It is a chicken-egg decision - publicity first or traction
first. It is not easy.
identity is a critical component of a startup's marketing strategy. Customers
will not "feel" consistent if a company lacks a clear identity. The
message will be muddled and difficult to disseminate. Startups should, without
a doubt, invest in brand identity.
The answer to that question can be answered in three parts:
The benefits of paid branding, the risks involved in paid startup branding, and deciding what to do. The benefits to a
start-up can be several.
More brand recognition, a more attractive proposition, more
opportunities to raise capital, and a more attractive target for a merger or acquisition.
The risks are primarily in the fact that it can arouse negative sentiment from
Why Startup Branding is Important?
When a start-up begins to create a brand for a smaller
business, paid branding can be a valuable option.But the question is: does a
start-up need to pay for brand recognition? The answer is yes, startup marketing can play a vital role in early
Startup Branding brings
you to the forefront of people's minds and allows them to recognise your
existence. It raises your visibility not only among customers but also among
investors and stakeholders. Branding gives your startup the value it deserves
and distinguishes it from the competition.
A shaving cream company, Newbee, commenced its premier
product. Soon it started facing hardships in an already overcrowded market.
Market leaders were MNC with deep pockets and distribution penetration, backed
by inducing advertisement on TV and print. MNCs have comfortably built an
impregnable brand in the mind of individual males.
Newbee analyzed to its happiness that MNCs have not made a
huge impact in saloons and therefore started focus only there. Soon it had its
distribution chain. Volume increased and variable cost started decreasing.
leadership, Newbee found a new lease of life and invested in production
enhancement. Soon it could reduce its cost further down, enticing even the MNCs
to get contract manufacturing from it.
Newbee had the scale, quality products, and knowledge of
variable quality for its customers. It was the world's largest producer of
shaving cream. However, it still had one problem. Its margins were low.
Now, with high revenue and disposable profits, it thought
of undertaking brand building and started advertising. It also increased the
prices of its product to offset marketing costs. Did it succeed?
Yes, it did and the balance lies in the balance in pricing
of its own product versus the competitor, even when both are resorting to brand
building. It is, in fact, advantageous to NewBee that they are able to keep
prices low, with the same level of margins as competitors, due to lower costs.
Here in this illustrative story, Newbee has been able to wipe off its
competitor from manufacturing.
Things to keep in mind for startup branding
strategies is a costly proposition. Still, many start-ups these days
undertake brand building very early, as they get hot money very soon in the
cycle and investors are in great hurry to create that hype to increase the
valuation, enabling them to exit with huge positive returns.
Ideal period of this cycle of investment-hype-customer
acquisition-growth-exit is 3 to 5 years. In this case, should a startup
undertake paid branding? If yes, what stage should it undertake it?
Consider the cases of amazon, makemytrip, flipkart, yatra,
via, redbus amongst many others, who built their product, refined it well over
time and then undertook paid branding.
While housing.com, ola, quikr, olx are some examples which
jumped to market with huge marketing budgets from an early stage. All the former
have painstakingly built their product, distribution, logistics and focused on
self-sustainability to create revenue first.
They approached the investors for growth-stage funding and
therefore pressure was diluted for big bang marketing. While later companies
got the seed /early stage funding and had the compulsion to generate market
It is no brainer that market valuation is more hype than
reality, now or in the dot-com era. Profit is not the leading criterion like in
case of amazon or flipkart. It has the potential to generate business in the
future that leads all the way.
It reminds stories of the era, when most companies going
for IPO, would build a healthy order book, possibly from friendly companies,
and go bust soon after the subscription, swindling many small time investors
who would have no means to know what happened.
branding is to target increased valuation and not sustenance, one must be
In the case of Newbee, it resorted to paid branding for the
startup branding strategies once it
attained substantial competitive advantage, else the chances of return over
investment reduced exponentially.
Writer mentors entrepreneurs