business & industrial marketing

Journal of Business & Industrial MarketingVolume 22, Number 6, 2007 ISSN 0885-8624 Branding in industrial markets Guest Editors: Michael Beverland, Adam Lindgreen and Julie Napoli Conten

Journal of

Business & Industrial

Marketing

Branding in industrial markets

Guest Editors: Michael Beverland,

Adam Lindgreen and Julie Napoli

Volume 22 Number 6 2007

ISSN 0885-8624

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

the need for brand management for

business-to-business (B2B)

companies

Philip Kotler and Waldemar Pfoertsch

from the service-dominant logic of

marketing

David Ballantyne and Robert Aitken

firm-focal firm relationships in

business-to-business service

networks

Felicia Morgan, Dawn Deeter-Schmelz and

Christopher R Moberg

industrial purchase decision: a case

study of the UK tractor market

Keith Walley, Paul Custance, Sam Taylor,

Adam Lindgreen and Martin Hingley

offer: exploring brand attributes inbusiness markets

Michael Beverland, Julie Napoli andRaisa Yakimova

manufacturer-reseller B2Brelationships

Mark S Glynn, Judy Motion andRoderick J Brodie

business-to-business servicesJane Roberts and Bill Merrilees

the selection of new subcontractorsAnna Blomba¨ck and Bjo¨rn Axelsson

implications for managers andexecutives

Access this journal electronically

The current and past volumes of this journal are available at:

www.emeraldinsight.com/0885-8624.htm

You can also search more than 150 additional Emerald journals in

Management Xtra (www.emeraldinsight.com/emx)

See page following contents for full details of what your access includes

As a subscriber to this journal, you can benefit from instant,

electronic access to this title via Emerald Management Xtra Your

access includes a variety of features that increase the value of

your journal subscription

How to access this journal electronically

To benefit from electronic access to this journal, please contact

support@emeraldinsight.com A set of login details will then be

provided to you Should you wish to access via IP, please provide

these details in your e-mail Once registration is completed, your

institution will have instant access to all articles through the

journal’s Table of Contents page atwww.emeraldinsight.com/

0885-8624.htm More information about the journal is also

available atwww.emeraldinsight.com/jbim.htm

Our liberal institution-wide licence allows everyone within your

institution to access your journal electronically, making your

subscription more cost-effective Our web site has been designed

to provide you with a comprehensive, simple system that needs

only minimum administration Access is available via IP

authentication or username and password

Emerald online training services

Visitwww.emeraldinsight.com/training and take an Emerald

online tour to help you get the most from your subscription

Key features of Emerald electronic journals

Automatic permission to make up to 25 copies of individual

articles

This facility can be used for training purposes, course notes,

seminars etc This only applies to articles of which Emerald owns

copyright For further details visitwww.emeraldinsight.com/

copyright

Online publishing and archiving

As well as current volumes of the journal, you can also gain

access to past volumes on the internet via Emerald Management

Xtra You can browse or search these databases for relevant

articles

Key readings

This feature provides abstracts of related articles chosen by the

journal editor, selected to provide readers with current awareness

of interesting articles from other publications in the field

Non-article content

Material in our journals such as product information, industry

trends, company news, conferences, etc is available online and

can be accessed by users

Reference linking

Direct links from the journal article references to abstracts of the

most influential articles cited Where possible, this link is to the

full text of the article

E-mail an article

Allows users to e-mail links to relevant and interesting articles

to another computer for later use, reference or printing

purposes

Structured abstractsEmerald structured abstracts provide consistent, clear andinformative summaries of the content of the articles, allowingfaster evaluation of papers

Additional complimentary services available

Your access includes a variety of features that add to thefunctionality and value of your journal subscription:

Xtra resources and collectionsWhen you register your journal subscription online, you will gainaccess toXtra resources for Librarians, Faculty, Authors,Researchers, Deans and Managers In addition you can accessEmerald Collections, which include case studies, book reviews,guru interviews and literature reviews

E-mail alert servicesThese services allow you to be kept up to date with the latestadditions to the journal via e-mail, as soon as new material entersthe database Further information about the services availablecan be found atwww.emeraldinsight.com/alerts

Emerald Research Connections

An online meeting place for the research community whereresearchers present their own work and interests and seek otherresearchers for future projects Register yourself or search ourdatabase of researchers atwww.emeraldinsight.com/

connections

Choice of access

Electronic access to this journal is available via a number ofchannels Our web sitewww.emeraldinsight.com is therecommended means of electronic access, as it provides fullysearchable and value added access to the complete content ofthe journal However, you can also access and search the articlecontent of this journal through the following journal deliveryservices:

EBSCOHost Electronic Journals Serviceejournals.ebsco.com

Informatics J-Gatewww.j-gate.informindia.co.inIngenta

www.ingenta.comMinerva Electronic Online Serviceswww.minerva.at

OCLC FirstSearchwww.oclc.org/firstsearchSilverLinker

www.ovid.comSwetsWisewww.swetswise.com

Emerald Customer Support

For customer support and technical help contact:

E-mailsupport@emeraldinsight.comWebwww.emeraldinsight.com/customercharterTel +44 (0) 1274 785278

Fax +44 (0) 1274 785201

www.emeraldinsight.com/jbim.htm

Guest editorial

About the Guest Editors Michael Beverland is a Senior Lecturer in

Marketing at the University of Melbourne He has published in several

journals includingBusiness Horizons, European Journal of Marketing,

Industrial Marketing Management, Journal of Advertising, Journal of

Business & Industrial Marketing, Journal of Business Research, Journal

of Management Studies, and the Journal of Product Innovation

Management

Adam Lindgreen is a Professor of Strategic Marketing at Hull

University of Technology He has published in several journals, including

Industrial Marketing Management, Journal of Business Ethics, Business

Horizons, Journal of Marketing Management, and Psychology &

Marketing, among others

Julie Napoli is a Senior Lecturer in Marketing at the University of

Melbourne She has published in several journals, includingBusiness

Horizons, International Journal of Advertising, Journal of Advertising

Research, Journal of Business Research, and Journal of Small Business

Management

Introduction to the special issue on

branding in industrial markets

Branding is gaining prominence among business-to-business

marketers However, extant research on branding in the

context of business-to-business marketing remains scarce,

with suggested conceptual frameworks lacking empirical

support Current research suggests that brands play some

role in purchasing decisions in business markets, and that

brands provide a source of competitive differentiation

Research also suggests that there are differences between

consumer and industrial brand management While much

literature has been published on consumer brand

management, we lack guidance on key industrial brand

issues, however Such issues include strategic brand

management, brand architecture, brand building and

maintenance, brand repositioning, and tactical branding

issues

This special issue of Journal of Business & Industrial

Marketing addresses some of the research lacunae identified

above

Following our own Guest Editorial, the first paper, “Being

known or being one of many: the need for brand management

for business-to-business (B2B) companies” by Philip Kotler

and Waldemar Pfoertsch, adds knowledge to the field of

business-to-business brand research by examining the need of

branding for business-to-business companies and analyzing

the options for success by means of the stock performance

Long-term branding strategies, brand performance and firm’s

business performance are found to be positively correlated

with stock increase Business performance can be improved

using current brand focus and guiding principles Also, the

findings suggest that companies should not only focus on

brand development, but rather adopt a long-term branding

strategy

Ballantyne and Robert Aitken, builds on insights from theservice-dominant logic of marketing The authors explorewhat reciprocal application of resources, knowledge, andcompetencies for the benefit of another party means forbrands and branding in a business-to-business context Also,several managerial implications are identified as follows Valuereceived comes from direct service interactions andserviceability of goods in use – and is a firm’s principalbranding opportunity Also, brand marks are transitionalcommunicative devices, stimulating brand recognition andreputation The paper suggests that firms develop or supportbrand communities (web-based), contribute to the servicecycle episodes experienced by customers by developing astrategic branding approach, and co-create value by co-branding Lastly, the paper argues that business-to-businessmarketing could be emotion-based and not merely logic- andrational-based

The third paper, “Branding implications of partner focal firm relationships in business-to-business servicenetworks” by Felicia Morgan, Dawn Deeter-Schmelz, andChristopher R Moberg, examines, through a conceptualmodel, how customers evaluate firms in a strategic, business-to-business service outsourcing network, and how theirassessment of firms involved in co-producing after-salesservice affects their evaluations of a focal selling firm Keyfactors influencing this relationship include focal brandstrength and the strength of the relationship between thepartner firm and the focal selling firm Among the study’sfindings are that post-sale business services provided directly

firm-to the cusfirm-tomer – irrespective of whether those services areprovided by the firm or its partners – play an important role

in building a firm’s brand image and equity As such, this isone of few studies investigating the way customers evaluateservice when it is performed by multiple partners, therebyproviding guidance on ways of improving the serviceexperience of network customers

The fourth paper, “The importance of brand in theindustrial purchase decision: a case study of the UK tractormarket” by Keith Walley, Paul Custance, Sam Taylor, AdamLindgreen and Martin Hingley, examines the role of branding

in the industrial purchase of agricultural tractors in the UK.Following explorative interviews with farmers and farmcontractors, the study identifies through conjoint analysisthe importance of five different attributes in industrialpurchasers’ decisions on tractor brand Also, the importance

of the attributes by tractor brand ownership is identified.Lastly, overall brand utility and brand utility by tractor brandownership are identified Among the study’s implications arethat manufacturers and distributors need to maintain a strongimage Also, they may charge higher prices for tractors, usingthe extra revenue to reinforce their brand image On-farmdemonstration of new tractors could be an experientialmarketing strategy Special attention should be given to thelocation of dealers and the service they provide

The fifth paper, “Branding the business marketing offer:exploring brand attributes in business markets”, by MichaelBeverland, Julia Napoli and Raisa Yakimova, considersattributes for building strong brand identity:

Two types of brands benefit from product benefits: high

performance brands and ingredient brands When a product

is conceptualized in terms of product innovation or

leadership, brand identity is linked to a firm-level capability

Products may be augmented with services, suppliers may sell

services rather than products, and sub-contractors may

provide service capabilities to customers Logistics,

consisting of capabilities and involving standardized and

customized components, are relevant for retailers seeking to

outsource category management Suppliers of complex

services and product suppliers of heavy capital items may

pursue adaptation Lastly, advice is relevant for advertising

agencies, market research agencies, business consulting, and

product suppliers, among others

The sixth paper, “Sources of brand benefits in

manufacturer-reseller business-to-business relationships” by

Mark S Glynn, Judy Motion and Roderick J Brodie,

investigates, through a qualitative study of six grocery and

liquor retailers, what the financial, customer, and managerial

benefits of manufacturer brands are to resellers of packaged

goods In so doing, the paper is one of the first studies to

examine the role of brands in channel relationships The

findings help manufacturers to understand and manage their

brands’ benefits and, in turn, enhance the relationships

outcomes with resellers These outcomes are satisfaction with

the brand, commitment to the brand, trust in the brand,

dependence on the brand, and cooperation with the

manufacturer Among the study’s managerial implications

are that minor brands are also important to resellers, for

example in countering the strength of major brands in a

product category

The seventh paper, “Multiple roles of brands in

business-to-business services” by Jane Roberts and Bill Merrilees,

investigates, through a quantitative study of 201 retail tenants,

the role of branding in the context of leasing mall space to

retail tenants A four-stage process, which leads to renewal of

mall lease, was identified as fitting the data Brand attitudes

could be explained mainly by service quality The study also

identified that brand performance played two major roles

First, brand performed a traditional role as a contributor to

the re-buy or repurchasing decision Second, brand

performed a role as a builder of relationship quality As

such, this paper is one of the first to examine the multiple

roles that brands can play in business-to-business marketing

There are various practical implications of the study’s

findings For example, the study’s findings may be used by

industrial firms to build stronger brands and, in turn, to use

these brands to build better relationships with their business

customers

Finally, the eighth paper, “The role of corporate brand

image in the selection of new subcontractors” by Anna

Blomba¨ck and Bjo¨rn Axelsson, investigates why and how

corporate brand image plays a role in the selection of new

subcontractors A qualitative study of three subcontractors

and six of their customers allows for an examination of

buyers’ and sellers’ considerations in sales and purchasing

processes Among the study’s findings is that the role of

brands is to gain interest, as well as provide trust to

customers Explicit communications to build trust areidentified relating to different phases of the selectionprocess These communications are discussed in terms ofcontent and source and are translated – in terms ofimplications – to the subcontractors

Specific issues not dealt with in this issue include: what arecurrent brand development practices in business marketing?How is brand architecture managed in business markets(including corporate branding)? Also, what are brand-building and brand-repositioning capabilities in businessmarkets (the capabilities behind brand building, maintenance,and growth)? What are brand extension and repositioningstrategies? What is the role of integrated marketingcommunications in business-to-business branding? What areimportant similarities and differences between branding inbusiness-to-business products and services? What are buyerreceptions to business-to-business branding efforts such as theimportance, or lack thereof, of brands in the purchaseprocess? What is the role of salespeople in business branding?Are there different peculiarities of business-to-business brands

in international markets (including global branding issues)?Lastly, how can business-to-business brands be valued?

