‘B2B Brand Equity ’

Guided by: Prof. Sushil Chaurasia

Submitted by: Bhaskar Bhirisitti

Tolani Institute of Management Studies

Batch: 2009-11

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Objectives of research

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B2B Brand EquityIn Business-to-Business scenario, things are different – branding is not meant to be relevant. Many managers are convinced that it is a phenomenon confined only to consumer products and markets. Their justification often relies on the fact that they are in a commodity business or specialty market and that customers naturally know a great deal about their products as well as their competitors’ products. To them, brand loyalty is a non-rational behavior that applies to breakfast cereals and favorite jeans – it doesn’t apply in the more “rational” world of B2B products. Products such as electric motors, crystal components, industrial lubricants or high-tech components are chosen through an objective decision-making process that only accounts for the so-called hard facts like features/functionality, price, service and quality etc. Soft-facts like the reputation of the business, whether it is well known is not of interest. Is this true? Does anybody really believe that people can turn themselves into unemotional and utterly rational machines when at work? I don’t think so.

B2B Branding- In its simplest form, B2B branding involves creating a positive image and reputation to a company as a whole. Creating such goodwill with business customers can lead to greater selling opportunities and potentially more profitable relationships. A strong B2B brand can thus provide a significant competitive advantage.

Is B2B branding relevant? The B2B market makes up a huge percentage of the global economy. Some of the world’s most accomplished and respected brands belong to business marketers, such as GE, Hewlett- Packard, IBM, Intel, Microsoft, Oracle, SAP, and Siemens.

Results by BBDO Consulting Germany highlight the power of branding. To visualize the effect of brands and branding on share price, they compared the financial market performance of 23 of the 30 DAX companies. The obvious result of the enormous difference in performance accentuates the general importance of brands. Companies with strong brands have recovered significantly faster from the stock market “slump” in the wake of the 9/11 terrorist attacks than weaker brands. Strong brands provide companies with higher return. Companies that once measured their worth strictly in terms of tangibles such as factories, inventory, and cash have to revise their point of view and embrace brands as the valuable and moreover equally important assets they actually are (along with customers, patents, distribution, and human capital).

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Fig. 1. Branding’s effect on share price

Take for instance the Boeing Company. Somewhere around a decade ago a very interesting incident happened at the Boeing headquarters in Seattle. Shortly after Judith A. Muehlberg, a Ford veteran started as head of the Marketing and Public-Relations department, she dared to utter the “B” word in a meeting of top executives. Instantly, a senior manager stopped her and said: “Judith, do you know what industry you’re in and what company you’ve come to? We aren’t a consumer- goods company, and we don’t have a brand.”Since then US aerospace giant Boeing has come a long way. Nowadays, branding and brand management do matter in a big way to them. In 2000, the company’s first-ever brand strategy was formalized and integrated in an overall strategy to extend its reach beyond the commercial airplane business. Today, the brand spans literally everything from its logo to corporate headquarters. Even the plan to relocate its corporate headquarter from Seattle to Chicago has been devised with the Boeing brand in mind.

Is it possible after all that the brand of the product may be something beyond the hard facts? Could it have a much greater influence than is initially acknowledged? The truth is that the brand encompasses everything, conscious or unconscious. The brand is present in every influential dimension affecting the buying center. Soft facts like security, risk reduction and trust are the most susceptible to brand and brand message.

Brands reduce risk; if a buyer chooses a well-known brand he thinks he is on the safe side. Best example: “Nobody ever got fired for buying an IBM”. Brand influence doesn’t stop there, unconsciously, it can also heavily impact the way a person perceives hard facts like price, quality or service as in the case of IBM – IBM products are generally not cheap, nevertheless, quite

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often; a higher price is regarded as acceptable because people automatically associate high quality and service with it.

Upon reflection, the concept of why branding plays a significant role in B2B settings should be clear. The fundamental purpose of a brand is to simplify decision-making, set expectations, and reduce risk. Given that business decisions are often complex, involving high stakes and much uncertainty, the ability of a brand to help counteract those forces is powerful. A strong brand can provide valuable reassurance and clarity to business customers who may be putting their company’s fate – and perhaps their own careers!

