Factors influencing the branding practices of SMEs in B2B markets in South Africa

Abstract

The development and growth of small and medium (SME) sized businesses is of national importance to the economic growth of South Africa as is evident in the attention the government places on growing this sector, culminating in the recent creation of a dedicated Small Business Ministry. Given this importance, the sustainable growth of small businesses, from initial concept and start-up, through growth and into maturity is of critical importance. It is counterproductive if small businesses get started, and then collapse. This will be an economic drag – not a boost. Anything that can help small companies to grow sustainable should receive great attention. This research study is an attempt at doing just this. Within the SME sector, many businesses focus on the individual end consumer. This Business to Consumer sector (B2C) is well known to most because it is the “front-end” of the economy. This is also the sector that has embraced modern marketing practices most openly in an effort to attract “shoppers”. But there is another, often less obvious segment to the economy: businesses focused on the needs of other businesses. This business-to-business (B2B) sector is notorious for being slower in embracing marketing as a key to sustainable growth and this becomes even more pronounced within the SME sector. Hence the primary research question of this study: What are the factors impacting the branding practices of B2B SMEs in South Africa? A quantitative approach was followed using exploratory factor analysis to analyse the key contributing factors among a sample of 164 small businesses operating within South Africa and focused primarily on business markets. Key findings of this study highlight the lack of modern marketing practices in B2B SME’s, firstly on a global scale, as indicated by the literature review, and then specifically in South Africa. Specifically, small companies neglect the development of their corporate brand. They are often still stuck in a mind-set of selling products instead of building deeper bonds between the company itself, its core offering and iv its key stakeholders. Clearly many small companies suffer an early demise because they neglect their brand. Ultimately, the development of a healthy SME sector in South Africa, especially within the B2B sector, require more than just prudent financial management, a good product or service, hard work and dedication. It also requires an ingredient – call it the secret ingredient because it is so widely neglected – of careful brand management from an early stage.