B2B Branding: Does it Work?
Does it make sense for B2B companies to take a cue from consumer companies and invest in brand awareness? Many B2B CEOs say no, but HBS marketing professor John Quelch disagrees in his latest blog entry. Key concepts include:
- Most B2B marketers cannot economically address thousands of small businesses using the traditional direct sales force.
- If left unattended, individual managers will each do their own ad hoc marketing.
- B2B marketers are realizing that developing brand awareness among their customers' customers can capture a larger share of channel margins and build loyalty that can protect them against lower-priced competitors.
Editor's Note— Harvard Business School professor John Quelch writes a blog on marketing issues, called Marketing Know: How, for Harvard Business Online. It is reprinted on HBS Working Knowledge.
Many business-to-business (B2B) CEOs view marketing as the domain of consumer goods brands. They are wrong. Among Interbrand's 10 most valuable global brands, we find Microsoft, Intel, IBM, and GE. All generate far more B2B revenues than sales to end consumers.
An HBS research team recently conducted a study of top B2B global brands. These brands shared the following characteristics:
- The CEO is a willing brand cheerleader, loves the brand heritage, and is a great storyteller. The CMO sees his or her purpose as helping the CEO achieve this role.
- The CEO understands that building brand reputation reduces commercial risk, insulates the company in a crisis, and provides the common purpose that can bond all the company's stakeholders.
- Efforts are focused on a single, global corporate brand rather than individual product brands.
- The payback on marketing expenditures is measured rigorously to the satisfaction of the hard-nosed engineers and finance staff who run the typical B2B enterprise.
- Coordination of company websites worldwide to present a consistent face to stakeholders is the best way to get control of marketing communications that may have become too decentralized.
Why should brand-building be important to B2B CEOs?
First, most B2B marketers have to address thousands of small businesses as well as enterprise customers. They cannot do so economically using the traditional direct sales force.
Second, if left unattended, individual managers will each do their own ad hoc marketing. The result will be a hodgepodge of corporate logos, taglines, and packaging. Customers will be confused and the company will look disorganized.
Third, B2B marketers are realizing that developing brand awareness among their customers' customers can capture a larger share of channel margins and build loyalty that can protect them against lower-priced competitors.
Consider these examples:
- Intel is the ultimate ingredient brand. It makes zero sales to end consumers, yet Intel built a consumer demand pull for its chips that required every PC manufacturer to incorporate them and to advertise Intel Inside on their products and in their ads. Other ingredient brands include Gore-Tex, Teflon, and even the Boeing 787 Dreamliner (as a differentiating ingredient for early adopter airlines).
- GE and Microsoft are hybrid brands with some direct-to-consumer sales that have helped to build the reputations of what are primarily B2B firms. But these enterprises, although selling to businesses, want to be in touch with end consumers—with their aspirations and needs. That is a source of competitive advantage in driving their innovation agendas.
- Accenture sells nothing to consumers. But its "Performance Delivered" campaign, backed by the advertising presence of Tiger Woods, has created a positive awareness of the brand among hundreds of thousands of people who may be working for the enterprises to which Accenture consults (or is seeking to consult). And the motivational value of inviting top customers, prospects, and employees to golf events involving Woods cannot be underestimated.
Would Dupont's shareholder value be the same today if it had not made consumers aware of nylon, Lycra, and Stainmaster and linked these innovations to the Dupont name? Definitely not.
Do you think brand-building is essential for B2B companies? Have you seen other characteristics of leadership in smartly branded B2B companies?
Join the discussion on Harvard Business Online.