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August 16, 2012

Small v Big

by Howard Fox Chartered Marketer

We all love big brands: Apple, Google, Samsung, and the perennial favourite Coca Cola. They take on a life of their own. Once brands reach a critical mass their success seems virtually self-fulfilling. Size allows advertising dominance, drives down unit costs and deters entry by new competitors.

But small can also be beautiful, and profitable.

 Any intelligent fool can make things bigger and more complex… It takes a touch of genius – and a lot of courage to move in the opposite direction. Albert Einstein 

If you are small, don’t try to be big, yet.

‘Boutique’ is the marketing translation of ‘small’.  It suggests a more personalised, high touch experience. Happily it also suggests high price. Play to your (small) strengths. There is little value pretending to be big if you aren’t (yet). That doesn’t mean that your brand and marketing collateral should look unprofessional. Your brand’s professional appearance is critical given that your customers are looking for clues that they can trust this small company they may not have heard about (yet). If you are not a graphic designer (i.e. you don’t wear a hat to work) don’t design your own marketing collateral.

Use testimonials, they can be far more believable when they recommend a small personal business, especially (providing it’s brand congruent), in a homely style.

Create a back-story – a compelling history for your company. It helps build trust and rapport with consumers. It’s why the massive Castle Lager brand highlights the Charles Glass story from time to time.  It makes a brand approachable and believable. Do you have a family or other history you can legitimately play up? Interesting story about how the business started? Have you been in existence for more than 20 years? Creating an impression of being long established and stable helps mitigate concerns about a company’s small size.

Go custom – In this era of mass production, consumers value the unusual. Think Orange County Choppers (Discovery Channel reality show featuring a cast of overly tattooed motorcycle customisers). Some industries have well established customised or bespoke business models – fashion and tailoring, architecture and interior design, and travel planning come to mind. Is there opportunity in your business to offer more personalised or customised products or services than the behemoths you are competing with? This is where being small can be a sustainable competitive advantage. Even with concepts like ‘mass customisation’ it remains very difficult and usually uneconomical for large companies to produce customised products.

 I can do small things in a great way. James Freeman Clarke American Clergyman

Imitation isn’t the sincerest form of flattery

Dyslexic brands I call them – the lesser known ‘Polystation’, ‘Sunbucks Coffee’ and less than fine electronics from ‘SQNY’. They look cheap, sell cheap and attract lawyers even faster than they pull tight-wad customers. Invariably someone thinks they will make a play on a big brand, get away with it and have customers flock to the offering. Remember “but it’s funny” isn’t a legal defence. Customers know what they are getting and are happy to pay what it’s worth – very little. Unless you can produce (er, your Chinese manufacturer can produce) your product really, really cheap, this strategy is a non-starter. Apart from the ethical and legal issues, categorising yourself as a knock-off severely hampers your future growth prospects. Large companies invariably started small – classically in a garage/ shed and proud of it. Think Apple, Hewlett-Packard, and Harley Davidson. How far do you think Apple would have come if they had called themselves ‘JBM’ to play on the name of that other computer company famous for the personal computer?

That said, you might be able to leverage prestigious brands – if you have a legitimate relationship with them. There is obvious value in displaying well known brands within your business if you are permitted to do so as an agent, distributor or reseller. The unspoken secret is of course that a few large brands offer a halo under which lesser brands in your portfolio can flourish.

Many a small thing has been made large by the right kind of advertising. Mark Twain


* Not to be confused with ‘Antidisestablishmentarianism’ the English language’s longest real word – which means, well, the opposite of ‘Disestablishmentarianism’.

Big brands are by their nature part of the establishment, with the most popular taking on an almost religious fervour. Even non-conformist brands like surf-wear labels Quiksilver, Billabong or No Fear start to become mainstream as they increase in size. Success has its own problems. Clearly surf brands primarily sell to non-surfers once they expanded beyond their initial surf shack. Once you have seen your dad (dads are always part of the establishment, right?) in his favourite Gotcha surf shorts, your impression of the coolness of the brand and in fact the underlying sport / category, is affected forever. Is there an opportunity for your smaller company to lead in coolness? To be antiestablishment? As cool brand categories well er, cool off, the market is always looking for the next hot, cool thing. In apparel, we have moved from surfing, through skateboarding typified by Tony Hawk et al, to the current popularity of the “Tapout” brand based on mixed marshal arts (income growth from $30 000 to $200 million in the ten years to 2009). Being small and unusual can be a big plus.