We would like to take the opportunity of thanking all thosewho have contributed towards this special issue of Journal ofBusiness & Industrial Marketing First, we thank the reviewerswho have taken time to provide timely feedback to theauthors, thereby helping the authors to improve theirmanuscripts The reviewing was a double-blind reviewingprocess We thank the following reviewers:

. Michael Antioco (Eindhoven University of Technology);

. Liliana Bove (Melbourne);

. Sonia Dickinson (Curtin University of Technology);

. Andreas Eggert (Paderborn);

. Mike Ewing, Francis Farrelly, Samir Gupta, and RaisaYakimova (all at Monash);

. Victoria Little (Auckland);

. Roger Palmer (Cranfield);

. Leyland Pitt (Simon Fraser);

. Pascale Quester (Adelaide); and

. Christine Vallaster (Innsbruck)

Second, we would like to extend special thanks to the editorWesley Johnston (Georgia State University) for giving us theopportunity of guest editing a special issue of Journal ofBusiness & Industrial Marketing

Last, but not least, we warmly thank all of the authors whosubmitted their manuscripts (not previously publishedelsewhere) for consideration of inclusion in Journal ofBusiness & Industrial Marketing We appreciate and aregrateful for the authors’ desire to share their knowledge andexperience with the journal’s readers – and for having theirviews put forward for possible challenge by their peers We areconfident that the articles in this Special Issue contribute toour understanding of branding in business markets

Michael B Beverland, Adam Lindgreen andJulie Napoli

Guest Editors

Guest editorial Journal of Business & Industrial Marketing

Volume 22 · Number 6 · 2007 · 355 – 356

Being known or being one of many: the need for brand management for business-to-business

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 stockincrease 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 addsknowledge to the field of B2B brand research

Keywords Business-to-business marketing, Brand management, Marketing strategy, International marketing

Paper type Conceptual paper

An executive summary for managers and executive

readers can be found at the end of this issue

Introduction

When talking about brands most people think of Coca-Cola,

Apple, Ikea, Starbucks, Nokia, and maybe Harley Davidson

These brands also happen to be among the most cited

best-practice examples in the area of business-to-consumer (B2C)

branding[1] For these companies their brand represents a

strong and enduring asset[2], a value driver that has literally

boosted the company’s success Hardly any company neglects

the importance of brands in B2C

In business-to-business (B2B), things are different –

branding is not meant to be relevant Many managers are

convinced that it is a phenomenon confined only to consumer

products and markets Their justification often relies on the

fact that they are in a commodity business or specialty market

and that customers naturally know a great deal about their

products as well as their competitors’ products To them,

brand loyalty is a non-rational behavior that applies to

breakfast cereals and favorite jeans – it doesn’t apply in the

more “rational” world of B2B products Products such as

electric motors, crystal components, industrial lubricants, orhigh-tech components are chosen through an objectivedecision-making process that only accounts for the so-calledhard facts like features/functionality, benefits, price, service,and quality, etc (Aaker and Joachimsthaler, 2000, p 22;Pandey, 2007) Soft-facts like the reputation of the business,whether it is well known, is not of interest Is this true? Doesanybody really believe that people can turn themselves intounemotional and utterly rational machines when at work? Wedon’t think so

Is branding relevant to B2B companies? Microsoft, IBM,General Electrics, Intel, HP, Cisco Systems, Dell, Oracle,SAP, Siemens, FedEx, Boeing – they are all vivid examples ofthe fact that some of the world’s strongest brands are B2Bbrands Although most also operate in B2C segments, theirmain business operations are concentrated on B2B Then whyare so many B2B companies spurning their fortune?

Take Boeing, for instance Only a few years ago a veryinteresting incident happened at the Boeing headquarters inSeattle Shortly after Judith A Muehlberg, a Ford veteran,started as head of the Marketing and Public RelationsDepartment, she dared to utter the “B” word in a meeting oftop executives Instantly, a senior manager stopped her andsaid: “Judith, do you know what industry you’re in and whatcompany you’ve come to? We aren’t a consumer-goodscompany, and we don’t have a brand”[3] Since then USaerospace giant Boeing has come quite a long way Nowadays,

The current issue and full text archive of this journal is available at

branding and brand management do matter in a big way to

them In 2000, the company’s first-ever brand strategy was

formalized and integrated in an overall strategy to extend its

reach beyond the commercial-airplane business Today, the

brand spans literally everything from its logo to corporate

headquarters Even the plan to relocate its corporate

headquarters from Seattle to Chicago has been devised with

the Boeing brand in mind (Khermouch et al., 2001) In 2005,

Boeing introduced its new flagship aircraft In a worldwide

campaign with AOL, they searched for a suitable name and

invented the “Dreamliner”, which was inaugurated by Rob

Pollack, Vice President of Branding for Boeing Commercial

Airplanes Marketing[4]

What is branding all about anyway? First of all we can tell

you what it is not: it is definitely not about stirring people into

irrational buying decisions Being such an intangible concept,

branding is quite often misunderstood or even disregarded as

creating the illusion that a product or service is better than it

really is (Hague and Jackson, 1994) There is an old saying

among marketers: “Nothing kills a bad product faster than

good advertising” (de Legge, 2002) Without great products

or services and an organization that can sustain them, there

can be no successful brand

Now you may wonder what branding really is all about

Scott Bedbury, author of the book A New Brand World puts it

as follows:

Branding is about taking something common and improving upon it in ways

that make it more valuable and meaningful (Bedbury, 2002, p 14).

Brands serve exactly the same general purpose in B2B

markets as they do in consumer markets: they facilitate the

identification of products, services and businesses as well as

differentiate them from the competition (Anderson and

Narus, 2004) They are an effective and compelling means to

communicate the benefits and value a product or service can

provide (Morrison, 2001) They are a guarantee of quality,

origin, and performance, thereby increasing the perceived

value to the customer and reducing the risk and complexity

involved in the buying decision (Blackett, 1998)

Brands and brand management have spread far beyond the

traditional view of consumer-goods marketers Brands are

increasingly important for companies in almost every

industry Why? For one thing, the explosion of choices in

almost every area Customers for everything from specialty

steel to software now face an overwhelming number of

potential suppliers Too many to know them all, let alone to

check them out thoroughly

For example, Pitney Bowes, one of the winners in Jim

Collins’s book Good to Great (Collins, 2001), has recently

introduced a new branding campaign After being on the

success track for more than 15 years, they felt it necessary to

educate their customers about all their new products

Chairman and CEO Michael J Critelli explained on

Bloomberg television how Pitney Bowes’s new

business-building brand campaign will fuel the company’s long-term

growth strategy, and his Chief Marketing Officer Arun Sinha

elaborated that a brand is more than a product – it’s a

shorthand that summarizes a person’s feelings toward a

business or a product A brand is emotional, has a personality,

and captures the hearts and minds of its customers Great

brands survive attacks from competitors and market trends

because of the strong connections they forge with customers

And that is what Pitney Bowes wants to achieve with its B2Bcustomers

The internet furthermore brings the full array of choices toevery purchaser or decision maker anywhere with just onemouse click Without trusted brands as touchstones, buyerswould be overwhelmed by an overload of information nomatter what they are looking for But brands do not only offerorientation, they have various benefits and advantages forcustomers as well as the “brand parents” They facilitate theaccess to new markets by acting as ambassadors in a globaleconomy (Khermouch et al., 2001)

Another important aspect of B2B branding is that brands

do not just reach your customers but all stakeholders –investors, employees, partners, suppliers, competitors,regulators, or members of your local community Through awell-managed brand a company receives greater coverage andprofile within the broker community (Pandey, 2007).Other than the biggest misconception that branding is onlyfor consumer products and therefore wasted in B2B, there areother common misunderstandings and misconceptionsrelated to B2B branding and branding in general Onefrequently mentioned branding myth is the assumption that

“brand” is simply a name and a logo Wrong! Branding ismuch more than just putting a brand name and a logo on aproduct or service

Take a moment and try to think about what “brand” means

to you personally Without a doubt certain products, brandnames, logos, maybe even jingles, pop into your head Manypeople think that this is all when it comes to defining brands.But what about the feelings and associations connected withthese products, brands, companies? What about the articlesyou’ve read about them? What about the stories you’ve heardabout them? What experiences have you had with thoseproducts, brands, companies? We could go on and pose morequestions like these A brand is an intangible concept Tosimplify it and make it easier to grasp is quite often equatedwith the more tangible marketing communications elementsthat are used to support it – advertising, logos, taglines,jingles, etc – but a brand is so much more than that (Dunnand Davis, 2004; Knapp, 2000):

. a brand is a promise;

. a brand is the totality of perceptions – everything you see,hear, read, know, feel, think, etc – about a product,service, or business;

. a brand holds a distinctive position in customers’ mindsbased on past experiences, associations, and futureexpectations; and

. a brand is a short-cut of attributes, benefits, beliefs, andvalues that differentiate, reduce complexity, and simplifythe decision-making process

Keeping all this in mind makes it clear that brands cannot bebuilt by merely creating some fancy advertising If youinternalize the concept of “brand” as a promise to yourcustomers it is quite obvious that it can only come to life ifyou consistently deliver on that promise Of course, yourbrand promise needs to be clearly defined, relevant andmeaningful, not to be mistaken with exaggerated marketingpromises

A further misconception of branding is that it is seen as asmall subset of marketing management Wrong again! Since abrand is reflected in everything the company does, a holisticbranding approach requires a strategic perspective This

Being known or being one of many

Philip Kotler and Waldemar Pfoertsch

Journal of Business & Industrial Marketing Volume 22 · Number 6 · 2007 · 357 – 362

simply means that branding should always start at the top of

your business If your branding efforts are to be successful, it

is not enough to assign a brand manager with a typically

short-term job horizon within company (Aaker and

Joachimsthaler, 2000)

Building, championing, supporting and protecting strong

brands is everyone’s job, starting with the CEO (Bedbury,

2002) Active participation of leaders is indispensable because

they are the ones who ultimately will be driving the branding

effort Brands and brand equity need to be recognized as the

strategic assets they really are, the basis of competitive

advantage and long-term profitability It is crucial to align

brand and business strategy, something that can only

effectively be done if the brand is monitored and

championed closely by the top management of an

organization Aaker and Joachimsthaler, 2000, p 19) To

appoint a Vice President of Branding, someone who is

responsible solely for brand management, would be an

important step No matter what the actual title, this person

should be the one person taking the required actions for

keeping the brand in line

Strong leaders demonstrate their foresight for the brand,

make symbolic leadership gestures, and are prepared to

involve their business in acts of world statesmanship that go

beyond the short term, and therefore require the sort of total

organizational commitment that only the CEO can lead

Consider Nucor, America’s largest steel producer today In

1972, about five years after facing bankruptcy, F Kenneth

Iverson as President and Samuel Siegel, Vice President of

Finance, renamed the company and announced “Nucor sells

steel to people who actually care about the quality of the

steel” This announcement and all steps that followed

propelled the company to the top of its industry

But do brands really pay off? Are they worth the effort and

time? Evaluating and measuring the success of brands and

brand management is a rather difficult and controversial

subject Moreover, it is not always possible to attribute hard

facts and numbers to them, which most marketers certainly

prefer As a result, there are only a restricted number of

research project and analysis dealing with the actual return on

investment for brands

Current research results[5] highlight the power of branding

To visualize the effect of brands and branding on share price,

they compared the financial market performance of 23 of the

30 German DAX companies (see Figure 1) The obvious

result of the enormous difference in performance accentuates

the general importance of brands Companies with strong

brands have recovered significantly faster from the stock

market “slump” in the wake of the 9/11 terrorist attacks than

weaker brands Strong brands provide companies with higher

return

Companies that once measured their worth strictly in terms

of tangibles such as factories, inventory, and cash have to

revise their point of view and embrace brands as the valuable

and moreover equally important assets they actually are

(along with customers, patents, distribution, and human

capital) Companies can benefit tremendously from a vibrant

brand and its implicit promise of quality since it can provide

them with the power to command a premium price among

customers and a premium stock price among investors Not

only can it boost your earnings and cushion cyclical

downturns, it can even help you to become really special

(Khermouch et al., 2001) The analysis of the largest DOW

companies (see Figure 2) shows an even more drasticsituation[6]

The stock market success of the “over performers” waseven larger than in the first analysis The top B2B brandperformers were:

. Caterpillar;

. GE; and

. Hewlett Packard

Caterpillar increased its position in an exceptional way The

“under performers” were:

2 6 percent, as compared with an average of 2 24 percent,and 2 36 percent for the “under performers”) These datastress the notion that weak brands particularly suffer indifficult times and do not recover as quickly as strong brands.These findings also suggest that the brand strength of B2Bcompanies clearly has an impact on financial marketperformance

Ongoing analysis of the largest global companies using thesame methods suggests that the Interbrand value (seeFigure 3) is positively correlated with market capitalizationthroughout the years 1999-2006[7], and that the Interbrandvalue is significantly positively correlated with income and netincome We also showed that market capitalization issignificantly positively correlated with income and netincome Market capitalization is not correlated withadvertisements

The definition, benefit, and functions of brands embraceevery type of business and organization In order to create andmaintain the sustainable competitive advantage offered by thebrand, companies need to concentrate their resources,structure, and financial accountability around this mostimportant asset Businesses with a strong brand positioningare benefiting from clarity of focus that provides them withmore effectiveness, efficiency, and competitive advantageacross operations (Clifton and Simmons, 2003)

B2B brand advocates underline that the real importance ofbrands in B2B has not yet been realized McKinsey &Company is one of them Together with the MarketingCentrum Muenster (MCM), one of the best known Germanresearch institutes, they investigated and analyzed theimportance and relevance of brands in several German B2Bmarkets They revealed that the most important brandfunctions in B2B are (Caspar et al., 2002, p 13):

