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ISSN 0885-8624
Volume 22 Number 6 2007
Journal of
Business & Industrial
Marketing
Branding in industrial markets
Guest Editors: Michael Beverland,
Adam Lindgreen and Julie Napoli
www.emeraldinsight.com
- Journal of Business & Industrial Marketing
Volume 22, Number 6, 2007
ISSN 0885-8624
Branding in industrial markets
Guest Editors: Michael Beverland, Adam Lindgreen and Julie Napoli
Contents
394 Branding the business marketing
354 Access this journal online
offer: exploring brand attributes in
355 Guest editorial business markets
Michael Beverland, Julie Napoli and
357 Being known or being one of many:
Raisa Yakimova
the need for brand management for
business-to-business (B2B) 400 Sources of brand benefits in
companies manufacturer-reseller B2B
Philip Kotler and Waldemar Pfoertsch relationships
Mark S. Glynn, Judy Motion and
363 Branding in B2B markets: insights
Roderick J. Brodie
from the service-dominant logic of
marketing 410 Multiple roles of brands in
David Ballantyne and Robert Aitken business-to-business services
Jane Roberts and Bill Merrilees
372 Branding implications of partner
firm-focal firm relationships in 418 The role of corporate brand image in
business-to-business service the selection of new subcontractors
networks ¨ ¨
Anna Blomback and Bjorn Axelsson
Felicia Morgan, Dawn Deeter-Schmelz and
431 Executive summary and
Christopher R. Moberg
implications for managers and
383 The importance of brand in the executives
industrial purchase decision: a case
study of the UK tractor market
Keith Walley, Paul Custance, Sam Taylor,
Adam Lindgreen and Martin Hingley
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- The second paper, “Branding in B2B markets: insights
Guest editorial from the service-dominant logic of marketing” by David
Ballantyne and Robert Aitken, builds on insights from the
service-dominant logic of marketing. The authors explore
what reciprocal application of resources, knowledge, and
competencies for the benefit of another party means for
brands and branding in a business-to-business context. Also,
About the Guest Editors Michael Beverland is a Senior Lecturer in several managerial implications are identified as follows. Value
Marketing at the University of Melbourne. He has published in several received comes from direct service interactions and
journals including Business Horizons, European Journal of Marketing, serviceability of goods in use – and is a firm’s principal
Industrial Marketing Management, Journal of Advertising, Journal of branding opportunity. Also, brand marks are transitional
Business & Industrial Marketing, Journal of Business Research, Journal communicative devices, stimulating brand recognition and
of Management Studies, and the Journal of Product Innovation reputation. The paper suggests that firms develop or support
Management.
brand communities (web-based), contribute to the service
Adam Lindgreen is a Professor of Strategic Marketing at Hull
cycle episodes experienced by customers by developing a
University of Technology. He has published in several journals, including
strategic branding approach, and co-create value by co-
Industrial Marketing Management, Journal of Business Ethics, Business
branding. Lastly, the paper argues that business-to-business
Horizons, Journal of Marketing Management, and Psychology &
marketing could be emotion-based and not merely logic- and
Marketing, among others.
rational-based.
Julie Napoli is a Senior Lecturer in Marketing at the University of
The third paper, “Branding implications of partner firm-
Melbourne. She has published in several journals, including Business
focal firm relationships in business-to-business service
Horizons, International Journal of Advertising, Journal of Advertising
networks” by Felicia Morgan, Dawn Deeter-Schmelz, and
Research, Journal of Business Research, and Journal of Small Business
Christopher R. Moberg, examines, through a conceptual
Management.
model, how customers evaluate firms in a strategic, business-
to-business service outsourcing network, and how their
assessment of firms involved in co-producing after-sales
service affects their evaluations of a focal selling firm. Key
Introduction to the special issue on
factors influencing this relationship include focal brand
branding in industrial markets strength and the strength of the relationship between the
partner firm and the focal selling firm. Among the study’s
Branding is gaining prominence among business-to-business
findings are that post-sale business services provided directly
marketers. However, extant research on branding in the
to the customer – irrespective of whether those services are
context of business-to-business marketing remains scarce,
provided by the firm or its partners – play an important role
with suggested conceptual frameworks lacking empirical
in building a firm’s brand image and equity. As such, this is
support. Current research suggests that brands play some
one of few studies investigating the way customers evaluate
role in purchasing decisions in business markets, and that
service when it is performed by multiple partners, thereby
brands provide a source of competitive differentiation.
providing guidance on ways of improving the service
Research also suggests that there are differences between
experience of network customers.
consumer and industrial brand management. While much
The fourth paper, “The importance of brand in the
literature has been published on consumer brand
industrial purchase decision: a case study of the UK tractor
management, we lack guidance on key industrial brand
market” by Keith Walley, Paul Custance, Sam Taylor, Adam
issues, however. Such issues include strategic brand
Lindgreen and Martin Hingley, examines the role of branding
management, brand architecture, brand building and
in the industrial purchase of agricultural tractors in the UK.
maintenance, brand repositioning, and tactical branding
Following explorative interviews with farmers and farm
issues.
contractors, the study identifies through conjoint analysis
This special issue of Journal of Business & Industrial
the importance of five different attributes in industrial
Marketing addresses some of the research lacunae identified
purchasers’ decisions on tractor brand. Also, the importance
above.
of the attributes by tractor brand ownership is identified.
Following our own Guest Editorial, the first paper, “Being
Lastly, overall brand utility and brand utility by tractor brand
known or being one of many: the need for brand management
ownership are identified. Among the study’s implications are
for business-to-business (B2B) companies” by Philip Kotler
that manufacturers and distributors need to maintain a strong
and Waldemar Pfoertsch, adds knowledge to the field of
image. Also, they may charge higher prices for tractors, using
business-to-business brand research by examining the need of
the extra revenue to reinforce their brand image. On-farm
branding for business-to-business companies and analyzing
demonstration of new tractors could be an experiential
the options for success by means of the stock performance.
marketing strategy. Special attention should be given to the
Long-term branding strategies, brand performance and firm’s
location of dealers and the service they provide.
business performance are found to be positively correlated
The fifth paper, “Branding the business marketing offer:
with stock increase. Business performance can be improved
exploring brand attributes in business markets”, by Michael
using current brand focus and guiding principles. Also, the
Beverland, Julia Napoli and Raisa Yakimova, considers
findings suggest that companies should not only focus on
attributes for building strong brand identity:
brand development, but rather adopt a long-term branding
product;
.
strategy.
service;
.
logistics;
.
Journal of Business & Industrial Marketing
advice; and
.
22/6 (2007) 355–356
adaptation.
.
q Emerald Group Publishing Limited [ISSN 0885-8624]
355
- Guest editorial Journal of Business & Industrial Marketing
Volume 22 · Number 6 · 2007 · 355 –356
customers. Explicit communications to build trust are
Two types of brands benefit from product benefits: high
performance brands and ingredient brands. When a product identified relating to different phases of the selection
is conceptualized in terms of product innovation or process. These communications are discussed in terms of
leadership, brand identity is linked to a firm-level capability. content and source and are translated – in terms of
Products may be augmented with services, suppliers may sell implications – to the subcontractors.
services rather than products, and sub-contractors may Specific issues not dealt with in this issue include: what are
provide service capabilities to customers. Logistics, current brand development practices in business marketing?
consisting of capabilities and involving standardized and How is brand architecture managed in business markets
customized components, are relevant for retailers seeking to (including corporate branding)? Also, what are brand-
outsource category management. Suppliers of complex building and brand-repositioning capabilities in business
services and product suppliers of heavy capital items may markets (the capabilities behind brand building, maintenance,
pursue adaptation. Lastly, advice is relevant for advertising and growth)? What are brand extension and repositioning
agencies, market research agencies, business consulting, and
strategies? What is the role of integrated marketing
product suppliers, among others.
communications in business-to-business branding? What are
The sixth paper, “Sources of brand benefits in
important similarities and differences between branding in
manufacturer-reseller business-to-business relationships” by
business-to-business products and services? What are buyer
Mark S. Glynn, Judy Motion and Roderick J. Brodie,
receptions to business-to-business branding efforts such as the
investigates, through a qualitative study of six grocery and
importance, or lack thereof, of brands in the purchase
liquor retailers, what the financial, customer, and managerial
process? What is the role of salespeople in business branding?
benefits of manufacturer brands are to resellers of packaged
Are there different peculiarities of business-to-business brands
goods. In so doing, the paper is one of the first studies to
in international markets (including global branding issues)?
examine the role of brands in channel relationships. The
Lastly, how can business-to-business brands be valued?
findings help manufacturers to understand and manage their
We would like to take the opportunity of thanking all those
brands’ benefits and, in turn, enhance the relationships
who have contributed towards this special issue of Journal of
outcomes with resellers. These outcomes are satisfaction with
Business & Industrial Marketing. First, we thank the reviewers
the brand, commitment to the brand, trust in the brand,
who have taken time to provide timely feedback to the
dependence on the brand, and cooperation with the
authors, thereby helping the authors to improve their
manufacturer. Among the study’s managerial implications
are that minor brands are also important to resellers, for manuscripts. The reviewing was a double-blind reviewing
example in countering the strength of major brands in a process. We thank the following reviewers:
product category. Michael Antioco (Eindhoven University of Technology);
.
