business & industrial marketing

Journal of Business & Industrial Marketing Branding in industrial markets Guest Editors: Michael Beverland, Adam Lindgreen and Julie Napoli Volume 22 Number 6 2007 ISSN 0885-8624 www.emeraldinsight.com jbim cover (i).qxd 17/10/2007 08:54 Page 1 Journal of Business & Industrial Marketing Volume 22, Number 6, 2007 ISSN 0885-8624 Branding in industrial markets Guest Editors: Michael Beverland, Adam Lindgreen and Julie Napoli Contents 354 Access this journal online 355 Guest editorial 357 Being known or being one of many: the need for brand management for business-to-business (B2B) companies Philip Kotler and Waldemar Pfoertsch 363 Branding in B2B markets: insights from the service-dominant logic of marketing David Ballantyne and Robert Aitken 372 Branding implications of partner firm-focal firm relationships in business-to-business service networks Felicia Morgan, Dawn Deeter-Schmelz and Christopher R. Moberg 383 The importance of brand in the industrial purchase decision: a case study of the UK tractor market Keith Walley, Paul Custance, Sam Taylor, Adam Lindgreen and Martin Hingley 394 Branding the business marketing offer: exploring brand attributes in business markets Michael Beverland, Julie Napoli and Raisa Yakimova 400 Sources of brand benefits in manufacturer-reseller B2B relationships Mark S. Glynn, Judy Motion and Roderick J. Brodie 410 Multiple roles of brands in business-to-business services Jane Roberts and Bill Merrilees 418 The role of corporate brand image in the selection of new subcontractors Anna Blomba ¨ ck and Bjo ¨ rn Axelsson 431 Executive summary and implications for managers and executives Access this journal electronically The current and past volumes of this journal are available at: www.emeraldinsight.com/0885-8624.htm You can also search more than 150 additional Emerald journals in Management Xtra (www.emeraldinsight.com/emx) See page following contents for full details of what your access includes As a subscriber to this journal, you can benefit from instant, electronic access to this title via Emerald Management Xtra. Your access includes a variety of features that increase the value of your journal subscription. 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However, you can also access and search the article content of this journal through the following journal delivery services: EBSCOHost Electronic Journals Service ejournals.ebsco.com Informatics J-Gate www.j-gate.informindia.co.in Ingenta www.ingenta.com Minerva Electronic Online Services www.minerva.at OCLC FirstSearch www.oclc.org/firstsearch SilverLinker www.ovid.com SwetsWise www.swetswise.com Emerald Customer Support For customer support and technical help contact: E-mail support@emeraldinsight.com Web www.emeraldinsight.com/customercharter Tel +44 (0) 1274 785278 Fax +44 (0) 1274 785201 www.emeraldinsight.com/jbim.htm Guest editorial About the Guest Editors Michael Beverland is a Senior Lecturer in Marketing at the University of Melbourne. He has published in several journals including Business Horizons , European Journal of Marketing , Industrial Marketing Management , Journal of Advertising , Journal of Business & Industrial Marketing , Journal of Business Research , Journal of Management Studies , and the Journal of Product Innovation Management . Adam Lindgreen is a Professor of Strategic Marketing at Hull University of Technology. He has published in several journals, including Industrial Marketing Management , Journal of Business Ethics , Business Horizons , Journal of Marketing Management , and Psychology & Marketing , among others. Julie Napoli is a Senior Lecturer in Marketing at the University of Melbourne. She has published in several journals, including Business Horizons , International Journal of Advertising , Journal of Advertising Research , Journal of Business Research , and Journal of Small Business Management . Introduction to the special issue on branding in industrial markets Branding is gaining prominence among business-to-business marketers. However, extant research on branding in the context of business-to-business marketing remains scarce, with suggested conceptual frameworks lacking empirical support. Current research suggests that brands play some role in purchasing decisions in business markets, and that brands provide a source of competitive differentiation. Research also suggests that there are differences between consumer and industrial brand management. While much literature has been published on consumer brand management, we lack guidance on key industrial brand issues, however. Su ch issues include strateg ic brand management, brand architecture, brand building and maintenance, brand repositioning, and tactical branding issues. This special issue of Journal of Business & Industrial Marketing addresses some of the research lacunae identified above. Following our own Guest Editorial, the first paper, “Being known or being one of many: the need for brand management for business-to-business (B2B) companies” by Philip Kotler and Waldemar Pfoertsch, adds knowledge to the field of business-to-business brand research by examining the need of branding for business-to-business companies and analyzing the options for success by means of the stock performance. Long-term branding strategies, brand performance and firm’s business performance are found to be positively correlated with stock increase. Business performance can be improved using current brand focus and guiding principles. Also, the findings suggest that companies should not only focus on brand development, but rather adopt a long-term branding strategy. The second paper, “Branding in B2B markets: insights from the service-dominant logic of marketing” by David Ballantyne and Robert Aitken, builds on insights from the service-dominant logic of marketing. The authors explore what reciprocal application of resources, knowledge, and competencies for the benefit of another party means for brands and branding in a business-to-business context. Also, several managerial implications are identified as follows. Value received comes from direct service interactions and serviceability of goods in use – and is a firm’s principal branding opportunity. Also, brand marks are transitional communicative devices, stimulating brand recognition and reputation. The paper suggests that firms develop or support brand communities (web-based), contribute to the service cycle episodes experienced by customers by developing a strategic branding approach, and co-create value by co- branding. Lastly, the paper argues that business-to-business marketing could be emotion-based and not merely logic- and rational-based. The third paper, “Branding implications of partner firm- focal firm relationships in business-to-business service networks” by Felicia Morgan, Dawn Deeter-Schmelz, and Christopher R. Moberg, examines, through a conceptual model, how customers evaluate firms in a strategic, business- to-business service outsourcing network, and how their assessment of firms involved in co-producing after-sales service affects their evaluations of a focal selling firm. Key factors influencing this relationship include focal brand strength and the strength of the relationship between the partner firm and the focal selling firm. Among the study’s findings are that post-sale business services provided directly to the customer – irrespective of whether those services are provided by the firm or its partners – play an important role in building a firm’s brand image and equity. As such, this is one of few studies investigating the way customers evaluate service when it is performed by multiple partners, thereby providing guidance on ways of improving the service experience of network customers. The fourth paper, “The importance of brand in the industrial purchase decision: a case study of the UK tractor market” by Keith Walley, Paul Custance, Sam Taylor, Adam Lindgreen and Martin Hingley, examines the role of branding in the industrial purchase of agricultural tractors in the UK. Following explor ative interviews with farmers and farm contractors, the study identifies through conjoint analysis the importance of five different attributes in industrial purchasers’ decisions on tractor brand. Also, the importance of the attributes by tractor brand ownership is identified. Lastly, overall brand utility and brand utility by tractor brand ownership are identified. Among the study’s implications are that manufacturers and distributors need to maintain a strong image. Also, they may charge higher prices for tractors, using the extra revenue to reinforce their brand image. On-farm demonstration of new tractors could be an experiential marketing strategy. Special attention should be given to the location of dealers and the service they provide. The fifth paper, “Branding the business marketing offer: exploring brand attributes in business markets”, by Michael Beverland, Julia Napoli and Raisa Yakimova, considers attributes for building strong brand identity: . product; . service; . logistics; . advice; and . adaptation. Journal of Business & Industrial Marketing 22/6 (2007) 355– 356 q Emerald Group Publishing Limited [ISSN 0885-8624] 355 Two types of brands benefit from product benefits: high performance brands and ingredient brands. When a product is conceptualized in ter ms of product innovation or leadership, brand identity is linked to a firm-level capability. Products may be augmented with services, suppliers may sell services rather than products, and sub-contractors may provide service capabilities to customer s. Logistics, consisting of capabilities and involving standardized and customized components, are relevant for retailers seeking to outsource category