Brand perceptions of 1 brand can be influenced by small, unconnected actions of others

Here’s a cautionary tale about how the innocuous actions of one brand can influence perceptions of another brand as well as cascade into more complicated issues.

At the end of October 2019 I flew into Kuala Lumpur International Airport from Narita, landing at 0500 hrs. On arrival at KLIA, I have 2 options to get to my house, Grab or the KLIA airport limousine service.

I intended to use Grab but when I arrived, I was prompted to take my picture for authentication purposes. As I’ve cracked my screen right over the forward facing camera, this wasn’t an option.

So the only option was the airport limo service. I couldn’t find an app for the service and their website doesn’t list the fares so I needed to use the booths at the airport.

I knew from memory that arriving between midnight and 0600 hours means I incur a 50% surcharge, which is fair enough.

As I walked through customs and reached the Airport Limo counter, it was closed. Fortunately I know there is also a counter at the domestic arrivals but I did wonder what the Japanese families who were on the same flight would do if they intended to take a taxi downtown.

Walking to the domestic arrivals area, I was approached by two illegal taxi operators who offered to take me downtown for RM200, almost double the expected airport limo rate, even after the surcharge.

Of course I told them to get lost but there are numerous stories on the internet of people who have been duped by these unscrupulous operators and I wonder if they approached any first time visitors, would they have paid the inflated price?

As these are not licensed operators, I presume they are not insured.

Anyway, when I got to the domestic taxi counter, I asked why the counter at international arrivals was closed and the young man replied, ‘Not closed, they are asleep.’

Now while I respect his honesty he shouldn’t be saying that. I mean, what sort of message does it send?

Finally, this frustrating and underwhelming brand experience ended with me walking out to the car where the only 2 drivers were talking to each other.

As I got in my car, the driver continued to chat with his friend. He then got in the car and continued chatting. It was all very casual, as if me the customer was more of an irritant than his only source of income.

But it also showcases the lack of appreciation for the customer that is so common in Malaysia.

It’s as if there is an assumption that there will always be an unlimited source of customers. This is especially common with those businesses that are monopolies.

This despite what happened recently to established businesses such as the taxi industry that has been decimated by travel disruptor Grab.

What are the branding lessons to be learned from this simple yet important interaction? The issue here is one of stakeholder communication and brand management.

These brands need to ask themselves why the booth at international arrivals is closed at a time 100s of passengers are landing at KLIA? How often does this happen?

Do staff sleep every night? If yes, what is the direct and indirect impact on revenue and reputation?

Why are the brand front liners so ill prepared for a simple customer question? Have they not been trained properly? What else do they answer so naively?

What can be done to fix the problem? How can staff be trained to present a more professional explanation? In this case, a simple response to such a question could be, “Sorry sir, they are changing shifts and will be back online in 5 minutes.”

There has been a lot of talk about illegal taxi operators at KLIA and how there is a zero tolerance toward them. That doesn’t seem to be the case in reality.

This isn’t just an issue for the KL taxi service, it’s also an issue for the Malaysia nation brand and the airport operator.

If tourists unwittingly use an illegal taxi and they are involved in an accident, incur medical expenses or worse, are killed. Who is accountable? Are the authorities, through lax enforcement, culpable?

Will it take a serious accident causing injury or even death to tourists to make the government do something?

What will be the impact on the brand if there is an accident and it goes viral? What damage will be done and how much and how long will it take to address the negative impact on the brand?

What will be the consequences of such an event on potential visitors or investors in the country? Will they potentially choose an alternative destination or review Malaysia as an investment option?

If illegal taxi operators are allowed to function without fear of prosecution, how does that impact the airport’s relationship with legal operators? If illegal taxi services can operate freely, why should legal operators follow the rules?

In the future, could those legitimate operators sue Malaysia Airports for loss of income?

What about the reputation of the police, already under fire in Malaysia for numerous issues ranging from drug abuse to mysterious disappearances, corruption and more?

What about the reputation of PDRM, will it be further tarnished by illegal touts operating with impunity at the airport?

If a Minister has stated there will be zero tolerance to illegal taxi touts why are they still operating? What impact will this have on future statements from the Minister, a representative of the government?