The seventh paper, “Multiple roles of brands in business- Liliana Bove (Melbourne);
.
to-business services” by Jane Roberts and Bill Merrilees, Sonia Dickinson (Curtin University of Technology);
.
investigates, through a quantitative study of 201 retail tenants, Andreas Eggert (Paderborn);
.
the role of branding in the context of leasing mall space to Mike Ewing, Francis Farrelly, Samir Gupta, and Raisa
.
retail tenants. A four-stage process, which leads to renewal of Yakimova (all at Monash);
mall lease, was identified as fitting the data. Brand attitudes Victoria Little (Auckland);
.
could be explained mainly by service quality. The study also Roger Palmer (Cranfield);
.
identified that brand performance played two major roles. Leyland Pitt (Simon Fraser);
.
First, brand performed a traditional role as a contributor to Pascale Quester (Adelaide); and
.
the re-buy or repurchasing decision. Second, brand Christine Vallaster (Innsbruck).
.
performed a role as a builder of relationship quality. As
Second, we would like to extend special thanks to the editor
such, this paper is one of the first to examine the multiple
Wesley Johnston (Georgia State University) for giving us the
roles that brands can play in business-to-business marketing.
opportunity of guest editing a special issue of Journal of
There are various practical implications of the study’s
Business & Industrial Marketing.
findings. For example, the study’s findings may be used by
Last, but not least, we warmly thank all of the authors who
industrial firms to build stronger brands and, in turn, to use
submitted their manuscripts (not previously published
these brands to build better relationships with their business
elsewhere) for consideration of inclusion in Journal of
customers.
Business & Industrial Marketing. We appreciate and are
Finally, the eighth paper, “The role of corporate brand
grateful for the authors’ desire to share their knowledge and
image in the selection of new subcontractors” by Anna
experience with the journal’s readers – and for having their
Blomback and Bjorn Axelsson, investigates why and how
¨ ¨
views put forward for possible challenge by their peers. We are
corporate brand image plays a role in the selection of new
confident that the articles in this Special Issue contribute to
subcontractors. A qualitative study of three subcontractors
our understanding of branding in business markets.
and six of their customers allows for an examination of
Michael B. Beverland, Adam Lindgreen and
buyers’ and sellers’ considerations in sales and purchasing
processes. Among the study’s findings is that the role of Julie Napoli
brands is to gain interest, as well as provide trust to Guest Editors
356
- Being known or being one of many: the need
for brand management for business-to-business
(B2B) companies
Philip Kotler
Marketing Department, Kellogg School of Management, Northwestern University, Evanston, Illinois, USA, and
Waldemar Pfoertsch
Pforzheim University, Pforzheim, Germany and China Europe International Business School, Shanghai, People’s Republic of China
Abstract
Purpose – This analysis aims to examine the need of business-to-business companies for branding and analyzes the options for success by means of
the stock performance.
Design/methodology/approach – The paper consists of a qualitative and quantitative pilot study and a quantitative main survey.
Findings – Long-term branding strategies, brand performance and firm’s business performance are found to be positively correlated with stock
increase. Current brand focus and use of guiding principles can lead to improved business performance.
Research limitations/implications – The study has possible location- and industry-specific limitations.
Practical implications – Managerially, the findings encourage firms to adopt a long-term branding strategy, focusing not only on brand development.
Originality/value – By systematically examining relationships between branding strategy and performance of the global firms, this study adds
knowledge to the field of B2B brand research.
Keywords Business-to-business marketing, Brand management, Marketing strategy, International marketing
Paper type Conceptual paper
electric motors, crystal components, industrial lubricants, or
An executive summary for managers and executive
readers can be found at the end of this issue. high-tech components are chosen through an objective
decision-making process that only accounts for the so-called
hard facts like features/functionality, benefits, price, service,
Introduction and quality, etc. (Aaker and Joachimsthaler, 2000, p. 22;
Pandey, 2007). Soft-facts like the reputation of the business,
When talking about brands most people think of Coca-Cola,
whether it is well known, is not of interest. Is this true? Does
Apple, Ikea, Starbucks, Nokia, and maybe Harley Davidson.
anybody really believe that people can turn themselves into
These brands also happen to be among the most cited best-
unemotional and utterly rational machines when at work? We
practice examples in the area of business-to-consumer (B2C)
don’t think so.
branding[1]. For these companies their brand represents a
Is branding relevant to B2B companies? Microsoft, IBM,
strong and enduring asset[2], a value driver that has literally
General Electrics, Intel, HP, Cisco Systems, Dell, Oracle,
boosted the company’s success. Hardly any company neglects
SAP, Siemens, FedEx, Boeing – they are all vivid examples of
the importance of brands in B2C.
the fact that some of the world’s strongest brands are B2B
In business-to-business (B2B), things are different –
brands. Although most also operate in B2C segments, their
branding is not meant to be relevant. Many managers are
convinced that it is a phenomenon confined only to consumer main business operations are concentrated on B2B. Then why
products and markets. Their justification often relies on the are so many B2B companies spurning their fortune?
fact that they are in a commodity business or specialty market Take Boeing, for instance. Only a few years ago a very
and that customers naturally know a great deal about their interesting incident happened at the Boeing headquarters in
products as well as their competitors’ products. To them, Seattle. Shortly after Judith A. Muehlberg, a Ford veteran,
brand loyalty is a non-rational behavior that applies to started as head of the Marketing and Public Relations
breakfast cereals and favorite jeans – it doesn’t apply in the Department, she dared to utter the “B” word in a meeting of
more “rational” world of B2B products. Products such as top executives. Instantly, a senior manager stopped her and
said: “Judith, do you know what industry you’re in and what
company you’ve come to? We aren’t a consumer-goods
The current issue and full text archive of this journal is available at
company, and we don’t have a brand”[3]. Since then US
www.emeraldinsight.com/0885-8624.htm
aerospace giant Boeing has come quite a long way. Nowadays,
Journal of Business & Industrial Marketing
Philip Kotler and Waldemar Pfoertsch have recently published B2B Brand
22/6 (2007) 357– 362
Management (Springer, Heidelberg/New York, NY, 2006, ISBN 978-3-
q Emerald Group Publishing Limited [ISSN 0885-8624]
540-25360-0); parts of this paper are from this publication.
[DOI 10.1108/08858620710780118]
357
- Being known or being one of many Journal of Business & Industrial Marketing
Volume 22 · Number 6 · 2007 · 357 –362
Philip Kotler and Waldemar Pfoertsch
branding and brand management do matter in a big way to And that is what Pitney Bowes wants to achieve with its B2B
customers.
them. In 2000, the company’s first-ever brand strategy was
The internet furthermore brings the full array of choices to
formalized and integrated in an overall strategy to extend its
every purchaser or decision maker anywhere with just one
reach beyond the commercial-airplane business. Today, the
mouse click. Without trusted brands as touchstones, buyers
brand spans literally everything from its logo to corporate
would be overwhelmed by an overload of information no
headquarters. Even the plan to relocate its corporate
matter what they are looking for. But brands do not only offer
headquarters from Seattle to Chicago has been devised with
orientation, they have various benefits and advantages for
the Boeing brand in mind (Khermouch et al., 2001). In 2005,
customers as well as the “brand parents”. They facilitate the
Boeing introduced its new flagship aircraft. In a worldwide
access to new markets by acting as ambassadors in a global
campaign with AOL, they searched for a suitable name and
economy (Khermouch et al., 2001).
invented the “Dreamliner”, which was inaugurated by Rob
Another important aspect of B2B branding is that brands
Pollack, Vice President of Branding for Boeing Commercial
do not just reach your customers but all stakeholders –
Airplanes Marketing[4].
investors, employees, partners, suppliers, competitors,
What is branding all about anyway? First of all we can tell
regulators, or members of your local community. Through a
you what it is not: it is definitely not about stirring people into
well-managed brand a company receives greater coverage and
irrational buying decisions. Being such an intangible concept,
profile within the broker community (Pandey, 2007).
branding is quite often misunderstood or even disregarded as
Other than the biggest misconception that branding is only
creating the illusion that a product or service is better than it
for consumer products and therefore wasted in B2B, there are
really is (Hague and Jackson, 1994). There is an old saying
other common misunderstandings and misconceptions
among marketers: “Nothing kills a bad product faster than
related to B2B branding and branding in general. One
good advertising” (de Legge, 2002). Without great products
frequently mentioned branding myth is the assumption that
or services and an organization that can sustain them, there
“brand” is simply a name and a logo. Wrong! Branding is
can be no successful brand.
much more than just putting a brand name and a logo on a
Now you may wonder what branding really is all about.
product or service.
Scott Bedbury, author of the book A New Brand World puts it
Take a moment and try to think about what “brand” means
as follows:
to you personally. Without a doubt certain products, brand
Branding is about taking something common and improving upon it in ways
names, logos, maybe even jingles, pop into your head. Many
that make it more valuable and meaningful (Bedbury, 2002, p. 14).
people think that this is all when it comes to defining brands.
But what about the feelings and associations connected with
Brands serve exactly the same general purpose in B2B
these products, brands, companies? What about the articles
markets as they do in consumer markets: they facilitate the
you’ve read about them? What about the stories you’ve heard
identification of products, services and businesses as well as
about them? What experiences have you had with those
differentiate them from the competition (Anderson and
products, brands, companies? We could go on and pose more
Narus, 2004). They are an effective and compelling means to
questions like these. A brand is an intangible concept. To
communicate the benefits and value a product or service can
simplify it and make it easier to grasp is quite often equated
provide (Morrison, 2001). They are a guarantee of quality,
with the more tangible marketing communications elements
origin, and performance, thereby increasing the perceived
that are used to support it – advertising, logos, taglines,
value to the customer and reducing the risk and complexity
jingles, etc. – but a brand is so much more than that (Dunn
involved in the buying decision (Blackett, 1998).
and Davis, 2004; Knapp, 2000):
Brands and brand management have spread far beyond the
a brand is a promise;
.
traditional view of consumer-goods marketers. Brands are
a brand is the totality of perceptions – everything you see,
.
increasingly important for companies in almost every
hear, read, know, feel, think, etc. – about a product,
industry. Why? For one thing, the explosion of choices in
service, or business;
almost every area. Customers for everything from specialty
a brand holds a distinctive position in customers’ minds
.
steel to software now face an overwhelming number of
based on past experiences, associations, and future
potential suppliers. Too many to know them all, let alone to
expectations; and
check them out thoroughly.
a brand is a short-cut of attributes, benefits, beliefs, and
.
For example, Pitney Bowes, one of the winners in Jim
values that differentiate, reduce complexity, and simplify
Collins’s book Good to Great (Collins, 2001), has recently
the decision-making process.
introduced a new branding campaign. After being on the
success track for more than 15 years, they felt it necessary to Keeping all this in mind makes it clear that brands cannot be
educate their customers about all their new products. built by merely creating some fancy advertising. If you
Chairman and CEO Michael J. Critelli explained on internalize the concept of “brand” as a promise to your
Bloomberg television how Pitney Bowes’s new business- customers it is quite obvious that it can only come to life if
building brand campaign will fuel the company’s long-term you consistently deliver on that promise. Of course, your
growth strategy, and his Chief Marketing Officer Arun Sinha brand promise needs to be clearly defined, relevant and
elaborated that a brand is more than a product – it’s a meaningful, not to be mistaken with exaggerated marketing
shorthand that summarizes a person’s feelings toward a promises.
business or a product. A brand is emotional, has a personality, A further misconception of branding is that it is seen as a
and captures the hearts and minds of its customers. Great small subset of marketing management. Wrong again! Since a
brands survive attacks from competitors and market trends brand is reflected in everything the company does, a holistic
because of the strong connections they forge with customers. branding approach requires a strategic perspective. This
358
- Being known or being one of many Journal of Business & Industrial Marketing
Philip Kotler and Waldemar Pfoertsch Volume 22 · Number 6 · 2007 · 357 –362
simply means that branding should always start at the top of companies (see Figure 2) shows an even more drastic
your business. If your branding efforts are to be successful, it situation[6].
is not enough to assign a brand manager with a typically The stock market success of the “over performers” was
short-term job horizon within company (Aaker and even larger than in the first analysis. The top B2B brand
Joachimsthaler, 2000). performers were:
Building, championing, supporting and protecting strong Caterpillar;
.
brands is everyone’s job, starting with the CEO (Bedbury, GE; and
.
2002). Active participation of leaders is indispensable because Hewlett Packard.
.
they are the ones who ultimately will be driving the branding
Caterpillar increased its position in an exceptional way. The
effort. Brands and brand equity need to be recognized as the
“under performers” were:
strategic assets they really are, the basis of competitive
Intel;
.
advantage and long-term profitability. It is crucial to align
IBM;
.
brand and business strategy, something that can only
J.P. Morgan; and
.
effectively be done if the brand is monitored and
Microsoft.
.
championed closely by the top management of an
organization Aaker and Joachimsthaler, 2000, p. 19). To It is worth mentioning that between 2002 and 2005 Microsoft
appoint a Vice President of Branding, someone who is continuously lost brand value. Even in 2002 when the crisis
responsible solely for brand management, would be an hit strongly the brand did not lose too much stock value (only
important step. No matter what the actual title, this person 2 6 percent, as compared with an average of 2 24 percent,
should be the one person taking the required actions for and 2 36 percent for the “under performers”). These data
keeping the brand in line. stress the notion that weak brands particularly suffer in
Strong leaders demonstrate their foresight for the brand, difficult times and do not recover as quickly as strong brands.
make symbolic leadership gestures, and are prepared to These findings also suggest that the brand strength of B2B
involve their business in acts of world statesmanship that go companies clearly has an impact on financial market
beyond the short term, and therefore require the sort of total performance.
organizational commitment that only the CEO can lead. Ongoing analysis of the largest global companies using the
Consider Nucor, America’s largest steel producer today. In same methods suggests that the Interbrand value (see
1972, about five years after facing bankruptcy, F. Kenneth Figure 3) is positively correlated with market capitalization
Iverson as President and Samuel Siegel, Vice President of throughout the years 1999-2006[7], and that the Interbrand
Finance, renamed the company and announced “Nucor sells value is significantly positively correlated with income and net
steel to people who actually care about the quality of the income. We also showed that market capitalization is
steel”. This announcement and all steps that followed significantly positively correlated with income and net
propelled the company to the top of its industry. income. Market capitalization is not correlated with
But do brands really pay off? Are they worth the effort and advertisements.
time? Evaluating and measuring the success of brands and The definition, benefit, and functions of brands embrace
brand management is a rather difficult and controversial every type of business and organization. In order to create and
subject. Moreover, it is not always possible to attribute hard maintain the sustainable competitive advantage offered by the
facts and numbers to them, which most marketers certainly brand, companies need to concentrate their resources,
prefer. As a result, there are only a restricted number of structure, and financial accountability around this most
research project and analysis dealing with the actual return on important asset. Businesses with a strong brand positioning
investment for brands. are benefiting from clarity of focus that provides them with
Current research results[5] highlight the power of branding. more effectiveness, efficiency, and competitive advantage
To visualize the effect of brands and branding on share price, across operations (Clifton and Simmons, 2003).
they compared the financial market performance of 23 of the B2B brand advocates underline that the real importance of
30 German DAX companies (see Figure 1). The obvious brands in B2B has not yet been realized. McKinsey &
result of the enormous difference in performance accentuates Company is one of them. Together with the Marketing
the general importance of brands. Companies with strong Centrum Muenster (MCM), one of the best known German
brands have recovered significantly faster from the stock research institutes, they investigated and analyzed the
market “slump” in the wake of the 9/11 terrorist attacks than importance and relevance of brands in several German B2B
weaker brands. Strong brands provide companies with higher markets. They revealed that the most important brand
return. functions in B2B are (Caspar et al., 2002, p. 13):
Companies that once measured their worth strictly in terms increase information efficiency;
.
of tangibles such as factories, inventory, and cash have to risk reduction; and
.
revise their point of view and embrace brands as the valuable value added/image benefit creation.
