BRAND MANAGMENT

LESSON 36: BUSINESS TO BUSINESS BRANDING

Objectives
On completion of this lesson you should know: a. What is B 2 B Branding b. How it works and its importance Business to business branding is for when you offer services or products to other businesses. The branding part comes in with the same role as it does in regular product or business branding. The idea is for you to get other businesses to think of your company first, before they turn to anyone else. In a sense, this is easier, because your target market will probably be somewhat smaller. But thats not always the case. Of course, it really depends on your product or service. Business To Business Branding - Ideal For Your Business When Done Correctly To make sure youre able to have business-to-business branding that is as effective as possible, you may want to consider branding consultants. Its the job of a branding consultant to get to know your company and your product and/or service well, in order to determine how to best help you. From there, they can help you create solid business to business branding. The important thing is that you do concern yourself with it. You dont want to sit around and just wait for your advertising to take effect. You have to get out there and make sure your customers know you are the best place to go for your product. Business Branding Business branding is just part of the entire branding process, but an important one, nonetheless. Branding in general is when you get your customers to connect your product with your company instead of any other company that might also produce your product. But what if you have many products? What then? Thats where business branding comes in. If youve got many products, like say, Amazon.com does, you need to concentrate on creating an identity for your business over all. This isnt always a more difficult task than simply product branding. But it can be depending on your product. For Business Branding, Get A Branding Agency The best way to assure that you can be certain your company ends up with strong business branding is by hiring a branding consultant or agency. Its their job to get to know you and your product so they can help you help your potential customers get to know you and your products and services better. You can try doing it on your own, but it is their specialty. Clearly, its important for people to know your company for more than just the products you provide. Business branding will help your customers, potential and otherwise, understand who your company is for its other qualities. Its history, its customer service, its identity. B-to-B Branding: Building the Brand Powerhouse For many business-to-business organizations, branding historically has been an uncomfortable subject. Such firms traditionally have been managed on the basis of the four Ps of marketing: product, price, place, and promotion. Organizations felt that if they built superior products at a low cost, managed the sales and distribution channel well, and promoted the product line, they would achieve marketplace success. Indeed, this has been the hallmark of marketing management for nearly 50 years. Senior management in business-to-business organizations apparently believed that all business purchasing decisions are rationally based. They feared that brand building was a topic suitable only for makers of toothpaste, automobiles, or luxury apparel; it was too emotional, too soft, or too squishy for products that sold through a buying process considered rational. In recent years, however, a number of factors have contributed to changing this traditional point of view. Firms find it difficult to stand out among a crowded field of companies offering similar and increasingly commodified products and services. In many cases, the four Ps are no longer the key to sustainable competitive advantage. In fact, they now are simply the table stakes every company must leverage to simply stay in business. Furthermore, the advent of interaction and the Internet encourage a recognized name that is linked to specific capabilities, values, and competencies. And there has been considerable interest in how brand strength translates into increased shareholder value through enhanced cash flows, reduced costs, increased customer retention, and enhanced asset value.

Focus Areas
This study sought to examine five key areas of business-tobusiness branding. 1. Brand architecture-how best-practice organizations balance and manage corporate, divisional, and product brands and leverage brand equities across the organization 2. Cobranding-how business-to-business organizations build brand value through initiatives such as ingredient branding, licensing, composite branding, and sponsorships 3. Development of the brand-value proposition or brand promise-how business-to-business firms use tools and processes to distill the brand to its essential values and articulate a memorable and compelling brand promise to external and internal audiences 4. Integrated brand communication-how leading practitioners plan, budget, and execute brand communication programs across the full spectrum of

11.673.2

Copy Right: Rai University

247

communication venues to customers, prospects, employees, investors, and other relevant stakeholders 5. Measuring success-how organizations monitor brand equity and determine the return on investment of their branding activities Overview of B 2B Branding Business-to-business organizations face a variety of challenges that distinguish their marketing activities from those of their consumer counterparts. They often face long buy-in periods and complex buying processes in which purchasing decisions are ostensibly made using only rational, objective criteria. Furthermore, rapidly changing technology means that products may be obsolete within a few weeks or months of leaving the factory floor. Perhaps most daunting of all, some firms have a traditional managerial mind-set focused on products, production, and distribution rather than creating perceptual value in the minds of customers. In spite of the unique nature of commercial and industrial marketing, brands are built in the business-to-business arena in much the same way as they are established in the consumer marketplace. Branding is about establishing trust and creditability. Strong business-to-business brands create an intellectual and emotional bond with customers, prospects, end users, channel partners, employees, and other stakeholders. And strong business-to-business brands are clearly delineated from their competitors. The best-practice partners detailed in this report have established unique and distinctive presences in their respective markets. In most cases, these brands have successfully extended their reach from the bricks-and-mortar world to the Internet. Partner firms are far more likely than sponsors to report they have a clearly differentiated brand identity, report much higher levels of immediate recall, and believe they have achieved higher rates of customer retention than have their competitors. Furthermore, most are able to command a premium price for their products and services. Brand Architecture Traditionally, business-to-business organizations have highly product-focused, with less focus on brand identity. In such organizations, marketing activity is often spread across a wide, disparate line of products and services, with little forethought given to creating a unifying or enduring identity in the minds of customers. As was mentioned earlier, in recent years a number of leading business-to-business marketers have begun to reconsider the importance of branding in commercial and industrial markets. At the same time, they have recognized the critical link that must be maintained between the firms branding strategy and its overall business strategies. Frequently this has led to redefining the relationship among corporate, divisional, and product level brands (brand architecture). Such changes have important implications for the roles and responsibilities of those who are tasked with brand identity management. Additionally, brand architecture policies and standards must be developed in a way that fosters the firms future growth, its

