This chapters function is to shape and prepare the readers perspective for the upcoming empirical and theoretical analysis. The theoretical framework will follow three major steps starting with the introduction of brand management among SMEs, presenting key concepts in this area alongside criticism and praises of these practices. Followed by this the next subchapter will present central benefits with brand management, and its ability to develop corporate reputation and act as a source of legitimacy. The third and last step will present theories regarding network relations, its relevance for SMEs, and how the central benefits, presented in the earlier subchapter, can support the process of establishing network relations.
Finally this thesis research model will be presented, summarizing the three steps presented in this chapter, and fundamentally functioning as the authors’ tool for analyzing the empirical findings later presented.
Brand management in SMEs
Keller (1998) defines brand management as a daily recurring aspect of a firms marketing policy, consisting of the implementation of a brand strategy and management of company brands. Central in this definition is the process of “daily recurring” which means that brand management is not recognized as a one-time only activity, but something that continuously should evolve alongside the firm (Ibid).
The purpose of brand management is the establishment of a brand strategy that over time creates and develops the brands related to a certain firm (Krake, 2005). One central part of brand management strategy is a clear marketing strategy that has the purpose of differentiating the firm from its competitors and add value that a branded article provides over an unbranded one (Ibid). In order to succeed in this process a firm needs to understand both its internal and external environment so that it can identify valuable assets, characteristics, and resources, internally and match this against demands and needs of current or potential stakeholders (Krake, 2005; Wong & Merrilees, 2005). This process helps an organization remain competitive as one of the most important aspects of strategic management is analyzing internal and external factors that either enhances or supports the firm on a market (Porter 1985; Porter, 2004; Barney, 1991).
Looking into the research concerning brand management it has traditionally been based upon a big business perspective (Abimbola, 2001; Wong & Merrilees, 2005). Common assumptions made in this research concern that organizations have access to a large amount of Brand Management in SMEs
•Building a Brand identity
•Corporate branding amongst SMEs
•Developing a Brand strategy Central benefits with brand management
•Legitimacy Network relations
•How the central benefits can establish network relations resources enabling them to dedicate strategies towards creating large corporate brands, evolving product brands, and sponsoring large events (Abimbola, 2001). Assumptions and conclusions made in this research is therefore not applicable on SMEs due to the fact that these firms have restricted resources such as: limited budget, time, or knowledge, limiting them from choices otherwise existent in larger companies (Ibid). This results in branding literature concerning SMEs being scarcer but a very popular and growing research field due to the important functions that these firms hold in our societies (Abimbola, 2001; European Commission, 2014).
The current literature concerning brand management in SMEs has recognized its importance in the process of distinguishing firms, building competitive advantage, and developing an understanding of the internal and external environment (Krake, 2005; Abimbola, 2001; Wong & Merrilees, 2005; Abimbola & Kocak, 2007; Centeno et al., 2013). This is acknowledged among researchers, owners and/or managers in SMEs (Centeno et al., 2013; Krake, 2005).
SME owners/managers have been found to have a desire for creating high brand awareness and envision their businesses to be placed in a unique and attractive market position (Krake, 2005).
Following is a model developed by Krake (2005) in order to illustrate what role brand management plays in SME firms.
The role illustrated is one that takes into consideration three influencing factors, namely the entrepreneur, company structure, and market, and utilizing this information when developing marketing activities both internally and externally (Krake, 2005). An example could be an owner/manager capitalizing on the passion of the entrepreneur and tailoring this message towards a segmented target audience as well as the internal organization, in order to create brand recognition externally and brand awareness, brand dedication internally. If done correctly and efficiently the organization stands to win brand recognition and increased turnover, something distinguishing itself from the competition and stabilizing its current position on the market. This whole process is to be formulated in a brand strategy (Ibid).
However for SMEs the process of brand management is not always so rewarding. There’s many reasons why these popular and attractive practices are not as focused in smaller firms.
Much is due to the consequential nature, and risk, brand management introduce to already pressured organizations (Krake, 2005; Centeno et al., 2013). SMEs often lack substantial resources in budget, time, and knowledge, which may determine the future survival of the firm (Inskip, 2004; Rode & Vallaster, 2005). Parallel with this SMEs often endure in markets that are characterized by competition and uncertainty, which is especially the case when establishing ventures on international markets (Andersson & Wictor, 2003). These factors create risks that SME management have to deal with on a daily basis, which demands that current resources available to SMEs are utilized properly (Centeno et al., (2013). Also a lack of knowledge in how to establish and develop brand management practices is often common among SMEs which in turn results in more uncertainty when formulating a brand strategy (Wong & Merrilees, 2005).
