Chapter 1 Introduction to Business-to-Business Marketing Management

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Business-to-Business Brand Management: Theory, Research and Executive Case Study Exercises. Advances in ... All rights of reproduction in any form reserved ... guideline leads to the fifth one that emphasizes the importance of emotional.
CHAPTER 1 EFFECTIVE BUSINESS-TOBUSINESS BRAND STRATEGIES: INTRODUCTION TO BUSINESS-TOBUSINESS BRAND MANAGEMENT Mark S. Glynn and Arch G. Woodside ABSTRACT The research and the authors spotlighted in this book represent a series of recent exciting developments in the topic of business-to-business (B2B) branding. The papers in this book enhance our understanding of practice in this important facet of the marketing discipline. Furthermore, each author presents areas for future research and important managerial implications. The papers in this book cover a broad spectrum of industries and continents as well as both product and service offerings. The papers address a wide range of B2B applications including resellers, retailers, logistics service providers, subcontractors, hairdressing services, and a producer of high-tech materials. In addition, two papers address branding in B2B markets and pricing more generally. These papers provide details of the research background, methodology, analysis of each study. The topic coverage of this volume is extensive as the following list shows: (1) Building a Strong B2B Brand; (2) Building a Strong Brand to Resellers; (3) B2B Brand Equity: Theory, Measurement, and Strategy; (4) Effective Strategies for B2B Service Brands; (5) Brand Meaning and Business-to-Business Brand Management: Theory, Research and Executive Case Study Exercises Advances in Business Marketing and Purchasing, Volume 15, 1–10 Copyright r 2009 by Emerald Group Publishing Limited All rights of reproduction in any form reserved ISSN: 1069-0964/doi:10.1108/S1069-0964(2009)0000015005

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its Impact in Subcontractor Contexts; (6) Brand Image, Corporate Reputation, and Customer Value; (7) Internal Branding Theory, Research, and Practice; (8) Pricing Theory and Strategy Applications in B2B Brand Management. Collectively these papers address most aspects of the marketing mix for B2B and industrial marketers. Each of the papers provides valuable brand management insights for managers.

INTRODUCTION An examination of the Interbrand list of the 100 most valuable brands shows that many of these leading brands have a business-to-business (B2B) focus including four of the top ten brands. However B2B brands are mistakenly often thought of as being less valuable than their consumer counterparts. The evidence in the Interbrand results shows that this assumption is incorrect as the prominence of brands such as IBM, Intel, GE, and Microsoft indicates. The value of these B2B brands also comprises an important proportion of the total shareholder value of these firms. While branding research predominantly focuses on consumer branding, recent years witness an increasing research interest in B2B branding. This research interest results in the publication of a major text on B2B brand management (Kotler & Pfoertsch, 2006) as well as the publication of a special brand management issue of the Journal of Business and Industrial Marketing in 2007. The second edition of a major B2B textbook (Anderson & Narus, 2004) also emphasizes B2B branding. In early research, the focus of B2B branding was from a product perspective that addresses the fundamental question of whether or not B2B companies should spend valuable marketing funds on branding their product. Many researchers apply the frameworks from pioneering researchers such as Aaker and Keller to researching branding in business markets. The focus of industrial branding is now expanding to the inclusion of services, nonindustrial contexts such as retailing, corporate branding, and considerations regarding the marketing mix. As a result, the theoretical perspectives relevant to B2B branding decisions are broadening. This volume on Businessto-business Branding Strategies in the Advances in Business Marketing and Purchasing series shows the progression and depth that is occurring in this developing research stream. Leading researchers in this growing area of branding research interest were invited to submit a paper to this volume. The resulting papers present

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an international perspective of branding decisions not only made by larger firms but also by small-to-medium size enterprises. The aim of this volume is not only to showcase these research developments but also to provide a snapshot to B2B marketing practitioners of the potential applications of many of these findings in each paper. The book is also relevant to MBA and postgraduate research students as part of their business management training programs. Most of the papers include an executive training case training study, review questions, together with instructor’s notes (available to instructors at the B2B_Brand_Management website) that provide additional commentary on these review questions.

