By Ibn Kailan ABDUL-HAMID (Dr)
In today’s highly competitive business environment, it is no longer sufficient for firms (particularly small and medium-sized enterprises) to merely offer a product.
The ability to build and maintain a strong brand has become essential for differentiation, cultivating customer loyalty, and achieving long-term profitability. This article draws a clear distinction between a product and a brand and makes the case for why SMEs must prioritize branding as a strategic imperative.
Understanding the Difference: Product vs. Brand
While every business offers a product, not all succeed in building a brand. This difference (often underestimated) is especially crucial for SMEs that seek to carve a niche and establish a sustainable competitive advantage. A product is a tangible good or an intangible service designed to fulfill a functional need.
For instance, a smartphone facilitates communication and internet access; a consulting firm delivers specialized expertise. In contrast, a brand encompasses the perceptions, emotions, associations, and experiences that consumers attach to a product or an organization. It is the intangible essence that goes beyond functional utility and shapes how customers feel and think about a company.
SMEs must internalize the following five critical distinctions between products and brands
For small and medium-sized enterprises (SMEs), grasping the nuanced but significant differences between a product and a brand is a strategic imperative. These distinctions help SMEs move beyond transactional thinking and develop long-term value propositions that resonate with customers, stakeholders, and markets. Understanding these differences empowers SMEs to design marketing strategies, customer experiences, and organizational cultures that build brand equity over time. Below are five key distinctions SMEs must internalize and apply in practice:
. Function vs. Meaning
A product fulfills a functional or utilitarian need (it does something specific). It may be defined by its performance, design, ingredients, or technological features. For example, a water bottle serves the practical purpose of holding and dispensing water. A brand, on the other hand, adds meaning to that function. It answers deeper questions: What does this product represent? How does it make the consumer feel? For SMEs, this distinction means going beyond product specifications to define and communicate the symbolic and emotional value their offerings provide. Branding infuses products with purpose and narrative: key to influencing modern consumer choice.
Tangibility vs. Intangibility
Products are tangible (or at least clearly observable if services)—they can be measured, tested, compared, and evaluated on objective criteria like price, size, color, or features. Brands are intangible. They exist in the mind of the consumer as perceptions, expectations, memories, stories, and emotional connections. A consumer may not recall all the technical specifications of a product, but they remember how the brand made them feel—confident, inspired, secure, or connected. This distinction matters for SMEs because customers are increasingly driven by emotional and psychological triggers, not just functional needs. SMEs should therefore invest in creating brand experiences, customer stories, and consistent emotional cues that reinforce their identity and value.
Transaction vs. Relationship
A product facilitates a transaction (a one-time exchange of value). The interaction ends when the sale is completed, and no ongoing connection is guaranteed. A brand, however, builds a relationship with the customer. It creates a journey that extends beyond the point of sale. Through consistent delivery, shared values, and post-purchase engagement, a brand invites the customer to be part of an ongoing community. For SMEs, focusing solely on product delivery risks reducing the business to a commodity. Instead, brand-driven SMEs cultivate loyalty programs, social media engagement, customer service touchpoints, and shared missions that encourage long-term retention and advocacy.
Price vs. Value
Products are typically evaluated on their price and features. In markets where many businesses offer similar goods or services, competition often drives prices down, leading to thinner margins and profit erosion. Brands compete on value (the perception of what the product is worth beyond its price). A branded handbag, for example, might cost five times more than an unbranded one with the same materials, but customers pay the premium because of perceived quality, identity association, and social status. For SMEs, building a brand allows for value-based pricing, rather than cost-based or competitor-based pricing. This means they can charge more, improve profitability, and avoid destructive price competition. The key is to communicate why the brand matters and how it enhances the customer’s experience or identity.
Commoditization vs. Differentiation
A product (especially when undifferentiated) is easily copied or substituted. In crowded markets, this leads to commoditization, where products become indistinguishable from one another, and price becomes the primary differentiator. A brand, by contrast, is unique. It reflects a distinctive personality, voice, promise, and positioning that competitors cannot easily replicate. Brands are built on history, reputation, customer experience, emotional connection, and consistent messaging. SMEs must recognize that product features alone will not sustain competitive advantage. Investing in brand development (through storytelling, design, culture, and positioning) allows them to stand out and build defenses against imitation. It transforms their offerings from interchangeable commodities into meaningful, memorable experiences.