Successful branding requires all stakeholders to work together, to understand what is their responsibility to the brand and what is required to deliver a seamless, positive brand experience at every touch point every time.

This simple example of a seemingly innocuous event with one brand has the potential to negatively impact numerous other brands. Every business should look at branding from the same perspective and not in isolation.

It’s potentially complicated but the rewards for all stakeholders are positive and for commercial organisations lead to greater profits.

‘Think Big’ yes, but first Malaysian business owners must stop thinking cheap

There’s a thought provoking piece in the business section of freemalaysiatoday.com that reports more Malaysians buying Chinese made goods ‘out of economic necessity’.

The article says that Malaysians look past the stigma of Chinese products even though there are concerns that they of inferior quality and possibly even dangerous compared to products from other countries.

The article quotes Mr Yeah Kim Leng, professor of Economics at Sunway University Business School who says, “the open market system brought about by globalisation and increased connectivity was intensifying competition for local businesses.”

The President of a local consumers association supports Mr Yeah’s point of view saying that even though many Malaysians are concerned about the quality and legitimacy of China made products, they are prepared to basically risk their lives because Chinese made goods are readily available and cheaper than Malaysian products.

Another economist and Klang MP Charles Santiago is quoted as saying, “Malaysians were buying food from China out of economic necessity despite their misgivings about the quality of the items.” He went on to say, rather worryingly, “There is no excuse for eating toxic food. We must ensure that the food coming into the country fulfils all international health standards.”

I agree with Mr Santiago, there is no excuse for eating toxic food. And in the last twenty years there have been reports out of China of adulterated baby formula. Factories using industrial-grade salt to pickle vegetables then spraying them with banned pesticides before shipment, soy sauce made from human hair, counterfeit alcohol and fruits and vegetables with unacceptably high levels of illegal pesticides.

In our house we stopped buying any foods and most other things from China more than 10 years ago. I don’t care what it costs, I’m not going to jeopardise the lives of my family in an attempt to save money which if they get sick is a false economy anyway. More on the false economy later. But it seems we’re the exception not the rule.

I think there is a deeper issue here. My theory is that there is a culture in Malaysia of ‘if it’s cheap, its good value.’ I think we’ve lost sight of what constitutes value. There are many reasons for this. We’ve been ripped off or know of people who have been ripped off, time and time again by unscrupulous companies from just about every sector and in particular automotive/property/food/transport/healthcare/hospitality and so on.

One patriotic Malaysian friend of mine (and I won’t be popular for quoting this), suggests some Malaysians have been let down so many times and have become so cynical about what companies promise that they now believe it’s better to pay the minimum amount for something and then if it doesn’t deliver on the promises made, well at least the bare minimum was spent.

At the same time, he believes this has created a stubbornness which in turn has made them unable to make sensible decisions when confronted with difficult scenarios.

He suggests that is why many people will spend 30 minutes stuck in traffic to avoid a RM1 toll charge. The fact that the wear and tear on the car engine, the petrol, the lost productivity and stress cost so much more than the RM1 toll charge is irrelevant. The goal is to avoid the RM1 toll charge.

It’s the same with people (and this is not just restricted to Malaysia) who make a special trip to fill up their petrol tank because the next day, petrol is going up by 2 sen a litre. Much of what is saved, is spent on the extra journey, the fuel used in the inevitable long queue and the time spent away from more important things. In almost all such cases, the action delivers a net loss or at best, an immeasurable gain.

And that’s why Malaysians are now buying toxic food. It’s not deliberate, it’s just a natural progression. How many times have you heard a conversation along the lines of:

Q: ‘How was the nasi lemak?’
A: ‘Good, it only cost RM6.’

Hardly the breakfast of champions but never mind, it only cost RM6

The fact that the dish was 80% rice, included 3 peanuts, two ikan bilis, a tiny serving of sambal, the scrawniest chicken wing and 1/8th of an egg is irrelevant. And that’s before we even discuss the source of the oil used in the cooking, the supply chain and the hygiene of the foreigners who cook the food. What’s become important is that it only cost RM6.

What’s all this got to do with the economy and in particular branding? Well for Malaysian businesses to compete against any foreign firms, not just those from China but also those from Europe, the USA and north Asia, they need to move on from the mentality of competing purely on price.