Literature Review

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Introduction

While branding research predominantly focuses on consumer branding, recent years witness an increasing research interest in B2B branding. This research interest results in the publication of a major text on B2B brand management (Kotler&Pfoertsch, 2006) as well as the publication of a special brand management issue of the Journal of Business and Industrial Marketing in 2007. The second edition of a major B2B textbook (Anderson & Narus, 2004) also emphasizes B2B branding. In early research, the focus of B2B branding was from a product perspective that addresses the fundamental question of whether or not B2B companies should spend valuable marketing funds on branding their product. Many researchers applies the frameworks from pioneering researchers such as Aaker and Keller to researching branding in business markets. The focus of industrial branding is now expanding to the inclusion of services, nonindustrial contexts such as retailing, corporate branding, and considerations regarding the marketing mix.

Research papers of leading researchers in this growing area of branding research interest are studied by me. The resulting papers present an international perspective of branding decisions not only made by larger firms but also by small-to-medium size enterprises.

BUILDING A STRONG B2B BRAND

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Following the introduction, the first paper, ‘‘Building a Strong Business- to-business Brand’’ by Kevin Lane Keller examines how basic branding theory applies to B2B but also highlights some importance differences with consumer markets that marketers should be aware of. He then presents a series of useful guidelines for marketers in B2B markets which are applicable to a wide range of marketing contexts. These guidelines include:

1) The importance of ensuring that employees understand the brand 2) That the corporate brand is important something not always evident in consumer markets

with their emphasis on product brands and3) Third, Keller highlights the dangers of commoditization for marketers and that particular

care is necessary to frame value perceptions that differentiate a B2B brand in the marketplace. For many B2B buying decisions, the brand purchase often becomes part of the production process and not always visible to the end customer. Thus in these situations marketers may feel a temptation to emphasize product associations.

4) For the fourth guideline the importance of nonproduct imagery is emphasized. This guideline leads to the fifth one that emphasizes the importance of emotional associations for B2B buyers which leads to longer term business relationships.

5) Finally, the last guideline emphasizes the range of marketing program options available to brand markers and importance of careful segmentation to optimize the effectiveness of marketing expenditure. Overall, the underlying message for industrial marketers is to focus on what the brand means to B2B customers. Extending this focus on brand meaning beyond the marketing group and throughout the entire organization can result in significant competitive advantages for the marketer.

Applying Keller’s Brand Equity Model in a B2B

The second paper by Kerri Kuhn and Frank Alpert introduces the Customer- Based Brand Equity (CBBE) model by Kevin Keller, and empirically tests its applicability in the market of electronic tracking systems for waste management. While Keller claims that the CBBE pyramid can be applied in a B2B context, this research highlights challenges of such an application, and suggests changes to the model are required. Assessing the equity of manufacturers’ brand names is more appropriate than measuring the equity of individual product brands as suggested by Keller. Secondly, the building blocks of Keller’s model appear useful in an organizational context, although differences in the sub dimensions are required. Brand feelings appear to lack relevance in the industrial market investigated, and the pinnacle of Keller’s pyramid, resonance, needs serious modifications. Finally, company representatives play a role in building brand equity, indicating a need for this human element to be recognised in a B2B model.

B2B BRAND EQUITY: THEORY, MEASUREMENT, AND STRATEGY

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This paper addresses the importance of brand equity between suppliers and retailers. Research between retailer and suppliers has traditionally been the focus of marketing channels and supply chain management. In these areas the importance of brand equity lacks consideration despite the importance of distribution support in a firm’s marketing mix. Dealing with retailers is however seen as a sales force function and separate from traditional brand management. Quan Tran and Carmen Cox argue that the emphasis on consumer branding results in an incomplete picture of what marketers need to do in their brand-building efforts. Tran and Cox report the results of a study in the international marketing context of independent Vietnamese retailers and their attitudes towards brands of soft drink. Survey results show that brand equity, brand trust, and brand loyalties are important for retailers. Testing the model empirically includes structural equation modeling. Results show a good fit to the data. Within this model positive relationships exist between manufacturer support which influence the brand associations and retailer perceptions of how the brand is performing. The study also shows how branding theory applies to the B2B marketing in a developing country. Recognition of the role that retailers play within the brand marketer’s program is one result of this study. Traditionally, this role is observable within the channel as one of passive support with marketers emphasizing key account management in actively managing these relation- ships. However, this paper indicates that retailer behavior as brand loyalty metrics reflect is a useful outcome for B2B marketers.

