Category: asia

Malaysian and Asian SMEs should look at communications when building brands

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I have a lot of respect for small businesses and their owners, especially here in Malaysia and all over South East Asia. The odds are stacked against them as they try to build a business in an environment that should favour them but because of conservative attitudes and the legacies left behind by unscrupulous operators in the past, they are up against it and many of them don’t make it. Even those that do make it do little more than survive.

Furthermore, competition is growing, not just from local competitors but from international ones as well. Rents are rising and real estate is expensive; banks are reluctant to take any risk, no matter how low, talent is hard to find and quite often entrepreneurs are unable to communicate in English due to ever changing education policies or a vernacular education. Plus, here in Malaysia, government subsidies on fuel and other commodities are probably going to be lifted or even abolished. Finally, AFTA means the market may be swamped by cheap products from other regional, less expensive countries.

But despite these and many other issues, depending who you listen to, small and medium sized industries, enterprises and businesses represent up to 99.2% of the Malaysian economic establishment and these organisations are therefore the engine room of the economy. And although the SME contribution to gross domestic product has been almost flat for the last 8 years, rising from 29% in 2000 to 31.4% in 2008, the sector still has a major role to play in the economy.

This is particularly true of the service sector which is the most progressive in terms of SME development. So it is good to hear that the National SME Development Council has approved the establishment of a special unit responsible for SMEs at a number of agencies and ministries. Under the Integrated Action Plan 2009/2010, 354 programmes will be implemented this year with financial commitments totalling RM6.02 billion (S$2.48billion).

Roughly RM3.3 billion has been allocated for the development of SMEs in the services sector in line with the government’s aim of developing Malaysia into a high-income economy.

So should these SMEs be bothered about brand building? Well, in many ways the concept of branding is even more important to small companies than it is to big companies. But obviously they don’t have the resources of a Multi National Corporation (MNC) so they need to be selective on what they address. One area that SMEs can improve significantly with very little investment is their communications. There is a lot of truth in the saying, you never get a second chance to make a first impression. So your communications must leave a positive first impression.

Another mistake SMEs make is that they believe volume is best. They believe that they must have a database with as many names as possible. And once they have that DB they must blast out the same message to everyone on it on an almost daily basis! Negative. The first step in your prospecting process is to qualify all leads to determine any interest level. There is no easy way to do this. It takes old fashioned hard work. Fortunately in Asia privacy laws are limited or even non existent so cold calling is acceptable but of course you need to have a strategy to get past gatekeepers.

Spend some time writing an introductory email. It doesn’t need to be long but if it is targetted and well written, even if the service or product offered is not required, the email may be stored in a resources folder for later reference.

Once you’ve identified your prospects and segmented your DB, use email not to try and sell a product but to make an appointment. Few people are going to buy from a mass email but you may get a reply to the email or some recognition when you follow up the email with a call.

The worst mistake any company can make, SME or MNC is to start their brand development with an advertising campaign. Branding is a journey, advertising is a pit stop on that journey, nothing more. Now I know you want to see your name on a billboard on the highway or a full page advertisement in the national newspaper so that you can announce to all your friends, business associates and clients that you have arrived but think about it, how effective is this going to be? Do you really want to waste that money? (There are exceptions to this rule, but very few).

If you do intend to advertise, make the copy relevant to the consumers you intend to communicate with and only use channels that users of your product are familiar with and engaged by.

If you follow these simple suggestions, you may have a chance of being one of the few SMEs that survive and possibly even thrive.

Managing your media placement is critical

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Here’s another example of poor control of ad placement online. If you are responsible for your own ad placement, make sure this will not happen. If the channel won’t let you dictate where your ads cannot appear, find another channel. If your agency is responsible for your ad placement tell them if this happens again, they’ll be one client short in a heart beat.

A is for Advertising

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This is a good place to start a compendium of branding terms because unfortunately, it is where many companies start their brand building. And that’s a shame, no tragedy because it is an expensive exercise in futility to try and build a brand using advertising alone.

Advertising can be traced back to around the late eighteenth century when the first print ads appeared in the USA. However, they were rarely much more than extensions of the editorial copy and newspapers were reluctant to allow ads that were bigger than a single column. Even magazines preferred to print all the advertisements at the back of the publication.