To move on from a belief that they can only compete if they are the cheapest. To see their business not as a series of transactions, but as building relationships with their customers. Because this approach is unsustainable. There will always be someone out there, who can produce what you produce cheaper. And in this case that someone is China.

The economist Mr Yeah suggests that Malaysian firms should ‘think big’ and he’s right, Malaysian firms or rather the businessmen that run them, need to think big but only after they move away from the belief that what’s cheap is good or what’s big is cheap. And the good news is that it’s not a huge step.

International luxury houses such as Gucci, LVMH, Prada, Georgi Armani and Channel have for years dominated sales of luxury goods in Malaysia. Closer to home, Malaysia has proven it can build brands from scratch. Think of Royal Selangor Pewter, PappaRich, Sime Darby, YTL, Proton and Linghams sauces, probably the first Malaysian brand to go international and now available in 100 countries.

But these are the exceptions, not the rule. And it’s the middle ground that needs to change. To move away from the false economy of cheap is best. The false economy in Malaysia has become so chronically negative that it is having a detrimental effect on decision making across the spectrum. Even though it is now threatening lives.

I find it extraordinary that I am writing a blog post about people willing to risk their lives to save a few pennies. But everywhere I go, my team and I have discussions about brand tactics that are driven not by questions such as “What do we have to do to make our business the number one choice in our sector” but instead by questions like “How much does it cost?”

Recently I had a discussion with the head of marketing at the Malaysian campus of a British school with a unique 150 year heritage. The head of marketing wants a video for the school and he asked us to submit a proposal. He didn’t have a brief (which as head of marketing he should prepare) but wanted us to submit a proposal for ‘a school video’. When we asked the budget, he refused to share it.

So there was no brief and no budget. I explained that there were already a lot of videos of the school online (‘none of which are very good’ according to the most senior member of staff) and how is this one going to be any different? He replied that that was our job.

That we should ‘think out of the box’, to ‘propose something unique’, to ‘do something special’. When we explained that ‘thinking out of the box’ took more time and therefore cost extra and therefore we needed to know the budget to see if was possible, he refused to share it.

I explained that even without the ‘thinking out of the box’ requirement, the budget was crucial because it would determine the type of production. Did he want a script? Did he require a film crew to visit the school? Are we to interview staff/pupils etc? Would he like drone shots? How long does he want the video to be? SD or HD? And so on.

We realised that if we were to go this route, we could be submitting ideas for months before we accidentally created something he liked. We also realised that by not sharing the budget, there was a good chance that even if we created something he liked, he might not be able to afford it (or alternatively, we could propose something that didn’t utilise the full budget, to the detriment of the school) and that his decision would probably be based on price and so we reluctantly walked away from the business.

This mentality of ‘cheapest’ has a negative impact on his brand. Not because he didn’t get to work with us although thats one reason, but also because it makes the video a priority instead of making what the video can do a priority. It’s the business equivalent of buying potentially tainted food from China and ignoring that fact because the main thing is it was cheap.

This culture of cheapest is best has caused him to move from doing what’s best to market the school to getting a video done. It actually becomes a box ticking exercise instead of a useful tactic. And we’re seeing this time and time again.

Once a large percentage of Malaysians get past the ‘cheapest is best’ mentality, then only then can businesses have the confidence to ‘Think big’. It will require a cultural change in both how they think and how they run their businesses. Once they do that then we’ll see more successful Malaysian businesses become brands.

Malaysian SMEs must start to build brands

This article first appeared in the 28th October 2011 issue of the Malaysian Reserve.

The recent budget and the implications of the budget are still being debated but what is clear is that the government is trying to help SMEs.

As part of the budget, the prime minister announced a RM100 million SME Revitalisation Fund for entrepreneurs who have tried and failed. The goal of the fund is to give those entrepreneurs the chance to get up and have another go.

SMEs are the engine room of countless economies and crucial to the development of many countries. In Malaysia the percentage contribution of SMEs to the nation’s Gross Domestic Product is 47.3%. This compares favourably to the larger economies of China (60%), Japan (55.3%) and Korea (50%).

One of the reasons Malaysian SMEs have stayed relevant is because most of them have been nimble and adaptable, making the change from primary industries such as agriculture and mining up until 1990 to an industrialized economy that saw manufacturing becoming the leading growth sector over the last 20 years.