.
and moreover equally important assets they actually are
Since these functions are essential determinants of the value a
(along with customers, patents, distribution, and human
brand can provide to businesses, they are crucial in regard to
capital). Companies can benefit tremendously from a vibrant
determining brand relevance in certain markets (Caspar et al.,
brand and its implicit promise of quality since it can provide
2002). The above mentioned brand functions are also vital to
them with the power to command a premium price among
B2B markets.
customers and a premium stock price among investors. Not
Nobody can guarantee that a business will realize
only can it boost your earnings and cushion cyclical
immediate benefits after implementing an overall brand
downturns, it can even help you to become really special
(Khermouch et al., 2001). The analysis of the largest DOW strategy. Since branding requires a certain amount of
359
- Being known or being one of many Journal of Business & Industrial Marketing
Volume 22 · Number 6 · 2007 · 357 –362
Philip Kotler and Waldemar Pfoertsch
Figure 1 Branding’s effect on DAX companies’ share price
Figure 2 Branding’s effect on DOW companies share price
investment, it is more probable that it will see a decline in net brand its processors. Because of the accelerating pace of
profits in the short run. Brand building is aimed at creating technological change as well as constantly growing sales rates in
long-term non-tangible assets and is not meant for boosting the consumer market, the company decided to focus on end
short-term sales. Michael J. Critelli, CEO of Pitney Bowes users. They realized that establishing a brand was the only way
(Sinha, 2003) is aware of this and ran re-branding efforts over to stay ahead of the competition. Today, Intel is a leader in
a period of many years to ensure his company’s future success. semiconductor manufacturing and technology, supported and
In the 1980s, personal computers gradually entered the powered by their strong brand, an almost unbeatable
homes of consumers. At that time the highly recognized brands competitive advantage, due to the ingredient branding
in the industry were those of computer manufacturers like IBM, approach and the “Intel Inside” campaign, an approach
Apple, and Hewlett-Packard. Back then, only the most which will be important for increasingly sophisticated
sophisticated computer users knew what kind of customers (Kotler and Pfoertsch, 2007).
microprocessing chip their machines contained, let alone who It is also not the intention to claim that B2B branding is the
made them. All that changed in 1989, when Intel decided to answer to all your company’s problems. Just as there are
360
- Being known or being one of many Journal of Business & Industrial Marketing
Philip Kotler and Waldemar Pfoertsch Volume 22 · Number 6 · 2007 · 357 –362
Figure 3 Correlation between Interbrand brand value versus market The essence of this concept is to infect B2B companies with
capitalization of DOW companies the branding virus – empowering them to make the leap to
becoming a brand-driven and more successful company.
There are many ways to measure overall company success,
such as sales increase, share value, profit, number of
employees, mere brand value (index), etc. To keep it simple
and to limit alterations that may have been influenced by
various sources other than the actual brand, we chose sales
over time as measurement for a company’s success in our
Guiding Principle. The transition point represents a
company’s rise to the challenge of building a B2B brand.
In our constantly changing business environment of new
technologies, globalization and market liberalization, alert
companies are presented with great opportunities. Winning
companies will discard old practices and innovate new
practices to exploit the major trends. With no thought B2B
branding and brand management will become increasingly
important, and the future of brands is the future of business –
probably the only major sustainable competitive advantage.
Companies who are driving in this direction are on the right
track. Other future aspects are branding and social
responsibility. Also, branding in China is in a stage of
leapfrogging into the world market. For decades, China has
limitations in the B2C branding world, limitations also exist in enjoyed a dominant place in world manufacturing because of
B2B. These restrictions still have to be identified and its low-cost labor. Chinese businesses today are pursuing
examined thoroughly in the following years. aggressive branding strategies involving internal growth or
To lead you through B2B branding exercises we suggest a acquiring foreign brand icons and managing them. Both
set of “guiding principles” (see Figure 4) that illustrate approaches could lead to world success. Consider design and
visually the different stages on the branding ladder[8]. It can branding as an increasingly important tool for differentiation.
literally be seen as the path companies have to follow in order Relevance, simplicity, and humanity – not technology – will
to achieve brand success. The beginning of the path is marked distinguish brands in the future.
by the decision whether or not to brand your products, To be successful in the B2B world, a holistic branding
services, or business. If a company, especially the people at approach is required that covers everything from the
the top, is not convinced that it is the right thing to do, it development and design to the implementation of marketing
doesn’t make any sense to continue (“B2B Branding programs, processes, and activities that are intersecting and
Decision”). After making the decision to brand, you have to interdependent. Marketing and brand management will be
figure out how you are going to do it. But deciding on the best critical to a company’s success in the future.
brand portfolio that fits your respective business/industry is
not enough to ensure your company’s brand success.
Notes
Therefore, the next stage addresses all the factors in
practice that make branding successful (“Branding
1 B2C companies have for years dominated the Interbrand
Dimensions”). If the right decisions are not taken
ranking of the 100 best global brands by more than 80
(“Acceleration through Branding”) or the execution falls
percent, and most of the article is about them (see Berner
short, branding pitfalls can occur! But there could also be
and Kiley, 2005).
future perspectives.
2 According to our calculations, in 2005 the total brand
value for all 100 best global brands reached more than $1
Figure 4 Guiding principles for B2B brand development trillion.
3 As quoted in Khermouch et al. (2001).
4 The Boeing Company (internet), cited August 2005.
5 In 2005, a qualitative and quantitative pilot study was
conducted with the 30 largest German DAX companies;
of these, ten were B2B companies.
6 For this analysis the Interbrand Global Best Brand data
were used to characterize the brand performance.
7 The Interbrand brand evaluation started in 1999 and is
available annually. In our research we compiled all
internationally available data, which led to a total of 130
companies. Further research is needed to qualify the
findings.
8 We understand the Guiding Principle as the leading idea
and guiding help to follow our thinking and the structure
of B2B brand management.
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- Being known or being one of many Journal of Business & Industrial Marketing
Volume 22 · Number 6 · 2007 · 357 –362
Philip Kotler and Waldemar Pfoertsch
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driven business: it’s the CEO who must lead the way”,
Aaker, D.A. and Joachimsthaler, E. (2000), Brand Leadership, Handbook of Business Strategy, Vol. 5 No. 1, pp. 241-5.
The Free Press, New York, NY. Hague, P. and Jackson, P. (1994), The Power of Industrial
Anderson, J.C. and Narus, J.A. (2004), Business Market Brands, McGraw-Hill, London.
Management: Understanding, Creating, and Delivering Value,
Khermouch, G., Holmes, S. and Ihlwan, M. (2001), “The
Pearson Prentice-Hall, Englewood Cliffs, NJ, p. 136.
best global brands”, Business Week, 6 August.
Bedbury, S. (2002), A New Brand World, Viking Penguin,
Knapp, D.E. (2000), The Brand Mindset, McGraw-Hill, New
New York, NY.
York, NY, p. 7.
Berner, R. and Kiley, D. (2005), “Global brands”, Business
Kotler, P. and Pfoertsch, W. (2007), Ingredient Branding:
Week, July, pp. 86-94.
Making the Invisible Visible, forthcoming.
Blackett, T. (1998), Trademarks, Macmillan, Basingstoke.
Morrison, D. (2001), “The six biggest pitfalls in B-to-B
Caspar, M., Hecker, A. and Sabel, T. (2002),
branding”, Business2Business, July/August, p. 1.