Mass advertising only really began in the second half of the nineteenth century when firms began to produce greater quantities of more and more products thanks to improved production techniques. Soon after manufacturing, other businesses such as department stores and mail order firms jumped on the bandwagon and by 1880 advertising in the US was estimated to be in the region of US$200 million. This grew to almost US$3 billion by 1920.

In the mass economy of the 1930s to the 1990s that coincided with the growth of mass circulation magazines, advertising companies proliferated. At the same time, companies wanting to stand out from the competition determined, quite rightly that the quickest way to grow was to raise the profile and awareness of the company’s product or service by informing or reaching as many people as possible in the shortest time.

The most common way to do this was via advertising, especially via TV advertising. The business of advertising is based on a model of repetition across mass media. OK, creativity is important, initially anyway, but once you get over the wow factor, the idea is to repeat the same message through as many channels as possible for as long as possible.

Budget played (and still does) a significant part in what sort of advertising an agency may recommend. It is important for you to know that from the advertising company point of view, the size of the available budget will determine two main points, 1) who works on the project (in terms of seniority and talent) and 2) what channels will be utilised. A larger budget generally results in TV advertising becoming part of the recommendations.

Other platforms include print advertisements, billboards, lamp post buntings, banners, taxi, bus and tube trains, coffee shop tables, flyers, leaflets and more. The introduction of the Internet has seen a proliferation of banner ads, tower ads, unicast ads, contextual ads, takeover ads, interstitial ads, floating ads, and other options to an already noisy, crowded and complicated marketplace. It is important to note that none of these initiatives are branding, they are all advertising and advertising is a tactical initiative not a strategic initiative, like branding.

In the mass economy and unfortunately still to this day, once a campaign has launched, probably to much fanfare, the client waits with anticipation to see the promised sales spike. Meanwhile the agency submitted any well executed commercials to one of the numerous creative shows that offer awards for creativity.

As mentioned earlier, repetition is important and with enough frequency, and perhaps a little vague targeting, this repetition was expected to encourage enough consumers to walk into a store or other outlet and choose or request the advertised product.

The model worked, to some degree fifty years ago but in today’s crowded marketplace, using advertising alone to build a brand is leaving too much to chance. It is simply too difficult to stand out from the crowd. Can you remember the last ‘great’ TV commercial or print ad that you saw? And even if you can, have you bought the product?

Quite often, the promised sales spike didn’t happen, unperturbed and with a straight face, the agency would ask the client for more money, arguing that it is the client’s fault as it should have made more money available in the first place for increased frequency. If you have gone this route, I suggest you bin the advertising agency and call a brand consultant.

Should you still use advertising? Absolutely because advertising will help your company project a vision of the relationship you can deliver to the customer. The ads also help you to educate customers about the value that you can offer them. Advertising must also communicate trust. Unfortunately this is forgotten by most advertisers, especially in South East Asia where outrageous claims made in advertising are rarely backed up in reality. In Malaysia for example, after years of being let down by claims made in advertising, only 14% of Malaysians now believe what companies tell them in their advertising.

But instead of seeking to increase awareness of your product or service with as many consumers as possible, ensure your advertising seeks to communicate with those consumers that are most likely to adopt your product or service.

Make your advertising relevant to those consumers you have targeted. Core messages must be related to those consumers interests, needs and/or desires. So rather than a one-size-fits-all approach in your communications, it is essential for messages to be about offering value to those specific customers and making their life better as a result. How to identify those consumers and what is relevant to them will be explored in brand audits and targetting.

The goal is to ensure a consumer incorporates an offering into their personal or business lives.

Adoption will ensure your brand is seen as the best, hey perhaps even the only choice. This won’t happen on its own. It is a process built on operational excellence, superb sales incorporating ‘top of game’ customer service and the ability to match offerings to the consumers individual requirements for value, on an ongoing basis. To build a brand retention is key and retention requires relationships and without relationships, adoption is not achievable.

And this is good news for Asian companies because the fact is Asian companies, and especially those from South East Asia, simply don’t have deep enough pockets to compete with international brands using outdated one-size-fits-all, mass economy tactics.