management. Suppliers of complex services and product suppliers of heavy capital items may pursue adaptation. Lastly, advice is relevant for advertising agencies, market research agencies, business consulting, and product suppliers, among others. The sixth paper, “Sources of brand benefits in manufacturer-reseller business-to-business relationships” by Mark S. Glynn, Judy Motion and Roderick J. Brodie, investigates, through a qualitative study of six grocery and liquor retailers, what the financial, customer, and managerial benefits of manufacturer brands are to resellers of packaged goods. In so doing, the paper is one of the first studies to examine the role of brands in channel relationships. The findings help manufacturers to understand and manage their brands’ benefits and, in turn, enhance the relationships outcomes with resellers. These outcomes are satisfaction with the brand, commitment to the brand, trust in the brand, dependence on the brand, and cooperation with the manufacturer. Among the study’s managerial implications are that minor brands are also important to resellers, for example in countering the strength of major brands in a product category. The seventh paper, “Multiple roles of brands in business- to-business services” by Jane Roberts and Bill Merrilees, investigates, through a quantitative study of 201 retail tenants, the role of branding in the context of leasing mall space to retail tenants. A four-stage process, which leads to renewal of mall lease, was identified as fitting the data. Brand attitudes could be explained mainly by service quality. The study also identified that brand performance played two major roles. First, brand performed a traditional role as a contributor to the re-buy or repurchasing decision. Second, brand performed a role as a builder of relationship quality. As such, this paper is one of the first to examine the multiple roles that brands can play in business-to-business marketing. There are various practical implications of the st udy’s findings. For example, the study’s findings may be used by industrial firms to build stronger brands and, in turn, to use these brands to build better relationships with their business customers. Finally, the eighth paper, “The role of corporate brand image in the selection of new subcontractors” by Anna Blomba¨ck and Bjo¨rn Axelsson, investigates why and how corporate brand image plays a role in the selection of new subcontractors. A qualitative study of three subcontractors and six of their customers allows for an examination of buyers’ and sellers’ considerations in sales and purchasing processes. Among the study’s findings is that the role of brands is to gain interest, as well as provide trust to customers. Explicit communications to build trust are identified relating to different phases of the selection process. These communications are discussed in terms of content and source and are translated – in terms of implications – to the subcontractors. Specific issues not dealt with in this issue include: what are current brand development practices in business marketing? How is brand architecture managed in business markets (including corporate branding)? Also, what are brand- building and brand-repositioning capabilities in business markets (the capabilities behind brand building, maintenance, and growth)? What are brand extension and repositioning strategi es? Wha t is t he role of in tegrated marketing communications in business-to-business branding? What are important similarities and differences between branding in business-to-business products and services? What are buyer receptions to business-to-business branding efforts such as the importance, or lack thereof, of brands in the purchase process? What is the role of salespeople in business branding? Are there different peculiarities of business-to-business brands in international markets (including global branding issues)? Lastly, how can business-to-business brands be valued? We would like to take the opportunity of thanking all those who have contributed towards this special issue of Journal of Business & Industrial Marketing. First, we thank the reviewers who have taken time to provide timely feedback to the authors, thereby helping the authors to improve their manuscripts. The reviewing was a double-blind reviewing process. We thank the following reviewers: . Michael Antioco (Eindhoven University of Technology); . Liliana Bove (Melbourne); . Sonia Dickinson (Curtin University of Technology); . Andreas Eggert (Paderborn); . Mike Ewing, Francis Farrelly, Samir Gupta, and Raisa Yakimova (all at Monash); . Victoria Little (Auckland); . Roger Palmer (Cranfield); . Leyland Pitt (Simon Fraser); . Pascale Quester (Adelaide); and . Christine Vallaster (Innsbruck). Second, we would like to extend special thanks to the editor Wesley Johnston (Georgia State University) for giving us