“Markenrelevanz in der Unternehmensfuehrung –
Pandey, M. (2007), “Is branding relevant to B2B?”, 27
Messung, Erklaerung und empirische Befunde fuer B2B-
January, available at: brandchannel.com
Maerkte”, p. 13, available at: www.marketing-centrum.de/
Sinha, A. (2003), “Branding in a deregulated environment”,
ias/conpresso/_file/AP_B2B_3010.pdf
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Clifton, R. and Simmons, J. (2003), Brands and Branding,
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Corresponding author
brands in the internet age”, Marketing Today, available at:
www.marketingtoday.com/marketing/1204/brand_v2.htm Philip Kotler can be contacted at: pkotler@aol.com
To purchase reprints of this article please e-mail: reprints@emeraldinsight.com
Or visit our web site for further details: www.emeraldinsight.com/reprints
362
- Branding in B2B markets: insights from the
service-dominant logic of marketing
David Ballantyne and Robert Aitken
University of Otago, Dunedin, New Zealand
Abstract
Purpose – This paper aims to explore how the service-dominant (S-D) logic of marketing proposed by Vargo and Lusch impacts on business-to-
business branding concepts and practice.
Design/methodology/approach – Vargo and Lusch argue that service interaction comes from goods-in-use as well as from interactions between a
buyer and a supplier. Their key concepts are examined and the branding literature critically compared.
Findings – Goods become service appliances. Buyer judgments about the value-in-use of goods extends the time-logic of marketing. The exchange
concept is no longer transaction bound. Service-ability (the capability to serve) becomes the essence of a firm’s value propositions. Service experience
becomes paramount in developing and sustaining the life of a brand.
Research limitations/implications – S-D logic highlights the need for rigour and clarity in the use of the term “brand”. It also opens up for
consideration a variety of previously unexplored contact points in the customer service cycle, expanded to include customer assessments of value-in-
use.
Practical implications – S-D logic encourages extending brand strategies into a wider variety of communicative interaction modes.
Originality/value – Some of the issues raised are not new but currently compete for attention in the shadow of media-dominant approaches to
branding.
Keywords Brand image, Value added, Value-in-use pricing, Marketing, Knowledge management, Relationship marketing
Paper type Conceptual paper
knowledge and competencies for the benefit of another party.
An executive summary for managers and executive
The emphasis in S-D logic on value-in-use is potentially
readers can be found at the end of this issue.
paradigm challenging but the foundational principle of
interaction resonates well with much of contemporary
Introduction marketing thought in services marketing, relationship
marketing and B2B marketing.
The service-dominant (S-D) logic of marketing proposed by
Understanding what S-D logic means in particular for
Vargo and Lusch (2004a) emphasises that customers make
brands and branding in a B2B context is the intent of this
critical value assessments when goods are in use, based on
article. We start with a commentary on the S-D logic thesis.
their service-ability. Put another way, goods become service
Next, we offer a critical examination of current thinking on
appliances and customers judge the worth of the service they
brand marks and brand meanings. Then, we examine the
experience from goods as value-in-use. Thus “service”
contribution of S-D logic to understanding B2B branding.
according to S-D logic includes the service experience
From this, the role of marketing communication in all its
derived from interacting with goods in use as well as from
forms becomes clear as a source of brand meanings. Finally,
service interactions with a supplier. So, by extending the
we draw some conclusions that we believe have important
temporal dimension of marketing to cover the service
implications for practitioners.
experiences derived from goods, and by aligning exchange
thinking around value-in-use, the concept of marketing
Commentary on S-D logic
becomes service-dominant, and exchange is no longer
transaction-bound. Every value proposition is an offer of
The catalyst for the current interest in an S-D logic for
service. Every business becomes a service business.
marketing was the publication of an award-winning article by
This brief introduction shows that the S-D logic of
Vargo and Lusch (2004a) entitled “Evolving to a new
marketing has both radical components and also familiar
dominant logic for marketing”. In the same year, another
associations for business-to-business (B2B) marketers.
article by Vargo and Lusch (2004b) appeared, directly
“Service interaction” is broader in concept and extended in
challenging the validity of the characteristic differentiators
time. It involves the reciprocal application of resources,
between services and goods (intangibility, heterogeneity,
inseparability and perishability), which had been established
The current issue and full text archive of this journal is available at more than 20 years earlier (see Fisk et al., 1993). In 2005, the
www.emeraldinsight.com/0885-8624.htm University of Otago in New Zealand invited a number of
leading international academics to The Otago Forum[1] to
debate the issues. A selection of papers from the Forum,
together with commentaries, later appeared as a special issue
Journal of Business & Industrial Marketing
22/6 (2007) 363– 371
of Marketing Theory (Aitken et al., 2006). Also, Lusch and
q Emerald Group Publishing Limited [ISSN 0885-8624]
Vargo (2006a) published an editorial selection of articles by
[DOI 10.1108/08858620710780127]
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- Branding in B2B markets: the service-dominant logic Journal of Business & Industrial Marketing
Volume 22 · Number 6 · 2007 · 363 –371
David Ballantyne and Robert Aitken
leading scholars early in 2006. The Journal of the Academy of the time logic of marketing exchange becomes open-ended,
from pre-sale service interaction to post-sale value-in-use,
Marketing Science will publish a special issue on S-D logic in
with the prospect of continuing, as relationships evolve
2007.
(Ballantyne and Varey, 2006).
The idea behind the Vargo and Lusch thesis is simple, but
Until quite recently, exchange in a marketing context was
the effects are far reaching: S-D logic asserts that service is
synonymous with a market transaction. Under such logic,
what customers are hoping to buy, anywhere, any time. Of
derived from mainstream goods logic and with origins in the
course, service interaction in business markets is not new but
neo-classical economic paradigm, any “value added” for
under S-D logic, goods purchased become service appliances.
customers is also a cost to the firm. This linear logic has been
In other words, a supplementary form of service experience
under constant challenge in B2B marketing and services
comes from goods, as buyers interact with those goods. If
marketing domains due largely to the influence of relational
goods become valuable to customers, as mechanisms for
perspectives entering the literature over the last 20 years (see
service, it follows that the value of the experience derived
for example, Anderson and Narus, 1990; Axelsson and
from goods is determined at time of use by customers, as
Easton, 1992; Berry, 1995; Christopher et al., 1991; Dwyer
value-in-use[2]. This applies equally in an industrial setting as
˚
et al., 1987; Gronroos, 1990; Gummesson, 1987; Hakansson
¨
goods (resources) become part of a customer’s own value
and Snehota, 1995).
creating inputs, whether in manufacture, assembly or
Lusch and Vargo (2006b) have recently outlined a lexicon
distribution.
of terms for the S-D logic which indicates the kind of
Service activity, of course, comprises a greater proportion of
cognitive shift involved in rethinking the scope of marketing
GNP than goods in many countries, but this is not the
action (see Table I). This is clearly a provisional list that
“service-dominant” meaning of Vargo and Lusch. Instead,
invites further work. For example, under S-D logic, customers
they seek to show that service is the undeniable core of every
engage in buying “service solutions” to solve problems rather
marketing interaction. This is not a mainstream marketing
than buying product benefits or features. But what if there are
way of thinking but it has been emphasised by others, for
no problems? Why should marketing innovation be restricted
example, in services marketing by Gronroos (1990), in
¨
to problem solving? Also, “promotion” is a limited form of
relationship marketing by Christopher et al. (1991), and –
marketing communication. Dialogue is by far a superior way
which may surprise some – in an early text by Kotler (1976).
of learning together. Both would seem to have their place as
However, Vargo and Lusch (2004a) extend their service-
part of a more interactive concept of integrated marketing
centricity further. The essential points in summary are these:
communications (Varey and Ballantyne, 2005).
S-D logic emphasises that customers are the arbiters of
.
What is absolutely clear under S-D logic is that any value
value in service interaction, either directly in interaction
judgment at point of purchase by a customer is necessarily
with suppliers or through service interaction derived from
provisional. Thus, the capability to perform and the reliability
goods.
of the firm become critical aspects of the firm’s value
S-D logic also emphasises the potential for co-creation of
.
propositions. With the function of goods seen as service
value and sharing of competencies and other knowledge
appliances, value-in-use will confirm or disconfirm these
resources between customers, suppliers and other market
provisional judgments. There are important implications for
actors. Again, value is derived from the service experience
branding here. We believe it works this way: The brand (as a
of the particular actors in interaction.
tangible mark) serves to signify the nature of the firm’s
S-D logic supports the notion of relationship development,
.
promises and implicit obligations, and customers and other
through which all kinds of communicative interaction and
stakeholders project these or any other values they see fit back
co-created value might emerge over time. This forces
into the brand (as a socially constructed value system). This
marketing innovation to the fore, in the sharing of new
“brand morphing” is examined in the next section.
ideas and knowledge within the firm, and between the firm
and its customers and suppliers.