Ad placement is critical to the success or failure of campaigns

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Here is a screen grab of an article about the terrible earthquake in Chile. Alongside the article is an ad for Celcom, a Malaysia mobile service provider. It is one of those ads that you are encouraged to roll your mouse over to expand the ad and get more information. What I was pleased to note was that unlike many other similar ads, this one reduced when you moved your mouse away from the ad. I find it offensive and intrusive when you roll your mouse over these ads and then cannot get the ad to reduce when you move the mouse away.

Anyway, to me it is another example of the dangers of not controlling your ad placement. This could be considered even worse because it features a man standing on the top of a mountain and by default references nature. I’m not really sure what the relevance of the mountain is and it is not explained in the copy. Perhaps we are supposed to associate using the telco with being on top of the world. Or perhaps it is not relevant and is just an image chosen by the advertising agency. Or perhaps we just make up our own minds in which case, having the ad alongside a horrifying article about the Chile earthquake is not helpful.

We won’t go into the fact that he is standing on the top of a mountain that doesn’t have any snow on it even though mountains lower than his do have snow on them, or the fact that the scale is so out of whack.

But tell me, does an ad like this, alongside a negative story, encourage you to roll your mouse over the ad, read the copy and then seek further information or do you simply ignore the ad?

Negative brand association, real world examples

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In October of last year, I wrote a piece on my blog about negative brand association. You can read the short post here

David Ansett of Storm in Australia approached the subject from a different angle and you can read his piece here

Essentially, my attitude is that if the concept of positioning a product in a consumers mind is a serious concept then it is only logical to assume that the same process can have a negative impact on the brand. Over the next few months, I will post examples that I encounter and I hope you guys will enter into a conversation with me on the impact, either positive or negative, of this brand association.

So we’ll kick of this project with a grab of a page I encountered today. I saw the question after answering another question and thought to myself that it would be interesting to see what, if any, the responses to the question might be.

As you can imagine I was shocked to see the ad right under the controversial, not to mention provocative question!

Today’s negative brand association story comes from the BBC site. This time it is a video about a drunk driver in China who is caught on film smashing into road dividers and barricades. You can see the full video here

You’ll note that the story is preceeded by a commercial for Lexus!

Here is a still image from the end of the commercial.

Actually this could also be included in brand disasters. Is it appropriate for a luxury brand such as Lexus to be associated with a drunk driver? Or does it not make a difference?

Any comments?

If a consumer cannot afford your brand, he won’t buy it

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Brands are defined by the economic, emotional and experiential value they provide to a consumer. If you can’t match the attributes of your brand to those requirements for value, consumers won’t buy it. Cost is a critical element.

No matter how much you spend on expensive TV commercials that the agency says will reach the most consumers and create awareness of your product the quickest, if a consumer cannot afford your product, he won’t buy it.

It doesn’t matter how much you spend positioning your product in the mind of consumers. If those consumers can’t afford your product, they won’t buy it.

Even if you manage to completely differentiate your product from other products, if a consumer can’t afford your product, he won’t buy it.

More effective brand communications required to build the Volvo brand in Malaysia

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Building a brand in any country requires more than a series of tactical initiatives to create awareness and ‘get the name out there’. It takes a meticulously planned and integrated strategy that incorporates the participation of numerous stakeholders and initiatives, both internal and external. Internally to ensure the whole organisation is on brand and externally to ensure communications and content resonates with target markets and are communicated via relevant channels. There’s more but for the purpose of this article that’s enough for now.

And what if the brand is to penetrate other markets? There was a time when all it took to do this was a continuation of the positioning tactics carried out in the home country, perhaps with a few language changes in print media and perhaps some dubbing of TV commercials (TVCs). An over simplification perhaps, but essentially correct.

But as we all know, the world is very different today.

Building western brands in Asia
To build a Western brand in Asia today, as many international brands are finding out the hard way, takes an even more robust and integrated brand strategy that has at its core organisational excellence. Only once has that strategy been developed can the brand strategy be executed. And part of the brand strategy, a small but critical part, is the communications campaign.

This is particularly true of the automotive industry that has seen a number of well known European and other Western brands find it hard to repeat the successes at home in new Asian markets. There are other issues such as high duties etc but many European brands perform below expectations, despite large marketing budgets.

