Introduction

Marketers in a variety of industries build and leverage their brands to develop new business lines and open new markets. A relative newcomer to the use of branding is the high tech industry. There, where innovation can erase competitive advantage in a matter of months, companies such as Hewlett-Packard, Compaq and Microsoft are all ardent practitioners of brand marketing, building and nurturing the intrinsic value of their brands through line extension. But what about the small technology companies whose product or service is intended to address a very specific market? Many of these companies do not practice brand marketing and often see branding as irrelevant to technology products and services.

Historically, branding has been part of the world of fast-moving consumer goods, dismissed as superfluous to the business-to-business markets by some industrial purists. The commercial customer’s buying decision process was perceived as being based solely on facts – cost of product, reliability, ability of the supplier to deliver the goods on time and within budget (Williams, 1995). Yet, publicly-held technology giants like Oracle and Intel have known for some time that successful branding is at the core of the technology marketing process. Moreover, the “clutter” of competing products and services, coupled with declining resources, are all affecting the more specialized “non-consumer” markets. Brand is not something that only belongs on the supermarket shelf. In fact, because the wrong technology purchase decision can cause someone to lose their job, brand is even more important in technology markets than in retail markets (Pettis, 1995).

Successful branding is especially critical for small technology companies targeting tightly-defined niche markets. These niche players need to employ branding as a means of creating an identity for themselves, their products and services, which can differentiate them from the competition, convey some tangible and psychological benefit, and support the overall strategic plan and corporate direction.

Barriers to Branding Acceptance

Despite the visible successes of the technology super-brands, the branding concept has not yet been fully accepted as an important part of conducting business in many small technology firms. Possible barriers to acceptance of the branding concept are:

• The Cult of the Techno-Genius. The vision of the lone entrepreneur developing some cutting-edge technology product in his/her basement is part of high tech lore. Names like Michael Dell, Steve Jobs and Bill Gates are often cited as evidence of the type of entrepreneurial drive that differentiates the technology industry from other industries.  But what fueled the success of these corporate leaders was their recognition of the need to surround themselves with individuals who understand how to build and grow a brand-based business, rather than a business based solely on the innovative talents of its technical geniuses.
• Inside-Out Product Development.  Not unrelated to the Cult of the Techno-Genius, Inside-Out Product Development takes what is created in the lab as the “given”. It is then up to the Marketing Department to go out and create the need for that product.  In the dynamic world of technology, it is difficult to resist the temptation to build software that the developer thinks is “cool”, but which does not solve a business problem for the market. Even Dell Computer Corporation fell into that trap when it developed a technological marvel code-named Olympic that nobody wanted.
• Going for the IPO Gold. For many months the press has been filled with stories of technology start-ups – mostly Internet companies – that have gone public and enriched their founders and employees beyond their wildest dreams. In an industry where fortunes change more quickly than the weather, the temptation to demonstrate the market value of a company’s products/services is almost irresistible. The tendency, then, is for small technology company executives to manage from quarter to quarter in order to meet the requirements and expectations of venture capitalists and potential shareholders. The product’s cash flow becomes the primary determinant of success. The danger of this IPO-directed view is that it focuses on maximizing short-term goals at the expense of long-term growth and brand building. Moreover, the IPO market has become extremely shaky of late, with Internet companies, the main drivers for the current bull market among new issues, under tremendous pressure as nervous investors pull money out of the market faster than they have been putting it in. Even the IPO successes will need to direct their attention to brand building in order to continue delivering returns to shareholders.
• The Known Quantity Syndrome. One of the benefits of niche marketing is the opportunity to focus all available resources on a single proposition, to diagnose a customer problem and act on it in a concentrated manner. The down side, however, is the temptation to assume that your market knows who you are, and that your company and its products/services are a known quantity that does not need “branding”. Awareness, however, does not guarantee long-term success. Current and prospective customers need to feel secure about doing business with a vendor. In the technology industry, that need is especially keen when the vendor is a small, privately-held company competing with large publicly-traded firms for the same limited pool of customers. The small vendor must link its company and products/services with the promise of quality in the minds of potential clients. That linkage will motivate potential customers in the niche to buy into the company’s future, both figuratively and literally.

Starting the Branding Process

Basically, the idea is to find one or two key messages that most affect the target buyer’s purchase decision and consistently and creatively repeat those messages in all communications. In market-driven companies, the CEO is usually the strongest advocate of branding and takes responsibility for defining customer- and market-orientation as the driving force in the branding process. In small technology firms, the CEO may not be leading the charge. In that case, the marketing manager can initiate a “grass roots” effort by assessing what steps, if any, the company has already undertaken that could facilitate the branding process, then clearly stating how the process can be completed within the resource boundaries of the organization.

