Branding Strategy For Small Businesses, Part 2

Branding strategy is a means to increase brand profitability that is ignored by many small business owners. This two part article covers six components of brand strategy to assist small business owners plan a profitable brand strategy. Part two covers pricing, distribution, and advertising and promotional strategies.

Part one covered the first three components of branding strategy:

• the target market for products or services,
• the name of the business,
• the slogan of the business.

Part two covers the last three components of branding strategy:

• the price of products and services,
• the distribution outlets delivering products to customers,
• the advertising and promotional strategies.

Pricing The pricing component of branding strategy includes four major decisions. Small business owners need to consider:

1. how well the product or service meets an unmet need,
2. its quality,
3. its distinguishing characteristics, and
4. what the target market is able and willing to pay for it.

Pricing decisions also need to consider how the product or service will be distributed, and the costs of marketing, advertising and promotion, in addition to the cost of producing the product or service.

Selecting the right price influences business and brand profitability and comprises an important branding strategy decision.

Distribution The distribution component of branding strategy requires that business owners determine the best distribution plan from three major categories:

• extensive distribution,
• selective distribution, and
• exclusive distribution.

Extensive distribution usually requires utilizing both wholesalers and retailers and should be reserved to products that require maximum exposure to capture a large market share.

Selective distribution involves selecting only retailers who serve the target market. Selective distribution is less expensive and often enables more sales because the selected retailers often share similar objectives and will work harder to promote the product.

Exclusive distribution sells only by contract to a select group of qualified retailers. The advantage is that the exclusive retailers are usually cooperative and enthusiastically promote the product.

The disadvantage is that the product may not get wide enough distribution for maximum sales potential and that other retailers may resent being refused the opportunity to handle the product. Another disadvantage is that the contracts must be clearly understood and meet all legal requirements. This requires additional legal expenses.

The selected distribution category influences sales and costs. Thus, selecting the best distribution is an important branding strategy decision because it significantly affects brand profitability. Advertising and Promotion Strategies When making advertising and promotion decisions for the brand strategy, the small business owner should consider which best fits the business, the product, and the life cycle of the product.

Advertising fares best when the product market is growing, when the product has a distinguishing characteristic that can be presented well in short messages, when features can be explained briefly, or when emotional appeals are relevant.

Promotion or public relations strategies are often more cost effective than advertising. They also do a better job of explaining more complex distinguishing characteristics and features, but are generally not as good at presenting emotional appeals, and lack the message control of advertising.

Personal selling is the most expensive strategy and should be reserved for: