dangers too.
Twelve months ago, we started work on a new brand with Derek McCann and Pace Marketing. The brand, which we now know as MCANAX, was designed to be applied to a wide range of tools and equipment to be sold to distributors in the automotive trade. Following three or four months of working on the planning and design of the brand, Derek and his team have spent the last eight months or so putting the brand to work. Recently, I dropped in to catch up with him and to hear how things are working out.
In recalling the beginnings of the project, Derek described a set-up that will be familiar to business owners everywhere: “We were looking at a situation where we were importing and distributing a relatively homogenous product. We were also aware that in our marketplace there are one or two notable brands that have loyalty and understanding. We wanted to take a homogenous product and brand it. And the logic in inviting outside input is quite simple because we are in part engineers, in part financiers, in part stockists and in part transporters. However, we’re not designers and we felt we were too close to the the trees.”
Having decided on the positioning and profile that Pace wanted for the new brand, Derek then considered a three step approach to introducing it into the market. The first step was to bring the product to market: “We see ourselves principally as distributors and certainly not as marketers in the classic sense. Our basic objective is to get distribution. In other words, to get the brand recognised by our consumers by placing it in front of them. Since our product grouping is a well defined, engineering product, and since our product is similar in appearance to its competitors (for example, the market demands that all engineer’s toolchests must be painted red!), the job was to make ours immediately identifiable.
The second step was to strengthen and deepen the range that was on offer. “We have already added several more items of garage equipment that weren’t in the original range. We now have the McAnax logo appearing on things as diverse as plastic toolboxes, grease guns, foot pumps and socket sets.”
The third step Derek sees happening some two or three years down the road when the brand is a well-established fixture in the market. “Up until now, the basic notion is that we are providing this product to professionals who, by dint of their professionalism, will recognise the intrinsic quality of the product. We have essentially parked the concept behind the brand until such time as we have developed a visual awareness of the brand in the marketplace. The third step will be to market the product in a more classical sense by talking about the storyline of the product and linking the brand to related or relatable activities.”
In the meantime, Derek faced some unexpected challenges in rolling out the McAnax brand. He and his team had spent a number of months identifying products for the range, applying the new identity, placing orders with manufacturers in the Far East and determining the right pricing for their market. They then took a deep breath and introduced the McAnax range to their distributors. “When we launched the brand, people accepted it immediately. They said, “that’s great”, “that makes sense” and then they had a look at the pricing and they all bought. They wiped me out. Our supply chain runs from four to six months. We ran into terrible problems with supply.”
Whilst Derek had anticipated a good response to the launch of McAnax (“I had already placed in my warehouse something approaching five times the normal level of stock.”), his underestimation of the demands of his market highlight some of the real challenges facing the new brand owner. “Strategy and planning is one thing but implementation is entirely different. Implementation is a sea of detail and the more facets there are, the more elements there are that can go wrong. For anyone who is considering doing this (branding), you have to be prepared for a couple of down sides. And the big down side is implementation. Implementation is hard. Buying the right amount of stock, persuading people to manufacture it for you and to your specification and not the way that suits them, maintaining the integrity of the artwork across global communications.”
And, as Derek has found, success brings its own challenges. “If it’s successful, you come into an entire range of other issues. You’re looking at the possibility of overtrading. Not only is your debtors ledger likely to give you problems, but your handling capacity will give you problems too. You may need larger premises, extra bodies, an increase in your transport capacity.”
But like business owners everywhere, these are difficulties that Derek is happy to have. “The benefits are great. There’s no question in my mind about it. But the costs in financial terms are great. The costs in terms of pressure on individuals is very great. And the risk is great.
The upside is a tremendous blast. Everybody can see growth and growth is good and sales numbers are going up and everyone is terribly happy. But the downside is that it all has to be paid for and it’s darned expensive. And somebody somewhere has to be very patient while it happens. And if you attempt this with inadequate resources you will fail.”