BusinesstoBusiness Marketing B2B Branding

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Business-to-Business MarketingB2B Branding

• Haas School of Business
• UC Berkeley
• Fall 2008
• Week 8
• Zsolt Katona

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Today

• Case Discussion Barco
• Case Discussion Intel Inside
• A few thoughts on B2B Branding
• How to measure brand equity? Conjoint analysis

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Most valuable global brands
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What is the value of a brand?
Sales
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Marketing Budget
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Is brand equity important in B2B?
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Some argue that

• B2B buyers are rational and not influenced by
  brands
• B2B purchases are about the relationship, only
  sales reps matter
• Price is the only thing that matters
• B2B products are too complex
• B2B companies sell to few customers

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But

• Buyers are people with emotions
• People do not even know that their emotions are
  affecting their decisions
• They may face an overwhelming choice
• Purchasing department may not be as technically
  sophisticated as engineers (high-tech)
• Relationship benefits are hard to objectively
  measure
• Signaling quality

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Brand value comes from

• Greater willingness to try
• Greater likelihood that the product is purchased
• Willingness to pay a price premium
• Less sensitive to price increases
• Less inducement to try a competitive offer

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Differences between B2C and B2B

• Customer risk is a bigger factor (You never get
  fired for buying IBM)
• Buyer is usually not a single decision maker
• Brand loyalty is usually higher in B2B, but
• Building brand equity takes more time
• Special case hybrid brands (microsoft, GE)

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Small brands

• Acme Brick brick manufacturer
• 1.5 million marketing mostly image building
• Partnerships with sports celebrities, PR, charity
  events
• 100-year product guarantee (ind. stand. 3 to 5)
• 84 brand preference
• Estimate brand is worth 10 price premium
• Sales 200 million, brand is worth 20 million
  annually

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Leading global brands

• The CEO is a brand cheerleader
• Understanding how a strong brand reduces
  commercial risk (customers customers)
• Efforts are focused on a global corporate brand,
  not individual products
• Coordination of company appearance
• Rigorously measure the payback on marketing
  expenditures

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How to measure brand value?
Conjoint Analysis Goal To estimate consumers
preference structure (valuation of attributes) by
forcing them to trade-off product
attributes. Major uses Measure brand value,
New product design, Design modification,
Pricing, Price discrimination, Benefit
segmentation.
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Examples of Conjoint use

• CONSUMER NONDURABLES
• Bar soaps
• Hair shampoos
• Carpet cleaners
• Synthetic-fiber garments
• Gasoline pricing
• Panty hose
• Lawn chemicals
• FINANCIAL SERVICES
• Branch bank services
• Auto insurance policies
• Health insurance policies
• Credit card features
• Consumer discount cards
• Auto retailing facilities
• High-tech maintenance service
• INDUSTRIAL GOODS

• OTHER PRODUCTS
• Automobile styling
• Automobile truck tires
• Car batteries
• Ethical drugs
• Toaster/ovens
• Cameras
• Apartment design
• OTHER SERVICES
• Car rental agencies
• Telephone services printing
• Employment agencies
• Information-retrieval services
• Medical laboratories
• Hotel design
• TRANSPORTATION

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Main Conjoint steps

• Define Product Concept
• Define relevant attributes (focus groups,
  interviews)
• Define levels for each attribute based on input
  from
• RD
• Saturation effects (focus groups)
• Collect data
• Full profile procedure
• Trade-off matrix
• Interpret data
• Attribute level valuations
• Attribute importance
• Simulate scenarios
• Price, market share

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Conjoint exercise Choosing a laptop computer for
personal use
Assume alternative laptops only differ in three
characteristics (each having two possible
levels) 1. Brand (Lenovo or Dell) 2. Weight
(3lb or 5lb) 3. Price (1000 or 2000)
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Task 1. Rank order the following
combinations (1 most
preferred, 8 least preferred) Once finished,
assign a rating to the alternatives. (100 is
highest, 0 is lowest) RANK
RATING Product _____
_____ Lenovo, 5lb, 1000 _____ _____
Dell, 3lb, 1000 _____ _____ Dell, 5lb,
2000 _____ _____ Lenovo, 3lb, 2000
_____ _____ Lenovo, 3lb, 1000 _____
_____ Dell, 5lb, 1000 _____ _____ Dell,
3lb, 2000 _____ _____ Lenovo, 5lb,
2000 Pick one level of one attribute. What is
the average rating for it? Do the same for all 6
attribute levels. Average rating Lenovo
_______ Dell _______ 3 lb _______ 5
lb _______ 1000 _______ 2000 _______
How much is 1 unit of rating worth?
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Task 2. Assume customer utility is linear and
additive. What is the customer utility of a
Dell PC weighing 4 lbs for 1500? V(Dell)
V(4 lb) V(1500) V(Dell, 4, 1500)
V(Dell) V(4lb) V(1500)
Assume market share is proportional to
value. What is this PCs market share if it
competes with a Lenovo, 3 lb, 2000
machine and a Dell, 5lb, 1000 machine? V(Dell,4
, 1500) V(Dell, 5, 1000) V(Lenovo, 3,
2000) --------------------------------------
Total MS(Dell, 4, 1500)
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Task 3. Calculate attribute importance by taking
the maximum difference in average attribute
ratings dividing it by the sum of all the
differences in attribute scores.
Vmax(brand) Vmax(weight) Vmax(price)
Importance of brand ______ Importance of
weight ______ Importance of price ______
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An example with cars
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Example CarsRelative importance of features in
car choice ()
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Conjoint summary thoughts

• Always use a professional market research firm.
• A key issue is finding the relevant attributes
• Consumers need to be familiar with the category
  (e.g. Electric car)
• There can only be a few attributes and levels
• Can include abstract attributes (e.g. brand)
• Does additive utility model make sense?
• What about interaction between attributes?

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Branding Lessons

• Branding is a basic way to protect ones market
  from commoditization
• In business markets, beyond product benefits, the
  brand also summarizes
• Process benefits (e.g. MIS systems, delivery)
• Relationships benefits (partnership,
  responsiveness)
• Branding works because perceptions matter
• Branding has a strategic role in terms of
• Resource allocation (RD vs. marketing)
• Going to market strategy (push or pull)
• Competitive strategy (positioning)