Marks and meanings critically examined
S-D logic proposes that what a supplier firm essentially
.
does in its marketing activity is offer value propositions
Coverage of branding issues in the B2B literature has been
(promises) and marshal resources together for customers.
sparse (Michell et al., 2001). A natural enough tendency has
This puts a new perspective on selling activity, marketing
been to associate branding with fast moving consumer goods
communication and brand management, as will be
and so branding in this domain dominates the research
discussed later.
picture. However, there are notable exceptions, for example
S-D logic requires a managerial focus on the customer
.
Baldauf et al. (2003), Bendixen et al. (2003) and Mudambi
interaction processes, and attention to monitoring the
et al. (1997). Yet, while brands are one of the most researched
productivity and value potential of the continuous activity
topics in the marketing literature, ambiguity rather than
flows. Rather than firms marketing to customers they
clarity of understanding has been the outcome.
market with customers (an interaction process). The
Ambiguity and complexity begin with the almost universal
bottom line is that marketing exchange becomes a set of
habit of using the single word “brand” in at least three
interactive episodes across time and is no longer
different marketing contexts. First, when “brand” means a
transaction-bound.
name or identifier, and second, when “brand” means a
Overall, S-D logic has the potential to shift strategic product and its characteristics. Then there is a third and more
marketing attention away from a point-of-sale selling focus obtuse way of using “brand”, and that is as a symbolic
to a service relationship focus, and in so doing, to rearrange framing device for utilitarian and non-utilitarian values that
marketers’ notions of efficient resource allocations. Put customers and others may see as attributes belonging to the
another way, to reveal the challenging aspect of this agenda, brand, as if these values were embedded characteristics of the
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David Ballantyne and Robert Aitken Volume 22 · Number 6 · 2007 · 363 –371
Table I What’s happening to marketing concepts?
Goods-dominant logic concepts Transitional concepts Service-dominant logic concepts
Goods Services Service
Products Offerings Experiences
Feature/attribute Benefit Solution
Value-added Co-production Co-creation of value
Profit maximization Financial engineering Financial feedback/learning
Price Value delivery Value proposition
Equilibrium systems Dynamic systems Complex adaptive systems
Supply chain Value chain Value-creation network/constellation
Promotion Integrated marketing communications (IMC) Dialogue
To market Market to Market with
Product orientation Market orientation Service orientation
Source: Lusch and Vargo (2006b)
product (see, for example, the seminal paper by Levy, 1959; Any brand image in our view is essentially socially
˚
also Lindlof, 1988; Salzer-Morling and Strannegard, 2004).
¨ constructed (see Berger and Luckman, 1967; Gergen, 1994;
This three-mirrored view of brands, we hope, is more Hackley, 1998). This means that brand image is not just the
revealing as an explanation than that offered by the American sum of individual perceptions but a shared reality,
Marketing Association (AMA), who state that: dynamically constructed through social interaction. If this
perspective is accepted, the meanings attached to a particular
A brand is a name, term, sign, symbol, or design, or a combination of them,
intended to identify the goods and services of one seller or group of sellers brand are located in the minds of its customers, and the wider
and to differentiate them from those of competitors (Kotler, 2000, p. 404).
community of opinion makers and stakeholders. It will likely
differ from the hoped-for perspective of the marketer or brand
Variants of this AMA definition occur in all major
manager. Also of note, the usage of the term “brand” to cover
introductory marketing texts and also in more specialist
multiple meanings is a recipe for ongoing confusion and
treatments of brands and branding (see, for example, Aaker,
manipulation. In a related way, Varey and Ballantyne (2005)
1991, 2004; Wilson et al., 1995).
have argued that advertising as the dominant form of
Brands at a fundamental level certainly are marks or
marketing communication declares its motives but often
symbols, the marketing purpose of which is to identify and to
conceals its methods. In the traditional logic of branding the
differentiate one product from another, or one firm from
same applies, but here methods concealment potentially
another. A brand, however, is much more that its brand-mark.
extends to those who use them, a case of branding myopia.
Any firm hopes that its stakeholders and target markets, both
So far, we hope to have shown that the logic of branding
customers and future prospects, will find its brand mark to be
inherited from mainstream (consumer) markets is ambiguous
memorable and associated with positive values about the
at least, and we have tracked the source of confusion to the
product or the company. However, Aaker and Joachimsthaler
semantics of the term “brand” itself, and to the current
(2000) comment bleakly that, within the traditional branding
paradigmatic tension over where the brand “resides”, i.e.
model, the brand is a tactic used to drive short-term results.
either in the strategic plans of the marketer or in the heads of
Even more problematically, many firms assume that the
the users and indeed other stakeholders.
meanings associated with the brand mark are something they
We now explore what the S-D logic of marketing means for
uniquely own and control. We take the contrary view that says
brands and branding, especially in a B2B context.
suppliers and their customers and other stakeholders co-create
brand meanings, that is to say, brand meanings are socially
constructed and in the public domain. It follows that diverse Branding logic seen from the perspective of S-D
interactions, discussions and opinions generate and logic
regenerate any firm-based notions of brand value.
The analysis that follows draws from the fundamentals of the
Some authors make a distinction between the firm’s brand
Vargo and Lusch (2004a) thesis. However, an elaboration of
identity and its brand image (see, for example, De
branding strategy is not specifically part of their thesis, a point
Chernatony, 1999). We find the identity/image distinction
also made by Brodie et al. (2006).
helpful in describing some aspects of brand thinking. The
S-D logic has the useful potential to shift strategic
distinction works this way: a firm’s brand identity is an
marketing attention away from a point-of-sale selling focus
idealised set of firm-generated propositions communicated to
to a service and relationship development focus, and in our
customers and other parties by whatever communicative
view, important implications follow for branding strategy.
means available. This notion of brand identity is by no means
Under S-D logic, any brand value judgments at point of
automatically accepted by target audiences because the
purchase by customers are provisional, awaiting testing in
collective thoughts and feelings that individuals and industry
action. Service-ability (as the service capability derived from
groups hold at any time about the brand-mark meanings are
goods) thus becomes a critical risk factor in fulfilment of the
ultimately of their own determination. Hence, we come to
firm’s value proposition. Put another way, brand value is
brand image as representative of perceptions within the market
place, and beyond. confirmed or disconfirmed in-use, at time of use, as
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- Branding in B2B markets: the service-dominant logic Journal of Business & Industrial Marketing
Volume 22 · Number 6 · 2007 · 363 –371
David Ballantyne and Robert Aitken
firm in marketing communication (brand identity) and
customers confirm or disconfirm the value proposition. As has
been discussed, the time logic of marketing exchange under S- accepted by target audiences (brand image). With this latter
D logic is open-ended. The open-ended nature of brand perspective, the responsibility for the brand is assumed to
relationships means that individual perceptions of brand (the reside totally with the marketing department (Davis, 2002),
meanings that become associated with a brand mark) are part so the focus becomes more tactical and reactive than strategic
of a brand’s wider stakeholder associations, whether based on and visionary (Aaker and Joachimsthaler, 2000). This is a
direct first-hand experience (value-in-use), or through difficult position to sustain in S-D logic terms as it ignores the
indirect experience shared or circulated in communicative value-in-use derived from a product by a customer over time,
interaction, media-based or otherwise. and also the word-of mouth communicative effects generated
What are the specific B2B brand management implications from within brand communities (see, for example, Andersen,
of this S-D logic? 2005; Muniz and O’Guinn, 2001). In our view, developing
brand image solely by traditional media message-making in a
A brand-mark is a relational asset whose value to the B2B context (indeed in any context) is like trying to capture
firm is contingent on past, present and future someone’s attention by clapping with one hand.