BUILDING A STRONG B2B BRAND Following this introduction, the second paper, ‘‘Building a Strong Businessto-business Brand’’ by Kevin Lane Keller examines how basic branding theory applies to B2B but also highlights some importance differences with consumer markets that marketers should be aware of. He then presents a series of useful guidelines for marketers in B2B markets which are applicable to a wide range of marketing contexts. These guidelines include first the importance of ensuring that employees understand the brand and second that the corporate brand is important something not always evident in consumer markets with their emphasis on product brands. Third, Keller highlights the dangers of commoditization for marketers and that particular care is necessary to frame value perceptions that differentiate a B2B brand in the marketplace. For many B2B buying decisions, the brand purchase often becomes part of the production process and not always visible to the end customer. Thus in these situations marketers may feel a temptation to emphasize product associations. For the fourth guideline the importance of nonproduct imagery is emphasized. This guideline leads to the fifth one that emphasizes the importance of emotional associations for B2B buyers which leads to longer term business relationships. Finally, the last guideline emphasizes the range of marketing program options available to brand markers and importance of careful segmentation to optimize the effectiveness of marketing expenditure. Overall, the underlying message for industrial marketers is to focus on what the brand means to B2B customers. Extending this focus on brand meaning beyond the marketing group and throughout the entire organization can result in significant competitive advantages for the marketer.

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BUILDING A STRONG BRAND TO RESELLERS The third paper by Mark Glynn examines what aspects of a manufacturer’s brand are actually relevant to resellers of those brands. Resellers represent a special category of B2B research in that the reseller sells the brand to endcustomers. However, the marketing strategies of brand manufacturers include both the retailer and the end customer using push-and-pull methods. Glynn’s paper examines the benefits of manufacturer’ brands as seen by the retailer and develops a scale that validities these benefits. A two-stage research method illustrates this scale development. This research approach begins with qualitative research of channel members namely manufacturers and retailers to gauge their perceptions of what they saw as the benefits of manufacturer brands. These findings show that the channel benefits of manufacturer brands are financial, manufacturer support, customer expectations, and brand equity. These benefits not only reflect customer-based brand equity but the impact of the manufacturer’s marketing mix on both the retailer and the retailer’s customer. The second stage of the research involved a survey of 357 New Zealand supermarket buyers. This survey quantitatively measures the manufacturer brand benefits across 16 brands from eight product categories. The results are generalizable to brands in the supermarket sector. A confirmatory factor analysis test confirms the reliability and validity of the manufacturer brand benefit constructs. A well-known procedure that Steenkamp and Van Trijp (1991) explain using LISREL 8.54 helps confirm the robustness of these measures. The results show first that the financial benefit that was evident in the qualitative research is not confirmed by this analysis. However, the three other constructs manufacturer support, retail customer expectations, and customer-based equity were important. These constructs show favorable fit statistics. These findings are important for B2B marketers as they confirm that it is not just the brand name itself that is important to retailers but also the resources manufacturers use to support the brand and which also creates customer demand. The study identifies two aspects of customer demand for retailers, firstly the brand demand in relation to the store and brand equity in relation to competing brands.

