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at 00:12:38 12/12/2011

Branding in a B2B Market

Brand is a key determinant to a firms marketing strategy for they impact its ability to gain a sustained competitive advantage over other competing firms in the industry. Effective branding, for instance, benefits the firm by communicating the intangible features like "superior quality" associated with its product and justifies such product's availability at a "premium price". Brand therefore is not only a differentiating agent but also a tool that instills buyer confidence by lowering the perceived risk of his or her purchase. Today we analyse the role of brand within a Business to Business context. A business market unlike a customer market is essentially a "behind the scenes" market since it caters to the transactions executed not between a consumer and a business but between the businesses themselves. It is characterised by large size, few customers, high spend and complexity amongst others. The demand in this market is a derived demand i.e. it is not direct and derives itself from the consumer market. Another key element of a business market is that the buying decisions or the decision making process is more rational when compared to a consumer market which leaves considerable room for irrational behaviour through impulsive buying. The rationality exhibited in business market may be attributed to the nature of buyer, who in a business market is a firm that arrives at a buying decision through complex yet systematic process and is not guided by emotions. Furthermore, in a business market there is an increased emphasis on sustaining relationships between channel partners. This is primarily because of the interdependence of the businesses in value creation In this backdrop, it would be worthwhile to draw upon the findings of recent empirical studies conducted on this issue which indicate that Brands' contribute significantly in developing customer loyalty even in a business markets. Its functions in a business market are similar to its functions in a consumer market. Yet according a marketing council survey; the emphasis on branding, as a marketing practice though second, next only to sales and promotions in a business market; is much lower than in the consumer market. Support for these findings is also evident from the brand rankings published by Business week and Inter-brand which identifies only 17 business-to-business brands in a list of 100 most valuable brands. However, it would be erroneous to completely undermine the role played by brands in a business market for it does acknowledge valuable brands like IBM, Microsoft, GE, Google, Intel, etc. dominating the business market. IBM and Microsoft are ranked second and third respectively in this list of valuable brands. The importance of branding in business market for some of these organisations can also be gauged from their branding efforts. In 1998, IBM budgeted $500 million on a campaign targeted at its e-business customers creating brand awareness about its potential as an IT services provider for businesses. Similarly, in 2002 Microsoft allotted approximately 20 million on business adverts in UK alone despite its dominance in the consumer market. The large amounts of monies invested by these firms in their branding efforts validate the high revenues and profit margins linked to a business market.

It must here be pointed out that the top rankings of these brands with the exception of Intel cannot solely be attributed to the recognition afforded to them in the business market given their strong presence in consumer market. They serve as a classic example of Brand extension over the business and consumer markets. IBM, for example, only recently emerged as a pure business brand after divesting its PC manufacturing business to Lenovo. Likewise, Microsofts popularity can be tied to its more through its more than successful windows operating system and office applications in the consumer market. These affiliations somewhat indicate a relationship between business market and the consumer awareness. In this context it would be worthwhile to make a reference to the microchip manufacturer. Intel's emergence as premier business brand is interesting for it may be linked to its increased emphasis on marketing communication channels directed towards the consumer market. Intel's campaigns for over a decade have focused on developing brand awareness which has reaped rewards in terms of its dominant market share in the business market for PCs and consumer electronics. The campaigns allowed the organisation to familiarise the end-users not only with its superior product but also with the Brand Intel which in turn succeeded in nurturing a derived demand for its microchips among its business customers. Leading PC manufacturers recognise the value of Intel brand and are seen co-brand Intel with its finished products. This illustration highlights that consumer market affiliations play a significant role in creating valuable brand equity in business market. Branding as a marketing practice thus cannot be sidelined in a business market and is not merely limited to the IT industry as the aforementioned instances may seem to suggest. GE serves as an apt illustration in this regard; the brand GE represents a variety of products ranging from incandescent bulbs to body scanners. However, its revenues from the business market outweigh its revenues from consumer market by more than 2/3rds. GE's "imagination at work" campaign allowed it to re-position the brand as dynamic and to be perceived as provider of superior technological solutions to its business customers. The foregoing analysis reveals a rather interesting and an apparent contradiction between the findings of the marketing council survey and the particular emphasis laid on branding efforts by some organisations in the business market. This contradiction may be best explained by drawing upon the very nature of the business markets. For instance, it can be argued that the findings of the marketing council are diluted by the extremely large size of the business market. It is difficult generalise results in a market where a whole range products are on offer ranging from plastics to highly sophisticated equipment. The analysis also reveals that the branding is dependent on the nature of products. This explains the importance accorded to branding strategies in technology and IT industry where the products essentially classify as a "low frequency, high cost purchases". Effective branding in these business markets thus makes buyers lean towards branded products for they are perceived to be of superior quality when compared to other products of similar nature available in the market. On the contrary branding maintains a low key in the business market for "high frequency, low cost generics". The emphasis on branding in these business markets is lower for it will not

effectively influence the business buyer. Also, it is unlikely that there would be a great deal of qualitative difference between a branded generic product and a non branded generic product and that such qualitative difference will in turn have a impact on the end product that is eventually sold to the consumer. Another course of argument that can be taken to explain the lower emphasis on branding in some business markets stems from the nature of the decision making unit. As noted earlier the decision making unit in a business market employs a complex systematic process for making a purchase decision. This implies that the firm must weigh from a strategic and an economic standpoint that whether branding its product will qualify the stringent test that requires it to convince the buyer in paying a premium price for the product. Therefore more often than not in a business market for generic products, a firm is likely to exploit its resources on attaining economies of scale rather than branding. In conclusion, it may be reiterated that Branding is a key considerations in determining a firms marketing strategy in a business environment but is limited mainly to affluent business markets.