Tuck School of Business at Dartmouth

Working Paper No. 2004-06

October 2003 Revised February 2004

A ROADMAP FOR BRANDING IN INDUSTRIAL MARKETS

Kevin Lane Keller Tuck School of Business at Dartmouth Frederick E. Webster, Jr. Tuck School of Business at Dartmouth

This paper can be downloaded from the Social Science Research Network Electronic Paper Collection: http://ssrn.com/abstract=530823

A ROADMAP FOR BRANDING IN INDUSTRIAL MARKETS

Frederick E. Webster, Jr. Kevin Lane Keller Amos Tuck School of Business Dartmouth College October 2003 Revised February 2004

ABOUT THE AUTHORS

Frederick E. Webster Jr. is the Charles Henry Jones Third Century Professor of Management, Emeritus at the Amos Tuck School of Business at Dartmouth College. He is known internationally for his research, writing, teaching, and consulting in industrial marketing strategy and organization. His research-based writing has produced more than 75 articles in the top academic and management journals and 15 books, the most recent being the second edition of Market-Driven Management, published in September, 2002 by John Wiley & Sons. Kevin Lane Keller is the E. B. Osborn Professor of Marketing at the Amos Tuck School of Business at Dartmouth College. His academic resume includes degrees from Cornell, Duke, and Carnegie-Mellon universities, award-winning research, and prior faculty positions at Berkeley, Stanford, and UNC. His textbook, Strategic Brand Management, has been adopted at top business schools and leading firms around the world and has been heralded as the bible of branding.

Contact information: Frederick Webster 6236 N. Ventana View Place Tucson, AZ 85750 USA Tel.: 520-615-9751 Frederick.E.Webster.Jr@Dartmouth.EDU

A ROADMAP FOR BRANDING IN INDUSTRIAL MARKETS

ABSTRACT Branding theory has been largely developed in the context of consumer products; yet, most economies are characterized by a preponderance of firms selling business-tobusiness or industrial products. Understanding how branding works in industrial markets is thus an important priority. In this article, we outline some of the distinguishing characteristics of industrial branding and offer some guidelines as to success with industrial brands.

INTRODUCTION Virtually all discussions of branding are framed in a consumer marketing context.1 Among the many reasons for this emphasis are the greater visibility and magnitude of expenditures for consumer brand development and promotion and the fact that consumer brands dominate the mass media to which we are exposed on a daily basis. However, it is wrong to conclude that branding is not as important and valuable to industrial (or "business-to-business") marketers.2 A moment's reflection will suggest that some of the most valuable and powerful brands in the world belong to industrial marketers: ABB, Caterpillar, Cisco, DuPont, FedEx, GE, Hewlett Packard, IBM, Intel, and Siemens are just a few of the many examples that spring to mind. Four of the five most valuable brands in the world, according to the annual Business Week/Interbrand ranking, are brands sold to or specified by industrial buyers: Microsoft, IBM, GE, and Intel.3 Only Coca-Cola has more value4. Other industrial companies that have recently publicly placed emphasis on building or strengthening their brands include Boeing, Emerson Electric, and Praxair. These examples illustrate that strong brands can be found in industrial markets for both goods and services and for both large dollar value capital equipment and less expensive, frequently purchased products. The purpose of this article is to examine the similarities and differences between consumer and industrial brands, to assess the somewhat unique role of branding in the success of business-to-business marketing, and to offer some guidelines for building successful business-to-business brands. In our development, we integrate relevant

2 concepts from branding, industrial marketing strategy, and organizational buying behavior.

THE BASICS OF BRANDING STRATEGY In our view, a brand can best be thought of as a psychological phenomenon. Formally, a brand is a name, sign, symbol, logo, etc. that identifies the goods and services of one seller and differentiates them from others. Via personal experiences, commercial messages, interpersonal communications and other means, however, a brand takes on meaning with customers. The power of a brand resides in the minds of customers and all the thoughts, feelings, perceptions, beliefs, attitudes, behavior and so on that result from the myriad of possible brand interactions. The brand surrounds a product or service with meaning that differentiates it from other product or services intended to satisfy the same need.5 A brand is thus much more than a name, and branding is a strategy problem, not a naming problem. A brand is a valuable intangible asset and must be managed carefully so that its meaning is preserved and enhanced and so that customers form strong bonds as a result. There are a number of important principles of brand management relevant to industrial branding, several of which are highlighted here. Two components of the psychological meaning of a brand are brand awareness and brand image. Customers must know what products or services are associated with a brand (brand awareness) and must know what attributes and benefits the brand offers and what makes it better and distinctive (brand image). Industrial brands can differentiate themselves on the basis of a whole host of attributes and benefits that range in tangibility