interactions with various firm stakeholders
A firm rightly controls its brand-marks, which are the tangible
Brand strategies can impact positively or negatively on
evidence of its brands. They also control the trademarks and
the strategic positioning of firms within business
copyrights that support the brands. Brands have histories and
hopefully futures. However, marketers cannot naively assume networks of relationships
that they have sufficient brand power or market dominance to ˚
The concept of network positioning (Hakansson and Snehota,
control the meanings ascribed to their brands by others. 1995) is not to be confused with brand positioning. The point
Many trade journal commentaries on brands and branding here is that many brand strategies develop with the customer
obfuscate the identity and image meanings associated with a specifically in mind, and yet the branding implications extend
brand mark. Difficulties arise when marketing managers, to resellers and other stakeholders. The latter group includes
without reference to product defects that will impinge on employees who must fulfil the brand promises made to
customer value-in-use experiences or firm-to-firm customers as value propositions in S-D logic terms, and
interdependencies, seek to develop marketing resellers who co-create value with their customers from a
communication programs to improve “brand image”. Such diversity of upstream sources and resources. Managing often
split-task thinking can lead to a branding logic that pays more conflicting stakeholder requirements requires particular
attention to communicating the value proposition than coordination skills and a developed cognitive framework to
product efficacy (improving product service-ability). Both, assist in the task (Payne et al., 2005).
of course, are aspects of customer relationship development. De Chernatony (1999) has suggested that employees are
major stakeholders in brand building efforts. He suggests that
A brand-mark is an aid to memory
the brand should represent the vision and culture of the firm,
The brand-mark offers communicable evidence of the
and this necessarily involves employees and staff in shaping
product and past value-in-use experiences, and is an index
and representing a firm’s values. Corporate branding has
for customers to cognitively file such brand meanings,
undergone similar shifts in emphasis to encompass employees
especially the customer’s inferred reputation of the “brand”
as stakeholders in recent years (Hatch and Schultz, 2003).
(in all its variety of meanings). For example, Keller’s (1993,
2003) Customer-based brand equity (CBBE) model could be
adapted for use in a B2B environment. Defining CBBE as Branding is essentially a form of communicative
“the differential effect that brand knowledge has on consumer interaction
responses to the marketing of that brand”, he states that the An important question for firms is: at what point does the
model is based on the belief that “the power of a brand lies in awareness of a brand and its assumed meaning actually begin?
what customers have learned, felt, seen and heard about the The formulation of brand perceptions and the non-specific
brand as a result of their experiences over time” (Keller, nature of their timing fit closely with the S-D logic emphasis
2003, p. 59). on value and its creation, past, present and future. There is
There is a contrary point of view that says a brand-mark is room for an expansion of media-driven branding where
not essential to create brand meaning. For example, a “no- brand-marks serve to represent the firm’s product benefits and
name” brand is sometimes successful where the strategy is to projected values, necessarily modified by the efficacy of the
cultivate a trendy anonymity within a word-of-mouth product and its value-in-use, and opinion generated by word-
generated community of users (Ballantyne, 2004a, p. 423).
of-mouth in the target markets and in the business
Nevertheless, the more common position is that brand-marks
community at large.
serve to represent (or stand in for) the product or firm.
A useful framework for re-focussing corporate branding
that fits with S-D logic is presented by Hatch and Schultz
Only by coupling the brand-mark and product (or firm)
(2003). In this structure, three elements are central:
reputation together is it appropriate to talk of brand
1 strategic vision;
meaning (the brand as a symbolic framework for
2 organisational culture; and
indexing meanings) 3 corporate image.
It may seem trivial to make this point but it takes social
However, if the gap between the projected image and the
interaction and product use together to sustain brand
reality of the customer experience widens, customers smell
meanings, unless it is argued (as many do) that the
dominant source of brand meaning is that projected by the hypocrisy. Reputation matters.
366
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David Ballantyne and Robert Aitken Volume 22 · Number 6 · 2007 · 363 –371
The limits of advertising as a source of brand among admirers of brands” (p. 412). Brand communities
share a number of core characteristics that include shared
meaning
rituals and behaviours, and a sense of moral responsibility
Brand advertising is a dominant and favourite communication between members that relates to brand values, as they see
medium for making branding messages in fast-moving them.
consumer goods (FMCG) industries. However, to the An allied concept of brand community provided by Cova
extent that brand advertising promises are persuasive, (1997) suggests that post-modern society is characterised by
studies of product diffusion and communication show that tribal affiliations that function to develop a series of
people are more inclined to act on mass-media messages if communal linkages. Individuals today are not only looking
confirmed by word-of-mouth from trusted relationship for service which enables them to be free but also something
sources (see, for example, Rogers, 1995). This does not which can link them into a community of others, as if in a
mean that trusted sources are always correct: it means that tribe (Cova, p. 311). There seems to be no reason to suppose
they have a higher status of reliability. that this tribal logic does not to some extent also apply to
Marketing communication today still basically operates as a industrial buyers (remembering it was once said with
one-way, media-based message making system (Varey and conviction that “Nobody ever got sacked for choosing
Ballantyne, 2005). This hegemonic message-making logic IBM”). S-D logic and its emphasis on service experience
dominates in marketing texts, and in use, notwithstanding the rather more than the service promise, on co-creation of value
emergence of more interactive perspectives represented by and mutual updating of knowledge, all make sense in this
integrated marketing communication (e.g. Duncan and context.
Moriarty, 1998; Gronroos and Lindberg-Repo, 1998).
¨ S-D logic calls for a broadening of marketing
However, even integrated marketing communication communication modes used between exchange parties, from
perspectives give limited cover on how to co-create informational, through communicational to dialogical. No
meaning, acquire knowledge or achieve flashes of inspired one modality need take precedence, but certain business
understanding. contexts and situations will call for certain communicational
We think it limiting to consider interaction and responses. However, S-D logic particularly supports dialogue
communication as separate processes. Any form of as a means of learning in interaction together, in the context
interaction between buyer and supplier acts as a source of of ongoing business relationships.
brand meaning, whether this is direct experience with a
product or supplier firm, or derived experiences passed on
Conclusions
from other users, advertising messages, and news media
including such new forms as internet weblogs. Branding under S-D logic becomes a communicative
It is possible to put communication and interaction back interaction process whereby firms attempt to support the
together again by combining three useful and traditional intended meanings of their value propositions. However, we
forms (see Table II). Communication can be informational, go further and say that brand value is confirmed or
communicational, and dialogical (Varey and Ballantyne, disconfirmed in use, at the time of use, as customers
2005). The informational mode includes message-making, confirm or disconfirm the value propositions in play. Let there
which has the useful intention to inform. Next, much of be no doubt that value propositions are essentially promises to
integrated marketing communication’s (IMC) aspirations are perform. Customers will make their most important
grounded in the communicational mode, where listening and judgments of value received through direct service
informing are key aspects of interaction. Finally, dialogue is a interactions with supplier firms and on service-ability of
process of learning together and it works in support of goods-in-use. Put another way, the time-logic of marketing
innovation and the co-creation of value[3]. The purpose of exchange is open-ended, from pre-sale service interaction to
dialogue is always open-ended, learning-oriented and value- post-sale value-in-use (Ballantyne and Varey, 2006). This
creating (Ballantyne, 2004b; Ballantyne and Varey, 2006). alone completely rearranges branding opportunities and
The concept of brand community fits this broadened possible impacts.
communicative context for creating brand meaning. S-D logic further suggests that it is the service experiences of
According to Muniz and O’Guinn (2001), a brand customers that most commonly impact on brand value,
community is a “specialised non-geographically bound through brand awareness and brand memory. Indeed, given
community that is based on a structured set of relationships the potential longevity of brand preferences and brand
Table II A classification of forms of interaction
Form of “market” system
Mode of social association Underlying decision practices Source of value governance
Promised by selling the benefits
Informational: persuasive Controlling and coercing Power inequivalence (perceived as
message making domination)
Communicational: informing Ethical communication with Co-produced by making and keeping Relational norms (perceived as
promises
and being informed stakeholders equitable exchanges)
Emergent in learning together: co-
Dialogical: a bias to learning Finding a voice in co-determination Networked (perceived as spontaneity)
created and integrated
Source: Ballantyne and Varey (2006), revised from Varey and Ballantyne (2005)
367
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Volume 22 · Number 6 · 2007 · 363 –371
David Ballantyne and Robert Aitken
memory derived from historical experience, the importance of product characteristics. That is to say, buyers make
the service-ability of goods becomes paramount in sustaining judgments about the future efficiencies, effectiveness, and
the life of a brand (in all meanings of the term). All product networking competencies of various suppliers (Moller and
¨
experiences and service perceptions meld with brand Torroen, 2003). Also, Golfetto and Gibbert (2006) report
¨¨
associations over time, and this helps to consolidate the in their recent work on “competence-based marketing”
reputation of firms in both their internal (employee) and that they found industrial buyers selecting suppliers by
external (customer) markets. These dynamical changes also profiling and evaluating supplier resources and
impact on the perceptions of the wider community of a firm’s competencies. This process was not limited to marketing
stakeholders. communication and was often initiated by a buyer in a
We are confident in asserting that S-D logic opens up new pre-contractual phase to align supplier competencies with
branding research opportunities. First, it will demand that buyer’s business processes, and later, with the
renewed rigour and clarity in the use of the term “brand”, supplier and buyer experientially working together to
and second, it will open up for consideration a variety of deliver these competencies to fit the buyer’s business
communicative interaction modes beyond (but including) processes.