the opportunity of guest editing a special issue of Journal of Business & Industrial Marketing. Last, but not least, we warmly thank all of the authors who submitted their manuscripts (not previously published elsewhere) for consideration of inclusion in Journal of Business & Industrial Marketing. We appreciate and are grateful for the authors’ desire to share their knowledge and experience with the journal’s readers – and for having their views put forward for possible challenge by their peers. We are confident that the articles in this Special Issue contribute to our understanding of branding in business markets. Michael B. Beverland, Adam Lindgreen and Julie Napoli Guest Editors Guest editorial Journal of Business & Industrial Marketing Volume 22 · Number 6 · 2007 · 355 – 356 356 Being known or being one of many: the need for brand management for business-to-business (B2B) companies Philip Kotler Marketing Department, Kellogg School of Management, Northwestern University, Evanston, Illinois, USA, and Waldemar Pfoertsch Pforzheim University, Pforzheim, Germany and China Europe International Business School, Shanghai, People’s Republic of China Abstract Purpose – This analysis aims to examine the need of business-to-business companies for branding and analyzes the options for success by means of the stock performance. Design/methodology/approach – The paper consists of a qualitative and quantitative pilot study and a quantitative main survey. Findings – Long-term branding strategies, brand performance and firm’s business performance are found to be positively correlated with stock increase. Current brand focus and use of guiding principles can lead to improved business performance. Research limitations/implications – The study has possible location- and industry-specific limitations. Practical implications – Managerially, the findings encourage firms to adopt a long-term branding strategy, focusing not only on brand development. Originality/value – By systematically examining relationships between branding strategy and performance of the global firms, this study adds knowledge to the field of B2B brand research. Keywords Business-to-business marketing, Brand management, Marketing strategy, International marketing Paper type Conceptual paper An executive summary for managers and executive readers can be found at the end of this issue. Introduction When talking about brands most people think of Coca-Cola, Apple, Ikea, Starbucks, Nokia, and maybe Harley Davidson. These brands also happen to be among the most cited best- practice examples in the area of business-to-consumer (B2C) branding[1]. For these companies their brand represents a strong and enduring asset[2], a value driver that has literally boosted the company’s success. Hardly any company neglects the importance of brands in B2C. In business-to-business (B2B), 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, benefits, price, service, and quality, etc. (Aaker and Joachimsthaler, 2000, p. 22; Pandey, 2007). 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? We don’t think so. Is branding relevant to B2B companies? Microsoft, IBM, General Electrics, Intel, HP, Cisco Systems, Dell, Oracle, SAP, Siemens, FedEx, Boeing – they are all vivid examples of the fact that some of the world’s strongest brands are B2B brands. Although most also operate in B2C segments, their main business operations are concentrated on B2B. Then why are so many B2B companies spurning their fortune? Take Boeing, for instance. Only a few years 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”[3]. Since then US aerospace giant Boeing has come quite a long way. Nowadays, The current issue and full text archive of this journal is available at www.emeraldinsight.com/0885-8624.htm Journal of Business & Industrial Marketing 22/6 (2007) 357– 362 q Emerald Group Publishing Limited [ISSN 0885-8624] [DOI 10.1108/08858620710780118] Philip Kotler and Waldemar Pfoertsch have recently published B2B Brand Management (Springer, Heidelberg/New York, NY, 2006, ISBN 978-3- 540-25360-0); parts of this paper are from this publication. 357 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 headquarters from Seattle to Chicago has been devised with the Boeing brand in mind (Khermouch et al., 2001). In 2005, Boeing introduced its new flagship aircraft. In a worldwide campaign with AOL, they searched for a suitable name and invented the “Dreamliner”, which was inaugurated by Rob Pollack, Vice President of Branding for Boeing Commercial Airplanes Marketing[4]. What is branding all about anyway? First of all we can tell you what it is not: it is definitely not about stirring people into irrational buying decisions. Being such an intangible concept, branding is quite often misunderstood or even disregarded as creating the illusion that a product or service is better than it really is (Hague and Jackson, 