3 and their relationship to the product. Some associations will be linked to the brands functional performance (e.g., based on the products value proposition and promised benefits); other associations will reflect more abstract considerations (e.g., corporate image dimensions embodying such attributes as credibility, reliability, trust, ethics, and corporate social responsibility). Branding is a core marketing activity. "To brand or not to brand?" is not the question. Every company has a name that will function as a brand if nothing else is done. For many industrial marketers, the company name is the brand. The question is "What do you want your name stand for? What do you want it to mean in the mind of the customer?" Every touch-point between the company and the customer becomes an input to brand image. Either the brand must be managed as a strategic asset or it will be managed by customers more or less at random. Properly managed, an industrial brand can realize the same advantages as a consumer brand, such as greater loyalty, price premiums, ability to extend into other categories, and so on.6 Brand positioning incorporates the core values of the brand, and should have both points-of-parity and points-of-difference vis a vis competitors' product offerings. Pointsof-difference are strong, favorable, and unique brand associations that drive customer behavior; points-of-parity are those associations where the brand breaks even with competitors and negates their intended points-of-difference. The core brand promise or brand mantra is an internal marketing expression that captures key points-of-difference that are the essence and spirit of the brand in a three-to-five word phrase. The brand mantra is the basis for the brand slogan, which is a translation of the mantra in consumerfriendly language that is used in advertising and other communications.

4 For example, Nikes internal brand mantra is authentic athletic performance but externally they use the brand slogan Just Do it as the signature to many of their ads. Examples of slogans for industrial brands which reflect underlying brand mantras are Agilent Technologies' "Dreams Made Real," Emerson's "Consider It Solved," GE's "Imagination at Work," Hewlett Packard's "Invent," "Novell's "The Power to Change," United Technologies' "Next Things First," and Xerox' "The Document Company." The development, history, and positioning of a brand are summarized in the Brand Charter. Every marketing action must be evaluated against, and be consistent with the Brand Charter. Strong brands have a consistent brand image for each individual customer and across the customer population. Brand strength reflects the quality and consistency of the firm's marketing efforts and the care with which the brand has been managed over time. To be successful, the brand must be consistent with the firm's strategy and the major tool of strategic marketing management.

INDUSTRIAL MARKETING STRATEGY: SEGMENTATION, TARGETING, AND POSITIONING In all markets, business and consumer, the successful development and management of a brand begins with the fundamentals of marketing strategy and the development of a marketing program.7 While this should be obvious, it is not uncommon to find companies launching major branding activities before the basic work of marketing strategy has been done. The short-lived madness of expensive but ill-advised national advertising campaigns that were hallmarks of the dot.com debacle of the late 1990s is perhaps the most dramatic example. However, the problem is more widespread as

5 companies that have not had strong marketing programs latch onto widespread renewed interest in the concept of branding and try to launch a branding campaign before they have completed the work of marketing strategy formulation. Industrial branding must be rooted in marketing strategy, the well-known fundamentals of which involve market segmentation, targeting, and positioning. Superior marketing is relevant, distinctive, consistent, cohesive, and creative, which leads to superior customer awareness, preference, and buying action. Superior customer knowledge about and preference for the firm's value offering yields competitive superiority, support from partners in the value chain (including vendors, resellers, and customers), and lower costs through greater efficiency and effectiveness in spending for marketing activities. Following a procedure outlined by Best,8 Rozin and Magnusson have described the development of a global branding strategy, for a new Dow Corning industrial product, consisting of a seven-step process.9 The process begins with a focus on customer needs, not the product. 1. Needs-based segmentation - grouping customers into segments based on similar needs and benefits sought 2. Segment identification - selecting customer characteristics including usage behaviors that make the segment distinctive and actionable 3. Segment attractiveness - evaluating the business value in terms of economic value and strategic fit of each needs-based segment 4. Segment profitability - estimating the net marketing profit contribution from each potential segment 5. Segment positioning - creating a value proposition and product/price offering based on each segment's customer needs and buying characteristics 6. Segment "acid test" - creating and testing "segment storyboards" (communications) for implementing each segment's positioning 7. Marketing mix strategy - creating a complete marketing program (product, price, promotion, and distribution) to implement the positioning strategy.