In summary the difficulties associated with brand management among SMEs is often a result of constrained resources and a venture stage that is more focused upon surviving and developing core products, then growing and developing added value features, and unique characteristics, that differentiates themselves among the competition (Wong & Merrilees, 2005; Centeno et al., 2013). This puts important operational activities and securing vital resources as a top priority among SME management which results in brand management being left less prioritized (Centeno et al., 2013). Brand management is instead often dealt with through spontaneous and subconscious activities employed by representatives of a SME, without a clear formulated brand strategy (Centeno et al., 2013; Abimbola & Kocak, 2007).
Due to this it is still hard to fully recognize the benefits of brand management within SMEs, and also to develop practical models that reflects clear and efficient strategies (Krake, 2005; Abimbola & Kocak, 2007).
Facing this problem that essentially builds upon the characteristics of SMEs combined with the needs of brand management practices, researchers, managers and/or owners calls for innovative solutions and guidelines. This is in order for SMEs to effectively communicate certain value offerings and establishing a presence, while also maintaining a low-cost mindset that cooperates with the amount of resources available at hand (Krake, 2005; Abimbola, 2001). More careful planning, centered entrepreneurs, and overarching corporate brands are recommendations within the current SME branding literature (Abimbola, 2001; Krake, 2005; Centeno et al., 2013). Inskip (2004) also proposes that SME managers can employ brand consultancy firms, or develop brand management teams, in order to properly work with brand management. This deals with the issue concerning the lack of knowledge amongst SME management and benefits the organization with long-term brand activities that act as unique resources for the firm. Successful examples of SMEs that manage to innovate in this process with great results have been presented (Krake, 2005; Gilmore, 2011; Centeno et al., 2013; Rode & Vallaster, 2005). The future of brand management practices among SMEs is therefore a research field with growing knowledge, understanding, and importance.
The following subtitles will delve deeper into the concept of brand management among SMEs, presenting the central concepts of brand identity, corporate branding, and brand strategy.
Building a brand identity
Perhaps the most central part of brand management is the development of a brand identity (Centeno et al., 2013; Krake, 2005). According to Centeno et al. (2013) a brand identity among SMEs will reflect the organization as a whole and make it easier for consumers or other stakeholders to effectively identify the organizations purpose, unique characteristics and value offerings. A brand identity is effectively the ambition that the brand manager strives to create, in his/hers every day brand management activities The brand identity can differ between products, or company and often relates to underlying characteristics or messages conveyed by the brand (Ind, 1997). The stakeholders’ current perception of the brand is called brand image and often will not fully coincide with the brand identity, leaving room for improvements and initiatives from the brand owner and/or manager through the work with brand management (Ind, 1997; Centeno et al., 2013). Centeno et al. (2013) presents four dimension of which brand identity can be created and improved from, namely: Brand as a product, Brand as an organization, Brand as a symbol, and Brand as a person. Amongst SMEs these concepts are often controlled and developed by the brand owners and/or managers’ inner drive and core values, and created in line with the brand budget in order to create differentiation through brand management activities (Centeno et al., 2013; Krake, 2005).
Brand as a person: This dimension propose that the brand identity share traits or characteristics with the brand owner in smaller SMEs, as it is they who often handle all the brand management activities and practices. As the SME increase in size it is normal that the brand identity develops into an organizational brand instead of just the personification of a brand. This should come naturally as the organizational members gets involved in the business culture and brand management process (Centeno et al., 2013).
Brand as a product: A very common dimension where the products themselves have their own brand identities, were products are seen as something more than just an object. Product brands could be used to efficiently establish and spread a brand identity as they are often more visible than company brands (Centeno et al., 2013). In many cases, especially among larger companies product brands differ among each other in order to efficiently target multiple market segments (Xie & Boogs, 2006).
Product brands are currently not suggested as recommendations for SMEs conducting brand management practices as their performance regarding increased turnover is seen as weak (Agostini et al., 2014).
Brand as a symbol includes all the graphical aspects of the brand identity, such as symbols, logos, brand names, colors etc. SME brand owners use this in order to enhance the brand image and more effectively create attention both internally and externally (Centeno et al., 2013).
Brand as an organization: The organization may have its own corporate brand, with its own brand identity as explained by Centeno et al., (2013) and Rode & Vallaster (2005). This is mentioned as one of the most important and cost effective sources of differentiation for the brand identity, as a corporate brand is unique in its cultural aspects and therefore more easily differentiated from its competition (Krake, 2005).