1994). There is an old saying among marketers: “Nothing kills a bad product faster than good advertising” (de Legge, 2002). Without great products or services and an organization that can sustain them, there can be no successful brand. Now you may wonder what branding really is all about. Scott Bedbury, author of the book A New Brand World puts it as follows: Branding is about taking something common and improving upon it in ways that make it more valuable and meaningful (Bedbury, 2002, p. 14). Brands serve exactly the same general purpose in B2B markets as they do in consumer markets: they facilitate the identification of products, services and businesses as well as differentiate them from the competition (Anderson and Narus, 2004). They are an effective and compelling means to communicate the benefits and value a product or service can provide (Morrison, 2001). They are a guarantee of quality, origin, and performance, thereby increasing the perceived value to the customer and reducing the risk and complexity involved in the buying decision (Blackett, 1998). Brands and brand management have spread far beyond the traditional view of consumer-goods marketers. Brands are increasingly important for companies in almost every industry. Why? For one thing, the explosion of choices in almost every area. Customers for everything from specialty steel to software now face an overwhelming number of potential suppliers. Too many to know them all, let alone to check them out thoroughly. For example, Pitney Bowes, one of the winners in Jim Collins’s book Good to Great (Collins, 2001), has recently introduced a new branding campaign. After being on the success track for more than 15 years, they felt it necessary to educate their customers about all their new products. Chairman and CEO Michael J. Critelli explained on Bloomberg television how Pitney Bowes’s new business- building brand campaign will fuel the company’s long-term growth strategy, and his Chief Marketing Officer Arun Sinha elaborated that a brand is more than a product – it’s a shorthand that summarizes a person’s feelings toward a business or a product. A brand is emotional, has a personality, and captures the hearts and minds of its customers. Great brands survive attacks from competitors and market trends because of the strong connections they forge with customers. And that is what Pitney Bowes wants to achieve with its B2B customers. The internet furthermore brings the full array of choices to every purchaser or decision maker anywhere with just one mouse click. Without trusted brands as touchstones, buyers would be overwhelmed by an overload of information no matter what they are looking for. But brands do not only offer orientation, they have various benefits and advantages for customers as well as the “brand parents”. They facilitate the access to new markets by acting as ambassadors in a global economy (Khermouch et al., 2001). Another important aspect of B2B branding is that brands do not just reach your customers but all stakeholders – investors, employees, partners, suppliers, competitors, regulators, or members of your local community. Through a well-managed brand a company receives greater coverage and profile within the broker community (Pandey, 2007). Other than the biggest misconception that branding is only for consumer products and therefore wasted in B2B, there are other common misunderstandings and misconceptions related to B2B branding and branding in general. One frequently mentioned branding myth is the assumption that “brand” is simply a name and a logo. Wrong! Branding is much more than just putting a brand name and a logo on a product or service. Take a moment and try to think about what “brand” means to you personally. Without a doubt certain products, brand names, logos, maybe even jingles, pop into your head. Many people think that this is all when it comes to defining brands. But what about the feelings and associations connected with these products, brands, companies? What about the articles you’ve read about them? What about the stories you’ve heard about them? What experiences have you had with those products, brands, companies? We could go on and pose more questions like these. A brand is an intangible concept. To simplify it and make it easier to grasp is quite often equated with the more tangible marketing communications elements that are used to support it – advertising, logos, taglines, jingles, etc. – but a brand is so much more than that (Dunn and Davis, 2004; Knapp, 2000): . a brand is a promise; . a brand is the totality of perceptions – everything you see, hear, read, know, feel, think, etc. – about a product, service, or business; . a brand holds a distinctive position in customers’ minds based on past experiences, associations, and future expectations; and . a brand is a short-cut of attributes, benefits, beliefs, and