entry into e-commerce, and its ability to adapt rapidly to changing market conditions and organizational forms. The report explores three key findings related to issues of brand architecture. 1. Effective business-to-business branding establishes a strong corporate or competency platform that supports multiple products and audiences and links to the organizations business strategies. 2. Business-to-business brands need high-level champions. 3. Brand architecture provides a solid but flexible framework for future growth, easing the introduction of new offerings and the absorption of acquisitions. Cobranding Business-to-business marketers increasingly are joining with other organizations to leverage the value of their brands. This might be done through joint marketing alliances, market development partnerships, or cobranding relationships. This section examines practices in the latter category by focusing on four primary types of cobranding relationships: licensing, ingredient branding, composite branding, and sponsorships. Best-practice organizations have pursued cobranding relationships of all types more aggressively and successfully than have the sponsor firms. Two key findings related to cobranding programsare1. Strong business-to-business brands leverage their strength through cobranding relationships. 2. Cobranding relationships must be carefully developed and managed to ensure consistent and appropriate portrayal of the brand. Development of Brand-Value Proposition or Brand Promise In the 1998 study Brand Building & Communication: Power Strategies for the 21st Century, one of the most important characteristics that differentiated best-practice organizations from sponsors was the extent to which the partners had articulated a clear, concise, and compelling statement of the brands essential value proposition or promise. The goal of the current study is to examine how business-to-business organizations successfully create industrial, commercial, or technology brands. What processes are used? What research is conducted? Who is involved? And what outside resources provide guidance or assistance? Partner organizations invest significant resources in understanding the brand from the standpoint of its many customer segments, as well as from the perspective of employees, channel customers, and even the financial community. Two major key findings are used as the basis for understanding how organizations determine and express the heart of the brand. 1. The brand promise is not a catchy slogan or tag line. It must be grounded in customer needs and linked to value delivery. 2. Powerful brands create an enduring and compelling aura of leadership, authority, and uniqueness.

BRAND MANAGMENT

248

Copy Right: Rai University

11.673.2

Integrated Brand Communication A key challenge facing branding organizations is how to project a consistent, coherent, and compelling brand identity using an expanding list of offline and online communication tools. Such firms are faced with coordinating brand messages across different communication functions and venues (advertising, public relations, trade exhibits, sales literature, online efforts, etc.) and must ensure that messages from different levels and divisions portray the brand appropriately and consistently. Increasingly, smart business-to-business marketers are not stopping at communicating the brands values and attributes only to customers and prospects. Rather, they recognize the importance of internal brand communication. They align the promises to customers with the internal policies and rocedures that enable employees to meet their commitments. Best practices regarding brand communication are grouped under four primary key findings. 1. The most important characteristics of brand communication are: sufficiency, consistency, stability, and focus. 2. Strong brands adapt and refine external communication elements over time but remain true to their heritage. 3. External brand communication must portray the brands strength, image, and leadership across a variety of vehicles and audiences. 4. Great brands are built from the inside out.

build close relationships with a customesr who dont want one!). Dependence is The Key Academics in marketing and sociology have, based on several years of close observation, pointed out the importance of dependence in understanding close relationships. In short, business customers want a close relationship with a seller when they are buying something that makes them dependent on the seller. If you think about it, this makes perfect sense. When a customer is dependent on a seller, they need a close relationship. For example, imagine the customer is putting their entire Internet business in the hands of a Internet consulting company. The customer is now dependent on the consulting company. Can you see how the customer might now want a close relationship? Wont they need the consulting company to be their in case anything happens? Weve written about this in some previous articles (Is CRM really about Relationships? and Customer Loyalty is Underwater ), but we never really mentioned what makes a customer dependent. So, here we will try to fill out the story. What Makes A Customer Dependent? Essentially you can think of a few things that would make a customer dependent. We will list those below along with some short discussion. Strategic Importance of the Product when a customer is purchasing something that is strategically important to them, it makes the customer more dependent on the seller and therefore more close relationship-oriented. What do we mean by strategically important? Well, essentially it means something that allows the customer to differentiate what it sells or how develops and sells in the market. Here is a simple, but realistic example. MS2.com sells a software product known as Product Lifecycle Automation. Without going into the specifics, the software essentially allows companies to develop and market their own products faster. By so doing, these customer companies are able to differentiate themselves in the market. This make customers who purchase the software dependent on MS2.com. Now, before concluding that it must be complex (like fancy software) to be strategic, heres another example. When NutraSweet (a sweetener) first entered the market, it sold its formula to Coca-Cola. This allowed Coke to differentiate its cola from all competitors in the market. Thus, NutraSweet was strategically important to Coke. NutraSweet, however, is not complex. Thus, you dont have to sell something that is complex for it to be strategically important!! So, ask yourself: Is what you sell strategically important to your customers? Downside Risks when a customer is purchasing something for which there are large downside risks (i.e., if it doesnt work, the customer is out of business), this obviously makes a customer more close relationship-oriented.