One of those is Volvo. Despite an extensive presence across most media, in 2009, out of a total industry volume (TIV) of just under 537,000 units, Volvo only sold 600 cars in Malaysia, South East Asia’s largest passenger market. This gives Volvo about 0.15% of the market. Although this is a slight increase over 2008 when Volvo sold 524 cars, it is way below the 2007 total of 752 units. Interestingly, in 1999 Volvo sold 839 cars, giving it 0.3% of the market. So Volvo’s market share of the Malaysian passenger car market has halved in 10 years. I think I know why.

Last Thursday, 28th January 2010, a half page full colour ad in the New Straits Times, (NST) Malaysia’s ‘premium’ newspaper caught my eye. The ad features the Volvo V50 and a headline “There’s more to life with Volvo.” The ad goes on to sell space and luxury using images of a kayak, a windsurfer and a mountain bike. The ad lists, in really small print, a number of dealers in key cities. There is no website address.

Last Friday 29th January 2010, Volvo ran another half page ad in the same publication, this time a spot colour ad. This ad features a Volvo XC60 parked on a snow covered road with the occupants, a man and a woman in warm fur collared winter parkas sitting in a pile of snow staring out at a snow covered landscape. This time the headline is “Volvo owners get more out of life!”

If I’m not mistaken, the traditional rule of thumb has it that you have approximately 3 seconds to grab a readers attention with a print ad headline, perhaps less in today’s noisy, cluttered world. I don’t know how effective the Volvo ads have been but I did notice that the offer in the second ad has been extended, rarely a good sign. I also noticed that there is no tracking mechanism in the copy. And, in case you can’t read it, the tagline in the print ad reads “Volvo owners get more out of life!” So the ad is targetting both existing and potential customers.

Coincidentally, there is a Volvo billboard outside my office, at the busy intersection of a very busy highway. The billboard ad features the Volvo XC90 Diesel. This time the headline is “Winner of fuel efficiency award.”

Sitting in my office in the Malaysian capital of Kuala Lumpur where the recent hot spell has seen the temperature top 40 degrees centigrade on more than one occassion and the humidity is often around 90%, I tried to figure out a couple of things.

1) What was the relevance of these communications to potential and existing Volvo owners in Malaysia?
2) Why are they using images featuring snow to sell a service in the tropics?
3) Why is an ad targetted at existing Volvo owners also trying to get the attention of non Volvo owners?
4) Where is the consistency?
5) Is this part of a planned out, integrated strategy or a series of one off tactics?
6) Why would anyone get out of a nice warm car and sit on wet cold snow to admire the view?

OK, ignore the last one.

Hemorrhoids and Frost bite
Well as far as I can tell, more out of life for the couple featured in the second ad is likely to be hemorrhoids and frost bite. I don’t mean to be fecetious, but what is the relevance to the Malaysian market? There are some marketers who insist that to build a brand you need to be first in a category and perhaps Volvo wants to be first in the frost bite category but I think not.

More confusing is the content. The main copy of the ad is encouraging existing Volvo owners to bring their cars in for servicing, repairs or to buy accessories and be entered into a competition to win vouchers that can be redeemed for more accessories and parts. Shooting off on a brief tangent, the takeaways I get from that copy, as a non Volvo owner are, in roughly equal amounts:

1) you are going to be spending a lot on parts and accessories so here’s a little help or
2) these cars are built so well that you will never actually win anything because nothing needs to be repaired but the model sold is so basic you’ll be spending a lot on accessories. Interestingly Volvo also offers a 3 year warranty/100,000km for cars sold in Malaysia so if you’ve got a new car you may have to wait 3 years to receive your prize!

Seriously though, The Volvo communications are confusing. Furthermore, according to the Star newspaper, 86% of Malaysians don’t trust advertising. So that means the print ads mentioned earlier are targetted at only 14% of Malaysians. Moreover, with an entry level Volvo S40 at around RM170,000 (US$48,000) it is off the radar of the average Malaysian so a mass media approach is a waste of valuable funds.

There are a number of other things Volvo can do to halt the slide in its market share and build a profitable brand in Malaysia.