6 There is nothing in the model of marketing strategy (market segmentation, targeting, and positioning) that differentiates between consumer and industrial markets. The basics of sound marketing are immutable.

CHARACTERISTICS OF INDUSTRIAL MARKETS Industrial markets are characterized by their buyers, not their products. Industrial markets consist of profit-seeking business firms and budget-constrained institutions such as government agencies, healthcare delivery organizations, educational institutions, and not-for-profit organizations. For business firms as customers, a key characteristic is that demand for their goods and services is derived, directly or indirectly, from the demand of other business firms, households, or individuals for the products that those firms produce. These firms' purchases are therefore guided importantly by their own strategy for delivering value to their customers and their owners in the form of attractive and differentiated product offerings and lower costs of production and service. A given manufacturer or service firm's brand is an asset to its customers and association with that brand can also be a benefit for the suppliers of that firm. Every firm in the value chain benefits from a strong brand. Branded industrial products and services often become part of the customer firm's product offering, such as "Intel Inside" for personal computers, Motorola telephones for Mercedes Benz, and FedEx delivery as part of the product offering of L. L. Bean or UPS delivery for Lands End. It is common for industrial marketers to derive a major portion of their total revenues and profits from a relatively small number of customers. This would be obvious in the case of commercial and military aircraft manufacturers and original

7 equipment (OEM) automotive parts suppliers, for example. The typical industrial firm probably has no more than a few hundred customers, with maybe five to ten accounting for over half of its total sales. The strength of the Boeing brand of airliners or the GE brand of jet engines has value for their commercial airline customers. Industrial goods and services can be classified in several different ways. One common typology defines raw materials, processed materials, component parts, subassemblies, light equipment, heavy capital equipment, construction, MRO (maintenance, repair, and operating) supplies, and services. Services can be further categorized to include financial, logistical, medical, educational, maintenance and repair, management consulting, marketing, technical, data-processing and information management, and a host of other services. Some services are bought in connection with the purchase, installation, and operation of physical products while others are stand-alone or "intangible" services such as tax advice or investment banking. Brand names serve as differentiating features in each of these product and service categories, which include some of industrial marketing's strongest brands such as Bechtel (construction), Cargill (raw materials), Caterpillar (heavy equipment), DuPont (processed materials), Emerson Electric (component parts and subassemblies, as well as systems), McKinsey (consulting), Mobil (MRO supplies -- fuels and lubricants), Morgan Stanley (banking), and Xerox (light equipment). Branding strategy obviously needs to be tailored to the specific product type. For many raw and processed materials and many types of components and sub-assembles, the product is inevitably tending toward commodity status as technology-based differences disappear and buyers become more knowledgeable and increasingly focus on price.

8 Branding in these market conditions must emphasize points of difference in service and other intangibles, such as company reliability and technical expertise, as the basis for differentiation and superior value offering. For capital equipment, the focus may shift more to the product offering itself with an emphasis upon underlying technology and product performance attributes, or it may also be the superior reliability, sophistication, and experience of the marketing company.

THE UNIQUENESS OF INDUSTRIAL BUYER BEHAVIOR Industrial markets are distinctive primarily because of their profit-motivated and budget-constrained customers, not their products. These customers are different from consumers because of the size of their purchases, the concentration of their buying power, the nature of the relationships they demand from their suppliers, and perhaps most importantly their buying process. Industrial buying is in most respects different from that of the individual or household consumer. Industrial buying is a combination of individual and organizational decisionmaking processes, and brands have influence on both sets of processes. Buying behavior involves individuals making decisions in interaction with other people both within and outside their organizations, in the context of their organization's goals, resources, strategy, and structure. The organization in turn is operating in the context of an economic, physical (i.e., geographic and climatic), political, technical, legal, and social/cultural environment that is continuously changing.10 Industrial buying decisions typically involve many actors, take place over a long period of time, and go through a series of decision stages.