An application of Keller’s brand equity model in a B2B context

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The importance of branding in industrial contexts has increased, yet a comprehensive model of business-to-business (B2B) branding does not exist, nor has there been a thorough empirical study of the applicability of a full brand equity model in a B2B context. This paper by Kerri-Ann L. Kuhn, Frank Alpert and Nigel K. Ll. Pope aims to discuss the suitability and limitations of Keller’s customer-based brand equity model and tests its applicability in a B2B market. The study involved the use of semi-structured interviews with senior buyers of technology for electronic tracking of waste management. The resultant model in comparison with the Keller’s Model is as follows

Findings – Findings suggest that amongst organizational buyers there is a much greater emphasis on the selling organization, including its corporate brand, credibility and staff, than on individual brands and their associated dimensions.

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EFFECTIVE STRATEGIES FOR B2B SERVICE BRANDS

This paper by Donna Davis, Susan Golocic, and Adam Marquardt examines how branding helps service providers in the logistics industry achieve marketplace differentiation. This paper draws attention to some fundamental differences between consumer and B2B branding.

1. Firstly, the importance of relationships with a small number of buyers and the resulting interdependence of buyers and sellers are substantially higher in most B2B versus B2C contexts.

2. Secondly, the fact that organizational buying decisions require multiple inputs from a range of individuals within the buyer organization. These points raise the question of how these fundamental differences affect the brand-marketing program.

This paper also focuses on another emerging area within branding theory, which is the study of service brands. Much of the early research into branding addresses the question of how brands affect consumer evaluations of products. One of the key questions for practitioners in this early branding research was how extending the brand to another product category impacts consumer’s brand evaluations. However, recent research underscores the importance of service rather than product to any market offering

Branding in B2B markets: insights from theService-dominant logic of marketing

This paper by David Ballantyne and Robert Aitken aims to explore how the service-dominant logic of marketing proposed by Vargo and Lusch impacts on business-to business branding concepts and practice. Vargo and Lusch argue that service interaction comes from goods-in-use as well as from interactions between a buyer and a supplier. Branding under S-D logic becomes a communicative interaction process whereby firms attempt to support the intended meanings of their value propositions. However, they go further and say that brand value is confirmed or disconfirmed in use, at the time of use, as customers confirm or disconfirm the value propositions in play. Findings – Goods become service appliances. Buyer judgments about the value-in-use of goods extend the time logic of marketing. The exchange concept is no longer transaction bound. Service-ability (the capability to serve) becomes the essence of a firm’s value propositions. Service experience becomes paramount in developing and sustaining the life of a brand.

Multiple roles of brands in business-to-business services

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This study by Jane Roberts and Bill Merrilees seeks to investigate the role of branding in a B2B service context. This paper focused on a particular B2B service industry, namely leasing mall space to retail tenants. A quantitative study is undertaken of 201 mall tenants using various statistical analysis.

The theoretical framework for this study was formulated in terms of a path analysis, as shown graphically in the figure.

The model represents a hierarchy of effects leading to the final contract renewal decision by the tenants. This model can be split into three main parts, moving backwards through the hierarchy of effects. Each path can be specified in terms of a specific hypothesis. For example, as shown in the figure, H1 refers to the path from brand attitude to renewal of the contract.The end stage of the model is the contract renewal decision. It is hypothesized that brand will be a major influence here (H1), consistent with the B2B product literature synthesized above. An additional influence could derive from trust (H2).The middle part of the model is the explanation of trust between the (mall) supplier and their customers (tenants). The traditional determinants of trust include empowerment (H3) and interaction that they term responsiveness (H4). Finally, unlike most traditional approaches to explaining trust, they introduced a relatively new potential influence, namely brand (H5).The front end of the model seeks to partially explain the development of brand attitudes. Service quality is one of the potential influences on brand attitudes (H6). A process variable, empowerment, is also included as a potential influence that might gain acceptability by the tenant (H7).Findings – The main finding was that brand attitudes were the most important influence on the contract renewal. Another major finding was that brand attitudes were mainly explained by service quality. Branding also played another, albeit minor role, in building trust between the supplier and the customers.