The first step is to determine whether or not there is a consensus as to what the company’s core values are in terms of vendor qualities as well as product qualities, and how the company and its constituents interact to create added value. Most small technology firms have already taken this first step toward branding by articulating a vision statement and philosophy aimed at building a corporate identity. For example, Universal Algorithms, a small privately-held company in Portland, Oregon that develops advanced space management and admissions workflow enhancement software for colleges and universities, describes its philosophy as helping colleges reach their goals and students reach their dreams. Seay Systems, a privately-held print management software development company in Dallas, Texas, describes its mission as developing software products that provide a comfortable migration to newer, faster, and more efficient computer systems. By articulating what they strive to achieve and who their constituents are, these two companies seek to motivate their constituents to buy into the company’s future. To complete this first phase, they would need to clearly articulate who they are and why their constituents can put their trust in those companies. Market information provides the inputs needed to do that.

Market Information and Research Inventory

Essential to the effectiveness of branding is to understand marketplace perceptions of the various brands, along with both rational and emotional motivators of purchasing behavior. Perceptions can vary from physical performance (i.e., functionality) to subjective, emotional issues (e.g., buying a brand like Oracle means job security). Ideally, primary and secondary research studies provide that much-needed market information.  However, small technology firms often struggle with budgetary constraints or limited experience outside of traditional product development research.

While there is no substitute for solid research designed in partnership with a market research company, niche players can develop a pro-active research process and still remain within the boundaries of their financial and human resources.  By taking stock of information that is already available in house, marketing managers often find a veritable treasure chest of resources that will help identify the company’s marketplace position. Internal sources of market information include customer demographics, feedback received from customer electronic message centers, client satisfaction surveys, feedback from field and telephone sales representatives, as well as from consultants and trainers working at various client sites. External sources for secondary research include industry analysts and thought leaders such as the Gartner Group and the Meta Group, online database services, and technology news service web sites. Together with competitive intelligence gleaned from internal and external public sources, these resources all provide insights as to what customer-oriented benefits as well as product features/functions are of importance to the market niche, and where the vendor’s strengths currently lie.

Brand Identity

Brand identity has four individual components – brand positioning, brand name, brand associations, and brand celebrity – each being of equal importance in generating the promise of quality in the hearts and minds of current and prospective customers.

Positioning: the Elevator Statement

A positioning statement tells in one sentence what business the company is in, what benefits it provides and why it is better than the competition. The classic approach to positioning is the “elevator scenario”: imagine you’re in an elevator and have 30 seconds to answer the quest, “What business are you in?”

For small technology companies, the positioning statement is more important to building brand identity than the corporate mission statement because it articulates clearly and concisely why the customer should buy. It forces the company to focus on what they really have, to look at the product from the marketplace perspective, and to abandon the past as a given position. Further, it ensures that all forms of communication – internal and external – maintain unity of focus. This in turn facilitates communication at the prospect level, helps the press and thought leaders understand what you are selling, and makes advertising and collateral clear and concise.

Examples of positioning statements from the technology super-brands are:

• We deliver useful innovation, as opposed to innovation for innovation’s sake (Compaq)
• Intel inside means state-of-the-art technology (Intel)
• Fast debugging for computer chips (Applied Microsystems) (Advertising Age, 1995)

The process of developing a positioning statement can be quite intense. It is best done in a group, taking up to one full day for the first product or service, and about half a day for subsequent ones. It begins with a discussion and definition of the overall customer problem, then proceeds to the overall solution, the product position, a description of the product, including those features that give the vendor a distinctive competence, and concludes with the key benefits.

Given marketplace conditions described earlier, small technology firms run the risk of acquiring an identity that was created for them by their competitors. Avoiding that risk means developing a positioning statement that is both credible and reflective of their strengths.

What’s in a name?

Starting with the right name (and logo) is the cornerstone of brand building. A good name to identify a company or distinguish its products from others must be unique and original, yet capable of carrying a favorable message to motivate the customer to have dealings with that company. Creating such a name is an art as well as a science with rules and guidelines rooted in sociology, psychology, semantics, and the law (Marconi, 1993). Simply put, a good brand name gives a good first impression and evokes positive associations with the brand.

As part of the internal assessment, the marketing manager should ask three basic questions with respect to naming:

• Do we have a systematic approach to naming our products and services?
• Has there been a consistent effort to link our company name with our suite of products?
• Do we have a clear policy with regard to trademarking and copyrighting?

A “not” to any one of these questions indicates a need to map out a naming process.

Basically, a name should be legible, pronounceable, memorable, and distinctive. The name of a product communicates both a denotative meaning – the literal, explicit meaning – and the connotative meaning, or the imagery associated with that name. The denotative and connotative meaning associated with a name should be consistent and support the overall strategy plan, corporate direction and product positioning, which will be addressed in a moment.

With these objectives in mind, the procedure for systematic name generation would start with the creation of a list of names derived from the objectives and benefits of the strategy, positioning and corporate direction statement. Appropriate synonyms and antonyms would then be listed and combined with the objectives and benefits to produce a list of “promising” words, prefixes and suffixes.. There are naming software packages such as NamePro and Computer Select that sell for less than $500 per licensed copy and can construct these listings and combinations automatically.