. increase information efficiency;

. risk reduction; and

. value added/image benefit creation

Since these functions are essential determinants of the value abrand can provide to businesses, they are crucial in regard todetermining brand relevance in certain markets (Caspar et al.,2002) The above mentioned brand functions are also vital toB2B markets

Nobody can guarantee that a business will realizeimmediate benefits after implementing an overall brandstrategy Since branding requires a certain amount of

investment, it is more probable that it will see a decline in net

profits in the short run Brand building is aimed at creating

long-term non-tangible assets and is not meant for boosting

short-term sales Michael J Critelli, CEO of Pitney Bowes

(Sinha, 2003) is aware of this and ran re-branding efforts over

a period of many years to ensure his company’s future success

In the 1980s, personal computers gradually entered the

homes of consumers At that time the highly recognized brands

in the industry were those of computer manufacturers like IBM,

Apple, and Hewlett-Packard Back then, only the most

sophisticated computer users knew what kind of

microprocessing chip their machines contained, let alone who

made them All that changed in 1989, when Intel decided to

brand its processors Because of the accelerating pace oftechnological change as well as constantly growing sales rates inthe consumer market, the company decided to focus on endusers They realized that establishing a brand was the only way

to stay ahead of the competition Today, Intel is a leader insemiconductor manufacturing and technology, supported andpowered by their strong brand, an almost unbeatablecompetitive advantage, due to the ingredient brandingapproach and the “Intel Inside” campaign, an approachwhich will be important for increasingly sophisticatedcustomers (Kotler and Pfoertsch, 2007)

It is also not the intention to claim that B2B branding is theanswer to all your company’s problems Just as there are

Figure 1 Branding’s effect on DAX companies’ share price

Figure 2 Branding’s effect on DOW companies share price

Being known or being one of many

Philip Kotler and Waldemar Pfoertsch

Journal of Business & Industrial Marketing Volume 22 · Number 6 · 2007 · 357 – 362

limitations in the B2C branding world, limitations also exist in

B2B These restrictions still have to be identified and

examined thoroughly in the following years

To lead you through B2B branding exercises we suggest a

set of “guiding principles” (see Figure 4) that illustrate

visually the different stages on the branding ladder[8] It can

literally be seen as the path companies have to follow in order

to achieve brand success The beginning of the path is marked

by the decision whether or not to brand your products,

services, or business If a company, especially the people at

the top, is not convinced that it is the right thing to do, it

doesn’t make any sense to continue (“B2B Branding

Decision”) After making the decision to brand, you have to

figure out how you are going to do it But deciding on the best

brand portfolio that fits your respective business/industry is

not enough to ensure your company’s brand success

Therefore, the next stage addresses all the factors in

practice that make branding successful (“Branding

Dimensions”) If the right decisions are not taken

(“Acceleration through Branding”) or the execution falls

short, branding pitfalls can occur! But there could also be

future perspectives

The essence of this concept is to infect B2B companies withthe branding virus – empowering them to make the leap tobecoming a brand-driven and more successful company.There are many ways to measure overall company success,such as sales increase, share value, profit, number ofemployees, mere brand value (index), etc To keep it simpleand to limit alterations that may have been influenced byvarious sources other than the actual brand, we chose salesover time as measurement for a company’s success in ourGuiding Principle The transition point represents acompany’s rise to the challenge of building a B2B brand

In our constantly changing business environment of newtechnologies, globalization and market liberalization, alertcompanies are presented with great opportunities Winningcompanies will discard old practices and innovate newpractices to exploit the major trends With no thought B2Bbranding and brand management will become increasinglyimportant, 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 righttrack Other future aspects are branding and socialresponsibility Also, branding in China is in a stage ofleapfrogging into the world market For decades, China hasenjoyed a dominant place in world manufacturing because ofits low-cost labor Chinese businesses today are pursuingaggressive branding strategies involving internal growth oracquiring foreign brand icons and managing them Bothapproaches could lead to world success Consider design andbranding as an increasingly important tool for differentiation.Relevance, simplicity, and humanity – not technology – willdistinguish brands in the future

To be successful in the B2B world, a holistic brandingapproach is required that covers everything from thedevelopment and design to the implementation of marketingprograms, processes, and activities that are intersecting andinterdependent Marketing and brand management will becritical to a company’s success in the future

Notes

1 B2C companies have for years dominated the Interbrandranking of the 100 best global brands by more than 80percent, and most of the article is about them (see Bernerand Kiley, 2005)

2 According to our calculations, in 2005 the total brandvalue for all 100 best global brands reached more than $1trillion

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 wasconducted with the 30 largest German DAX companies;

of these, ten were B2B companies

6 For this analysis the Interbrand Global Best Brand datawere used to characterize the brand performance

7 The Interbrand brand evaluation started in 1999 and isavailable annually In our research we compiled allinternationally available data, which led to a total of 130companies Further research is needed to qualify thefindings

8 We understand the Guiding Principle as the leading ideaand guiding help to follow our thinking and the structure

of B2B brand management

Figure 3 Correlation between Interbrand brand value versus market

capitalization of DOW companies

Figure 4 Guiding principles for B2B brand development

Aaker, D.A and Joachimsthaler, E (2000), Brand Leadership,

The Free Press, New York, NY

Anderson, J.C and Narus, J.A (2004), Business Market

Management: Understanding, Creating, and Delivering Value,

Pearson Prentice-Hall, Englewood Cliffs, NJ, p 136

Bedbury, S (2002), A New Brand World, Viking Penguin,

New York, NY

Berner, R and Kiley, D (2005), “Global brands”, Business

Week, July, pp 86-94

Blackett, T (1998), Trademarks, Macmillan, Basingstoke

Caspar, M., Hecker, A and Sabel, T (2002),

“Markenrelevanz in der Unternehmensfuehrung –

Messung, Erklaerung und empirische Befunde fuer

B2B-Maerkte”, p 13, available at: www.marketing-centrum.de/

ias/conpresso/_file/AP_B2B_3010.pdf

Clifton, R and Simmons, J (2003), Brands and Branding,

Profile Books, London, p 5

Collins, J (2001), Good to Great: Why Some Companies Make

the Leap and Others Don’t, Random House, New York, NY

de Legge, P (2002), “Brand version 2.0: business-to-business

brands in the internet age”, Marketing Today, available at:

www.marketingtoday.com/marketing/1204/brand_v2.htm

Dunn, M and Davis, S.M (2004), “Creating the driven business: it’s the CEO who must lead the way”,Handbook of Business Strategy, Vol 5 No 1, pp 241-5.Hague, P and Jackson, P (1994), The Power of IndustrialBrands, McGraw-Hill, London

brand-Khermouch, G., Holmes, S and Ihlwan, M (2001), “Thebest global brands”, Business Week, 6 August

Knapp, D.E (2000), The Brand Mindset, McGraw-Hill, NewYork, NY, p 7

Kotler, P and Pfoertsch, W (2007), Ingredient Branding:Making the Invisible Visible, forthcoming

Morrison, D (2001), “The six biggest pitfalls in B-to-Bbranding”, Business2Business, July/August, p 1

Pandey, M (2007), “Is branding relevant to B2B?”, 27January, available at: brandchannel.com

Sinha, A (2003), “Branding in a deregulated environment”,Keynote Address, Post-Expo 2003, available at: www.pb.com/bv70/en_us/extranet/contentfiles/editorials/downloads/ed_pres_arun_css_ed_pres_arun_brand_speech_arun.pdf

Corresponding author

Philip Kotler can be contacted at: pkotler@aol.com

Being known or being one of many

Philip Kotler and Waldemar Pfoertsch

Journal of Business & Industrial Marketing Volume 22 · Number 6 · 2007 · 357 – 362

To purchase reprints of this article please e-mail: reprints@emeraldinsight.com

Or visit our web site for further details: www.emeraldinsight.com/reprints

Branding in B2B markets: insights from the

service-dominant logic of marketing

David Ballantyne and Robert Aitken

University of Otago, Dunedin, New Zealand

Research limitations/implications – S-D logic highlights the need for rigour and clarity in the use of the term “brand” It also opens up forconsideration 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 tobranding

Keywords Brand image, Value added, Value-in-use pricing, Marketing, Knowledge management, Relationship marketing

Paper type Conceptual paper

An executive summary for managers and executive

readers can be found at the end of this issue

Introduction

The service-dominant (S-D) logic of marketing proposed by

Vargo and Lusch (2004a) emphasises that customers make

critical value assessments when goods are in use, based on

their service-ability Put another way, goods become service

appliances and customers judge the worth of the service they

experience from goods as value-in-use Thus “service”

according to S-D logic includes the service experience

derived from interacting with goods in use as well as from

service interactions with a supplier So, by extending the

temporal dimension of marketing to cover the service

experiences derived from goods, and by aligning exchange

thinking around value-in-use, the concept of marketing

becomes service-dominant, and exchange is no longer

transaction-bound Every value proposition is an offer of

service Every business becomes a service business

This brief introduction shows that the S-D logic of

marketing has both radical components and also familiar

associations for business-to-business (B2B) marketers

“Service interaction” is broader in concept and extended in

time It involves the reciprocal application of resources,

knowledge and competencies for the benefit of another party.The emphasis in S-D logic on value-in-use is potentiallyparadigm challenging but the foundational principle ofinteraction resonates well with much of contemporarymarketing thought in services marketing, relationshipmarketing and B2B marketing

Understanding what S-D logic means in particular forbrands and branding in a B2B context is the intent of thisarticle We start with a commentary on the S-D logic thesis.Next, we offer a critical examination of current thinking onbrand marks and brand meanings Then, we examine thecontribution of S-D logic to understanding B2B branding.From this, the role of marketing communication in all itsforms becomes clear as a source of brand meanings Finally,

we draw some conclusions that we believe have importantimplications for practitioners

Commentary on S-D logic

The catalyst for the current interest in an S-D logic formarketing was the publication of an award-winning article byVargo and Lusch (2004a) entitled “Evolving to a newdominant logic for marketing” In the same year, anotherarticle by Vargo and Lusch (2004b) appeared, directlychallenging the validity of the characteristic differentiatorsbetween services and goods (intangibility, heterogeneity,inseparability and perishability), which had been establishedmore than 20 years earlier (see Fisk et al., 1993) In 2005, theUniversity of Otago in New Zealand invited a number ofleading international academics to The Otago Forum[1] todebate the issues A selection of papers from the Forum,together with commentaries, later appeared as a special issue

of Marketing Theory (Aitken et al., 2006) Also, Lusch andVargo (2006a) published an editorial selection of articles by

The current issue and full text archive of this journal is available at

leading scholars early in 2006 The Journal of the Academy of

Marketing Science will publish a special issue on S-D logic in

2007

The idea behind the Vargo and Lusch thesis is simple, but

the effects are far reaching: S-D logic asserts that service is

what customers are hoping to buy, anywhere, any time Of

course, service interaction in business markets is not new but

under S-D logic, goods purchased become service appliances

In other words, a supplementary form of service experience

comes from goods, as buyers interact with those goods If

goods become valuable to customers, as mechanisms for

service, it follows that the value of the experience derived

from goods is determined at time of use by customers, as

value-in-use[2] This applies equally in an industrial setting as

goods (resources) become part of a customer’s own value

creating inputs, whether in manufacture, assembly or

distribution

Service activity, of course, comprises a greater proportion of

GNP than goods in many countries, but this is not the

“service-dominant” meaning of Vargo and Lusch Instead,

they seek to show that service is the undeniable core of every

marketing interaction This is not a mainstream marketing

way of thinking but it has been emphasised by others, for

example, in services marketing by Gro¨nroos (1990), in

relationship marketing by Christopher et al (1991), and –

which may surprise some – in an early text by Kotler (1976)

However, Vargo and Lusch (2004a) extend their

service-centricity further The essential points in summary are these:

. S-D logic emphasises that customers are the arbiters of

value in service interaction, either directly in interaction

with suppliers or through service interaction derived from

goods

. S-D logic also emphasises the potential for co-creation of

value and sharing of competencies and other knowledge

resources between customers, suppliers and other market

actors Again, value is derived from the service experience

of the particular actors in interaction

. S-D logic supports the notion of relationship development,

through which all kinds of communicative interaction and

co-created value might emerge over time This forces

marketing innovation to the fore, in the sharing of new

ideas and knowledge within the firm, and between the firm

and its customers and suppliers

. S-D logic proposes that what a supplier firm essentially

does in its marketing activity is offer value propositions

(promises) and marshal resources together for customers

This puts a new perspective on selling activity, marketing

communication and brand management, as will be

discussed later

. S-D logic requires a managerial focus on the customer

interaction processes, and attention to monitoring the

productivity and value potential of the continuous activity

flows Rather than firms marketing to customers they

market with customers (an interaction process) The

bottom line is that marketing exchange becomes a set of

interactive episodes across time and is no longer

transaction-bound

Overall, S-D logic has the potential to shift strategic

marketing attention away from a point-of-sale selling focus

to a service relationship focus, and in so doing, to rearrange

marketers’ notions of efficient resource allocations Put

another way, to reveal the challenging aspect of this agenda,

the time logic of marketing exchange becomes open-ended,from pre-sale service interaction to post-sale value-in-use,with the prospect of continuing, as relationships evolve(Ballantyne and Varey, 2006)