“Brand as an organization” often originates from “Brand as a person” once employees gets involved with the organizational culture and brand management process (Centeno et al., 2013).
In all four dimensions the brand owner plays an essential role in the process of creating, nurturing, and developing, the respective dimension (Centeno et al., 2013). Uniqueness and sources of differentiation are often found through the owners own characteristics making him/her vital in the brand management process in SMEs (Centeno et al., 2013; Krake, 2005; Wong & Merrilees, 2005). This process includes establishing and communicating certain values and norms internally and externally, creating a corporate culture and a brand image, which educates the stakeholders of the brand identity (Centeno et al., 2013; Krake, 2005; Gilmore, 2011). The brand owner mainly does this through its centralized position within the organizations and its inner drive and core values (Centeno et al., 2013). The commitment to this process is often based from personal choice and preference (Ibid).
As the firm develops and grows the brand owner and the employees gain new knowledge and competencies which further influences the development of the brand identity (Centeno et al., 2013). A good example is when the brand identity moves from being a personification of the brand owner into an identity that more and more reflects the current corporate culture (Ibid).
This opens up the possibility of a process of corporate branding employed by larger companies, which is currently one of the top recommendations for brand management among SMEs (Centeno et al., 2013; Abimbola, 2001; Krake, 2005).
Corporate branding amongst SMEs
A corporate brand conveys essence, culture, character and purpose of a company, and is really the heart and soul from which all outward expressions emanate (Ind, 1997)
The corporate brand consists of a corporate identity and a corporate image (Rode & Vallaster, 2005). Corporate identity exist as an interrelation between corporate culture, corporate design, corporate behavior and corporate communication (Rode & Vallaster, 2005):
Corporate culture: the dynamic core of the corporate identity. Sums up value statements and guidelines that employees should follow.
Corporate design: Refers to all visual aspects of the corporate brand such as: Jingle, name, slogan and character.
Corporate behavior: Refers to how human resource processes are managed including recruiting, empowering and supporting employees. Needs to be consistent with company values, design and internal communication.
Corporate communication: The communication that occurs within the organization in order to build standardized routines, accomplish organizational and individual goals or respond to organizational change. It really comes down to a tool to coordinate and inform employees in all organizational relevant behaviors.
Once the organization communicates the corporate identity externally through various ways of interaction, a corporate image is formed (Rode & Vallaster, 2005). The dynamic process linking these two concepts is fundamentally corporate branding. The process is holistic, planned, strategically focused and fully integrated within the company (Ind, 1997). For SMEs corporate branding stands as a unique opportunity to differentiate the organization while simultaneously develop corporate reputation, and brand recognition (Krake, 2005; Centeno et al., 2013; Rode & Vallaster, 2005). This could be done by establishing a corporate culture which differentiates an organization through its uniqueness. Also a corporate culture will help guide organizational members into behaving in a preferred manner, which hopefully helps establish more successful stakeholder interactions. The result of this will be the establishment of a brand identity which is related to a positive corporate reputation. Due to its productive nature it is currently highlighted as one of the most important brand management practices by much literature concerning brand management amongst SMEs (Rode & Vallaster, 2005; Krake, 2005; Abimbola, 2001; Abimbola & Kocak, 2007; Centeno et al., 2013).
Formulating corporate branding strategies for SMEs takes certain talent and skills. Management should be central in this process, and in the case of small ventures the entrepreneur should pick up the key role (Merrilees, 2007; Rode & Vallaster, 2005). Initially it is the brand owners’ task to create, develop and maintain a productive corporate brand that effectively establishes a cultural personality within the organization, and makes use of relevant resources in order to externally spread this personality and identity among stakeholders (Merrilees, 2007; Rode & Vallaster, 2005). As the organization and corporate brand develops the brand owner should establish teams in order to relieve themselves from certain tasks, and make sure that they are focused on the most essential brand management activities (Rode & Vallaster, 2005). This will also engage employees even more within the organization, which is essential in order for the corporate brand to continue its development (Merrilees, 2007; Rode & Vallaster, 2005; Centeno et. al, 2013).
The process however demands that brand owners/managers dedicate some of their resources into understanding the relationship between internal identities and external images (Rode & Vallaster, 2005). It is important that they identify unique and relevant characteristics that is closely related to the core business and value offerings, and match this uniqueness against the appropriate crowd of stakeholders (Zimmerman & Zeitz, 2002). Identifying the appropriate crowd of stakeholders is done by analyzing the external environment and establishing an understanding of the stakeholders’ preferences, social culture and demands. The whole process should maintain a planned and strategic perspective and mainly be conducted by centralized figures within the firm (Ibid). However in the case with SMEs owners/managers generally have a hard time relieving resources for these tasks, even though they acknowledge the central importance of corporate branding (Rode & Vallaster, 2005; Centeno et.al, 2013).