advertising and packaging. S-D logic also gives rise to the This matches well with the S-D logic and its emphasis
practical possibility of experimenting with time-based on communicative interaction, reciprocal servicing,
customer contact points, and with strategies aligned more resource sharing, solution orientation and the co-
closely to customer value-in-use assessments. Some of these creation of value. Of special interest in the context of
issues are not new to branding scholars but they currently this article, the assessment of brand value is a shifting
compete for attention in the shadow of media-dominant process rather than an act, and begins “upstream” with
approaches to branding. These new S-D branding assessments of the competencies available to the buyer
perspectives seem to us to be amenable to use in a B2B firm, backed by the reputation of the supplier firm. Any
context. assessment of defined tangible product characteristics
comes later again. It does seem to us that B2B buyer
Implications for practitioners behaviour strategy is more akin to a service orientation
than consumer goods. And when the appropriate focus for
Great customer service is a B2B firm’s principle branding
.
branding activity is reflectively considered, it is likely as
opportunity. This comes in two forms – direct service
not the B2B firm that is brand-marked, rather more than
interaction with a buyer company and indirect service
its products.
interaction through goods-in-use. Media advertising should
Explore strategic opportunities for developing or supporting
.
have a useful but support role in brand building in most B2B
brand communities using web-based media sites as well as call-
companies.. With S-D logic, the service experience of
centres and perhaps direct marketing as appropriate to
customers (direct or indirect) leads in varying degrees to
enhancing knowledge exchange in value-in-use contexts.
positive or negative trust in the supplier firm and/or its
Traditionally, industrial markets have not shown much
goods and services. It follows that judgments of value-in-
interest in developing brand communities of the consumer-
use and resultant word-of-mouth effects are the primary
based variety, like those of Harley-Davidson and Saab
communicative sources of brand awareness and meaning.
described by McAlexander et al. (2002) and Muniz and
Notwithstanding, media advertising over the last 50 years
O’Guinn (2001), respectively. However, the potential
has carried the weight of brand building, and still does
positive impact of encouraging web-based brand
today. This is the conventional branding logic, even to
communities in industrial markets could be even greater
some extent for service brands (Berry, 2000, p. 135;
than in consumer markets, according to Andersen (2005),
however, see also Berry and Lampo, 2004).
because business and professional users may have a more
That said, marketing communication can play a varied
committed interest in exchanging product-related
and useful support role in any service-oriented brand
information with the supplier company and amongst
development, especially in creating awareness of the
themselves.
offering, stimulating trial, and providing appropriate
Develop a strategic branding approach contributing to the cycle
.
language and imagery to help position a brand in its
of service episodes experienced by customers. S-D logic offers
market (Berry and Lampo, 2004). But if value-in-use
opportunities to connect with customers in new ways,
(experiential) judgments are out of line with media-
based on the specific use to which goods are put in a
mediated messages, customers will place trust in their own
buyer’s value creating processes. This could mean new
experience and the word-of-mouth of trusted colleagues
dimensions of post-sale service and logistics service
and friends.
support. The concept of the cycle of service from services
View brand-marks as transitional communicative devices
.
marketing fits well, where the interaction process is
which over time stimulate brand recognition, reputation and
characterised as a sequence of episodes, moments of truth,
other meanings associated with the variety of interactions and
or critical incidents (see Albrecht, 1990; Ballantyne et al.,
exchanges between a firm, its customers and other stakeholders.
1995; Carlzon, 1987; Vandermerwe, 1993).
B2B marketers in our view should always explore the full
The central S-D logic idea of goods as service
range of branding opportunities from media messages to
applications means that tracking the service experience
explanatory brochures and distinctive packaging through
of customers over time and contributing additional service
to communicative interaction in the form of trade fairs
support is an open-ended opportunity. These ideas are not
and other forms of dialogical interaction. That said, task
new in service industries but are less common in B2B
capability seems to be uppermost in buyer consideration in
many industrial markets rather more than developed contexts.
368
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David Ballantyne and Robert Aitken Volume 22 · Number 6 · 2007 · 363 –371
the development of economic thought around these
Co-creation of value under S-D logic enhances opportunities for
.
co-branding. The relationship between a supplier and a themes, see Vargo and Morgan (2005). Tangible goods
customer or another stakeholder evolves around a mutual of course won out as the dominant logic. See also an earlier
and reciprocal understanding of where value resides. Value historical review by Ramirez (1998) which emphasises a
is mutual when it has benefits for all involved and value co-production framework at variance with that
reciprocal when value is co-created. S-D logic lends itself commonly associated with industrial production.
3 Dialogue is not given any depth of treatment in the
to all forms of value creation through co-operation, such
original S-D logic thesis, although there are supportive
as through co-design, co-production, co-delivery, and
especially in the context of this article, co-branding. The references (Vargo and Lusch, 2004a, pp. 13-14). For a
opportunity for a more integrated communication fuller treatment of the application of dialogue in various
approach is thus broadened and deepened. This in turn marketing contexts, see Ballantyne (2004a, b), Varey
supports the development of an enhanced brand image. (2002), and Varey and Ballantyne (2005).
4 For a perceptive commentary on how marketing
For example, Intel, as an industrial component provider,
interaction works in time, see Medlin (2004).
has enhanced its brand image through association with
computer hardware manufacturers and assemblers, and
the highly visible placement of its brand mark on their
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About the authors
manufacturing model”, Journal of Service Research, Vol. 6
David Ballantyne is an Associate Professor of Marketing at
No. 4, pp. 324-35.
the University of Otago in New Zealand and an International
Vargo, S.L. and Morgan, F.W. (2005), “Services in society
Fellow at the Centre for Relationship Marketing and Service
and academic thought: an historical analysis”, Journal of
Management, Hanken Swedish School of Economics in
Macromarketing, Vol. 25 No. 1, pp. 42-53.
Helsinki. He was convener of the first wide-ranging
Wilson, R.M.S., Gilligan, C. and Pearson, D.J. (1995),
international dialogue on S-D logic, The Otago Forum,
Strategic Marketing Management, Butterworth-Heinemann,
held at the University of Otago in November, 2005. He is also
Oxford.
a co-author with Martin Christopher and Adrian Payne of
Relationship Marketing: Bringing Quality, Customer Service and
Further reading
Marketing Together (1991), the first text published
Christopher, M., Payne, A. and Ballantyne, D. (2002), internationally in this field of marketing inquiry. A second
Relationship Marketing: Creating Stakeholder Value, 2nd ed., edition was published in 2002 as Relationship Marketing:
Butterworth-Heinemann, Oxford. Creating Stakeholder Value. David Ballantyne is the
Dixon, N. (1998), Dialogue at Work, Lemos and Crane, corresponding author and can be contacted at:
London. dballantyne@business.otago.ac.nz
Gummesson, E. (2002), Total Relationship Marketing, 2nd ed., Robert Aitken is a Lecturer in the Department of
Butterworth-Heinemann, Oxford. Marketing at the University of Otago. His academic and
Nonaka, I. and Takeuchi, H. (1995), The Knowledge Creating research interests include advertising, consumer behaviour,
Company: How Japanese Companies Create the Dynamics of teaching and learning, communications and the media. He is
Innovation, Oxford University Press, New York, NY. lead author of the Marketing Theory 2006 special issue
Storbacka, K. and Lehtinen, J.R. (2001), Customer “Service-dominant logic of marketing: insights from The
Relationship Management: Creating Competitive Advantage Otago Forum”. He is a constructivist who is interested in how
through Win-win Relationship Strategies, McGraw-Hill, people make sense of the world and an idealist in wanting to
Singapore. know how we can make it a better place.
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