9 Types of Industrial Buying The role played by the industrial brand will vary with the type of buying situation. There is a continuum of types of buying situations based on the complexity of the problem being solved, the newness of the buying requirement, the number of people involved, and the time required. The process itself consists of a number of decision stages from problem recognition through the development of specifications, the identification and evaluation of vendors and product offerings, the choice of one or more vendors, the negotiation of buying terms, the evaluation of performance, and the management of the ongoing relationship. There are obviously many different ways to characterize this process in terms of the number of steps and sub-steps. Types of buying situations can further be defined in terms of the newness of the buying problem from straight-rebuy or routine-purchase-behavior through modified-rebuy or limited-problemsolving to new-buy or extensive-problem-solving. Mudambi reported research finding three clusters of buyers based on the perceived importance of branding: "branding receptive," "highly tangible," and "low interest."11 These were correlated with type of purchase situation. Branding-receptive buyers were found in more risky purchase situations and tended to be formal and thorough but open-minded. They tended to use more suppliers than those buyers in the other segments. They were said to be more sophisticated, perhaps better educated, and to buy in larger volumes. Highly tangible buyers, on the other hand, were characterized by typical product-oriented modified rebuys and "went by the book" in a structured process. The "low interest" buyers were characterized by transaction-oriented, straight-rebuy procurements based on convenience and low involvement.

10 Over time, new-buy situations become rebuys and routine purchase behavior. The established supplier will attempt to avoid a new buy situation for the products now being purchased whereas potential vendors will try to create a modified rebuy or new buy situation. The marketer's brand will play different roles in these different situations. In the routine repurchase, the brand will be a driver for customer loyalty. In new-buy situations, the manufacturer's brand name recognition and brand promise will be important in establishing trust and the customer's willingness to consider change in purchasing preferences and behavior. New brands obviously create a new-buy or modified-rebuy situation for the potential market. Buying Centers The participants in the buying process can be described in terms of their roles in the buying process. These roles have been defined as initiators, users, buyers, deciders, influencers, and gatekeepers.12 Very quickly summarized: 1. initiators define the buying situation and start the buying process; 2. users actually use the product; 3. buyers can commit the organization to spend money; 4. deciders have the authority to choose among potential product offerings and vendors; 5. influencers add information or constraints in the buying process; 6. gatekeepers can control the flow of information into the buying process. This buying decision making unit (DMU) is often called the buying center. Several individuals can occupy a given role (e.g., there may be many users or influencers) and one individual may occupy multiple roles. A purchasing manager, for example, often occupies simultaneously the roles of buyer, influencer, and gatekeeper, as when he or she can determine which sales reps can call on other people in the

11 organization, what budget and other constraints to place on the purchase, and which firm will actually get the business, even though others (deciders) might select two or more potential vendors who can meet the company's requirements. The typical buying center has many members, typically a minimum of five or six and often numbering in the dozens. The buying center may include people outside of the target customer organization, such as government officials, consultants, technical advisors, and other members of the marketing channel. Strong brand awareness and favorable attitudes among the dispersed members of the buying center can exert major influence throughout the process. Some members of the buying center (deciders) may have the authority to decide on behalf of the organization and could conceivably behave in an autocratic, authoritarian manner. Others may have veto power and the ability to overturn any decision made by another individual or the buying group as a whole. Typically, however, there will be some kind of a group decision-making rule such as consensus, or "one man, one vote," using such interpersonal influence processes as persuasion, compromise, bargaining, and negotiation. Individuals will be subject to many social and interpersonal influences within the buying center at multiple levels within the organization. They may be loyal to the needs of their particular department or division even as they attempt to find a solution to the buying problem. The need to achieve consensus in the industrial buying process in order to arrive at a group decision is a major driver on the necessity and value of branding in industrial markets. The brand can be a major tool for achieving a consensus in organizational perceptions, predispositions, and buying action.

12 Each member of the buying center is likely to give priority to very different decision criteria. For example, engineering personnel may be concerned primarily with maximizing the actual performance of the product; production personnel may be concerned mainly with ease of use and reliability of supply; financial personnel may focus on initial purchase price whereas purchasing may be concerned with operating and replacement costs; union officials may emphasize safety issues, and so on. While each of these participants may be trying to minimize both the risk of product performance and the "psycho-social" risk of making a decision that will be judged by others, each may also define those risks in a different way. Getting all of the participants in the DMU to the same conclusion and getting a commitment out of the organization is usually a very complicated process. As a general proposition, the more complex the buying process in terms of the complexity of the procurement problem, the size and scope of the DMU, and the amount of time required, the more valuable a strong brand becomes in helping to achieve organizational consensus and decision. Strong brands and strong brand loyalty can be a major asset for industrial marketers because of the preference of organizations collectively, and their members individually, to avoid risk-taking in buying decisions. The organization's evaluation-and-reward system may implicitly provide incentives for brand loyalty by encouraging the choice of "tried-and-true" or at least familiar and respected brands. Industrial Buying Dynamics The fundamental point is that individuals, not organizations, make decisions. These individuals are motivated by their own needs and perceptions as they do their