However, many of those SMEs that made the move from commodities to manufacturing succeeded because they were able to compete on price. And with low labour and other costs, Malaysian made products were attractive and demand was constant. This also encouraged FDI.

But talk to any Malaysian manufacturing SME and you will most likely find that over the last 20 years, with few exceptions, every new contract negotiation with the companies they have supplied clothing or equipment to has resulted in their being forced to lower their price. Margins, with a few exceptions are down to less than 4%.

Despite relationships that may span as many as 20 years, loyalty is non existent and, despite vague promises of long term relationships, business is now being lost to Cambodia, China, Indonesia and Vietnam.

Hardly surprising when average factory wages in Malaysia are 250% higher than in Cambodia, 200% higher than in Vietnam, 160% higher than in Indonesia and even 40% higher than in China. Worse of all, as a contract manufacturer for a third party, Malaysian manufacturers have no knowledge of their consumers and little chance of finding new business.

As FDI and even local investment in manufacturing has dried up as brand owners seek less expensive locations, Malaysian SMEs are now fighting for their survival and whilst the SME revitalization fund is an important step to help those who have failed, Malaysian SMEs will need to develop more strategic ways to differentiate themselves.

One obvious way for SMEs to do this is to build brands. Yet the majority of Malaysian SMEs ignore the importance of branding. But competition, accentuated by AFTA and China’s entry into the WTO means that if they do not begin to brand, they will not be able to compete. The long term reliance on cost to differentiate, driven by historical experience in commodities and the fact that Malaysia was a cheap manufacturing base, will no longer suffice.

The irony is that Many Malaysian SMEs have done the hard part. Malaysian SMEs are already capable but are yet to sell their capabilities to the world. A major investment in branding will allow Malaysian SMEs to leverage substantial advances in quality manufacturing, workforce productivity, logistics and efficiency.

Malaysian SMEs already produce garments for international brands, components for the international aerospace industry, electronics for the global computer industry and numerous personal consumer goods.

In the services sector Malaysian SMEs provide support to banks, airlines, hospitality providers, medical services, insurance companies, and so on.

But these SMEs may lose out to international competition if they do not develop brands. Now is the time for SMEs to learn the importance of branding and the strategies and skills needed to create and maintain market strength through building relationships, providing personalisation and delivering value to customers.

Compounding the problem is that Malaysia is becoming a victim of its own success. As it becomes a more mature economy, global MNCs will start to take notice, as they are already doing and flood the market with international brands using international budgets to buy market share. Unless Malaysian SMEs begin to brand they will not survive this onslaught.

It’s especially important that Malaysian SME’s allocate their (and the Governments) limited resources effectively. The brand promotion grant, launched by the government about six years ago helped some companies advertise but using advertising to build a brand requires deep pockets and leaves too much to chance because it is so hard to stand out from the clutter and be heard over the noise of other advertisers and make an impact with consumers who are permanently distracted.

The good news is that branding today does not necessarily require huge investments in logos, slogans and expensive creative driven advertising campaigns pushed out across traditional mass media, which too often result in at best, a short-term sales spike but have no real long term gains for the company.

By utilizing emerging technologies and trends that are having a major impact on brands and branding and by leveraging these technologies and trends, and by integrating such trends and technologies with the social nature of Malaysian culture, Malaysian SMEs can potentially build global powerhouse brands. And not in the twenty years it has taken traditionally taken to build a brand, but possibly in as few as five to ten years.

But to do this Malaysian SMEs must focus not on price and trying to undercut rivals, both domestic, regional and international, but by identifying prospects, building relationships and understanding customer requirements for value. This will take a significant change on organizational culture but it is one that Malaysian SMEs must make.

It is great news that the government is trying to help SMEs with the SME revitalization fund but it is also important that SMEs help themselves and understand that if they are to survive and thrive, they can no longer compete on price alone.

Why you should start building your Brand today

This article first appeared in the Friday 29th April 2011 edition of The Malaysian Reserve/International Herald Tribune

Does this statement sound familiar? “I know I need to start thinking about building my brand but I don’t know where to start so it can wait.”

I’ve heard this statement a lot recently and if it is a general feeling throughout the business community, then we’ve got a problem.