B2B BRAND EQUITY: THEORY, MEASUREMENT, AND STRATEGY The fourth paper also addresses the importance of brand equity between suppliers and retailers. Research between retailer and suppliers has

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

EFFECTIVE STRATEGIES FOR B2B SERVICE BRANDS The fifth paper by Donna Davis, Susan Golocic, and Adam Marquardt examines how branding helps service providers in the logistics industry achieve marketplace differentiation. This paper draws attention to some fundamental differences between consumer and B2B branding. Firstly, the importance of relationships with a small number of buyers and the resulting interdependence of buyers and sellers are substantially higher in most B2B versus B2C contexts. Secondly, the fact that organizational buying decisions require multiple inputs from a range of individuals within the buyer organization. These points raise the question of how these fundamental differences affect the brand-marketing program. This paper also focuses on another emerging area within branding theory, which is the study of service brands. Much of the early research into branding addresses the question of how brands affect consumer evaluations

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of products. One of the key questions for practitioners in this early branding research was how extending the brand to another product category impacts consumer’s brand evaluations. However, recent research underscores the importance of service rather than product to any market offering (Vargo & Lusch, 2004). The research method in this paper also uses a mixed-method approach to develop and test a conceptual model. Firstly in-depth interviews with managers reveal some key themes and highlight the importance of brand image and awareness not only for customers but also for employees and trading partners. The conceptual model examines how the service provider relationship moderates the formation of brand equity. Evaluating this model includes tests on both service providers and customers. The results show interesting differences in terms of how these two groups perceive brand awareness and brand image. The study includes a series of openended questions to provide further insight into these findings. Another dimension this research highlights is the importance of the corporate name and thus the service quality associating with corporate name is important in building positive brand associations.

BRAND MEANING AND ITS IMPACT IN SUBCONTRACTOR CONTEXTS The sixth paper by Anna Blo¨mback considers the supplier perspective of B2B branding. Previous research focuses on the supply of manufactured goods; however, this study considers the situation where the supplier customizes the product offering. In the subcontracting context, the product mix therefore includes a unique service component to the offering. This study applies a qualitative research approach to both suppliers and customers for a rich perspective of the data in multiple contexts. The first context involves the buyer manufacturing a specific item and requires an existing subcontractor. The second situation involves a context where no previously known subcontractor exists. Subcontractors represent aspects of both corporate and service brands. In this research, the findings show that buyers use both hard and soft factors for selecting a subcontractor. These hard factors include experience and performance, whereas the soft factors impressions of the subcontractor are gained from a variety of sources including sales representations and trade fairs. This research highlights the importance of the corporate brand image as buyers do not separate the image of the supplier from the product that it offers.

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This research reveals how buyers make decisions on a supplier often based on little information or corporate band image. As the selection process progresses this information gathering increases the awareness of the supplier’s total offering. The research also highlights the importance of trust in this selection process especially when buyers have prior knowledge of potential suppliers. This research also highlights the importance of corporate branding where the supplier cannot formally brand the market offering, particularly in the section of new subcontractors.

BRAND IMAGE, CORPORATE REPUTATION, AND CUSTOMER VALUE The seventh paper by Anca Cretu and Rod Brodie examines how corporate reputation relates to brand image. Their research addresses the relationship outcomes of buyers that result from reputation and brand image. As both these components form part of the market offering other issues such the service delivery as well as prices and cost are important too. The conceptual framework in the paper shows the multidimensional nature of brand equity which means the brand part of the offering is just one component that B2B buyers evaluate. This research examines buyer–seller relationships in the hairdressing industry, the supplying of goods to a local hair dressing salon. In this research the relationship outcomes include customer value and customer loyalty. In contrast with previous studies the findings show a strong influence of corporate reputation on both value and loyalty. Prices and costs of the market offering also influence customer value. However, the linkage between the brand image and the market offering and customer value is only marginally significant. This research highlights the differential effect of both corporate reputation and brand image on relationship outcomes. Managers should be aware that brand image is influential as far as the product offering is concerned but to manage the relationship means that firms should pay more attention to managing corporate reputation as well as just focusing on brand management.