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B2B Branding Online

This paper by Haakon Jensen investigates the impact of information technology by exploring academic contributions on B2B branding by addressing four related research questions which are as follows

I. To what extent do academics agree on how to approach branding strategies?II. How does internal marketing reinforce the brand strategy?III. How does the online environment affect the external dimension of the branding triangle?IV. What impact will social media have on branding?

The main emphasis of the study is how the online environment is perceived and what impact social media will have on B2B branding. In order to address these questions the study explores issues with branding strategies and internal marketing. The findings of the study suggested that B2B brand strategies should be aligned towards and reinforce the overall business strategy, whilst striving for consistency throughout every customer touch point in order to achieve interactive effects from branding in multiple mediums. Internal marketing is important to obtain consistency, as the employees ultimately are the ones responsible for delivering upon the brand promise. These principles are also essential when engaging in social media.

Do B2B Brands Contribute to Relationship Marketing Success?

This paper by Mark Glynn reviews whether B2B brands can enhance B2B relationships. This paper examines the extent to which the literature has considered the inter-organizational aspects of B2B branding. The research question is to what extent do B2B brands contribute to relationship marketing success? The research method used is a literature review. The review firstly examines branding research from the buyer and then from the selling firm perspective. Then interorganisational aspects of buying and selling firms are examined. Finally, some implications and directions for further research are suggested.

BRAND IMAGE, CORPORATE REPUTATION, AND CUSTOMER VALUE

This paper by Anca Cretu and Rod Brodie examines how corporate reputation relates to brand image. Their research addresses the relationship outcomes of buyers that result from reputation and brand image. As both these components form part of the market offering other issues such the service delivery as well as prices and cost are important too. The conceptual framework in the paper shows the multidimensional nature of brand equity which means the brand part of the offering is just one component that B2B buyers evaluate. This research examines buyer–seller relationships in the hairdressing industry, the supplying of goods to a local hair dressing salon.

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In this research the relationship outcomes include customer value and customer loyalty. In contrast with previous studies the findings show a strong influence of corporate reputation on both value and loyalty. Prices and costs of the market offering also influence customer value. However, the linkage between the brand image and the market offering and customer value is only marginally significant. This research highlights the differential effect of both corporate reputation and brand image on relationship outcomes. Managers should be aware that brand image is influential as far as the product offering is concerned but to manage the relationship means that firms should pay more attention to managing corporate reputation as well as just focusing on brand management.

PRICING THEORY AND STRATEGY APPLICATIONS IN B2B BRAND MANAGEMENT

In this paper Gerald Smith and Arch Woodside examines theory and implementation of price decisions for B2B brands. This paper examines both the strategic and implementation aspect of price decisions in managing B2B brands. Unlike other aspects of the marketing mix such as product, place, and promotion, pricing decisions affects firm revenue directly. The paper presents a conceptual framework that includes the external market- place conditions as well as the strategic policy of the firm with regard to pricing together with the performance outcomes. The paper examines the literature on perceived value, perceived quality, pricing strategy, how buyers respond to pricing, segmented pricing, yield management systems likely competitor response, as well as an assessment of costing and contribution. The paper provides several examples of the value of these choice experiments. The paper includes a very useful price-signaling framework that compares competitive responses with opportunistic behavior. The paper concludes by recommending several options for B2B brand market- ers. These options illustrate the need for brand marketers to consider a wider range of goals rather than a simple focus on profit and loss. Brand marketers need to examine these ramifications using a large toolkit for pricing decisions.