We’ve got a problem because as Malaysia becomes an increasingly wealthy country it will increasingly become a target for global brands that have seen their penetration in more traditional markets reach saturation point.

Moreover, free trade agreements and stagnant manufacturing or services based economies are also encouraging global brands to take notice of countries like Malaysia.

In the last twelve months, major global brands from the agriculture, automotive, aviation, biotechnology, education, fashion, food, hospitality, logistics, property, transportation and other sectors that in the past have barely considered Malaysia, are now establishing offices here.

Even Unilever owned brand Marmite, a quintessentially British savoury spread most often used on toast, now has sales in excess of RM20 million in Malaysia, mainly because it makes a bowl of congee a little more interesting!

And as these global brands take note of Malaysia they will invest substantial funds to establish their brands here and once those brands are established, it will be difficult for Malaysian products and services to compete with them. Unable to compete, over time, these Malaysian brands will fail.

So Malaysian firms really must begin the process of building brands now, rather than later. The good news is that beginning the process of building a brand or revamping an existing company has many benefits. Some of the most significant include the ability to charge more for products and services as well as a reduction in costs. Furthermore, changes in technology and communications mean that Malaysian firms might not have to invest significant funds into mass communications.

A word of warning though. Any branding initiative should begin with a careful analysis of the organization, its processes and systems, especially those that are customer facing and whether or not it has a customer centric culture, what it stands for and whether these elements are relevant today. Be ready for bad news but see it as feedback and an opportunity to improve not as criticism.

And once the brand is ready, communications should focus not on broadcasting how wonderful the brand is across traditional mass media channels, but on engaging prospects with content that resonates with them and delivering economic, emotional and experiential value to consumers and across all touch points.

Here are six more reasons why you shouldn’t wait to start to build a brand.

Reason No 1: Branding unifies your organization & motivates staff
Your people will want to be part of a respected and recognized brand because personnel who can identify with and support a brand’s culture, values and behaviour are better motivated, more loyal and engaged, both internally and externally.

As a result, your people will have pride and an interest in the company they work for and what they do for that company. Morale will improve, productivity will rise and resignations will be reduced. Moreover, a culture that strives to deliver value to customers and on customer terms will prevail. This in turn will lead to increased sales.

Reason No 2: Branding integrates & enhances brand touch points
This is really important. Organisations with weak or non-existent brands more often than not, make promises they cannot keep, focus on acquiring customers but pay little attention to existing customers and underestimate the importance of the customer experience. By developing a brand and building processes and systems into the brand delivery system, every single touch point between your organization and the consumer will be geared towards delivering a positive experience. Positive brand experiences will go a long way towards building customer loyalty, key to profitability.

Reason No 3: Branding reduces costs
What better incentive can there be for building a brand? Branding requires a brand strategy and a strategy will anticipate multiple scenarios and prepare the organization for outcomes, reducing the likelihood of expensive cost over runs or unexpected expenses.

Furthermore, a well recognized and well respected brand attracts talent, reducing the need for time consuming recruitment campaigns and expensive head hunters. A brand also reduces marketing costs. Less established products or services can spend up to 10% of revenue on marketing, brands often spend as little as 0.8% up to 2% on marketing.

Reason No 4: Branding justifies a price premium
Yet another major incentive for anyone still not convinced they should be building a brand. Branding allows you to charge more for your product or service because people will pay more for a name they can trust and have confidence in.

Reason No 5: Branding shortens the sales cycle
A strong, well respected and recognized brand creates trust and an emotional attachment to the product which also helps to make purchasing decisions easier. Over time, this influences the speed at which a prospect or customer makes that purchasing decision. This in turn allows a company to build customer loyalty and create brand ambassadors to sell the brand on their behalf, shortening the process further.

Reason No 6: Branding blocks competition
By focusing on building a brand rather than carrying out a series of transactions, you will ‘ring fence’ your brand and stop the competition from poaching your customers. As interactions with your brand increase, customers will automatically think of you when thinking of your category, thereby ignoring competitors.

In an increasingly competitive and noisy environment where better established global brands with deeper pockets are starting to flex their muscle, it is imperative that Malaysian firms, large and small start to build their brands now, before global brands get a foot hold in the country and it is too late.