SENARIO
East Coast Exporters Briefing Session.
EXECUTIVE SUMMARY
Globalization is today’s buzzword. Coca-Cola is selling beverages in almost 200 countries worldwide while McDonald has over 30,000 restaurants in 118 countries. Brand names such as Microsoft, Disney etc are instantly recognizable internationally and consumer are willing to fork up premium prices as the brands spell quality, satisfaction and quality for money.
Nowadays, millions of packaged good producers, food and beverages, hardware and software as well as services providers are competing for consumers globally. In this regard, branding is vital to distinguish Malaysia’s good and services, provides market positioning as well as the edge for venturing the global market.
1.0 INTRODUCTION ON BRANDING
PROJECT
A brand can be defined as an asset that does not have physical existence and the value of which cannot be determined exactly unless it becomes the subject of a specific business transaction of sales and acquisition (Seetheraman, A et all, 2001).
The importance of branding is well captured by the Chairman of Interbrand: “He who owns the brands, owns the wealth” (Cass Creative Report, 2004). For 2007, the 100 top global brands recorded worth of USD 1,156.7 billion.
According to Interbrand.com, Coca-Cola remains the best global brand valued at USD 65.32 billion while Hertz, occupying the 100th spot was valued at USD 3.02 billion. No Malaysian brand has ever been included at the top 100 global brand. According to Association of Accredited Advertising Agents Malaysa (4As), Malaysia’s top five most valuable brands in 2007 were Maybank (USD 2.8 billion), Public Bank (USD 2.0 billion), Maxis (USD 1.5 billion), Genting (USD 1.3 billion) and Celcom (USD 1.2 billion).
Branding is the fundamental aspects of successful business which Malaysian companies especially SMEs must seriously adopt and integrate in their current business practices. To gain market positioning, companies must undergo transition form price competition to branding in the domestic market. Over time, the brand will be able to undergo the routes towards globalization of the brands.
2.0 BRANDING AND MARKET POSITIONING
Even with Malaysia’s expanding economy and premier position in global trade, there is very little number of truly world class and internationally recognized Malaysia brands. The majority of the brands in Malaysia today are no more than well-known names, without the key attribute to real brands. By establishing a brand, firm’s reputation could be enhanced as well as foster brand loyalty. This leads to greater marketing advantages such as lower marketing costs, news customers as well as greater trade leverage (Calderon et al, 1997; Ewing et all, 2001).
To ensure their share in the market as well as product and services positioning, Malaysian products and services needs to have the three main components of brand awareness, loyalty and quality perception.
2.1 Brand Awareness
Brand awareness is a very important element in the branding process. Firms should make customers become aware of the products thus prompting them to choose the recognized brand among similar products. Demand of the brand will increase when more awareness and acceptances are created among customers.
Case Study: Madura Industries Sdn. Bhd., a Terengganu based producer of soft drinks can more effectively compete within Malaysia by effectively positioning it’s brand “Maduria” as totally halal, competitive pricing with same delicious taste of similar segmentation of medium priced soft drink market such as Cheers, F&N and Yeo’s.
2.2 Brand Loyalty
Brands add value to customer’s loyalty. To ensure continuous and growing share market, Malaysia firms need customer to pledge loyalty to their products which is recognizable via the use of branding.
Case Study: In the stretch of Kampung Losong, there are abundance of Keropok Lekor (Fish Sausage) stalls which was collectively branded as T’Lekor under the Terengganu Government initiatives. However, people who know that Kak Yah branded T’Lekor would only buy their keropok from her stall as it was the best. This highlights loyalty to a brand ensures it’s continuity as well as increased
2.3 Brand Quality
To ensure market positioning as well as stable pricing, brand may also be used to put perceived quality on a firm’s offering. Customers are more willing to pay price premium for products they perceive of higher quality.
Case Study: There are abundance of Batik materials all around Terengganu especially in Pasar Payang with prices starting from RM120 upwards. However, with branding, Noor Arfa Batek commanded higher prices doubling or even tripling the current prices due to the perception that Noor Arfa offers better quality and exclusive design.
3.0 BRANDING AND INTERNATIONAL PROFILE
Brand is the only one passport for companies to get into another country and go global. With branding, Malaysian products and services have tremendous potential for conquering the international market. International marketing strategy could enhance a firm's reputation and build strong brand awareness. It can also foster brand loyalty that leads to certain marketing advantages, such as lower marketing costs, new customers, and greater trade leverage (Calderon et al., 1997; Ewing et al., 2001).
International marketing strategy can also create brand loyalty and awareness that can reduce marketing costs and generate a price premium. Keller (2000) advocates that consistent marketing support is necessary in order for brands to be successful. All these studies suggest that international marketing strategy can influence directly a firm's performance.
3.1 GLOBAL STRATEGY FORMULATION
In order to ensure successful foray in the global market, brands venturing outside should first formulate their international marketing strategy which could be summarized into four steps;
3.1.1 Assessment and Adjustment of Core Strategy
Firstly, the firm should do their internal analyses which also include assessment of it strength, current market positioning as well as potential market for global penetration. Competitive analysis should also be done in ensuring the viability of the new global venture. Core strength could include visionary leader, dedicated team, good product as well as effective branding.
3.1.2 Formulation of Target Countries, Segments and Competitive Strategies
The company must first understand the structure of the global market industry which includes potential customer requirements, choices of target countries, product selection, market segments as well as competitive strategies. The firm needs also to decide in series of strategic decision which includes competitive strategy choices whether to offer cost leadership, product differentiation or selective focus. Country market choices need to be analyzed on to concentrate in specific country or diversified over several countries or within certain region.