13 organizational work in an attempt to maximize the rewards (pay, advancement, recognition, and feelings of achievement) offered by the organization. These payoffs are earned based on the performance evaluation-and-reward system of the organization. The buying organization has goals, resources, structure, and systems that guide and constrain the actions of the individuals within the organization. Each individual is trying to achieve organizational goals subject to resource and other constraints in a way that minimizes risk and maximizes the probability of payoffs consistent with his or her individual needs and goals. Personal needs "motivate" the behavior of individuals but organizational needs "legitimate" the buying decision process and its outcomes. People are not buying "products." They are buying solutions to two problems, the organization's economic and strategic problem and their own personal "problem" of obtaining individual achievement and reward. In this sense, industrial buying decisions are both "rational" and "emotional," as they serve both the organization's and the individual's needs. However, in the typical buying decision, the solution to the organization's problem will tend to take precedence over the individual's needs, especially when it comes to providing a rationale for the choices made. Economic and functional appeals will normally be dominant in the brand value proposition, although emotional appeals may be appropriate from time to time but must be used carefully. For example, the dominant brand attribute may be the rational/functional one of superior product performance, but the emotional/motivating appeal might be that the buyer cannot afford the psycho-social risk of buying the product from another, perhaps less well-known or less reliable vendor. Some industrial service brands, FedEx for example, are positioned

14 as choices that will make the buyer "look good" to his or her boss or colleagues. But they will look good because the product performs well, not because of some hidden psychological or ego-enhancing benefit. For this reason, product-related brand associations are likely to play a more important role than non-product related associations for successful industrial branding. At the same time, product associations and the brand positioning must be responsive to individual needs, perceptions, and incentives, offering relevance and salience for the individual as well as the organization.

INDUSTRIAL BUYING AND RELATIONSHIP MANAGEMENT Over the past decade or so, both buying practice and marketing theory have moved toward a view of industrial buying and marketing as relationship management.13 This represents a significant shift away from the dominant paradigm of an adversarial relationship in which buyer and seller attempt to maximize their own benefit in the transaction as a zero-sum, "I win, you lose" game. The focus has shifted from transactions and conflict to long-term relationships and cooperative buyer-seller behaviors. Compared with earlier practice, industrial customers now rely upon fewer vendors for their requirements with longer-term contracts for a larger portion of their total needs. While prices and margins may be somewhat lower under these conditions, marketers often benefit from the more reliable revenue stream, lower costs to serve, and lower marketing costs. Industrial buyers in turn obtain a more complete and reliable solution to their problem, often at lower prices and lower total cost of procurement. However, not all customers are relationship customers. There is a continuum of procurement situations and customer types from pure transactions to strategic alliances.

15 In the middle are increasingly strong buyer-seller relationships, from repeated transactions through simple relationships to strategic buyer-seller partnering to integrated firm-to-firm alliances. Unique market segments can be defined at multiple points on this continuum. One company in the chemical industry, for example, identified segments ranging from "Low-Price Seekers" to "Dial Toners" who simply wanted to call up and place an order at a fair price to Techies" who valued the firm's scientific expertise to "Win-Win Partners" who wanted a full strategic partnership with their supplier. A strong branding program has been developed to appeal across these different segments. Industrial brands may have different roles to play in different market segments. Relationship and partnership customers will likely place greater value on the trustworthiness, reliability, and corporate credibility dimensions. Transactions customers may focus more on product performance, pricing, and tangible service attributes. To summarize, industrial branding must take into account the complexity of the industrial or organizational buying process. Not only must the brand image have value and relevance for the individual decision makers, but it must have meaning that can be shared among them. It must appeal to the needs and perceptions of people in different buying roles with different frames of reference and different buying criteria, people who often live in different "thought worlds." In strategic buyer-seller relationships, the partner who owns the strongest brand is likely to own the relationship with the customer. This fact has profound importance in terms of the firm's control over its position in the value chain. Intel as a supplier of computer chips has done a masterful job with its "Intel Inside" campaign of managing a complex relationship with its OEM computer customers and maintaining control over the

