Insight
Invisible Champion's Brand Development Path
[Taiwan Economic Research Monthly]
Analysis of the development types of brand enterprises in Taiwan
(Written by Guan Jialin)
According to the BAV (Brand Asset Valuation) model proposed by Young & Rubicam, using consumers' brand awareness as the horizontal axis and brand strength as the vertical axis, the development of corporate brands is categorized into four types: new brands, niche brands, brand leaders, and aging brands. In this article, we will focus on niche enterprise brands, with elemental brands, OEM-to-brand, and B2B-to-B2C enterprise types, supplemented with examples from GORE-TEX, a well-known international enterprise, and domestic cases such as Dingji, Baoxiong Fishing Tools, and Zhongwei Medical Materials, to explore different types of potential enterprise brand development and the path to break through, in the hope of providing more enterprises in Taiwan with successful cases to learn from.
Most people are familiar with the world's most famous companies, which are not only the focus of research by scholars, analysts and forensic organizations, but also the focus of investors. However, they have overlooked the invisible champions that are quietly shining the light and whose product market share is among the highest in the same industry in the world. These invisible champions influence Taiwan's economy with a value of NT$7 trillion and 9 million jobs, and their influence is not to be underestimated.
Herman Simon, one of Europe's leading management gurus, has studied nearly 500 outstanding German SMEs and awarded the title of Invisible Champion to some of the lesser-known companies that have the highest market share in their industry worldwide. Prof. Simon's definition of a German Hidden Champion is a company that meets the following three criteria: it is among the top three companies in its market, it has annual revenues of less than 4 billion US dollars, and it has a low level of public visibility.
Drawing on Germany's Invisible Champion, depicting the blueprint of Taiwan's solid enterprises
Since 2008, the global economy has been affected by the financial turmoil, and Taiwan, which relies heavily on export trade and is closely connected to the global economy, has been seriously impacted. In order to stabilize Taiwan's economy quickly and avoid marginalization of Taiwan's economy, the Taiwan government borrowed the development experience of Germany's "Invisible Champion" (attached) and combined it with the characteristics of Taiwan's industrial development to define Taiwan's Invisible Champion, which is also known as a hardcore enterprise: an enterprise that is of an appropriate scale, has solid basic technology, is technologically unique and critical in a specific field, is highly competitive in the international marketplace, and has the domestic market as its main operation or production base. The enterprises with appropriate scale, solid basic technology, technological uniqueness and criticality in specific fields, high international market competitiveness, and using the domestic market as their main operation or production base.
Exhibit: Invisible Champion Traits Seven Traits
1. Focused corporate goals
2. Rather be the head of the chicken market positioning
3. Close to and fully understand customers
4. Value Orientation as the Main Appeal
5. Emphasis on all-round innovation
6. To fight against competitors
7. Deepen the value chain without participating in alliances
Source: Industrial Development Bureau, Ministry of Economic Affairs, "Promotion of Medium-sized Enterprises (2012)".
Information from the 107th White Paper on Small and Medium Enterprises (SMEs) shows that there were about 1.43 million SMEs in Taiwan in 2017, accounting for 97.7% of all enterprises. hidden among these SMEs are a number of unknown champions that possess core technologies and competitiveness, but whose brand names are not well known. Taiwan's past OEM culture has allowed these enterprises to produce products in the shadow of others, and to be married to others. Some enterprises have realized that cost-oriented thinking is not a long-term solution, and they do not know where to start to make changes, and even encountered the dilemma of insufficient funds during the implementation process, which tests their determination to continue to move forward.
In order to support Taiwan's potential enterprises and revitalize Taiwan's economy, the government has been actively cultivating enterprises with key or unique technologies in specific fields under the "Promoting Medium-sized Enterprises to Leap Forward Program" in recent years, and has also promoted the "Brand Taiwan Development Program" by the Industrial Development Bureau (IDB) of the Ministry of Economic Affairs (MOEA), which has assisted enterprises to cultivate the value of their brands and strengthen Taiwan's brand competitiveness in the international arena. Below is a list of international and domestic success stories of three major business models: elemental branding, OEM-to-branding, and B2B-to-B2C, with a glimpse into their branding success.
International Case: GORE-TEX, a well-known apparel element brand
A product contains a unique element, the enterprise focuses on this characteristic to strengthen the promotion, so that the end consumers have a resonance with the unique selling point, so as to promote the sales of the product, this marketing mode is called "element brand" marketing. The world's most famous elemental brands include Intel, Tetra Pak, Dolby Audio, and for apparel, U.S. cotton fiber and Lycra fiber.
According to Kevin Lane Keller, an American brand management expert, elemental branding refers to the process of establishing brand equity for raw materials and components that suppliers must use in their downstream products. Intel began to promote the "Intel Inside" brand concept in the 1990s, before the concept of "elemental branding" emerged. Later, many companies began to follow suit, building trust with consumers and prompting ingredients to gradually become the brand standard for end-products. Another famous example is the apparel material brand GORE-TEX. In the early days, Gore was founded to research and develop polytetrafluoroethylene (PTFE), and during the research process, it was inadvertently discovered that expanded polytetrafluoroethylene (ePTFE) material had the amazing property of low water absorption. In 1970, a patent was filed for GORE-TEX, and a fabric that combined waterproofing, breathability, and windproofing was introduced to the market.
As a B2B brand, GORE-TEX continues its consumer marketing efforts in order to influence the end consumer. Generally speaking, very few companies communicate directly with consumers about their B2B products because this business model can easily lead to price wars, and upstream suppliers are forced to lower their costs when downstream manufacturers have other options. In order to change the predicament of "price comparison", upstream manufacturers must change their mindset and find ways to make their own enterprise's elemental products change from downstream manufacturers' "choices" to necessary "demands". By publicizing their elemental products to end-consumers, consumers will rely on a certain commodity element, and then take the initiative to tell downstream manufacturers about their demands so that the products are irreplaceable, and ultimately, achieve the ultimate goal of premium pricing.
Elemental brand marketing focuses on strong product power and thorough understanding of the market. In addition to knowing its position in the market, it is necessary to analyze in detail which end-product manufacturers it should choose to cooperate with, the reaction of competitors, how to maintain its own competitive advantage, and how consumers evaluate the elemental brand, and it is pointless to publicize the brand if it cannot gain the trust of the consumers. Factor brands are becoming more popular and more homogeneous competitors are likely to emerge in the future. Enterprises should regularly assess the value of their product brands, take good brand protection measures, and carefully choose end manufacturers in order to deeply root their brands in people's hearts.
  For more cases, please read the information outlined in the July 2019 issue ofTaiwan Economic Research Monthly (Vol. 42, No. 7)