Until quite recently, exchange in a marketing context wassynonymous with a market transaction Under such logic,derived from mainstream goods logic and with origins in theneo-classical economic paradigm, any “value added” forcustomers is also a cost to the firm This linear logic has beenunder constant challenge in B2B marketing and servicesmarketing domains due largely to the influence of relationalperspectives entering the literature over the last 20 years (seefor example, Anderson and Narus, 1990; Axelsson andEaston, 1992; Berry, 1995; Christopher et al., 1991; Dwyer

et al., 1987; Gro¨nroos, 1990; Gummesson, 1987; Ha˚kanssonand Snehota, 1995)

Lusch and Vargo (2006b) have recently outlined a lexicon

of terms for the S-D logic which indicates the kind ofcognitive shift involved in rethinking the scope of marketingaction (see Table I) This is clearly a provisional list thatinvites further work For example, under S-D logic, customersengage in buying “service solutions” to solve problems ratherthan buying product benefits or features But what if there are

no problems? Why should marketing innovation be restricted

to problem solving? Also, “promotion” is a limited form ofmarketing communication Dialogue is by far a superior way

of learning together Both would seem to have their place aspart of a more interactive concept of integrated marketingcommunications (Varey and Ballantyne, 2005)

What is absolutely clear under S-D logic is that any valuejudgment at point of purchase by a customer is necessarilyprovisional Thus, the capability to perform and the reliability

of the firm become critical aspects of the firm’s valuepropositions With the function of goods seen as serviceappliances, value-in-use will confirm or disconfirm theseprovisional judgments There are important implications forbranding here We believe it works this way: The brand (as atangible mark) serves to signify the nature of the firm’spromises and implicit obligations, and customers and otherstakeholders project these or any other values they see fit backinto the brand (as a socially constructed value system) This

“brand morphing” is examined in the next section

Marks and meanings critically examined

Coverage of branding issues in the B2B literature has beensparse (Michell et al., 2001) A natural enough tendency hasbeen to associate branding with fast moving consumer goodsand so branding in this domain dominates the researchpicture However, there are notable exceptions, for exampleBaldauf et al (2003), Bendixen et al (2003) and Mudambi

et al (1997) Yet, while brands are one of the most researchedtopics in the marketing literature, ambiguity rather thanclarity of understanding has been the outcome

Ambiguity and complexity begin with the almost universalhabit of using the single word “brand” in at least threedifferent marketing contexts First, when “brand” means aname or identifier, and second, when “brand” means aproduct and its characteristics Then there is a third and moreobtuse way of using “brand”, and that is as a symbolicframing device for utilitarian and non-utilitarian values thatcustomers and others may see as attributes belonging to thebrand, as if these values were embedded characteristics of the

Branding in B2B markets: the service-dominant logic

David Ballantyne and Robert Aitken

Journal of Business & Industrial Marketing Volume 22 · Number 6 · 2007 · 363 – 371

product (see, for example, the seminal paper by Levy, 1959;

also Lindlof, 1988; Salzer-Mo¨rling and Strannega˚rd, 2004)

This three-mirrored view of brands, we hope, is more

revealing as an explanation than that offered by the American

Marketing Association (AMA), who state that:

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

and to differentiate them from those of competitors (Kotler, 2000, p 404).

Variants of this AMA definition occur in all major

introductory marketing texts and also in more specialist

treatments of brands and branding (see, for example, Aaker,

1991, 2004; Wilson et al., 1995)

Brands at a fundamental level certainly are marks or

symbols, the marketing purpose of which is to identify and to

differentiate one product from another, or one firm from

another A brand, however, is much more that its brand-mark

Any firm hopes that its stakeholders and target markets, both

customers and future prospects, will find its brand mark to be

memorable and associated with positive values about the

product or the company However, Aaker and Joachimsthaler

(2000) comment bleakly that, within the traditional branding

model, the brand is a tactic used to drive short-term results

Even more problematically, many firms assume that the

meanings associated with the brand mark are something they

uniquely own and control We take the contrary view that says

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

interactions, discussions and opinions generate and

regenerate any firm-based notions of brand value

Some authors make a distinction between the firm’s brand

identity and its brand image (see, for example, De

Chernatony, 1999) We find the identity/image distinction

helpful in describing some aspects of brand thinking The

distinction works this way: a firm’s brand identity is an

idealised set of firm-generated propositions communicated to

customers and other parties by whatever communicative

means available This notion of brand identity is by no means

automatically accepted by target audiences because the

collective thoughts and feelings that individuals and industry

groups hold at any time about the brand-mark meanings are

ultimately of their own determination Hence, we come to

brand image as representative of perceptions within the market

place, and beyond

Any brand image in our view is essentially sociallyconstructed (see Berger and Luckman, 1967; Gergen, 1994;Hackley, 1998) This means that brand image is not just thesum of individual perceptions but a shared reality,dynamically constructed through social interaction If thisperspective is accepted, the meanings attached to a particularbrand are located in the minds of its customers, and the widercommunity of opinion makers and stakeholders It will likelydiffer from the hoped-for perspective of the marketer or brandmanager Also of note, the usage of the term “brand” to covermultiple meanings is a recipe for ongoing confusion andmanipulation In a related way, Varey and Ballantyne (2005)have argued that advertising as the dominant form ofmarketing communication declares its motives but oftenconceals its methods In the traditional logic of branding thesame applies, but here methods concealment potentiallyextends to those who use them, a case of branding myopia

So far, we hope to have shown that the logic of brandinginherited from mainstream (consumer) markets is ambiguous

at least, and we have tracked the source of confusion to thesemantics of the term “brand” itself, and to the currentparadigmatic tension over where the brand “resides”, i.e.either in the strategic plans of the marketer or in the heads ofthe users and indeed other stakeholders

We now explore what the S-D logic of marketing means forbrands and branding, especially in a B2B context

Branding logic seen from the perspective of S-D logic

The analysis that follows draws from the fundamentals of theVargo and Lusch (2004a) thesis However, an elaboration ofbranding strategy is not specifically part of their thesis, a pointalso made by Brodie et al (2006)

S-D logic has the useful potential to shift strategicmarketing attention away from a point-of-sale selling focus

to a service and relationship development focus, and in ourview, important implications follow for branding strategy.Under S-D logic, any brand value judgments at point ofpurchase by customers are provisional, awaiting testing inaction Service-ability (as the service capability derived fromgoods) thus becomes a critical risk factor in fulfilment of thefirm’s value proposition Put another way, brand value isconfirmed or disconfirmed in-use, at time of use, as

Table I What’s happening to marketing concepts?

Goods-dominant logic concepts Transitional concepts Service-dominant logic concepts

Profit maximization Financial engineering Financial feedback/learning

Equilibrium systems Dynamic systems Complex adaptive systems

Promotion Integrated marketing communications (IMC) Dialogue

Product orientation Market orientation Service orientation

Source: Lusch and Vargo (2006b)

customers confirm or disconfirm the value proposition As has

been discussed, the time logic of marketing exchange under

S-D logic is open-ended The open-ended nature of brand

relationships means that individual perceptions of brand (the

meanings that become associated with a brand mark) are part

of a brand’s wider stakeholder associations, whether based on

direct first-hand experience (value-in-use), or through

indirect experience shared or circulated in communicative

interaction, media-based or otherwise

What are the specific B2B brand management implications

of this S-D logic?

A brand-mark is a relational asset whose value to the

firm is contingent on past, present and future

interactions with various firm stakeholders

A firm rightly controls its brand-marks, which are the tangible

evidence of its brands They also control the trademarks and

copyrights that support the brands Brands have histories and

hopefully futures However, marketers cannot naively assume

that they have sufficient brand power or market dominance to

control the meanings ascribed to their brands by others

Many trade journal commentaries on brands and branding

obfuscate the identity and image meanings associated with a

brand mark Difficulties arise when marketing managers,

without reference to product defects that will impinge on

customer value-in-use experiences or firm-to-firm

interdependencies, seek to develop marketing

communication programs to improve “brand image” Such

split-task thinking can lead to a branding logic that pays more

attention to communicating the value proposition than

product efficacy (improving product service-ability) Both,

of course, are aspects of customer relationship development

A brand-mark is an aid to memory

The brand-mark offers communicable evidence of the

product and past value-in-use experiences, and is an index

for customers to cognitively file such brand meanings,

especially the customer’s inferred reputation of the “brand”

(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

“the differential effect that brand knowledge has on consumer

responses to the marketing of that brand”, he states that the

model is based on the belief that “the power of a brand lies in

what customers have learned, felt, seen and heard about the

brand as a result of their experiences over time” (Keller,

2003, p 59)

There is a contrary point of view that says a brand-mark is

not essential to create brand meaning For example, a

“no-name” brand is sometimes successful where the strategy is to

cultivate a trendy anonymity within a word-of-mouth

generated community of users (Ballantyne, 2004a, p 423)

Nevertheless, the more common position is that brand-marks

serve to represent (or stand in for) the product or firm

Only by coupling the brand-mark and product (or firm)

reputation together is it appropriate to talk of brand

meaning (the brand as a symbolic framework for

indexing meanings)

It may seem trivial to make this point but it takes social

interaction and product use together to sustain brand

meanings, unless it is argued (as many do) that the

dominant source of brand meaning is that projected by the

firm in marketing communication (brand identity) andaccepted by target audiences (brand image) With this latterperspective, the responsibility for the brand is assumed toreside totally with the marketing department (Davis, 2002),

so the focus becomes more tactical and reactive than strategicand visionary (Aaker and Joachimsthaler, 2000) This is adifficult position to sustain in S-D logic terms as it ignores thevalue-in-use derived from a product by a customer over time,and also the word-of mouth communicative effects generatedfrom within brand communities (see, for example, Andersen,2005; Muniz and O’Guinn, 2001) In our view, developingbrand image solely by traditional media message-making in aB2B context (indeed in any context) is like trying to capturesomeone’s attention by clapping with one hand

Brand strategies can impact positively or negatively onthe strategic positioning of firms within businessnetworks of relationships

The concept of network positioning (Ha˚kansson and Snehota,1995) is not to be confused with brand positioning The pointhere is that many brand strategies develop with the customerspecifically in mind, and yet the branding implications extend

to resellers and other stakeholders The latter group includesemployees who must fulfil the brand promises made tocustomers as value propositions in S-D logic terms, andresellers who co-create value with their customers from adiversity of upstream sources and resources Managing oftenconflicting stakeholder requirements requires particularcoordination skills and a developed cognitive framework toassist in the task (Payne et al., 2005)

De Chernatony (1999) has suggested that employees aremajor stakeholders in brand building efforts He suggests thatthe brand should represent the vision and culture of the firm,and this necessarily involves employees and staff in shapingand representing a firm’s values Corporate branding hasundergone similar shifts in emphasis to encompass employees

as stakeholders in recent years (Hatch and Schultz, 2003)

Branding is essentially a form of communicativeinteraction

An important question for firms is: at what point does theawareness of a brand and its assumed meaning actually begin?The formulation of brand perceptions and the non-specificnature of their timing fit closely with the S-D logic emphasis

on value and its creation, past, present and future There isroom for an expansion of media-driven branding wherebrand-marks serve to represent the firm’s product benefits andprojected values, necessarily modified by the efficacy of theproduct and its value-in-use, and opinion generated by word-of-mouth in the target markets and in the businesscommunity at large

A useful framework for re-focussing corporate brandingthat fits with S-D logic is presented by Hatch and Schultz(2003) In this structure, three elements are central:

Branding in B2B markets: the service-dominant logic

David Ballantyne and Robert Aitken

Journal of Business & Industrial Marketing Volume 22 · Number 6 · 2007 · 363 – 371

The limits of advertising as a source of brand

meaning

Brand advertising is a dominant and favourite communication

medium for making branding messages in fast-moving

consumer goods (FMCG) industries However, to the

extent that brand advertising promises are persuasive,

studies of product diffusion and communication show that

people are more inclined to act on mass-media messages if

confirmed by word-of-mouth from trusted relationship

sources (see, for example, Rogers, 1995) This does not

mean that trusted sources are always correct: it means that

they have a higher status of reliability

Marketing communication today still basically operates as a

one-way, media-based message making system (Varey and

Ballantyne, 2005) This hegemonic message-making logic

dominates in marketing texts, and in use, notwithstanding the

emergence of more interactive perspectives represented by

integrated marketing communication (e.g Duncan and

Moriarty, 1998; Gro¨nroos and Lindberg-Repo, 1998)

However, even integrated marketing communication

perspectives give limited cover on how to co-create

meaning, acquire knowledge or achieve flashes of inspired

understanding

We think it limiting to consider interaction and

communication as separate processes Any form of

interaction between buyer and supplier acts as a source of

brand meaning, whether this is direct experience with a

product or supplier firm, or derived experiences passed on

from other users, advertising messages, and news media

including such new forms as internet weblogs

It is possible to put communication and interaction back

together again by combining three useful and traditional

forms (see Table II) Communication can be informational,

communicational, and dialogical (Varey and Ballantyne,

2005) The informational mode includes message-making,

which has the useful intention to inform Next, much of

integrated marketing communication’s (IMC) aspirations are

grounded in the communicational mode, where listening and

informing are key aspects of interaction Finally, dialogue is a

process of learning together and it works in support of

innovation and the co-creation of value[3] The purpose of

dialogue is always open-ended, learning-oriented and

value-creating (Ballantyne, 2004b; Ballantyne and Varey, 2006)