16 Intel brand so that is has value for both OEMs and end-users. Microsoft provides another good example.

BRANDING STRATEGIES FOR INDUSTRIAL BRANDS Observation suggests that the typical industrial brand is the company name, from ABB to Xerox. The company blanket brand (GE for example) may be applied to a wide range of products from components (lamps) to light (switchgear) and heavy (turbines) equipment and even construction (turn-key power-generation plants). Some industrial marketers, of course, also employ sub-brands for individual product lines, such as Praxair's Medipure brand of medical oxygen, GE's Lexan plastic, DuPont's Teflon coatings, and Intel's Pentium chip, but seldom are these sub-brands divorced from the company brand. This practice is consistent with the fact that industrial marketing and buying are increasingly focused on relationships, not individual transactions. The customer wants an on-going relationship with a reliable supplier of quality products and services. The relationship is company-to-company. The brand is a relationship between buyer and seller. The characteristics of the supplying firm -- its financial strength, its reputation for ethical dealing, its record of reliable delivery and service, its technical expertise, its ability to control production processes, and so on, are likely to be even more important than the quality of its products per se. The quality of the product is a given, the "table stakes" in the competitive game; the characteristics of the company as a supplier are often the key differentiators.

17 This is in marked contrast to many consumer products, especially frequently purchased goods found in broad distribution. The consumer probably doesn't care which of several competing firms has manufactured the diapers she buys; the diaper manufacturer cares greatly which suppliers of linerboard and printing it is depending upon for the packaging that will contain and display its product on the retailers' shelves. In terms of economic value, brand strength becomes more important and the brand becomes more valuable as a strategic asset as the size of the user base increases and users play a more important role in the buying process. Thus, the leading industrial market brands in terms of estimated financial market value -- Microsoft, IBM, GE, and Intel -- represent products familiar to millions of users. The brand value comes from the present and future value of earnings on sales to individual users of these companies' products. But this does not mean that the product becomes a consumer product. Whereas brand promotion by these manufacturers may create enhanced perception of value on the part of the actual user, the development of purchase specifications, the buying process itself, and the actual purchase are done by the businesses that buy these products and incorporate them into their operations and product offerings. You may use an IBM computer in your work, but it is owned and maintained by your employer. The attributes incorporated in the brand value proposition must be meaningful for the buyers, users, influencers, and deciders in the organizational buying decision process.

GUIDELINES FOR SUCCESSFUL INDUSTRIAL BRANDS Drawing lessons from this brief overview of the essentials of the industrial buying process and industrial marketing strategy, it is possible to develop some simple

18 guidelines to deal with the uniqueness and complexity of industrial branding (see Figure 1). These guidelines are based on judgment derived from the preceding analysis, although each of them raises potential additional research questions for marketers and academic investigation.

1. The role and importance of branding should be tied directly into the industrial marketer's business/profit model and value-delivery strategy. The starting point for the business model should be the firm's distinctive competence, its target market and customers, its position in the value chain, and its strategy for delivering superior value to those chosen customers. These strategic basics should be embedded in the brand value proposition and brand mantra. Then the industrial brand should be managed as a strategic asset with appropriate commitment of resources, managerial attention, and controls.

2. Understand the role of the brand in the organizational buying process. Use market research to identify the composition of the buying center (DMU) and the decision criteria used by the organization members who occupy the key roles in the DMU. This analysis will lead to the definition of unique market segments. Understand the importance of various company and product attributes to the decision makers and identify the key differentiators vs. competition by segment. This requires understanding the organization's evaluation and reward systems and how different company and product characteristics are viewed as they relate to the buyer's business strategy.

19 3. Be sure the basic value proposition has relevance for all significant players in the decision-making unit and decision-making process. There will be many people involved in any buying decision and they all must find the brand promise both relevant and responsive to their needs and concerns. The brand promise must be consistent with both the organization's goals and the individual's needs as they are related to organizational goal attainment.

4. Emphasize a corporate branding approach. It is important to remember the importance of the buyer-seller relationship and the central role played by the buyer's corporate credibility and reliability. To achieve this kind of single-minded focus and clarity of brand imaging and positioning, it is advisable to use sub-brands selectively, and to use as few descriptive modifiers as possible with the company brand name.

5. Build the corporate brand around brand intangibles such as expertise, trustworthiness, ease of doing business, and likeability as a means to establish corporate credibility, reputation, and distinctiveness.14 These are the values that will enhance the firm's value as a strategic partner for its customers. However, these general concepts must be made real by reference to specific company attributes, activities, and experiences.