1) Separate the acquisition strategy from that of the retention strategy.
2) An indifference to retention branding is short-sighted. Michigan State University estimated that US$1 spent on acquisition generates US$5 in revenue, while every dollar spent on retention creates US$60 in revenue. Bain and Co has estimated that increasing retention by 5% can increase profits by 25%. Companies have a 5 – 15% of selling something to a new customer, but a 50% chance when selling to an existing customer. But retention branding requires a completely different strategy to acquisition branding.
3) In the mass economy the brand communications goal was to increase awareness. This evolved into persuasion but the ultimate goal today is adoption. Adoption ensures the brand is seen as the best or, better still, the only choice. But adoption of a brand is not an event it is a process built on the back of organisational excellence and reinforced by the ability to deliver relevant solutions on customer terms.
4) Volvo cannot expect adoption if messaging is inconsistent and fragmented. If print campaigns and billboards are to be part of the brand communications, keep them consistent. Announcing fuel efficiency awards is not going to drive traffic to showrooms.
5) Review communication tools and explore social media options. I believe there is no benefit at all for a luxury product like Volvo to advertise in a daily newspaper in Asia.
6) Understand social media is for communities and those communities must be relevant. The only opportunity for interaction on the Volvo website leads the viewer to an international site. Volvo owners in Malaysia will want to be part of a community here, and learn about issues and opportunities in Malaysia, not in Istanbul.

The purpose of this article is not to embarrass Volvo. So if anyone from Volvo reads this article, please view my comments as feedback, not criticism. There are a number of automotive manufacturers making similar mistakes but Volvo caught my eye!

Stop your product joining the 95% club

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According to an Ernst & Young study, the failure rate of new U.S. consumer products is 95%. 95%! Imagine if Boeing or Airbus had a 5% success rate! Yet despite this appalling return, companies spend approximately US$1.5 trillion on marketing, and in particular advertising, annually!

A couple of years ago, (before the explosion of social media, Dominique Hanssens, a director at the Marketing Science Institute in the US and a professor at UCLA’s Anderson Graduate School of Management, reported that the average advertising elasticity for established products is .01. He went on to say that if one of those brands increased its advertising expenditure by 100%, it would see a sales increase of only 1%.

He used as an example Anheuser-Busch. If the firm doubled the US$445 million that it was spending at the time on TV, print, radio, outdoor, and Internet advertising, it would enjoy a 1% increase in net revenues from the then base of US$5.7 billion. Put another way, Anheuser-Busch would spend a total of US$890 million to make US$57 million.

We have to accept that mass economy models that made global brands out of such products as Coke, Budweiser, Marlboro, Sony and others are no longer relevant. And if firms continue to invest in outdated tactics that no longer work, their products will join the 95% club.

If they are to survive, brands today must address current branding imperatives. Current branding imperatives include building and maintaining relationships with customers and partners, internal communication, education, understanding and adaptation of corporate goals throughout the organisations.

Clearly defined organisational processes that are developed with the customer in mind and not shareholders or the organisation. These processes must be developed for both customer facing and non-customer facing departments, not independently but in tandem.

Communications, including advertising are important, but not the traditional one size fits all mass market approach. Communications must understand the requirements of prospects and customers and communicate with them using content that resonates with them via channels that are relevant to them.

Branding imperatives also require effective use of technology and, most important of all, ongoing feedback, measurement and improvement. These establish the foundations for identifying prospects and acquiring and retaining (key to brand success) profitable customers.

If John McEnroe were to play tennis against Roger Federer today, using the racquets he played with back in the day, he might win a few points but he is going to lose the match. It is the same for companies who fail to adapt to the branding imperatives of today.

If consultants recommend you emulate models used by such brands as Coke, Pepsi, Sony and other mass economy brands that were built when tennis racquets were made of wood, show them the door. Likewise, enormous budgets, integrated, synergistic, holistic, innovative, design or creative driven, energetic, positioning campaigns will not establish a brand.

Companies, and governments must understand that there is no quick way to build a brand. It is this obsession and belief that there is a silver bullet and it is called advertising that keeps the 95% club growing.

Will poor execution of a great offer become a public relations nightmare for Hilton hotels?

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This is an example of how the old world of ‘special offers’ with hidden strings attached clashes with the new world of social media where transparency, honesty and engagement rule. It also shows, once again that a one-size-fits-all brand strategy conceived by well meaning executives in one country can backfire on the brand in other locations.

Hilton January sale
At the beginning of January 2010, Hilton Worldwide announced “a global multi-brand wide January Sale. Guests who book hotel rooms in January can save 50 percent off weekend getaways throughout the year at participating hotels in Europe, Middle East, Africa and Asia Pacific.”