Go unofficial – Pepsi famously trumped Coca Cola’s (official) sponsorship of the 1996 Cricket World Cup in India with its “Kaha na war hai” or “Nothing official about it” campaign[1]. Based on research that “official” had significant negative connotations for the youth market, being ‘unofficial’ had obvious value. Ok, some of the tactics, such as flying branded balloons over competitors sponsored stadiums wouldn’t fly these days – just ask Kulula who received short shift from FIFA with is ‘Unofficial National Carrier of the You-Know-What’ campaign. But you get the idea – being explicitly unofficial without being illegal could be an attractive market positioning.

Go commando. Guerrilla marketing – edgy unconventional (but ideally legal) tactics create buzz, which hopefully “goes viral”. The intention is to swap clever creativity for big budgets. Of course what is never said is that many efforts at guerrilla marketing fizzle and achieve little more than amusing the marketers involved. But when they pay off they can pay off big. Nando’s v Sanlam [ ] is a fine example. As a bonus, Sanlam, a big established brand keen not to be seen as a bully and unimpeded by any competitive issues, played along to the benefit of both brands as well as the Johannesburg Children’s Home.

Business has only two functions – marketing and innovation. Milan Kundera

Big fish in a small pond

Dominate, don’t dissipate.A ‘smaller marketing budget’ needs to be thought of rather as a ‘more focused budget’. You are better off dominating in media, a region, industry or interest group, than ‘spraying and praying” your advertising and marketing efforts too widely.

Go local. In a retail setting, being seen as an integral part of the community can help build customer loyalty. Think of the ‘local pub’ in the UK. It is what a large chain of supermarkets is trying to achieve with its national ads showing supermarket managers being part of and helping their local community. It is much easier to achieve this when you truly are simply part of a single community and aren’t in a load of others. If you are highlighting your localness, it makes sense to use local media, which obviously is highly focused, usually cheaper and might result in reciprocal support for your business.

Go specialised. How often do you go into a specialist shop – perhaps a hobby shop, only to be somewhat disappointed with the range of goods available? The opportunity inherent in being a smaller but specialised business is to have sufficient depth of offering to become a destination outlet. In return for a narrower set of merchandise but much greater depth, prospective customers will travel a significant distance on a specially planned trip. Those businesses that get this right have an opportunity to dominate across a much wider geographic area. The example I like is Herbert Evan’s art shop at Rosebank, Johannesburg. Stocked literally to the ceiling with luscious art supplies I’ll certainly travel a significant distance to spend more than I intended. They further leverage this depth by supplying ad agencies’ art departments across the region.

Shop assistant:Just how obscene an amount of cash are we talking about here? Profane or really offensive?’

Richard Geer: ‘Really offensive.’

Shop assistant: ‘I like him so much.’

Scene from film Pretty Woman (1990) in which Richard Geer takes Julia Roberts shopping on Rodeo Drive, Hollywood.

Go upmarket. High price is a differentiator too.‘Big’ is often associated with low cost – think large factory outlets, hypermarkets and discounters. ‘Small’ can be freed from this presumption. Don’t assume consumers always want to pay less. The luxury market while small, can be lucrative. Is there opportunity to take your business seriously upmarket? In this respect, one can’t be half pregnant. Remember it’s difficult to be positioned as both upmarket, expensive and exclusive, while retaining a cheap, mass market range.

Sell rather than market

Selling always seems to be considered a second-class citizen compared to marketing. Let’s not forget that the Chartered Institute of Marketing (UK based; world’s largest organisation for professional marketers; was founded over a hundred years ago as ‘The Sales Management Association’. Selling is inclined to be more focused than most marketing and can be very cost effective for smaller organisations. Smaller organisations can usually be structured to allow the founder and or senior management to actually get in front of customers and close sales. How many large corporates can say the same? Remunerating sales staff on an incentive or commission basis clearly reduces risk by limiting fixed costs, an important consideration when small. Really understanding your (more focused set of) customer needs, and then selling technical solutions rather than simply chasing the next product sale will differentiate your business.

 Perhaps it is better to be irresponsible and right, than to be responsible and wrong. Winston Churchill.

Fail fast. Pivot

Taken from Internet start-ups (who know more than a thing or two about failure), this refers to admitting failure early if your business isn’t generating the business hoped for, then rapidly and completely changing its direction. Your business has certain strengths. It might be production capacity, accessibility to resources or technology. It might be the technical competence of your people. It might not be the strength of your business model.

First published in Your Business.

[1] Global Sport Sponsorship John Amis, T. Bettina Cornwell 2005

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