The concept of brand community fits this broadened

communicative context for creating brand meaning

According to Muniz and O’Guinn (2001), a brand

community is a “specialised non-geographically bound

community that is based on a structured set of relationships

among admirers of brands” (p 412) Brand communitiesshare a number of core characteristics that include sharedrituals and behaviours, and a sense of moral responsibilitybetween members that relates to brand values, as they seethem

An allied concept of brand community provided by Cova(1997) suggests that post-modern society is characterised bytribal affiliations that function to develop a series ofcommunal linkages Individuals today are not only lookingfor service which enables them to be free but also somethingwhich can link them into a community of others, as if in atribe (Cova, p 311) There seems to be no reason to supposethat this tribal logic does not to some extent also apply toindustrial buyers (remembering it was once said withconviction that “Nobody ever got sacked for choosingIBM”) S-D logic and its emphasis on service experiencerather more than the service promise, on co-creation of valueand mutual updating of knowledge, all make sense in thiscontext

S-D logic calls for a broadening of marketingcommunication modes used between exchange parties, frominformational, through communicational to dialogical Noone modality need take precedence, but certain businesscontexts and situations will call for certain communicationalresponses However, S-D logic particularly supports dialogue

as a means of learning in interaction together, in the context

of ongoing business relationships

Conclusions

Branding under S-D logic becomes a communicativeinteraction process whereby firms attempt to support theintended meanings of their value propositions However, we

go further and say that brand value is confirmed ordisconfirmed in use, at the time of use, as customersconfirm or disconfirm the value propositions in play Let there

be no doubt that value propositions are essentially promises toperform Customers will make their most importantjudgments of value received through direct serviceinteractions with supplier firms and on service-ability ofgoods-in-use Put another way, the time-logic of marketingexchange is open-ended, from pre-sale service interaction topost-sale value-in-use (Ballantyne and Varey, 2006) Thisalone completely rearranges branding opportunities andpossible impacts

S-D logic further suggests that it is the service experiences ofcustomers that most commonly impact on brand value,through brand awareness and brand memory Indeed, giventhe potential longevity of brand preferences and brandTable II A classification of forms of interaction

Mode of social association Underlying decision practices Source of value

Form of “market” systemgovernance

Informational: persuasive

message making

Controlling and coercing Promised byselling the benefits Power inequivalence (perceived as

domination)Communicational: informing

and being informed

Ethical communication withstakeholders

Co-produced by making and keepingpromises

Relational norms (perceived asequitable exchanges)Dialogical: a bias to learning Finding a voice in co-determination Emergent inlearning together: co-

created and integrated

Networked (perceived as spontaneity)

Source: Ballantyne and Varey (2006), revised from Varey and Ballantyne (2005)

memory derived from historical experience, the importance of

the service-ability of goods becomes paramount in sustaining

the life of a brand (in all meanings of the term) All product

experiences and service perceptions meld with brand

associations over time, and this helps to consolidate the

reputation of firms in both their internal (employee) and

external (customer) markets These dynamical changes also

impact on the perceptions of the wider community of a firm’s

stakeholders

We are confident in asserting that S-D logic opens up new

branding research opportunities First, it will demand

renewed rigour and clarity in the use of the term “brand”,

and second, it will open up for consideration a variety of

communicative interaction modes beyond (but including)

advertising and packaging S-D logic also gives rise to the

practical possibility of experimenting with time-based

customer contact points, and with strategies aligned more

closely to customer value-in-use assessments Some of these

issues are not new to branding scholars but they currently

compete for attention in the shadow of media-dominant

approaches to branding These new S-D branding

perspectives seem to us to be amenable to use in a B2B

context

Implications for practitioners

. Great customer service is a B2B firm’s principle branding

opportunity This comes in two forms – direct service

interaction with a buyer company and indirect service

interaction through goods-in-use Media advertising should

have a useful but support role in brand building in most B2B

companies With S-D logic, the service experience of

customers (direct or indirect) leads in varying degrees to

positive or negative trust in the supplier firm and/or its

goods and services It follows that judgments of

value-in-use and resultant word-of-mouth effects are the primary

communicative sources of brand awareness and meaning

Notwithstanding, media advertising over the last 50 years

has carried the weight of brand building, and still does

today This is the conventional branding logic, even to

some extent for service brands (Berry, 2000, p 135;

however, see also Berry and Lampo, 2004)

That said, marketing communication can play a varied

and useful support role in any service-oriented brand

development, especially in creating awareness of the

offering, stimulating trial, and providing appropriate

language and imagery to help position a brand in its

market (Berry and Lampo, 2004) But if value-in-use

(experiential) judgments are out of line with

media-mediated messages, customers will place trust in their own

experience and the word-of-mouth of trusted colleagues

and friends

. View brand-marks as transitional communicative devices

which over time stimulate brand recognition, reputation and

other meanings associated with the variety of interactions and

exchanges between a firm, its customers and other stakeholders

B2B marketers in our view should always explore the full

range of branding opportunities from media messages to

explanatory brochures and distinctive packaging through

to communicative interaction in the form of trade fairs

and other forms of dialogical interaction That said, task

capability seems to be uppermost in buyer consideration in

many industrial markets rather more than developed

product characteristics That is to say, buyers makejudgments about the future efficiencies, effectiveness, andnetworking competencies of various suppliers (Mo¨ller andTo¨rro¨en, 2003) Also, Golfetto and Gibbert (2006) report

in their recent work on “competence-based marketing”that they found industrial buyers selecting suppliers byprofiling and evaluating supplier resources andcompetencies This process was not limited to marketingcommunication and was often initiated by a buyer in apre-contractual phase to align supplier competencies withthat buyer’s business processes, and later, with thesupplier and buyer experientially working together todeliver these competencies to fit the buyer’s businessprocesses

This matches well with the S-D logic and its emphasis

on communicative interaction, reciprocal servicing,resource sharing, solution orientation and the co-creation of value Of special interest in the context ofthis article, the assessment of brand value is a shiftingprocess rather than an act, and begins “upstream” withassessments of the competencies available to the buyerfirm, backed by the reputation of the supplier firm Anyassessment of defined tangible product characteristicscomes later again It does seem to us that B2B buyerbehaviour strategy is more akin to a service orientationthan consumer goods And when the appropriate focus forbranding activity is reflectively considered, it is likely asnot the B2B firm that is brand-marked, rather more thanits products

. Explore strategic opportunities for developing or supportingbrand communities using web-based media sites as well as call-centres and perhaps direct marketing as appropriate toenhancing knowledge exchange in value-in-use contexts.Traditionally, industrial markets have not shown muchinterest in developing brand communities of the consumer-based variety, like those of Harley-Davidson and Saabdescribed by McAlexander et al (2002) and Muniz andO’Guinn (2001), respectively However, the potentialpositive impact of encouraging web-based brandcommunities in industrial markets could be even greaterthan in consumer markets, according to Andersen (2005),because business and professional users may have a morecommitted interest in exchanging product-relatedinformation with the supplier company and amongstthemselves

. Develop a strategic branding approach contributing to the cycle

of service episodes experienced by customers S-D logic offersopportunities to connect with customers in new ways,based on the specific use to which goods are put in abuyer’s value creating processes This could mean newdimensions of post-sale service and logistics servicesupport The concept of the cycle of service from servicesmarketing fits well, where the interaction process ischaracterised as a sequence of episodes, moments of truth,

or critical incidents (see Albrecht, 1990; Ballantyne et al.,1995; Carlzon, 1987; Vandermerwe, 1993)

The central S-D logic idea of goods as serviceapplications means that tracking the service experience

of customers over time and contributing additional servicesupport is an open-ended opportunity These ideas are notnew in service industries but are less common in B2Bcontexts

Branding in B2B markets: the service-dominant logic

David Ballantyne and Robert Aitken

Journal of Business & Industrial Marketing Volume 22 · Number 6 · 2007 · 363 – 371

. Co-creation of value under S-D logic enhances opportunities for

co-branding The relationship between a supplier and a

customer or another stakeholder evolves around a mutual

and reciprocal understanding of where value resides Value

is mutual when it has benefits for all involved and

reciprocal when value is co-created S-D logic lends itself

to all forms of value creation through co-operation, such

as through co-design, co-production, co-delivery, and

especially in the context of this article, co-branding The

opportunity for a more integrated communication

approach is thus broadened and deepened This in turn

supports the development of an enhanced brand image

For example, Intel, as an industrial component provider,

has enhanced its brand image through association with

computer hardware manufacturers and assemblers, and

the highly visible placement of its brand mark on their

products

. A common view is that branding in consumer markets is based

on emotional appeals while branding in B2B markets is based

on logic and rationality We recommend testing the validity of

this assumption in specific contexts Consumer-oriented

firms (such as IBM, Apple, Coca-Cola, and Toyota) use

emotional brand appeals to differentiate and position

themselves uniquely in their markets Such emotional ties

are thought not to exist in B2B settings However,

understanding the emotional and cognitive interplay that

impacts on any brand image might be a matter of assessing

the degrees of emotional relevance, rather than assuming

that absolute rationality applies It is possible to monitor

and track brand image over time in terms of performance

criteria, so we recommend firms test the validity of

assumptions about the emotional appeal of brands in

particular market contexts The idea that emotion as a

social well-spring can be bracketed out of B2B marketing

decisions seems extreme to us, especially when B2B

marketing logic acknowledges the benefits of social

relationships as a basis for generating trust and

commitment with customers and other stakeholders

Future directions

S-D logic encourages us to think differently about the fluidity

of brand connections between firms, their B2B customers and

stakeholders, and the excessively constrained communication

logic that may exist in B2B settings S-D logic also asks us to

break out of the narrow role specifications of marketing

exchange and to explore the untapped potential for

co-creating brand value Perhaps the most exciting challenge of

the S-D logic is its potential for extending the time-logic of

marketing exchange[4], beyond its still current transactional

straitjacket, in exchanges of service for service, legitimized by

a marketing logic that emphasises communicative interaction,

relationship development and the generation of knowledge

competencies adequate to serve our fast developing

post-industrial society

Notes

1 The Otago Forum web site is available at: www.business

otago.ac.nz/Marketing/Events/OtagoForum/

2 This emphasis on value-in-use resonates with pivotal

debates in classical economics as to the comparative utility

of goods and services For a revealing historical account of

the development of economic thought around thesethemes, see Vargo and Morgan (2005) Tangible goods

of course won out as the dominant logic See also an earlierhistorical review by Ramirez (1998) which emphasises avalue co-production framework at variance with thatcommonly associated with industrial production

3 Dialogue is not given any depth of treatment in theoriginal S-D logic thesis, although there are supportivereferences (Vargo and Lusch, 2004a, pp 13-14) For afuller treatment of the application of dialogue in variousmarketing contexts, see Ballantyne (2004a, b), Varey(2002), and Varey and Ballantyne (2005)

4 For a perceptive commentary on how marketinginteraction works in time, see Medlin (2004)

Aaker, D.A and Joachimsthaler, E (2000), Brand Leadership,The Free Press, London

Aitken, R., Ballantyne, D., Osborne, P and Williams, J.(2006), “Editorial for the special issue on the service-dominant logic of marketing: insights from The OtagoForum”, Marketing Theory, Vol 6 No 3, pp 275-329.Albrecht, K (1990), Service Within, Dow Jones-Irwin,Homewood, IL

Andersen, P.H (2005), “Relationship marketing and brandinvolvement of professionals through web-enhanced brandcommunities: the case of Coloplast”, Industrial MarketingManagement, Vol 34 No 1, pp 39-51

Anderson, J.C and Narus, J.A (1990), “A model ofdistributor firm and manufacturer firm workingpartnerships”, Journal of Marketing, Vol 54 No 1, pp 2-58.Axelsson, B and Easton, G (Eds) (1992), Industrial Networks– A New View of Reality, Routledge, London

Baldauf, A., Cravens, K.S and Binder, G (2003),

“Performance consequences of brand equity management:evidence from organizations in the value chain”, Journal ofProduct & Brand Management, Vol 12 No 4, pp 220-36.Ballantyne, D (2004a), “Communicating through interactionand dialogue”, in Gabbott, M (Ed.), An Introduction toMarketing: A Value Exchange Approach, Pearson EducationAustralia, Frenchs Forest, pp 418-45

Ballantyne, D (2004b), “Dialogue and its role in thedevelopment of relationship specific knowledge”, Journal

of Business & Industrial Marketing, Vol 19 No 2,

pp 114-23

Ballantyne, D and Varey, R.J (2006), “Creating value-in-usethrough marketing interaction: the exchange logic ofrelating, communicating and knowing”, Marketing Theory,Vol 6 No 3, pp 335-48

Ballantyne, D., Christopher, M and Payne, A (1995),

“Improving the quality of services marketing: service(re)design is the critical link”, Journal of MarketingManagement, Vol 11 Nos 1-3, pp 9-10

Bendixen, M., Bukasa, K.A and Abratt, R (2003), “Brandequity in the business-to-business market”, IndustrialMarketing Management, Vol 33 No 5, pp 371-80