This “namestorming” portion of the process should take place internally, with a cross-functional group of participants representing managerial and non-managerial positions in the company. This will reinforce feelings of naming process ownership company-wide, facilitating process success.

Once the list of “promising” names has been generated, conduct name testing research,  using a neutral, third-party research firm, to evaluate the candidate-names on legibility and pronounceability, association, distinctiveness, imagery and end benefits. There are several firms specialized in providing quality name research within a relatively short time frame and at reasonable costs, creating less stress on internal resources. Based on research results, the “winner” should be selected and the name protected legally through trademarking. Finally, if the corporate name already has a strong, positive image, it is wise to link it directly to the product brand name to take advantage of the halo effect. This is an approach used skillfully by Microsoft.

Brand Associations

These are the attributes that customers think of when they hear of see the brand name. Those associations should reflect the direction identified in the positioning statement. Once developed, the positioning must be communicated to critical mass to the marketplace via comprehensive program of advertising, sales promotion and public relations combined. This requires creative executions that grab the attention of the vendor’s market segment, generates interest in what the vendor has to say, stimulates the desire to obtain the benefits offered, and prompt action to establish and maintain a solid partnership with that vendor. A creative shop that understands the resource limitations of a small technology company can develop concepts consistent with your positioning, then test those concepts internally and externally. The concept selected can then be developed into a campaign theme to be used across all media vehicles and run for several years.

Brand Celebrity

Celebrity – sometimes referred to as brand character – adds emotion, culture and myth to the brand identity. This can be expressed by a symbol (the Java coffee cup), a well-known spokesperson (actor Jeff Goldblum touting the simplicity of the iMac) or a slogan (“Intel Inside”). Brand celebrity is created by the campaign theme; it is perpetuated by consistent, frequent use of that theme in all communications.

The key to obtaining the celebrity we desire is benefit retention. After creating the benefit message, executing it creatively, uniquely and credibly, we want that benefit message to stick in the minds of our constituents. That means letting the campaign run. Just because your Management Team is bored with the campaign doesn’t mean the marketplace is bored with it. By the time the public is glancing at an ad for the first time, the advertiser’s management team has seen in layout form mechanical development, proof, and finished copy, and thus, is sick of it (Luther, 1992).

In short, the campaign should be kept running until you have determined through research that it is becoming less effective in the minds of your market segments. You will have then created a solid, positive brand identity that clearly and favorably distinguishes you in the marketplace.

Brand Strategy and Communications

The campaign theme should be applied across all communications media – advertising, sales promotion, and public relations activities – based on an integrated communications plan. However, the most well thought-out communications plan is worthless if appropriate resources are not invested to implement the plan. Achieving a strong brand image can only be done through consistent and frequent exposure.

Building Brand Equity

Brand equity is the added value provided by the brand name. It is also the financial advantage of a well-known brand versus one that is not as well-known. Software is much more valuable if it’s from Microsoft or Lotus.

For public companies, brand equity is the share price; for private companies, it’s an intangible asset on the balance sheet called “goodwill”. Yet, even intangible assets can be quantified if properly managed and nurtured. One need only recall the $12.9 billion sale of Kraft to Philip Morris. $11.6 billion (90%) of the sale price was for goodwill, the majority of which was based on the estimated brand values.

Once an integrated marketing communications plan is in place, the small technology vendor should not only utilize the traditional assessment measurement of sales, but also track marketplace perceptions and preferences versus competition over time and relate those perceptions to other marketing activities such as promotions and advertising pressure. Such tracking research would be part of the integrated marketing communications plan.

Summary

Large technology companies are successfully building upon brand equity to enhance their promise of quality. Small niche players can also build a clear, well-defined brand identity that ensures the long-term loyalty of its constituents.

By clearly and frequently articulating those product and vendor qualities that differentiate them from the competition and which stress customer-oriented benefits, niche players can enhance their perceived value, quality and satisfaction of customer experiences. This translates into a strong customer constituency.

Branding provides a springboard for new products, contributes to stable, long-term demand and maximizes profitability. This translates into a strong corporate constituency.

Finally, branding helps to attract and motivate quality employees, building the value of the company in general. This translates into a strong co-worker constituency.

Given the dynamics of the technology market, only those companies that build their brand value and equity can thrive over the long-term. For the small niche player, branding is not an option. It’s a necessity.

References

Advertising Age Special Reports, 1995 Power 50 – Technology.

Luther, William M. (1992). The Marketing Plan. New York: AMACOM.

Marconi, Joe (1993). Beyond Branding. Chicago: Probus Publishing Company.

Pettis, Chuck  (1995). TechnoBrands: How to Create and Use Brand Identity to Market, Advertise and Sell Technology Products. New York: AMACOM.

Williams, Sean (1995). The Influence of Branding and Packaging on Consumer vs. Commercial Markets. Rochester Institute of Technology College of Business,  October 31, 1995 monograph.

Articles, Marketing
Brand Associations, Brand Celebrity, Brand Identity, Brand Strategy, branding, Branding Acceptance, Branding Process, Building Brand Equity, Building Niche Brands