6. Avoid confusing corporate communication strategy and brand strategy and carefully manage the relationship between the two sets of activities to avoid potential conflict. The focus of brand strategy should be on the brand as a strategic entity and what it means for

20 the customer, not on the broader issues of corporate citizenship that may or not be relevant for buyers. The brand must be much more than the company name. The distinction between corporate communication and brand strategy becomes especially important when the firm must manage a public relations crisis.

7. Apply detailed segmentation analysis within and across industry-defined segments, based on differences in the composition and functioning of buying centers within those segments. Brand positioning within those sub-segments must then be tailored to the unique needs of the individuals in those segments but, just as importantly, must build upon and be consistent with the overall corporate brand positioning. The challenge here will be especially great if the company develops unique products and services for these sub-segments and individual product or market managers begin to lobby for distinct brands. The more dispersed the firm's product offering, the stronger the arguments in favor of distinct brands for separate business units and the greater the need for top-level, global brand strategy development, coordination, and execution.

8. Build brand communications around the interactive effects of multiple media, recognizing that: a) budgets are usually smaller than in consumer marketing; b) "mass" media are likely to be very limited in terms of reach and availability; c) specialized media such as industry trade shows, educational activities, and professional journals may be most effective in reaching specific sub-segments of buyers within customer organizations. Figure 2 summarizes potential communication options for industrial buyers. A specific challenge is managing sales force communications and sales support in ways which are

21 consistent with the overall brand strategy. The difficulty is that the sales force has a short-term planning horizon and may engage in activities that compromise brand equity in the long-run (e.g., making promises that cannot be delivered). Training, compensation and incentives must be employed to help convince the sales department of the long-run value of having a strong corporate brand and their importance in maintaining and ideally enhancing brand equity.

9. Adopt a top-down and bottom-up brand management approach. Top-down brand management involves marketing activities that capture the "big picture" and recognize the possible synergies across products and markets to brand products accordingly. Particular attention is paid to how to best develop and leverage the corporate brand. Managing industrial brands in a top-down fashion requires centralized and coordinated marketing guidance and actions from high-level marketing supervisors and senior executives of the firm. Given that many senior executives and CEOs in particular with industrial product companies have not risen to the top via a marketing route, ensuring that they understand, embrace and communicate branding principles is crucial. Bottom-up brand management, on the other hand, requires that marketing managers primarily direct their marketing activities to maximize brand equity for individual products for particular business units and markets. Both pairs of brand management activities can be complementary and mutually reinforcing.

10. Educate all members of the organization as to the value of branding and their role in delivering brand value. Whereas a few individuals may be responsible for developing

22 brand strategy, the whole organization is responsible for its implementation. Industrial products and brands are likely to have multiple customer "touch points," each of which must be managed consistent with the brand image. Customers' perceptions of the brand are influenced by every contact they have with the company and its products. Value delivery "in the field" must be consistent with the value proposition of the brand strategy. Every person in the organization must understand the brand strategy, be committed to it, and understand specifically how their behavior contributes to its execution. Performance evaluation and rewards must be consistent with the specific behaviors called for by the brand strategy and value proposition. It is not too much to suggest that each person's job description should be explicit in this regard and this responsibility acknowledged during the performance review session.

SUMMARY The recent upsurge in interest in brand equity and brand strategy has had an impact on industrial marketing as business-to-business marketers refocus on their corporate names and brands. While most discussions of branding have tended to ignore industrial markets, the fundamentals of sound brand strategy, beginning with market segmentation, targeting, and positioning, apply. But the uniqueness of industrial markets, and especially of the organizational buying process, must be taken into account in developing sound industrial branding strategy. The result can be the creation of better differentiated product offerings, stronger relationships between industrial marketers and their customers, more customer loyalty, better response to company innovations and marketing expenditures and the creation of more value for customers and the firm.

Figure 1 Guidelines for Successful Industrial Brands

1.

The role and importance of branding should be tied directly into the industrial marketer's business/profit model and value-delivery strategy. Understand the role of the brand in the organizational buying process. Be sure the basic value proposition has relevance for all significant players in the decision-making unit and decision-making process. Emphasize a corporate branding approach. Build the corporate brand around brand intangibles such as expertise, trustworthiness, ease of doing business, and likeability Avoid confusing corporate communication strategy and brand strategy Apply detailed segmentation analysis within and across industry-defined segments, based on differences in the composition and functioning of buying centers within those segments. Build brand communications around the interactive effects of multiple media. Adopt a top-down and bottom-up branding approach. Educate entire organization as to value of branding and their role in delivering brand value.