INTERNAL BRANDING THEORY, RESEARCH, AND PRACTICE In the eighth paper, Syliva von Wallpach and Arch Woodside focus on corporate branding. The paper explores the differences between the

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corporate brand and the employee’s view of the brand. Employees are important representatives of the brand to customers as often, the only contact customers have with the brand is with the firm employee. This paper explores the origins of the discrepancies between corporate and internal brand. The research method uses mixed-method research and involves collecting organizational members’ stories about the internal brand and its meaning. The data are analyzed by means of a hermeneutic text analysis, which considers both the language and the context of the informant’s text. This research provides some interesting insights into the role of brand ambassadors and the question of whether or not internal branding as seen by employees of the firm are ever congruent with the strategic intentions of management. This research highlights the importance of the backstage processes that may appear to contradict the brand corporate image as customers perceive. To address such problems, the authors suggest that management need to recognize the differences between the intended organization reality and the tacit socially constructed reality. Understanding of the social reality within an organization is a useful starting point for building the internal brand. Even though differences between employees and management existed in this study, the research did highlight common ground between the employee and the manager in terms of shared values.

PRICING THEORY AND STRATEGY APPLICATIONS IN B2B BRAND MANAGEMENT In the final paper Gerald Smith and Arch Woodside examine theory and implementation of price decisions for B2B brands. This paper examines both the strategic and implementation aspect of price decisions in managing B2B brands. Unlike other aspects of the marketing mix such as product, place, and promotion, pricing decisions affects firm revenue directly. The paper presents a conceptual framework that includes the external marketplace conditions as well as the strategic policy of the firm with regard to pricing together with the performance outcomes. The paper examines the literature on perceived value, perceived quality, pricing strategy, how buyers respond to pricing, segmented pricing, yield management systems likely competitor response, as well as an assessment of costing and contribution. Within the literature the paper highlights the importance of correctly modeling likely choice behavior. Conjoint analysis is a method of particular

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value to practitioners; this method is useful in assessing the relative importance of many of the product and service components of alternative product-service offerings from the customer’s viewpoint. The value of conjoint analysis of pricing decisions represents a more accurate method of predicting choice behavior compared to survey methods where customers report their probable behavioral intention to price change decisions. The paper provides several examples of the value of these choice experiments. The paper includes a very useful price-signaling framework that compares competitive responses with opportunistic behavior. The paper concludes by recommending several options for B2B brand marketers. These options illustrate the need for brand marketers to consider a wider range of goals rather than a simple focus on profit and loss. Brand marketers need to examine these ramifications using a large toolkit for pricing decisions.

CONCLUSION Consider asking a sample of managers and academic researchers the question ‘‘What first comes to mind when you hear the term ‘‘brand management’’?’’ Many responses would mention brand associations relating to the concept ‘‘consumer.’’ Consumer issues initially sparked a large body of academic research as well as the resulting managerial applications and consultancy around the topic of branding, but this volume demonstrates the benefits of brand management for B2B marketers. While aspects of consumer branding do naturally apply to B2B branding, this volume highlights some important differences between these two marketing contexts. A powerful observation is that consumer branding theory does not totally address the B2B context. Therefore, the papers in this volume show that alternative theoretical perspectives are necessary for further knowledge development in B2B brand management research. A common misconception is that the literature on B2B branding research is scarce. However, a glance through the reference lists in each of the papers in this volume indicates a much larger body of literature on the topic of B2B brand management exists which is growing all the time. This volume also demonstrates the insights that accrue from utilizing a diverse number of research methodologies. These insights enrich our understanding of this important topic area in branding.

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REFERENCES Anderson, J. C., & Narus, J. A. (2004). Business market management: Understanding, creating and delivering value (2nd ed.). Upper Saddle River, NJ: Prentice Hall Inc. Kotler, P., & Pfoertsch, W. (2006). B2B brand management. Berlin: Springer. Steenkamp, J.-B., & Van Trijp, H. C. M. (1991). The use of LISREL in validating marketing constructs. International Journal of Research in Marketing, 8, 283–299. Vargo, S. L., & Lusch, R. F. (2004). Evolving to a new dominant logic for marketing. Journal of Marketing, 68(1), 1–17.