values that differentiate, reduce complexity, and simplify the decision-making process. Keeping all this in mind makes it clear that brands cannot be built by merely creating some fancy advertising. If you internalize the concept of “brand” as a promise to your customers it is quite obvious that it can only come to life if you consistently deliver on that promise. Of course, your brand promise needs to be clearly defined, relevant and meaningful, not to be mistaken with exaggerated marketing promises. A further misconception of branding is that it is seen as a small subset of marketing management. Wrong again! Since a brand is reflected in everything the company does, a holistic branding approach requires a strategic perspective. This Being known or being one of many Philip Kotler and Waldemar Pfoertsch Journal of Business & Industrial Marketing Volume 22 · Number 6 · 2007 · 357 – 362 358 simply means that branding should always start at the top of your business. If your branding efforts are to be successful, it is not enough to assign a brand manager with a typically short-term job horizon within company (Aaker and Joachimsthaler, 2000). Building, championing, supporting and protecting strong brands is everyone’s job, starting with the CEO (Bedbury, 2002). Active participation of leaders is indispensable because they are the ones who ultimately will be driving the branding effort. Brands and brand equity need to be recognized as the strategic assets they really are, the basis of competitive advantage and long-term profitability. It is crucial to align brand and business strategy, something that can only effectively be done if the brand is monitored and championed closely by the top management of an organization Aaker and Joachimsthaler, 2000, p. 19). To appoint a Vice President of Branding, someone who is responsible solely for brand management, would be an important step. No matter what the actual title, this person should be the one person taking the required actions for keeping the brand in line. Strong leaders demonstrate their foresight for the brand, make symbolic leadership gestures, and are prepared to involve their business in acts of world statesmanship that go beyond the short term, and therefore require the sort of total organizational commitment that only the CEO can lead. Consider Nucor, America’s largest steel producer today. In 1972, about five years after facing bankruptcy, F. Kenneth Iverson as President and Samuel Siegel, Vice President of Finance, renamed the company and announced “Nucor sells steel to people who actually care about the quality of the steel”. This announcement and all steps that followed propelled the company to the top of its industry. But do brands really pay off? Are they worth the effort and time? Evaluating and measuring the success of brands and brand management is a rather difficult and controversial subject. Moreover, it is not always possible to attribute hard facts and numbers to them, which most marketers certainly prefer. As a result, there are only a restricted number of research project and analysis dealing with the actual return on investment for brands. Current research results[5] 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 German DAX companies (see Figure 1). 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). Companies can benefit tremendously from a vibrant brand and its implicit promise of quality since it can provide them with the power to command a premium price among customers and a premium stock price among investors. Not only can it boost your earnings and cushion cyclical downturns, it can even help you to become really special (Khermouch et al., 2001). The analysis of the largest DOW companies (see Figure 2) shows an even more drastic situation[6]. The stock market success of the “over performers” was even larger than in the first analysis. The top B2B brand performers were: . Caterpillar; . GE; and . Hewlett Packard. Caterpillar increased its position in an exceptional way. The “under performers” were: . Intel; . IBM; . J.P. Morgan; and . Microsoft. It is worth mentioning that between 2002 and 2005 Microsoft continuously lost brand value. Even in 2002 when the crisis hit strongly the brand did not lose too much stock value (only 2 6 percent, as compared with an average of 2 24 percent, and 2 36 percent for the “under performers”). These data stress the notion that weak brands particularly suffer in difficult times and do not recover as quickly as strong brands. These findings also suggest that the brand strength of B2B companiesclearlyhasanimpactonfinancialmarket performance. Ongoing analysis of the largest global companies using the same methods suggests that the Interbrand value (see Figure 3) is positively correlated with market capitalization throughout the years 1999-2006[7], and that the Interbrand value is significantly positively