2. 3.

4. 5.

6. 7.

8.

9. 10.

Figure 2 Alternative Communication Options for Industrial Markets

1.

Media Advertising (TV, radio, newspaper, magazines)

2.

Trade Journal Advertising

3.

Directories

4.

Direct Mail

5.

Brochures and Sales Literature

6.

Audio-Visual Presentation Tapes

7.

Giveaways

8.

Sponsorship or Event Marketing

9.

Exhibitions, Trade Shows, and Conventions

10.

Publicity or Public Relations

ENDNOTES
1

Aaker, D. A. (1996), Building Strong Brands: Building, Measuring, and Managing Brand Equity, New York, NY: The Free Press. Keller, K. L. (1998), Strategic Brand Management, Upper Saddle River, NJ: Prentice-Hall, Inc.
2

Shipley, D. and Howard P. (1993) Brand Naming Industrial Products, Industrial Marketing Management, 22(1), 59-66. Mudambi, S., Doyle, P. and Wong, V. (1997), An Exploration of Branding in Industrial Markets, Industrial Marketing Management, 26:453-466.
3

It should be noted that the customer franchises for these four brands number in the millions, giving them some of the characteristics of consumer market brands. Yet, they also can be deemed industrial brands. We return to this consideration later in the paper.
4

Business Week, "Brands in an Age of Anti-Americanism," August 4, 2003, pp. 47-54.

Other accepted perspectives on branding exist, approaching brands as symbols, collection of attributes, consumption communities, benefit bundles and personalities.
6

Frith, M. (1993), Price Setting and the Value of a Strong Brand Name, International Journal of Research in Marketing, 10 (Dec), 381-386. Gordon, G.L., Calantone, R.J. and Di Benedetto, C.A. (1993), Brand Equity in the Business-to-Business Sector: An Exploratory Study, Journal of Product and Brand Management, 2(3), pp. 4-16. Hutton, J.G. (1997), A Study of Brand Equity in an Organizational Context, Journal of Product and Brand Management, 6(6), 428-439. 7 Rozin, R. S., and Magnusson L. (2003), "Processes and Methodologies for Creating a Global Business-to-Business Brand," Brand Management, 10, 3(February), 185-207.
8

Best, R. (2000), Market-Based Management, Upper Saddle River, NJ: Prentice-Hall, Inc. p. 110.
9

Rozin, R. S., and Magnusson L. (2003), "Processes and Methodologies for Creating a Global Business-to-Business Brand," Brand Management, 10, 3(February), 185-207.
10

For a detailed theory of organizational buying behavior, see Webster, F. E., Jr and Wind, Y. (1972a), "A General Model for Understanding Organizational Buying Behavior," Journal of Marketing, 36(April), 12-19. Webster, F.E., Jr and Wind, Y. (1972b), Organizational Buying Behavior, Englewood Cliffs, NJ: Prentice-Hall, Inc.. For a review of the extensive research literature, see Ward, S. and Webster, F.E. Jr. (1991), Organizational Buying Behavior, Chapter 12 in T.S. Robertson and H.H. Kassarjian, Handbook of Consumer Behavior, Upper Saddle River, NJ: Prentice-Hall, pp. 419-458.
11

Mudambi, S.M. (2002), "Branding Importance in Business-to-Business Markets: Three Buyer Clusters," Industrial Marketing Management, 31, 6(September), 525-533.
12

Webster, F.E., Jr and Wind,Y. (1972a), "A General Model for Understanding Organizational Buying Behavior," Journal of Marketing, 36(April), 12-19. Webster, F.E., Jr and Wind, Y. (1972b), Organizational Buying Behavior, Englewood Cliffs, NJ: Prentice-Hall, Inc. Bonoma, T.V. (1982), "Major Sales: Who Really Does the Buying?," Harvard Business Review, 60 (May-June), 111-19.

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13

Rackham, N., and DeVincentis, J.R., Rethinking the Sales Force: Redefining Selling to Create and Capture Customer Value, New York, NY: McGraw-Hill, 1999. Webster, F.E., Jr. (1992), "The Changing Role of Marketing in the Corporation," Journal of Marketing, 56(October), 1-17.
14

Mitchell, P., King, J. and Reast J. (2001), Brand Values Related to Industrial Products, Industrial Marketing Management, 30 (5), 415-425.