Brand equity building, market research needed as foundation to growth of MSMEs
(Manila, Philippines, April 5, 2011) – Micro, small, and medium enterprises (MSMEs) play a big role in boosting the economy of the Philippines, as this sector comprises 99.6% of businesses in the country. As the failure rate for startup small businesses can be high, Synergy managing director Germaine Reyes expressed the need for small businesses to know how to build brand equity to help them grow and eventually provide more job opportunities locally.
- Statistics from the United States Small Business Administration show that more than 50% of new business ventures fail in the first year and 95% are bound to fail in five years. This, said Reyes, may be a contributing loss to the country’s economy, particularly when MSMEs fuel the increase in employment for Filipinos and are a major contributor to the economy.
- More than 3 million jobs were created by MSMEs in 2009 or 63.2% of the total jobs generated in that year. As of 2009, the Department of Trade and Industry (DTI) recorded 777,357 MSMEs in the country and only 3,080 large enterprises. Moreover, this segment has contributed significantly to the Philippine economy, accounting for 25% of the country’s total exports revenue.
“As an entrepreneur starting a small business, understanding your competitive edge to succeed in an industry dominated by MSMEs is a huge challenge. Are you offering a product or service similar with others but there is no perceived differentiation? That’s a difficult space to compete in because you will succumb to just a price war with your competitors. Or, are you offering a product or service addressing a need that other players slightly or are not able to provide? This is a ‘space’ that you would like to be in so that, in the process of offering something different to your consumers, you can, in some way, justify your pricing,” Reyes commented.
Entrepreneurs should know the key questions in market research that they themselves can initially seek the answers to, Reyes elaborated. These key questions include: how does one position the product or service; who the audience is; and how should one price the product or service in relation with what the competition is offering. Having a clear knowledge on these is a good start to ensure success in the marketplace.
According to Reyes, in positioning one’s product or service, one should examine if they have recurring clients and ask them what benefits these clients see in their products or service which make them go back to them instead of going to their competitors. Or instead ask what the benefits the product or service provide and how unique it is compared to other players. It is this key or bundled benefit that needs to be reiterated, using whatever media or communication vehicle they deem appropriate for their target market. This is the start of brand-equity building, which is marketing.
Small businesses, however, should be clear on their target market. Unless they are offering a one-size-fits-all product/service, they need to identify whom in particular the key benefits of their product/service will be most relevant with. One should also be keen on who their closest competitors are for them to benchmark their pricing vis-à-vis offering. Lowering prices per se, which is often practiced by small businesses to secure short-term sales is not advisable in the long term, said Reyes.
Whether or not working on a tight budget, these are key market research questions most small businesses should know the answers to, Reyes said. “Market research can aid in reducing business risks and developing future action points for the growth of your small business,” explained Reyes. “As one’s market becomes sophisticated or more complex, however, the need to do this more systematically through a market research firm becomes more advisable.”
Conducting surveys or qualitative research by a market research firm are hoped to provide more comprehensive and be more cost-effective in the long-term instead of committing errors that will adversely impact the product or service. As one’s market becomes more complex, public information or doing backyard research may prove limiting. The use of more proven tools such as house-to-house interviews, intercept interviews, central location tests, telemarketing, and online research will become more appropriate and effective in obtaining inputs that provide better, well-directed solutions to move forward, finalized Reyes.
About Synergy Business Consultancy
Synergy Business Consultancy is a full-service marketing research consulting company. The company is currently celebrating its 11th year in providing marketing-based, business solutions to a diverse industry, from fast-moving consumer goods (FMCG) to service and business sectors. Synergy provides not just the ‘whats’, but also the ‘so whats’ and the ‘now whats’ of researches done. Synergy is also a member of ESOMAR and BPA/P.