correlated with income and net income. We also showed that market capitalization is significantly positively correlated with income and net income. Market capitalization is not correlated with advertisements. The definition, benefit, and functions of brands embrace every type of business and organization. In order to create and maintain the sustainable competitive advantage offered by the brand, companies need to concentrate their resources, structure, and financial accountability around this most important asset. Businesses with a strong brand positioning are benefiting from clarity of focus that provides them with more effectiveness, efficiency, and competitive advantage across operations (Clifton and Simmons, 2003). B2B brand advocates underline that the real importance of brands in B2B has not yet been realized. McKinsey & Company is one of them. Together with the Marketing Centrum Muenster (MCM), one of the best known German research institutes, they investigated and analyzed the importance and relevance of brands in several German B2B markets. They revealed that the most important brand functions in B2B are (Caspar et al., 2002, p. 13): . increase information efficiency; . risk reduction; and . value added/image benefit creation. Since these functions are essential determinants of the value a brand can provide to businesses, they are crucial in regard to determining brand relevance in certain markets (Caspar et al., 2002). The above mentioned brand functions are also vital to B2B markets. Nobody can guarantee that a business will realize immediate benefits after implementing an overall brand strategy. Since branding requires a certain amount of Being known or being one of many Philip Kotler and Waldemar Pfoertsch Journal of Business & Industrial Marketing Volume 22 · Number 6 · 2007 · 357 – 362 359 investment, it is more probable that it will see a decline in net profits in the short run. Brand building is aimed at creating long-term non-tangible assets and is not meant for boosting short-term sales. Michael J. Critelli, CEO of Pitney Bowes (Sinha, 2003) is aware of this and ran re-branding efforts over a period of many years to ensure his company’s future success. In the 1980s, personal computers gradually entered the homes of consumers. At that time the highly recognized brands in the industry were those of computer manufacturers like IBM, Apple, and Hewlett-Packard. Back then, only the most sophisticated computer users knew what kind of microprocessing chip their machines contained, let alone who made them. All that changed in 1989, when Intel decided to brand its processors. Because of the accelerating pace of technological change as well as constantly growing sales rates in the consumer market, the company decided to focus on end users. They realized that establishing a brand was the only way to stay ahead of the competition. Today, Intel is a leader in semiconductor manufacturing and technology, supported and powered by their strong brand, an almost unbeatable competitive advantage, due to the ingredient branding approach and the “Intel Inside” campaign, an approach which will be important for increasingly sophisticated customers (Kotler and Pfoertsch, 2007). It is also not the intention to claim that B2B branding is the answer to all your company’s problems. Just as there are Figure 1 Branding’s effect on DAX companies’ share price Figure 2 Branding’s effect on DOW companies share price Being known or being one of many Philip Kotler and Waldemar Pfoertsch Journal of Business & Industrial Marketing Volume 22 · Number 6 · 2007 · 357 – 362 360 limitations in the B2C branding world, limitations also exist in B2B. These restrictions still have to be identified and examined thoroughly in the following years. To lead you through B2B branding exercises we suggest a set of “guiding principles” (see Figure 4) that illustrate visually the different stages on the branding ladder[8]. It can literally be seen as the path companies have to follow in order to achieve brand success. The beginning of the path is marked by the decision whether or not to brand your products, services, or business. If a company, especially the people at the top, is not convinced that it is the right thing to do, it doesn’t make any sense to continue (“B2B Branding Decision”). After making the decision to brand, you have to figure out how you are going to do it. But deciding on the best brand portfolio that fits your respective business/industry is not enough to ensure your company’s brand success. Therefore, the next stage addresses all the factors in practice that make branding successful (“Branding Dimensions”). If the right decisions are not taken (“Acceleration through Branding”) or the execution falls short, branding pitfalls can occur! But there could also be future perspectives. The essence of this concept is to infect B2B companies