BRAND MANAGMENT

Difference Between Consumer and B 2 B Marketing

Consumer marketing is concerned with matching the resources of the selling organization with the needs of consumers. It focuses on end users Organisational marketing is concerned with provision of products and services to the organizations.

Key Issues In B 2 B Branding Budgets for B 2 B campaigns are often smaller When Do B2B Customers Want a Close Relationship? by Allen Weiss Given all the talk these days about relationship marketing, B-toB auctions, and eWebs of all sorts, one might get the impression business relationships are changing in a fundamental way. This view, however, is likely to be misguided. This is because it is based on the idea that the Internet will do away with all social aspects of business relationships. One central idea throughout current discussions is the challenge of building close relationships with customers. While this is a reasonable goal, it begs the question as to whether all business customers want a close relationship. Here we will try to examine the conditions under which a customer might want such a relationship. More importantly, a good understanding of this will help you to appreciate when the efforts of building a close relationship are not warranted (just think how much time you can save if you stop trying to

11.673.2

Copy Right: Rai University

249

Note how similar this is to the so-called Mission Criticality of the product or service theyre buying. If youre selling something that is mission critical to a customer, they are close relationship-oriented. So, ask yourself: Does what you sell have big downside risks for your customers? Switching Costs when a customer must build up high switching costs in order to buy and use your product or service, they become more close relationship oriented. What types of switching costs are there? We typically think of switching costs in terms of obvious things like equipment or software. So, if you have to change software in order to buy a sellers product, you incur high switching costs. While this true, it is a limited view of switching costs. For example, switching costs can come in the form of training or replacing people, or even new procedures that are geared to work with a specific seller (such as information links or administrative controls). When a buyer must build up any of these switching costs in order to buy a sellers product, the buyer becomes close relationship oriented. Finally, we should note that switching costs might take the form of psychological switching costs. These arise due, in part, to the comfort a customer may derive from purchasing from a seller with a strong brand name. So, ask yourself: Does what you sell require large switching costs for your customers? Modularity when a customer is buying something that is easy to mix and match within their usage system, it makes them less (not more) close relationship-oriented. To understand this, first understand the concept of a usage system. Most products are purchased as part of an overall system. A usage system is simply a set of products that must be used together to be useful to a customer. An example would be an Internet connection. By itself, and Internet connection is worthless. Its value becomes apparent only within the context of its usage system (a computer, browser, and the Internet connection). Many things that firms sell are in fact part of a larger usage system (databases and applications, WAP-enabled cell phones and WML coded content, etc.). To the extent that what a customer is buying is easily mix and matched inside the usage system, they become less relationshiporiented. Thus, if any database can be used with a given application, then the customer for databases becomes less relationship oriented towards a database vendor. You can readily see how industry standards and the open source movement has a profound impact on modularity when it comes to technology and the Internet. So, ask yourself: Is what you sell highly modular for your customers? The Bottom Line As you can see there are various forces acting on customers to make them more or less close relationship-oriented. Its the
250

combination of these different forces that will inform you whether your customer is really close relationship-oriented, or simply looking for transaction. The important point to remember is this. Not all customers want a close relationship. It depends on what theyre buying. In my experience, the answer to this question typically is immediately apparent. For example, if what you sell is 1) not strategically important to a customer, 2) is not mission critical, 3) requires very little switching costs, and 4) is modular, then you are likely dealing with customers who dont want or need a close relationship. They want a transaction...and the driving force of choice will likely be the best price. But if these factors point to a customer who wants a close relationship, well you must be prepared for being a great partner in that relationship. Now you might be able to understand the limitations of these auctions for all business transactions. Customers buying products and services that make them close relationshiporiented are not going to be interested in an auction. Auctions put the emphasis on price, but thats not what close relationship oriented customers are interested in. What they want is a partner who is willing to be there with them (remember they are now dependent on the seller), and such customers are typically willing to pay more for a good partner. The follow-up question, is what it takes to be a great partner of a relationship oriented customer, and this we will discuss in a future tutorial. Notes

BRAND MANAGMENT

Copy Right: Rai University

11.673.2