In a study conducted by Rode & Vallaster (2005) a minority of the studied SMEs focused on developing corporate branding practices, but the ones who did employ these practices showed increased success, and potential, relative to their competition.
Developing a brand strategy
Central when conducting brand management within perhaps any type of firm is developing a brand strategy. The purpose of the brand strategy is to present tools that helps organizations achieve more productive brand management results. By formulating strategies organizations can more successfully identify brand barriers and find appropriate solutions on how to overcome these (Wong & Merrilees, 2005). When developing a brand strategy within SMEs it is essential that the management team is a driving and engaging factor (Krake, 2005; Centeno et al., 2013). As the SMEs lack substantial amount of resources it is not realistic that the firm is able to employ whole branding campaigns, but instead they should focus on capitalizing on the maximum amount of brand recognition relative to the least amount of resources spent (Gilmore, 2011; Krake, 2005). Only basic instruments should be utilized in these strategies such as trademark, symbols, logo, registered design, brand name and firms’ corporate reputation and integrated communication (Abimbola, 2001). Wong & Merrilees (2005) presents four constructs that help SME firms focus and enhance their brand management results: Brand distinctiveness, brand orientation, brand barriers, and brand marketing performance:
Brand distinctiveness: Focuses on creating a brand that catch and enhances the distinctiveness of a product/service in order to create marketing edge that can benefit the venture on long term success.
Brand orientation: Refers to the extent of which the brand owners is ready to reinforce distinctiveness for the brand. Reflects how much action is taken in order to successfully employ branding activities and dedicate resources for marketing efforts.
Brand barriers: These include obstacles that hinders SMEs from conducting certain branding activities. Most common barriers are financial, knowledge and time constraints that blocks the firm from focusing on brand endeavors (Wong & Merrilees, 2005; Centeno et al., 2013).
Brand marketing performance: This sums up the results of the branding activities in order to measure how well branding practices achieves its quest for competitive advantages.
Table of contents :
1.2 Problem Discussion
1.3 Research question
1.6 Key concepts and definitions
2. Theoretical framework
2.1 Brand management in SMEs
2.1.1 Building a brand identity
2.1.2 Corporate branding amongst SMEs
2.1.3 Developing a brand strategy
2.2 Central benefits with brand management
2.2.1 Corporate reputation
2.3 Network relations
2.3.1 How the central benefits can establish network relations
2.4 Research model
3.1 Research method
3.1.1 Abductive approach
3.1.2 Qualitative method
3.1.3 Case study design
3.1.4 Qualitative interviews
3.2 Literature research
3.3 Data collection
3.3.2 Company Selection
3.3.3 Selection of Respondents
3.4 Data analysis
3.5 Criticism of the Sources
3.7 Validity and Reliability
3.8 Ethical Considerations
4. Empirical findings
4.1.1 How brand management is conducted in Alpha
4.1.2 How brand management affects corporate reputation and legitimacy
4.1.3 How the three constructs can establish network relations
4.2.1 How brand management is conducted in Beta
4.2.2 How brand management affects corporate reputation and legitimacy
4.2.3 How the three constructs can establish network relations
4.3.1 How brand management is conducted in Charlie
4.3.2 How brand management affects corporate reputation and legitimacy
4.3.3 How the three constructs can establish network relations
4.4.1 How brand management is conducted in Delta
4.4.2 How brand management affects corporate reputation and legitimacy
4.4.3 How the three constructs can establish network relations
4.5.1 How brand management is conducted in Echo
4.5.2 How brand management affects corporate reputation and legitimacy
4.5.3 How the three constructs can establish network relations
4.6.1 How brand management is conducted in Foxtrot
4.6.2 How brand management affects corporate reputation and legitimacy
4.6.3 How the three constructs can establish network relations
5. Analysis and discussion
5.1 Brand management in SMEs
5.1.1 SME Brand orientation and resource limitations
5.1.2 SME Brand management areas and activities
5.1.3 Brand management approach among SMEs
5.2 Central benefits with brand management
5.2.1 Corporate reputation
5.3 How the central benefits can establish network relations
5.4 Developing the current framework
5.4.1 The relationship between the key concepts
5.4.2 Differences regarding how SMEs work with brand management
6.1 Findings and conclusions
6.2 Theoretical implications
6.3 Practical guidelines
6.5 Recommendations for future studies