Berger, P.L and Luckman, T (1967), The Social Construction

of Reality: A Treatise in the Sociology of Knowledge, Irvington

Publishers, New York, NY

Berry, L.L (1995), “Relationship marketing of services –

growing interest, emerging perspectives”, Journal of the

Academy of Marketing Science, Vol 23 No 4, pp 236-45

Berry, L.L (2000), “Cultivating service brand equity”,

Journal of the Academy of Marketing Science, Vol 28 No 1,

pp 128-37

Berry, L.L and Lampo, S.S (2004), “Branding

labour-intensive services”, Business Strategy Review, Vol 15 No 1,

pp 18-25

Brodie, R.J., Glynn, M.S and Little, V (2006), “The service

brand and the service-dominant logic: missing fundamental

premise or the need for stronger theory?”, Marketing

Theory, Vol 6 No 3, pp 363-79

Carlzon, J (1987), Moments of Truth, Ballinger, Cambridge,

MA

Christopher, M., Payne, A and Ballantyne, D (1991),

Relationship Marketing: Bringing Quality, Customer Service

and Marketing Together, Butterworth-Heinemann, Oxford

Cova, B (1997), “Community and consumption: towards a

definition of the ‘linking value’ of product or services”,

European Journal of Marketing, Vol 31 Nos 3/4,

pp 297-316

Davis, S.M (2002), Brand Asset Management: Driving

Profitable Growth through Your Brands, Jossey-Bass, San

Francisco, CA

De Chernatony, L (1999), “Brand management through

narrowing the gap between brand identity and brand

reputation”, Journal of Marketing Management, Vol 15,

pp 157-79

Duncan, T and Moriarty, S.E (1998), “A

communication-based marketing model for managing relationships”,

Journal of Marketing, Vol 62 No 2, pp 1-13

Dwyer, F.R., Schurr, P.H and Oh, S (1987), “Developing

buyer-seller relationships”, Journal of Marketing, Vol 51

No 2, pp 11-27

Fisk, R.P., Brown, S.W and Bitner, M.-J (1993), “Tracking

the evolution of the services marketing literature”, Journal

of Retailing, Vol 69 No 1, pp 61-103

Gergen, K.J (1994), Realities and Relationships: Soundings in

Social Construction, Harvard University Press, Cambridge,

MA

Golfetto, F and Gibbert, M (2006), “Marketing

competencies and the sources of customer value in

business markets”, Industrial Marketing Management,

Vol 35 No 8, pp 904-12

Gro¨nroos, C (1990), Service Management and Marketing:

Managing the Moments of Truth in Service Competition,

Lexington, Lexington, MA

Gro¨nroos, C and Lindberg-Repo, K (1998), “Integrated

marketing communications: the communications aspect of

relationship marketing”, Integrated Marketing

Communications Research Journal, Vol 4 No 1, pp 3-11

Gummesson, E (1987), “The new marketing-developing

long term interactive relationships”, Long Range Planning,

Vol 20 No 4, pp 10-20

Hackley, C.E (1998), “Social constructionism and research

in marketing and advertising”, Qualitative Market Research:

An International Journal, Vol 1 No 3, pp 125-31

Ha˚kansson, H and Snehota, I (Eds) (1995), DevelopingRelationships in Business Networks, Routledge, London.Hatch, M.J and Schultz, M (2003), “Bringing thecorporation into corporate branding”, European Journal ofMarketing, Vol 37 Nos 7/8, pp 1041-64

Keller, K.L (1993), “Conceptualizing, measuring andmanaging customer-based brand equity”, Journal ofMarketing, Vol 57 No 1, pp 1-22

Keller, K.L (2003), Strategic Brand Management: Building,Measuring, and Managing Brand Equity, 2nd ed., Prentice-Hall, Upper Saddle River, NJ

Kotler, P (1976), Marketing Management: Analysis, Planningand Control, 3rd ed., Prentice-Hall, Englewood Cliffs, NJ.Kotler, P (2000), Marketing Management: The MillenniumEdition, Prentice-Hall, Upper Saddle River, NJ

Levy, S.J (1959), “Symbols for sale”, Harvard BusinessReview, July/August, pp 117-24

Lindlof, T (1988), Media Audiences as InterpretiveCommunities, Sage Publications, Newbury Park, CA.Lusch, R.F and Vargo, S.L (Eds) (2006a), The Service-Dominant Logic of Marketing: Dialog, Debate, and Directions,M.E Sharpe, Armonk, NY

Lusch, R.F and Vargo, S.L (2006b), “Service-dominantlogic: reactions, reflections and refinements”, MarketingTheory, Vol 6 No 3, pp 281-8

McAlexander, J.H., Schouten, J.W and Koeing, H.G (2002),

“Building brand community”, Journal of Marketing, Vol 66

Mo¨ller, K.A and To¨rro¨en, P (2003), “Business suppliers’value creation potential: a capability-based analysis”,Industrial Marketing Management, Vol 32 No 2, pp 109-18.Mudambi, S.M., Doyle, P and Wong, V (1997), “Anexploration of branding in industrial markets”, IndustrialMarketing Management, Vol 26 No 5, pp 433-46.Muniz, A.M Jr and O’Guinn, T.C (2001), “Brandcommunities”, Journal of Consumer Research, Vol 27,March, pp 412-32

Payne, A., Ballantyne, D and Christopher, M (2005), “Astakeholder approach to relationship marketing strategy: thedevelopment and use of the ‘six markets’ model”, EuropeanJournal of Marketing, Vol 39 Nos 7/8, pp 855-71.Ramirez, R (1999), “Value co-production: intellectual originsand implications for practice and research”, StrategicManagement Journal, Vol 20, pp 49-65

Rogers, E (1995), Diffusion of Innovation, 4th ed., The FreePress, New York, NY

Salzer-Mo¨rling, M and Strannega˚rd, L (2004), “Silence

of the brands”, European Journal of Marketing, Vol 38Nos 1/2, pp 224-38

Vandermerwe, S (1993), From Tin Soldiers to Russian Dolls,Butterworth-Heinemann, Oxford

Varey, R.J (2002), Relationship Marketing: Dialogue andNetworks in the E-commerce Era, Wiley, Chichester.Varey, R.J and Ballantyne, D (2005), “Relationshipmarketing and the challenge of dialogical interaction”,Journal of Relationship Marketing, Vol 4 No 3, pp 13-30

Branding in B2B markets: the service-dominant logic

David Ballantyne and Robert Aitken

Journal of Business & Industrial Marketing Volume 22 · Number 6 · 2007 · 363 – 371

Vargo, S.L and Lusch, R.F (2004a), “Evolving to a new

dominant logic for marketing”, Journal of Marketing, Vol 68

No 1, pp 1-17

Vargo, S.L and Lusch, R.F (2004b), “The four service

marketing myths: remnants of a goods-based

manufacturing model”, Journal of Service Research, Vol 6

No 4, pp 324-35

Vargo, S.L and Morgan, F.W (2005), “Services in society

and academic thought: an historical analysis”, Journal of

Macromarketing, Vol 25 No 1, pp 42-53

Wilson, R.M.S., Gilligan, C and Pearson, D.J (1995),

Strategic Marketing Management, Butterworth-Heinemann,

Oxford

Further reading

Christopher, M., Payne, A and Ballantyne, D (2002),

Relationship Marketing: Creating Stakeholder Value, 2nd ed.,

Nonaka, I and Takeuchi, H (1995), The Knowledge Creating

Company: How Japanese Companies Create the Dynamics of

Innovation, Oxford University Press, New York, NY

Storbacka, K and Lehtinen, J.R (2001), Customer

Relationship Management: Creating Competitive Advantage

through Win-win Relationship Strategies, McGraw-Hill,

Singapore

Wikstrom, S and Normann, R (Eds) (1994), Knowledge andValue: A New Perspective on Corporate Transformation,Routledge, London

About the authors

David Ballantyne is an Associate Professor of Marketing atthe University of Otago in New Zealand and an InternationalFellow at the Centre for Relationship Marketing and ServiceManagement, Hanken Swedish School of Economics inHelsinki He was convener of the first wide-ranginginternational dialogue on S-D logic, The Otago Forum,held at the University of Otago in November, 2005 He is also

a co-author with Martin Christopher and Adrian Payne ofRelationship Marketing: Bringing Quality, Customer Service andMarketing Together (1991), the first text publishedinternationally in this field of marketing inquiry A secondedition was published in 2002 as Relationship Marketing:Creating Stakeholder Value David Ballantyne is thecorresponding author and can be contacted at:dballantyne@business.otago.ac.nz

Robert Aitken is a Lecturer in the Department ofMarketing at the University of Otago His academic andresearch interests include advertising, consumer behaviour,teaching and learning, communications and the media He islead author of the Marketing Theory 2006 special issue

“Service-dominant logic of marketing: insights from TheOtago Forum” He is a constructivist who is interested in howpeople make sense of the world and an idealist in wanting toknow how we can make it a better place

To purchase reprints of this article please e-mail: reprints@emeraldinsight.com

Or visit our web site for further details: www.emeraldinsight.com/reprints

Branding implications of partner firm-focal firm relationships in business-to-business service

networks

Felicia Morgan, Dawn Deeter-Schmelz and Christopher R Moberg

Ohio University, Athens, Ohio, USA

Abstract

Purpose – By outsourcing or partnering with two or more firms to perform certain activities targeted toward customers, firms are engaging in servicenetworks This research begins to examine how customers evaluate firms in a strategic, B2B service network and how their assessment of firmsinvolved in co-producing after-sales service affects their evaluations of a focal selling firm These evaluations include the key relational outcomes ofbrand image, satisfaction, and behavioral intentions

Design/methodology/approach – The conceptual model examines the effects of partner firm performance on customers’ evaluations of a focalselling firm Key factors such as focal brand strength and the strength of the relationship between the partner firm and the focal selling firm areproposed to influence this relationship

Findings – Post-sale business services provided directly to the customer are likely to play an important role in building a firm’s brand image and equity,whether those services are provided by the firm or its partners

Research limitations/implications – The individual firm to individual customer dyad approach that currently dominates the literature does notadequately capture the complex nature of today’s B2B service relationships This research develops a conceptual model that directly addresses the waycustomers evaluate service when it is performed by multiple partners

Practical implications – Discovering how customers evaluate service experiences in which multiple firms co-produce the service within a B2B servicenetwork can provide firms with the guidance needed to improve the performance of the entire network and the overall service experience of networkcustomers

Originality/value – This paper presents new theoretical developments in the area of business-to-business service networks This research alsoaddresses several gaps in the industrial marketing literature, particularly B2B services and branding

Keywords Service industries, Networking, Business-to-business marketing, Brands

Paper type Research paper

An executive summary for managers and executive

readers can be found at the end of this issue

Introduction

One important recent development in the marketing literature

has been the application of the network paradigm to the study

of service provider relationships with customers Because

service providers often work with other firms to meet the

ever-increasing expectations of customers, the complexity of

relationships is increasing Utilizing the individual firm to

individual customer dyad approach that currently dominates

the literature does not adequately capture the complex nature

of today’s service relationships Researchers need to examine

the relationship between customers and “service networks”,

where two or more entities jointly provide a service experience

to a customer, for two main reasons First, discovering how

customers evaluate service experiences in which multiple

firms co-produce the service can provide firms with the

guidance needed to improve the performance of the entirenetwork and the overall service experience of networkcustomers (Morgan and Tax, 2004; Morgan, 2004).Second, consumers’ perceptions of services co-produced bymultiple providers can have important branding implications,for service delivered by a third party can affect the brandstrength and/or image of the focal firm (Ahluwalia et al., 2000;Dube and Maute, 1998; Simonin and Ruth, 1998)

Early research on service networks has focused on to-consumer (B2C) relationships For example, Morgan(2004) examined how consumers evaluated service providersinvolved in having a car repaired after a minor accident In thatstudy, the service network consisted of a focal firm (anautomobile insurance company), and two partner firms, (arepair shop and a rental car firm) Morgan’s study (2004)strongly suggests that, in service network contexts, partner firmperformance is a key influence on consumer evaluations of thefocal firm, including the focal firm’s brand strength and image.Specifically, the results indicated that partner firmperformance, the strength of the focal brand (the insurancecompany), and the perceived strength of the relationshipsbetween the focal firm and its partner firms all significantlyinfluence consumers’ evaluations of the focal brand’s imageduring a service network experience

business-While examining consumer evaluations of service networks

is valuable, there are business-to-business (B2B) contextswhere service networks are common, even when tangible

The current issue and full text archive of this journal is available at

goods are sold We argue that critical differences between

B2C and B2B service networks exist Consider, for example, a

customer purchasing a computer In a B2C context a

consumer may interact one-on-one with a provider such as

Dell to purchase a single computer Subsequent interactions

with third-party providers might include a shipping firm such

as UPS and after-sales service Alternatively, in a B2B

environment the process is more complex The selling firm

may work with multiple members of a buying center rather

than a single customer Once a buyer and seller have entered

into an arrangement, customer satisfaction largely depends on

the service provided after the purchase or during the term of

the contract Much of the B2B buyer’s evaluation will be

related to logistics and customer service activities such as

warehousing, order fulfillment, order tracking, delivering the

right product at the right time, smooth installation, and

accurate billing (Dwyer and Tanner, 2002; Moberg and Speh,

2004; Rogers and Daugherty, 1995; Sheffi, 1990) Product

support in the forms of general service, warranties, provision

of spare parts, expert assistance, online assistance, and field

service is also more critical in a B2B environment in which

customers are dependent on suppliers to deliver the services

needed to operate (Kumar and Kumar, 2004) The increased

complexity of this process highlights time as a potential

difference between B2C and B2B, i.e the total time for

delivering a co-produced B2B service is likely to be longer

than that for delivering a co-produced service in a consumer

setting Given these key differences, we argue that research

examining B2B service networks is warranted

The previous review highlights the practical differences

between service networks in B2C versus B2B settings

However, these are not the only differences worth exploring;

key theoretical differences may also exist For consumers, the

notion of network coheres around an “experience” The

primary question is whether the service network experience

will cohere in a B2B context: will the buying firm perceive the

network as a whole and interpret the co-produced service as a

single process representative of a single brand? Or will the

industrial buying firm recognize outsourced processes as

representative of separate brands? One can imagine a situation

in which a retailer purchases a manufacturer’s product from a

distributor and receives that product from a third-party

transportation firm Does the retail buyer interpret this

purchase as an experience or as a series of separate activities

provided by separate firms? Research examining these ideas is

needed to assist manufacturers as they build relationships

with partner firms and develop and implement branding

strategies The dearth of studies exploring branding from an

industrial marketing perspective underscores the need for

theoretical development in this area (Lynch and de

Chernatony, 2004)

