It’s a known fact, large corporations usually monopolise the market share. So how can SME (Small Medium Scale Enterprises) or SMI (Small Medium Scale Industries) even hope to stay afloat? Right from the outset, it’s more or less destined that corporate giants will suppress small players of market share. Is there no hope for these small timers, who form the majority of the SME and SMI?
Product / Brand Exposure In The Market
For the sake of this article, we’ll quote the manufacturing industry as the example. And to make it even more relevant, we’ll use FMCG (Fast Moving Consumer Goods) manufacturing as the main point of our discussion. Anything from laundry detergent and hair shampoo, to cooking oil and tomato sauce.
Most of the common product brands in the market belong to giant conglomerates. For example, Nestlé S. A., the largest food company in the world. They own beverage brands like *Milo and *Nescafé, confectionery like *Kit Kat and *Smarties, baby food like *Gerber and *Cerelac, even pet food like *Alpo and *Purina.
*Disclaimer – All the brand names quoted above belong to Nestlé S. A. The names are used here are only as an example. We make no claims of ownership whatsoever with regard to the names quoted.
Henceforth, any new player who wants to penetrate into existing markets will find it rather difficult to compete against the giants. Especially small players of SME or SMI. So does that mean that all hopes are lost?… And that they should simply just give up and walk away?…
How Did Giants Conquer The Market In The First Place?
Whether you realise it or not, a product (branded product) enjoys recognition and acceptance simply because it’s known. And the companies behind successful brands simply reinforces their brands to enjoy a continuous exposure. It’s easier for large conglomerates to do that, as they normally set aside a substantial budget for A&P (Advertising And Promotion).
They’ve invested heavily in media creation and (more importantly) media space. Fresh contents and repeated exposure in the media keeps their brand names right at the tips of the audience’s tongues. On top of that, they’re also actively involved in many high profile events, like sponsorships for schools or neighbourhood functions. The more often these brand names are exposed to the audience, the more recognisable they’ll become.
And when it comes time for people to purchase an equivalent product, these brand names will silently whisper into their ears to buy them. At the end of the day, the more brand owners spend on exposing their brands, the more they’ll sell their branded products.
It’s easy – Money makes money!… The problem only arises when you have no money!…
What About SME / SMI With Low, Or No A&P Budget?
A successful brand is literary a continuous cycle. The more money they spend on their A&P, the more their branded products will sell. And the more branded products that they sell, the higher their profit will be. Hence the higher their profit, the more money they can set aside for the following cycle’s A&P budget. It’s a vicious cycle…
The problem will arise when a new player wants to break into the market. With limited budget for A&P, they won’t be able to keep their brand names afloat in the market. This will then result in lower exposure, thus lower sales. And lower sales means lower profit, which will result in insufficient funds for the following cycle’s A&P budget. Another vicious cycle…
Does this mean that brands by SME/SMI companies are doomed to forever be unknown?… From the look of the unbreakable cycle described above, it really seems to be so…
Traditional Techniques To Monopolise A&P
Large corporations buy up media spaces by bulk. Newspaper ads, magazine ads, billboard ads, television ads, you name it, they’ve got it. And they even have their annual events lined up well in advanced too. Product sponsorships, product placements, product endorsements, even giveaway balloons with their brands printed, to be given away to children where they’re holding their events.
Their objective is simple – expose their brand names as often, and to as many people as possible. And their modus operandi is to saturate as many media channels as possible with their brands… It’s crude, but it’s effective. Sort of like a fuel guzzling sport utility vehicle, it’ll take you from Point-A to Point-B. And in a world where not many people can afford to own a car, they’re the kings of the road.
Non-Traditional Options To A&P Expenditure
Let’s face it, you can’t directly compete with the fuel guzzling sport utility vehicle of the big players. But you can operate an energy efficient vehicle (e.g. electric car), and very carefully manoeuvre yourself around your wealthier competitor. Of course the purchase price of a cutting edge technology will definitely be much higher. But the lower operational cost will more than make up for it in the long run. You can effectively expose your brands to your potential customers, and perhaps even convince your competitors’ die-hard fans to give your brand a try too.
In this metaphor, driving the fuel guzzling sport utility vehicle is akin to openly bombarding all the available media spaces with your brand exposure. It’s effective, but it’s also expensive too, not to mention that there’ll inevitably be lot’s of wastage here and there.
The energy efficient electric car is akin to intelligently spending your limited resources. You take action only where it’s most effective in generating leads, and build your brand name efficiently.
In this comparison, both the fuel guzzling SUV and the electric car can effectively take you from Point-A to Point-B. The difference is that you’re burning a lot more fuel in the SUV to achieve what is essentially the same result. If you already have a fat A&P budget, then by all means, go right ahead. But if you’re operating on a limited budget, or a new player in the market filled with old timers, it pays to play it smart. Competing head-on with big corporations, on a level playing field is literary committing suicide. But competing intelligently, and on your own terms, you might even etch a comfortable existence in the already crowded habitat.
“Alright, I’m Interested… So How Do I Play The Game?”
A small timer SME or SMI company selling an equivalent FMCG product with an existing big player is tough. You’ll be like a small fish trying to stay alive in a pond where a bigger fish calls home. It’s difficult, but not impossible. It’s highly unlikely that you’ll be able to completely take over the market from the big player. But you definitely can establish yourself there, and be a serious contender and competitor to your bigger neighbour.
In the next article, we shall explore some steps that you can take establish your brand in a competitive market. So stay tuned for the next instalment. To ensure that you won’t miss it when it comes out, just subscribe to any of the social media channels below.