Entrepreneurs often think branding is a luxury they can't afford.
This week I am visiting the Southwestern University for Finance and Economics in Chengdu, a large city in the Sichuan province of China. I came to teach a class on branding and positioning to the women’s entrepreneurship program here. When I visited last year, I wrote two cases on businesses owned by women on the course. With my colleague on the faculty at SWUFE, Jiafei Jin, I wrote about Ningdu Lemon Science and Technology, a company based in Anyue and led by Liu Ying. A second case, which focused on a new restaurant chain called BingoBagel, the brain child of Fei Fei Wu, was co-written with Stephanie He and Ma Jing, who are also on the faculty here.
Stephanie He and I check the Chinese translations of the slides before the lecture.
Soon after writing up the cases near the end of 2011, I taught them in my MBA branding class at Oxford and the cases worked very well. The acid test, however, was to come back and teach them to a local audience of entrepreneurs–with the business owners present to ask and answer questions! Stephanie He had the cases and all the lecture materials translated into Chinese, so that they would be more accessible to the students. We were grateful that both Fei Fei Wu and Liu Ying were available to come in to the classroom to meet with the students.
The entrepreneurs were attentive as they listened to the simultaneous translation of my lecture into Chinese. I discovered that, in spite of the very professional translation assistance, it is difficult to get the interaction you typically want in teaching a case.
Students in the classroom watched the slides and listened carefully to the translation.
However, the students were very enthusiastic, so once they warmed up to asking questions and making comments, the pace was very brisk. Most has read the case and were able to ask good questions. Many of them had strong opinions about the next steps each business should take. In fact, they were so enthusiastic that it was difficult after each case to close the session discussion for a tea break!
Students spoke into a microphone so that behind-the-scenes translators could convert their questions into English for my headset.
As is often the case, these entrepreneurs were very product-focused. I find this is especially true in China, even though many global brands have their products manufactured here–and then turn around and sell them on the global market for a huge premium! Nike, Dolce & Gabbana, and many other world-class brands leverage on Chinese production, then use their brands to make a profit. I was reassured when one of the students stood up and emphatically announced that China needs to build its own brands. This is certainly an observation that many global economists have made and the initiative must come from China’s entrepreneurs.
Liu Ying came to talk about her business, which may be able to build a brand on the reputation of Anyue as the "Lemon Capital" of China.
However, it is often hard to see how important beginning with a brand is when you are in the early stages of building a business. Liu Ying’s business is a perfect example of the importance of branding: she and several competitors produce products from the lemons grown in Anyue. She has innovated with various additions to her line, but her competitors keep imitating her. A strong brand umbrella would help her to maintain leadership with these new lines, while protecting her against the price competition that tend to typify commodities. She also needs to diversify her business into the consumer market and needs a “pull” mechanism to help her with retailers. All these things are standard reasons for getting started on a brand.
The question, of course, is always what the brand should be, what position it should try to carve out for itself, and how that position should be expressed, in terms of messaging, but also in the elements of offering. This was the topic of the BingoBagel case, in which the owner is trying to introduce bagels, an unfamiliar food item in China, as an accompaniment to coffee, which is consumed in only very limited amounts. The intention is to balance between appealing to Chengdu’s many Western expatriates, while reaching out to local consumers who have not yet acquired the coffee-and-bagel habit. Occupying that unusual space between a Starbuck’s-style Western coffeehouse and the typical Chinese restaurant frequented for lunch is a challenge that pops up in decisions from what time to open to where to display the bagels. Having a clear positioning in mind helps to guide even these basic decisions.
Since my visit last year, Fei Fei Wu had opened a new store and had produced a series of brochures telling “the story of the bagel,” as well as the stories behind other offerings, such as her new “tea latte.” In fact, the very concept of a “tea latte,” is a brilliant positioning move, as it bridges the gap between the teahouse of China and the coffeehouse of the West.
Entrepreneurs in the SWUFE course, discuss the pros and cons of brand positions.
Again, these are notions that are often counterintuitive to entrepreneurs, who tend to be a bit hesitant to invest in intangibles like brands when their concrete needs for equipment, new stores, or additional staff seem pressing. Yet the stability and strategic direction offered by a good brand can hardly be overstated.