Based on the scarcity of research on service networks and the

need to examine the impact of service networks on

customer-firm relationships, including branding implications, the major

goal of this research is to conceptualize how customers evaluate

firms in a B2B service network and how their assessment of the

firms co-producing the after-sales service affects their

evaluation of the focal (selling) firm In the following sections

we discuss service networks, service processes and experiences,

and the role of brand image in a service network Next, we

explore service networks and branding in a B2B context and

offer research propositions We end with a discussion of

implications for researchers and practitioners

Conceptual perspectives

Service networksThe seminal concepts that form the very core of servicesmarketing are all dyadic in nature: the service encounter(Shostack, 1985), service quality (e.g Parasuraman et al.,1985), service recovery (Tax et al., 1998) Yet in manyinstances customers do not interact with individual firms inisolation Rather, for any given situation, the process andoutcomes of customer interactions with a service or companymay be shaped by multiple entities Ever-increasingspecialization, or microspecialization, in the marketplace iscreating interdependence among providers, collaborators, andcustomers and more indirect forms of exchange (Vargo andLusch, 2004) The evolution of service provision towardmultiple providers calls for transitioning from the traditionalfocus on the customer-firm dyad to a focus on servicenetworks Further, while all firms must learn to manage theirnetwork relationships, firms that outsource customer-contactactivities to network partners face the challenge of managingcustomer relationships “once-removed” An important yetoverlooked issue in services marketing is the assessment of thereciprocal impact of the performance of members of a servicenetwork on customer relationships with and evaluations ofeach firm within a network (Morgan and Tax, 2004) Someresearchers have made inroads into developing conceptualframeworks and theories to promote a better understanding ofnetworks (cf Ritter and Gemunden, 2003), yet with fewexceptions (e.g Gittell, 2002; Singh, 1991), we have notaddressed the way customers evaluate a service when it isperformed by multiple partners

The service network has been defined as “two or moreentities connected formally or informally which directlyprovide a range of resources and activities that create valueand help customers solve short- or long-term problems”(Morgan and Tax, 2004) The keys to this definition are:

. each entity in the network performs service activities thatwork in combination with other firms’ service activities;and

. each entity in the network interacts directly withcustomers

We focus on direct interactions with customers because manyservices are produced and consumed at the same time Thequality of service and customer evaluations are dependent onwhat happens in “real time” when service-producingemployees play a role as part of the product itself and as anessential ingredient of the experience for the customer(Zeithaml and Bitner, 2003)

Service networks can take on a variety of structural forms;however, because we are exploring the effects of partnerperformance on customer evaluations of a focal firm within aservice network, the issue of centrality is of primary interest.Centrality refers to the occupation of a centrally positionedand powerful node within the network with linkages to allother network members (cf Brass and Burkhardt, 1992).Centrality is most evident in “firm-centric networks” (cf.Brass and Burkhardt, 1992) that may be of a “fan-” or “star-shaped” structure and are comprised of a focal firm, all thefirms to which it is connected, and the interconnectionsthereby implied Jarillo (1988) conceptualized a network withsuch a “hub firm” that sets up the network and takes a pro-active stance in the care of it as a strategic network This type ofnetwork is the focus of this paper An example of a strategic

B2B service network is shown in Figure 1 The solid lines in

Figure 1 indicate that the focal firm has a relationship with

each of the partner firms; the dotted lines are representative of

direct customer contact

Service processes and experiences

The service delivery process has been studied in terms of

discrete units of analysis, usually based upon the number and

scope of interactions (Gro¨nroos, 2000) There is a general

understanding of these concepts; however, terminology has

not been consistent in the literature In the interests of clarity,

we refer to the smallest unit of analysis in the interaction

process as an “encounter”, or a single customer contact with a

service provider A typical B2C encounter is dropping clothes

off at the cleaners; accepting a delivery of new equipment is

representative of a B2B encounter An “episode” is a series of

related encounters (e.g Liljander and Strandvik, 1995) and is

associated with the firm level of analysis Examples include

dinner at a restaurant (B2C) and hosting an employee

training session (B2B)

An “experience” consists of all service encounters and

episodes related within a common time period, project, event,

or combination of these (Gro¨nroos, 2000) An example of a

B2C experience is a night on the town, including episodes of

riding in a taxi, dining at a restaurant, and attending the

theater A B2B service experience might entail the entire

process of procuring a new database management software

package, including episodes of ordering, delivery, installation,

training, and maintenance It is important to note that

ultimately, the boundaries of an experience are subject to the

interpretation of the customer – that is, the experience starts

and ends when the customer perceives it does According to

Padgett and Allen (1997, p 52), a service experience is a

“time-bounded progression of events beginning with theidentification of service consumption as a distinct situationand ending with the resolution of the situation” They suggestthat an experience begins when the consumer defines asituation in response to a given need and begins activity (i.e.thoughts, feelings, and behaviors) related to addressing theneed The experience concludes when the functional andemotional outcomes of the service are realized Pragmatically,

we can assume logical starting and ending points of anexperience for many everyday services, but without askingeach customer specifically, we are confined to the limitations

of the assumption Thus, when examining service networkexperiences (as was the case in Morgan, 2004), a key implicithypothesis is that the customer perceives the network as awhole and interprets the service co-production by multiplemembers as a single process, under the aegis of the focalbrand Although Morgan (2004) found support for thishypothesis in a B2C context, it remains to be seen whetherthe holistic service network “experience” will remain a viableunit of analysis in a B2B setting

Brand image in a service network context

A brand is a multidimensional construct linking the creating activities of suppliers with perceptions in customers’minds (de Chernatony and Dall’Olmo Riley, 1999) Forbranding strategies to be successful, and brand equity to becreated, customers must perceive that there are meaningfuldifferences among brands in the product or service category.Establishing a high level of brand awareness and positivebrand image in memory produces the knowledge structuresthat can affect the customer response and produce customer-based brand equity (Keller, 1998) The strength, favorability,and uniqueness of the associations that comprise brand imageplay a critical role in determining the customer responsedifferential Thus, it is brand image that is primarilyresponsible for brand differentiation

value-Service brand image is the customer’s “mental picture ofthe brand created in response to brand related stimuli”(Padgett and Allen, 1997, p 50) Because of the intangiblenature of services, building and managing service brand imagerequires an understanding of how customers make sense ofservices, or create and attach self-relevant meanings to serviceexperiences There are more points at which customersinteract with services brands (versus goods brands) and theexperience is more strongly influenced by employees (e.g.Burmann and Zeplin, 2005), which can result in greatervariability An important goal for brand managers is to achievebrand differentiation while maintaining a consistent brandexperience across “brand touchpoints” A “brandtouchpoint”, also known as a “brand contact”, is defined asany information-bearing experience that a customer orstakeholder has with a brand (Schultz et al., 1993) Brandtouchpoints include the company’s controlledcommunications of the brand’s purpose and identity, thecore elements of the brand such as logos, symbols, andadvertising tag lines (i.e the “presented brand”; Berry, 2000),encounters with service-producing employees of the firm, andexternal brand information essentially uncontrolled by thecompany, including word of mouth messages (Schultz et al.,1993) and the behaviors of distributors and agents (Duncanand Moriarty, 1998) Because a brand is essentially the sum ofits touchpoints, direct and indirect, explicit and hidden

Figure 1 Strategic or “firm-centric” business-to-business service

network

Branding implications of partner firm-focal firm relationships

Felicia Morgan et al.

Journal of Business & Industrial Marketing Volume 22 · Number 6 · 2007 · 372 – 382

communication dimensions must all be recognized and

accounted for by managers in order to achieve a consistent

brand message (e.g de Chernatony and Dall’Olmo Riley,

1999, Duncan and Moriarty, 1998) However, this task takes

on new levels of complexity when critical service components

are delivered by employees of network partners, or in other

words, are outsourced (Burmann and Zeplin, 2005)

An increasing number of researchers and practitioners seem

to agree that it is at least as important for the employees of an

organization to understand the concept and values associated

with the brand as it is for customers (e.g Berry, 2000; Ind,

2003; Mitchell, 2002) For service organizations, internal

branding, or the process of gaining employees’ intellectual and

emotional buy-in to the brand, is an especially relevant means

of driving brand and business performance (Thompson et al.,

1999) This is primarily due to the fact that for many services,

it is employees who create the brand experience for

customers According to Berry (2000), the primary source

of brand meaning for customers who have actually

experienced a service is the experience itself Thus, the

brand is created and recreated for customers at every service

encounter Because the customer-brand experience is driven

by all employees who contribute to the brand’s products,

services, and communications, all employees need to be

familiar with the company’s presented brand concepts and

strategies, and be committed to “live” the brand both inside

the organization and out (Burmann and Zeplin, 2005)

However, Berry (2000) emphasizes that for services firms,

customer-contact personnel are the primary medium through

which brand image and equity are built; thus, without a

connection to and understanding of the brand, these

employees can most easily undermine advertising-driven

expectations with inappropriate words or behavior (Mitchell,

2002) Contact employees can make the brand come alive

only by representing the beliefs, attitudes, and behaviors

associated with the brand in such a way that customers

perceive a consistent message across the whole range of

services provided (de Chernatony and Dall’Olmo Riley,

1999) Berry and Parasuraman (1991, p 129) recommend

that firms adopt the practice of internalizing the brand, which

involves “explaining and selling the brand to employees [ .]

training employees in brand-strengthening behaviors [ .]

rewarding and celebrating employees whose actions support

the brand”

Although we may conclude that customer-contact

employees are the primary medium through which service

brand image and equity are built (Berry, 2000), and thus

internal branding is especially critical for services firms, it is

inherently difficult to apply “internal” branding philosophies

and tactics to service experiences that span two or more

organizations When important components of a total service

experience are delivered by the employees of another firm,

how can the objectives of internal branding – namely the

intellectual and emotional buy-in of employees – be achieved?

There are implications for selecting, managing, and

maintaining relationships with service network partners that

have similar cultures and a willingness to cooperate and

coordinate activities toward achievement of superordinate, or

network goals (Bucklin and Sengupta, 1993) Because of the

intrinsically difficult nature of managing the activities of

service providers not under the organization’s direct control,

the service network context represents unique challenges for

managers A service organization must not only be aware of

the potential effects of network partner activities on theorganization’s own brand image, the organization mustmanage and attempt to leverage these effects to ensurebrand differentiation among competitors and consistent andfavorable service brand image in customers’ minds

B2B service networks and branding

A review of the services literature reveals that research onservice networks is in its infancy and focuses on the impact ofservice networks on customer perceptions only in traditionalB2C environments (e.g Morgan, 2004; Morgan and Tax,2004) In the B2B and industrial marketing literature, theincreasing existence and importance of networks to businessmarketers has been recognized (e.g Gummesson, 2004;Coviello et al., 1997) However, much of the research oncritical B2B concepts and theories, such as customerrelationship management and supply chain management,ignores the network perspective and continues to focus oncustomer-supplier dyads (e.g Gummesson, 2004; Moberg

et al., 2003) The proposed examination of the brandingimpact of service networks on focal firms in B2Benvironments can add to both the services and B2Bliterature domains because it considers simultaneously thepotential effects of the multiple brand relationships within thenetwork, rather than adopts a dyadic perspective

While research on branding in B2B service networks islacking, researchers have begun to examine service quality,customer evaluations of service, and branding from anindustrial perspective Bolton et al (2003) have taken animportant first step in studying customer service evaluations

by business customers, finding that both the functional andtechnical qualities of service delivery influenced businesscustomer evaluations In another study, van Birgelen et al.(2002) used a sample of international customers of amultinational office equipment manager to study the effects

of national culture characteristics on buyers’ evaluations offace-to-face versus technology-infused service delivery Lin

et al (2005) conducted an in-depth investigation of theservice quality of after-sales service information in theTaiwanese machine tool industry, albeit from themanufacturers’ perspective These studies, along withseveral others, highlight a key point: the competitiveadvantage for most B2B firms lies in the added valueassociated with superior service rather than in the elements ofthe marketing mix (Bolton et al., 2003; Donath, 2001; Leleand Sheth, 1987; Loomba, 1998) Good service drivescustomer satisfaction, promotes customer loyalty, and thus is

a key defensive marketing strategy (Berry, 1995) Indeed,research has provided evidence of a link between service andthe long-term financial performance of industrial service firms(Kumar, 1999) Still, little is known about the influence ofservice on the satisfaction and loyalty behaviors of businesscustomers