“To take advantage of the January Sale, guests can pre-purchase hotel rooms between January 1, 2010 and January 31, 2010 and receive the discounted rate for Friday, Saturday and Sunday night stays throughout 2010.”

Hilton Hotels is making a really big deal of this January sale And so it should, after all 50% off a Hilton room is a significant amount of money. Especially in a recession. But I suspect executives at the head office in Virginia didn’t think it through enough.

After all, whilst January and February may be slow months in the USA and other western countries, it is the busiest time of the year in countries like China, Malaysia, Thailand, Vietnam as families get ready for the lunar New Year. In other words, peak time and not really the right time to give away hotel rooms at half price!

But anyway, despite my ‘reservations’, and (plot spoiler) they were the only ones I was going to make, when I read the other benefits

– Lazy breakfast until 11am
– Late checkout until 6pm
– Kids stay and eat for free (Terms & conditions apply)

I knew this would be a great offer for me to take advantage of personally. My family had been suggesting a trip to Singapore but I had managed to put them off the idea because of the costs etc. But with rooms at half price, kids eating for free and the late checkout, even I saw this as an excellent opportunity.

3 hour cocktail hour with free flow
Especially as the Hilton, with its great location and attentive and tolerent staff (very important with my family), is our 2nd favourite hotel in Singapore. Did I mention that the cocktail hour on the executive floor lasts for 3 hours of free flow everything?! Well that helps as well.

So, excitedly I called my wife, to see if we had anything on that weekend. Conincidentally, she was going to be in Singapore earlier that week hosting clients at the Singapore air show and could stay on for the weekend. I thought it odd that Hilton would have such an attractive offer at such a peak period but told her I would drive the kids down to Singapore and meet her at the Hilton for the weekend. She was understandably excited. I also sent a text to my teenage daughter who called back immediately and asked excitedly if we could go shopping!

So the family is pumped, now all I have to do is take advantage of the fantastic Hilton offer. For our preferred weekend of 5th – 8th Feb the offer is not available. Hhhmn, OK, never mind, these things happen, especially with the Singapore air show ending on the Thursday.

So I call my wife and teenage daughter again to check availability for weekend of 12th – 15th Feb. Great, they are both free. Unfortunately the special offer isn’t available that weekend either. Now I’m starting to get irritated because this is taking more time than it should but worse, I’m going to get the cold shoulder at home for 2 weeks. I better check availability for other weekends before calling my family. So I check the weekend of 19th – 22nd Feb. Not available. What about the weekend of 29th Jan – 1st Feb? Nope.

As disappointment sets in and I realise the dream of a very affordable weekend at the Singapore Hilton was just that, a dream, I choose some random dates to see if the offer is available at other times. 5th – 8th March, unavailable. 16th – 19th April, unavailable. One last try, 23rd – 26th July, oops, a 404! This is ridiculous, I can’t spend any more time on this.

Social media
At Hilton facebook page, there is more information on the Hilton sale. But further inspection of the dialogue shows that a vast majority of the comments posted by consumers, both existing customers and new prospects, is related to their frustrations and disappointments because they can’t book on the weekends they want! So I’m not the only one!

It is great to see Hilton using social media, not only to announce such initiatives, but also to engage prospects and customers in real time. But the unfortunate Hilton representative responded to 15 or so complaints, all related to lack of availability and then appears to have given up!

Here are 5 things the Hilton should have done to get the most out of this campaign.

1) Understand that we don’t all march to the beat of the US drum. This is not a political statement, but common sense. Chinese New Year is a very busy time of the year for approximately 1.5 billion people in North and South East Asia. Flights and hotels are full.
2) Check local calendars in the countries you offer special offers. The Singapore Air Show sees hotel rack rates as much as double.
3) If you must black out peak dates, do it in a transparent manner, so that prospects and customers are aware at the outset of restrictions and will not be disappointed. Hiding them in T&C doesn’t count.
4) It is no longer enough to announce a great offer and then assume everone will listen, praise the announcer based on the content of the offer only. As Peter Drucker said, “Communication only works from one member of ‘us’ to another.” If the offer doesn’t stack up, consumers will let others know about it and any good can be undone very quickly.
5) Your existing customers are the key to profitability. Make such offers available to them before new customers.

What started as a great offer from a truly global brand soon became a public relations nightmare and the Hilton credibility has suffered as a result.

What do you think?