The importance of branding in industrial markets
Demonstrations of the power of branding in consumer markets reverberate around the globe. In contrast, the role of branding in industrial markets is unclear and under-researched. Three basic questions stimulate the thesis: (1) What is industrial branding?; (2) Is industrial branding important, and if so, to whom?; and (3) What are the implications of industrial branding for managers? Industrial branding is the process of increasing the meaningful differentiation of an industrial product by developing added values or benefits of the brand and communicating them to the customer. The thesis introduces a continuum of industrial brands from commodities to independent brands. Functional benefits form the foundation of value, yet industrial branding emphasises that intangible and emotional values can also affect the choices customers make. Successful branding engineers a close fit between the benefits desired by customers and the tangible and intangible features of the brand. The pinwheel of brand value to the industrial customer captures the dynamics of the situation. Most previous research examines branding from the seller's perspective. Instead, the thesis utiises in-depth interviews to gain insights into the perceived benefits of branding to the buyer. Then, two extensive surveys of UK industrial buyers contribute to knowledge by successfully measuring the importance of branding in specific product markets (bearings and circuit-breakers). Analysis of the survey data reveals that branding is important, but not to all buyers or in all situations. The data are used to test hypotheses emanating from a preliminary new model of industrial branding in the purchase decision process. Cluster analysis is used for benefit segmentation, the grouping of customers by the perceived importance of choice criteria or attributes. The relative importance of branding is a significant factor in the creation of three buyer clusters. Firms in the branding receptive cluster highly value branding attributes such as how well known the company is, the company's general reputation, and the number of prior purchases from the company. Firms in the high tangibility cluster value tangible attributes such as physical product properties and price most highly, and branding least highly. Firms in the low relevancy cluster show low interest in the purchase and rate all the attributes relatively low in importance. Previous research has shown the difficulty of linking benefit segments to more accessible characteristics. However, in the thesis, attribute importance of firms in the three segments is related to a number of buyer, purchase, and decision process characteristics. Branding importance is related to aspects such as buyer expertise, perceived risk, and the level of involvement in the decision process. Finally, the thesis offers suggestions for adjusting the marketing mix for buyers in each of the clusters. These recommendations recognise that segmentation analysis is only as good as how well it can be utilised by the sales force. Overall, the thesis provides evidence of the power of industrial branding, and helps explain its importance. For a significant portion of buyers, the purchase decision comes down to the relatively intangible attributes of the company brand. Despite this, the potential of industrial branding remains relatively untapped.