3.1.3 Development of Global Marketing Strategy
The firms also need to determine their product offering such as degree of standardization or adaptation. The firms should include the marketing mix of the product offering as well as advertising and promotion programmed that could be implemented.
3.1.4 Implementation
After all factors are taken into consideration as well as implementation, periodic review needed to be done in ensure that all steps are taken into consideration. Objectives such as set Key Performance Indexes (KPIs), sales figure target as well number of countries penetration within a set time limit. Monitoring as well as constant corrective action should be taken to ensure the goals are met.
3.2 ASSISTANCE BY MATRADE
In this regard, assistant from the Malaysian government via MATRADE can be utilized by firms in order to secure it branding position as well as secure international market profile via grants such as Brand Promotion Grant (BPG), Market Development Grant (MDG) and Services Export Fund (SEF).
4.0 CASE STUDY: PENSONIC GROUP
To highlight the path of transition of Malaysian firm using branding to established market share as well as penetrate the global market, PENSONIC Group is chosen as a case study.
4.1 BACKGROUND
The PENSONIC Group had a legacy since 1965 since it’s started as a small retailer cum workshop for electrical home appliances, Keat Radio and Electrical Co. 1982 saw the birth of PENSONIC brand as the Group venture into importation of audio and visual products under the PENSONIC brand. The core businesses of the PENSONIC Group are now in manufacturing, distribution, import and export of electrical home appliances for the domestic and export markets.
4.2 MARKET POSITIONING
1982 also saw the birth of the PENSONIC brand. The PENSONIC brand was first registered as a trademark in Malaysia in 1984 and till now it has registered trademarks in more than 20 countries. By 1995, PENSONIC core businesses are now in manufacturing, distribution, import and export of electrical home appliances for the domestic and export markets. The domestic distribution activities of the PENSONIC Group now span across 10 branches and more the 800 dealers countrywide. PENSONIC products are now exported to many countries in ASEAN, East Asia, West Asia and Middle-East.
The Strategy
Through its strong distribution-channel network, the PENSONIC Group adopts a multi-brand platform to cater for different product categories and different market segments. Through many years of focused brand-building efforts, competitive pricing, high quality and wide-ranging products, the PENSONIC brand is now well recognized as the premier Malaysian brand for electrical home appliances in the country.
4.3 INTERNATIONAL PROFILE
Facing globalization, PENSONIC formulated a master brand strategy clearly defined brand vision and values to drive it to greater heights. Aggressive brand building activities are now planned and executed to transform the PENSONIC brand into an Asian brand at the first stage and a global brand in the future. It is also continually strengthening its capability in product innovation, design and development to support its next wave of growth. PENSONIC now has a vibrant, energetic and charismatic personality raring to forge ahead.
4.4 RESULT
The continual efforts in building the PENSONIC brand have been well rewarded with positive results. The PENSONIC Group has grown tremendously over these last few years, doubling the mere turnover of RM93 Million in 2001 to RM187 Million in 2006.
5.0 RECOMMENDATION: BRANDING OF TERENGGANU BATIK
Terengganu is famous for its excellent batik, making it a potential sector to consider as one of the state’s main exports. The noted brand for Terengganu batik is Noor Arfa Batik with its ready capacity and capability for global market. However, the majority of the other batik producers are from small, backyard cottage industries which are more inclined to just sell their products via middleman instead of selling it or branding it themselves. There are even less possibly of them exporting the batik themselves as each could only supply small number of batik material each month as opposed to the overseas importers who would normally demand large consignments for distribution in their area of coverage.
In order to ensure that Terengganu batik could be exported effectively, cooperation between the Yayasan Pembangunan Usahawan (YPU) Terengganu and the batik producers are vital. YPU could established a batik clearing house where all the micro batik producers could send their finished product for rebranding, further added value such as repackaging as well as quality control and design direction. Promotional activities as well as local and global marketing strategy could also be established in order to ensure “Terengganu Batik”’s brand awareness, brand loyalty and brand quality. Noor Arfa Batik could also act as a mentor or anchor to the project in giving the benefit of their experience and expertise in guiding the successful implementation of the state branding.
MATRADE will act in the advisory and monitoring capacity in the branding and exporting of Terengganu Batik. With the help of 38 MATRADE overseas offices, market intelligence could be done to identify the countries that are interested in importing batik along with the challenges that need to be conquered in ensuring successful export. MATRADE could also provide assistance in term of identifying the best trade promotions options such as specific international trade fairs or specialized visit to fashion houses. Monetary assistance such as Market Development Grant (MDG) as well as Brand Promotion Grant (BPG) could also be utilized to defray the cost of branding Batik Terengganu as well as established their presence globally.
6.0 CONCLUSION
Branding can be used to enhance the global reach and standing of Malaysian products and services as shown by successful Malaysian brand both locally and globally such as PENSONIC, Royal Selangor Pewter, Lewre and Petronas.
According to the Association of Accredited Advertising Agents (4As), Malaysia’s top 30 brands value has risen nine per cent to RM 61.8 billion in 2008 from RM 56.6 billion in 2007. This shows that the usage of branding do provide brand names good and services market preference.
It must be noted that most of Malaysian top enterprises were barely in existence 20 years ago. The potential and opportunities for these enterprises to become a global player in the future is highly possible especially with clear market positioning and international marketing strategy in place.
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