with the branding virus – empowering them to make the leap to becoming a brand-driven and more successful company. There are many ways to measure overall company success, such as sales increase, share value, profit, number of employees, mere brand value (index), etc. To keep it simple and to limit alterations that may have been influenced by various sources other than the actual brand, we chose sales over time as measurement for a company’s success in our Guiding Principle. The transition point represents a company’s rise to the challenge of building a B2B brand. In our constantly changing business environment of new technologies, globalization and market liberalization, alert companies are presented with great opportunities. Winning companies will discard old practices and innovate new practices to exploit the major trends. With no thought B2B branding and brand management will become increasingly important, and the future of brands is the future of business – probably the only major sustainable competitive advantage. Companies who are driving in this direction are on the right track. Other future aspects are branding and social responsibility. Also, branding in China is in a stage of leapfrogging into the world market. For decades, China has enjoyed a dominant place in world manufacturing because of its low-cost labor. Chinese businesses today are pursuing aggressive branding strategies involving internal growth or acquiring foreign brand icons and managing them. Both approaches could lead to world success. Consider design and branding as an increasingly important tool for differentiation. Relevance, simplicity, and humanity – not technology – will distinguish brands in the future. To be successful in the B2B world, a holistic branding approach is required that covers everything from the development and design to the implementation of marketing programs, processes, and activities that are intersecting and interdependent. Marketing and brand management will be critical to a company’s success in the future. Notes 1 B2C companies have for years dominated the Interbrand ranking of the 100 best global brands by more than 80 percent, and most of the article is about them (see Berner and Kiley, 2005). 2 According to our calculations, in 2005 the total brand value for all 100 best global brands reached more than $1 trillion. 3 As quoted in Khermouch et al. (2001). 4 The Boeing Company (internet), cited August 2005. 5 In 2005, a qualitative and quantitative pilot study was conducted with the 30 largest German DAX companies; of these, ten were B2B companies. 6 For this analysis the Interbrand Global Best Brand data were used to characterize the brand performance. 7 The Interbrand brand evaluation started in 1999 and is available annually. In our research we compiled all internationally available data, which led to a total of 130 companies. Further research is needed to qualify the findings. 8 We understand the Guiding Principle as the leading idea and guiding help to follow our thinking and the structure of B2B brand management. Figure 3 Correlation between Interbrand brand value versus market capitalization of DOW companies Figure 4 Guiding principles for B2B brand development Being known or being one of many Philip Kotler and Waldemar Pfoertsch Journal of Business & Industrial Marketing Volume 22 · Number 6 · 2007 · 357 – 362 361 [...]... firm-focal firm relationships Journal of Business & Industrial Marketing Felicia Morgan et al Volume 22 · Number 6 · 2007 · 372 –382 industrial systems and products”, Journal of Business & Industrial Marketing, Vol 19 No 5, pp 310-9 Lele, M.M and Sheth, J.N (1987), The Customer is Key, Wiley, New York, NY Leuthehesser, L and Kholi, A.K (1995), “Relational behavior in business markets: implications for relationship... archive of this journal is available at www.emeraldinsight.com/0885-8624.htm Journal of Business & Industrial Marketing 22/6 (2007) 372– 382 q Emerald Group Publishing Limited [ISSN 0885-8624] [DOI 10.1108/08858620710780136] 372 Branding implications of partner firm-focal firm relationships Journal of Business & Industrial Marketing Felicia Morgan et al Volume 22 · Number 6 · 2007 · 372 –382 Conceptual perspectives... 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Strategic Marketing at Hull University of Technology. He has published in several journals, including Industrial Marketing Management , Journal of Business Ethics , Business Horizons , Journal of Marketing. Aitken Journal of Business & Industrial Marketing Volume 22 · Number 6 · 2007 · 363–371 370 Vargo, S.L. and Lusch, R.F. (2004a), “Evolving to a new dominant logic for marketing , Journal of Marketing, . Senior Lecturer in Marketing at the University of Melbourne. He has published in several journals including Business Horizons , European Journal of Marketing , Industrial Marketing Management , Journal