Why SMEs Should Prioritize Branding
Branding is often mistakenly viewed as the preserve of large corporations with significant marketing budgets. However, in today’s dynamic and highly competitive environment, branding is even more critical for small and medium-sized enterprises (SMEs). Far from being a luxury, branding for SMEs is a strategic necessity—an engine for differentiation, growth, and survival. Below are arguments on why SMEs should make branding a top business priority:
Customer Loyalty and Advocacy
Branding is central to building emotional connections that translate into customer loyalty. While products satisfy functional needs, brands create trust, familiarity, and belonging. These are especially important for SMEs, which often lack the scale and price competitiveness of larger rivals. A well-established brand fosters repeat business (critical for SMEs that rely heavily on a stable customer base due to limited marketing reach). Moreover, loyal customers become brand advocates, promoting the business through word-of-mouth, online reviews, and social media (often at no cost to the business). This form of advocacy not only reduces customer acquisition costs but also enhances credibility in the market.
Pricing Power and Profitability
Unlike products that often compete on price, strong brands compete on perceived value. When consumers trust a brand and feel emotionally connected to it, they are more willing to pay a premium. This allows SMEs to shift away from the destructive race to the bottom associated with price wars. Brand equity enables SMEs to defend pricing even in competitive environments, protecting their margins and creating more room for reinvestment and innovation.
Market Differentiation
In saturated and commoditized markets, differentiation is vital. Without a brand, SMEs risk being viewed as interchangeable suppliers of generic goods or services. Branding provides the means to craft a distinct identity through visual elements (logos, colors, packaging), verbal elements (taglines, tone of voice), and experiential elements (customer service, store design, digital experience). Through branding, SMEs can highlight their unique selling proposition (USP), whether it be craftsmanship, local relevance, sustainability, or cultural resonance. This distinct positioning makes it easier for consumers to remember and choose the brand over generic alternatives.
Strategic Flexibility and Growth
A strong brand provides a platform for diversification and growth. Customers who trust a brand are more receptive to new products introduced under that brand name. This allows SMEs to extend their brand equity across categories—launching complementary products or entering new markets without starting from scratch. For example, an SME known for producing high-quality organic skincare products can leverage its brand reputation to launch a natural haircare line or enter new regional markets. The brand becomes a bridge for growth, reducing perceived risk for customers and enabling more agile business expansion.
Attracting Talent, Partners, and Investors
Brand perception doesn’t just influence customers; it also affects potential and current employees. Talented professionals prefer to work for companies with strong, reputable brands that align with their values and offer a sense of purpose and pride. In a talent-driven economy, an SME with a compelling employer brand is better positioned to attract skilled workers, reduce turnover, and enhance internal morale. Employees often become brand ambassadors, influencing both internal culture and external perceptions.
Building Credibility with Investors and Business Partners
Investors, suppliers, and other strategic partners are more likely to engage with SMEs that demonstrate professionalism, consistency, and market relevance (all of which are conveyed through branding). A strong brand communicates stability, growth potential, and a clear market position, helping SMEs gain access to funding, better terms of trade, or collaborative opportunities. Branding also signals a long-term orientation (indicating that the SME is not merely focused on short-term sales but is committed to creating lasting value).
Enabling Emotional Differentiation
Beyond functional differentiation, branding allows SMEs to connect with customers on an emotional level (an increasingly powerful form of competitive advantage). Brands that tap into identity, values, aspirations, or community can command deeper loyalty. For example, SMEs that emphasize sustainability, cultural heritage, or social empowerment resonate with value-driven consumers who are not merely buying products but aligning with causes. This emotional appeal can convert customers into lifelong advocates.
Resilience During Crises
A strong brand provides a buffer during challenging times. In periods of economic downturn, public relations issues, or competitive disruptions, brands with established trust and loyalty are more likely to retain customers and recover faster. SMEs with weak or nonexistent brands are often the first to lose market share in a crisis.
Conclusion
While offering a product is fundamental, building a brand is transformational. SMEs that invest in brand development move beyond transactional selling to become trusted and valued entities in the lives of their customers. By understanding the fundamental differences between a product and a brand, and by implementing deliberate brand-building strategies, SMEs can unlock long-term growth, profitability, and resilience in an increasingly dynamic marketplace.
The writer is the Head, Department of Marketing, University of Professional Studies, Accra