Although in recent years more attention has been focused

on B2B branding, it nevertheless represents another researched construct in the industrial marketing literature(Lynch and de Chernatony, 2004) Yet industrial firmsincreasingly are turning to branding to differentiate theirproducts and/or services (Shipley and Howard, 1993) Asargued by Lynch and de Chernatony (2004), the clusters offunctional and emotional values that comprise a brandpromise the buyer a unique, positive experience, whether thatbuyer be operating in a B2B or B2C environment In support

under-of this premise, Mudambi (2002) found that industrial buyers

consider branding in their purchase decision, although the

importance of branding varies by buyer and purchase

situation Sweeney (2002) reported that business brands

played a critical influencing role during four stages of the

purchasing decision process, including the development of the

supplier list, the shortlist of firms for negotiation, signing the

purchase agreement, and deciding on supply and support

services These findings suggest that branding can play an

important role in the B2B purchasing process

Some researchers have argued that B2B brands go further

than B2C brands by creating ties with other stakeholders,

including channel intermediaries and employees, as well as

customers (Lynch and de Chernatony, 2004; APQC

International Benchmarking Clearinghouse, 2001) In

essence, the brand is the sum of all customer interactions

with the company, which in the industrial environment can

include billing, promotions, salespeople, product

demonstrations, trade shows, as well as after-sales support

services (Smith, 2004) Importantly, these interactions

between the customer and the firm are equivalent to the

brand touchpoints discussed previously By outsourcing or

partnering with two or more firms to perform certain activities

targeted toward customers, B2B firms are engaging in service

networks

Proposed model

The fundamental premise of this study is that customers’

experiences with partner firms within a strategic B2B service

network will affect their evaluations of the focal firm This is

the main relationship of interest in this study and it is depicted

in Figure 2 with a horizontal arrow from the independent

variable (i.e partner firm performance), to the dependent

variable (i.e customer evaluations of focal firm) These

customer evaluations include key relational outcomes such as

the brand image of the focal firm (i.e brand meaning; Berry,

2000), satisfaction with the focal firm, and behavioral

intentions toward the focal firm Because customer

perspectives on networked organizations have been scarcely

studied, we have chosen to focus primarily on theindependent variable (i.e partner firm performance) and itsrelationship with customer evaluations of the focal firm Forthe purposes of this study, we consider other variables only intheir capacity as moderators of this relationship The othervariables of interest are the key factors proposed to influencethe manner in which experiences with partner firms in thenetwork affect customer evaluations of the focal firm Thesesituational or “context” factors include the strength of therelationship between the focal firm and the customer, focalbrand strength, the importance or “criticality” of the partner’sservice within a particular service network context, and thestrength of the relationship between the focal firm and thepartner firm Two of these variables – focal brand strengthand focal firm-partner firm relationship strength – have beenshown to influence the extent to which partner episodesimpact a focal firm’s brand image in a consumer setting(Morgan, 2004)

A moderator-oriented approach to this research isappropriate for several reasons First, according to Baronand Kenny (1986), moderator research is typical when there

is a strong focus on a particular predictor variable Ourprimary interest is in developing theory relevant to theindependent variable, partner firm performance, and itseffects on customer evaluations of the focal firm Second,although the potential for mediation exists among some of thevariables in the proposed model, this remains an empiricalissue for future study; at this stage, the independent variable,partner firm performance, is not conceptualized as causallyantecedent to any of the other exogenous variables Finally,the relationship between partner firm performance andcustomer evaluations of the focal firm has potentially criticalmanagerial implications for the focal firm, but of course, thefocal firm has little control over partner actions Thus,information about actionable (i.e controllable) factorsmoderating this relationship will be of high value topractitioners and managers who are actively engaged inpartnerships and service network alliances

Figure 2 Proposed model

Branding implications of partner firm-focal firm relationships

Felicia Morgan et al.

Journal of Business & Industrial Marketing Volume 22 · Number 6 · 2007 · 372 – 382

Research propositions

Partner performance

Proposition one reflects the fundamental premise of this

paper: the actions of partner firms in the service network will

affect customer evaluations of the focal firm Firms within a

service network co-produce the service experience for the

customer In so doing, these firms effectively create (implicitly

or explicitly) co-branded services, establishing “experiential”

brand alliances in the presence of their customers Brand

alliances involve the long- or short-term association or

combination of two or more individual brands (Rao and

Ruekert, 1994) that may be represented physically (e.g a

bundled package of branded products) or symbolically (e.g

advertisements, documents, signage) and are subject to the

context effects of proximate cues (Simonin and Ruth, 1998)

These proximate cues may come from either

marketer-controlled sources or secondary sources (Keller, 1998)

Marketer-controlled sources include tangible evidence within

the servicescape such as documents, signage, and equipment

(Bitner, 1992) and verbal information from service providers

(Keller, 1998) Secondary sources include other individuals,

organizations, places, and events (Keller, 1998) Simonin and

Ruth (1998) demonstrated that brand alliances create

spillover effects to the equity of the core brands These

effects arise from customer perceptions of the nature of the

associations and “fit” between the brands

Morgan’s (2004) study demonstrated a similar effect in a

consumer service network: the brands presented together in

the network formed an experiential alliance that customers

evaluated in much the same manner as the de facto brand

alliances studied by Simonin and Ruth (1998) Morgan

(2004) found that any levels of association within the service

network – i.e any perception on the part of customers that

the firms were part of the same service process or experience

– will create significant feedback effects to the focal brand In

that study, the effects took the form of an improvement or

decline of brand image

According to Berry’s (2000) services branding model, it is

the customer’s experience with the firm that has the most

influence on the firm’s brand image The presented brand and

external brand communications influence brand image to a

much lesser degree Morgan’s (2004) empirical findings

suggest that not only is this true, but the influence on brand

image extends to experiences with partner firms that the

customer associates with the focal firm This suggests that

even a firm with a strong presented brand and favorable

external communications cannot maintain a favorable brand

image unless the customer’s experiences with the firm – and

its partners – continue to be positive

It is expected that the partner firm’s performance will affect

other relational outcomes such as satisfaction with and

behavioral intentions toward the focal firm Customer

satisfaction is an overall post-purchase evaluation, the

customer’s fulfillment response (Oliver, 1997) The most

widely used model within the customer satisfaction literature

is the disconfirmation of expectations paradigm (e.g Oliver,

1997; Oliver and Bearden, 1985) This paradigm holds that

customers compare perceived product and service

performance to expectations and that satisfaction is a

function of the discrepancy between perceived performance

and expectations Performance that exceeds expectations is

positively disconfirmed, performance that meets expectations

is confirmed, and performance that falls short of expectations

is negatively disconfirmed The more positive thedisconfirmation, the greater the satisfaction Within thismodel, perceived performance has been shown to be a strongdeterminant of satisfaction evaluations (e.g Cadotte et al.,1987; Gupta and Stewart, 1996; Tse and Wilton, 1988).Perceived performance has been conceptualized as acomposite of attributes or benefits received In a servicenetwork context, customers “receive” these benefits directlyfrom a partner firm which, from the customer’s viewpoint,performs as an extension of the focal firm Thus, the partnerfirm’s performance will be a key determinant of thecustomer’s satisfaction with the focal firm

Finally, both satisfaction and brand image have each beenpositively associated with customer loyalty (e.g Bolton et al.,2003; Oliver, 1997) and we expect that these relationshipswill also hold within the B2B service network context.P1 The network partner’s performance will have directand positive effects on customer evaluations of thefocal firm

Focal brand strengthAssociations resulting from customers’ prior first-handexperiences with service network brands, whether within thenetwork or elsewhere, will be a significant source ofinformation (Berry, 2000) If a focal brand is strong,customers will extend concomitant favorable and uniqueassociations to other brands and firms to which it is perceived

to be connected (Simonin and Ruth, 1998) According toAaker (1996), a signal of brand strength is the brand’sresilience in the face of misfortune Stronger brand beliefs andattitudes are more resistant to negative information andcustomer loyalty and commitment enable a strong brand tobetter withstand any relationship transgressions thatcustomers ascribe to the company or the brand itself(Ahluwalia et al., 2000; Dube and Maute, 1998) Hogarthand Einhorn (1992) note that as information accumulates and

as people become more firmly committed to their beliefs,sensitivity to new information declines A strong brandimplies strongly held brand beliefs, strong brand equity, andmore pieces of accumulated information Additional pieces of

“information” gleaned by the customer – i.e brandknowledge obtained via an experience with a servicenetwork partner brand – represent a smaller percentage ofthe customer’s brand image knowledge structure, and willtherefore cause little or no brand belief updating to occur for astrong brand (see also Petty and Cacioppo, 1986) Within theservice network context, then, it is reasonable to expect thatthe stronger the focal brand, the more resilient it will be to theeffects of partner brand episodes on customer evaluations ofits brand image Weak focal brands will be more subject tofeedback effects from partner performance

Brand names function not only as associative cues, but also

as predictive cues of product performance (Janiszewski andVan Osselaer, 2000; Keller, 1998) In a rare empirical study ofcustomer evaluations of a complex service (packaged tours),Andreassen and Lindestad (1998) demonstrated that a firm’simage is a strong predictor of customer satisfaction andloyalty A strong brand presents a strong promise, setting uphigher expectations on the part of customers Prior researchhas demonstrated that brand expectations are a key factor incustomer satisfaction evaluations (cf Cadotte et al., 1987;

Gupta and Stewart, 1996; Tse and Wilton, 1988) We

propose that the customer’s expectations of a focal firm as

developed through the presented brand and/or direct

experience will extend to those partners the focal firm has

“charged” with co-providing its services

P2 The focal firm’s brand strength will moderate the

effects of partner firm performance on customer

evaluations of the focal firm

Focal firm-partner linkage strength

Simonin and Ruth (1998) found that brand alliances of

different types significantly affect the respective partnering

brands The strength of the association between brands in a

brand alliance impacts customer evaluations of the

composite, or whole, as well as the individual brands

(Simonin and Ruth, 1998) In a B2B service network,

customer perceptions of the strength of the association

between the partner firm(s) and the focal firm may be

influenced by the type of relationship (i.e contractual,

agency) and/or the level of interdependency In the brand

alliance literature, Rodrigue and Biswas (2004) found that

complementary partner firm capabilities and the presence of

a contractual relationship with the focal firm (i.e a strong

association) impacted consumer attitudes toward the alliance

and the core brands Other sources of information for

customers as to the strength of the partner firm-focal firm

relationship may include conflict handling, level of

interdependence, and quality of information exchange

(Wiertz et al., 2004) Wiertz et al.’s (2004) study suggests

that within a multi-channel service system, high levels of

these dimensions are positively related to optimal levels of

customer service Thus, the more members of the service

network are perceived to cooperate, the more likely

customers will perceive them as strongly linked As with

previous findings from the brand alliance (e.g Simonin and

Ruth, 1998) and (nascent) service network domains

(Morgan, 2004), the stronger the customer-perceived links

between brands, the greater the spillover effects to the core

brands In the service network, episodes with partners that

have strong linkages to the focal brand will have a stronger

impact on focal brand image than episodes with weak

linkages

P3 Focal firm-partner firm relationship strength will

moderate the effects of partner firm performance on

customer evaluations of the focal firm

Focal firm-customer relationship strength

The behavior of entities is often moderated by context

Business markets are domains in which buying and selling

companies interact; the interaction takes place within the

context of a relationship Supplier-customer relationships in

B2B markets evolve over time and, with mutual investment,

often increase in value (Turnbull et al., 1996) Such

relationships may be characterized by increasing mutual

adaptation and increasing commitment (Ford, 1982)

Concomitantly, this interactivity may be expected to lead to

stronger bonds of loyalty between the relational parties

(Turnbull et al., 1996) The marketing literature suggests that

the nature and strength of B2B relationships should moderate

the effects of firm performance on customers’ evaluations and

behavioral intentions (e.g Bendapudi and Berry, 1997; Dwyer

et al., 1987) While most support of such effects is conceptual

in nature, emerging empirical evidence suggests they are likely

to occur For example, a recent study by Bolton et al (2003)strongly supports the notion that relationship characteristicssuch as nature and duration moderate the effect of firmperformance on customer evaluations Boulding et al (1999)show that as customers gain experience in evaluating a serviceover time, they change their evaluation strategies, weighingprior opinions more heavily than new information (see alsoHogarth and Einhorn, 1992) Thus, a strong and long-standing relationship between a focal firm and a givencustomer may better situate the focal firm to withstand anyrepercussions arising from a partner firm’s service failures ortransgressions during contact with that customer

P4 Focal firm-customer relationship strength willmoderate the effects of partner performance oncustomer evaluations of the focal firm

Importance of partner serviceThe marketing literature suggests that although every serviceencounter is important, some are more “critical” than othersand contribute more to customer satisfaction ordissatisfaction (cf Bitner et al., 1990) The term “coreservice” has been used to describe the bundle of services orproducts that companies must produce to fulfill the needs ofcustomers or target markets Within a B2B service network,certain after-sales support activities such as installation ofequipment or the operation of a call center may be consideredmore “core” than billing or other administrative tasks.Regardless of who performs these services, these coreactivities are likely to weigh more in overall evaluations ofthe service, the network, and the focal firm Core servicesperformed by partners will be subject to no less scrutiny thancore services performed by the focal firm itself In accord withthis line of thinking, a study by Leuthehesser and Kholi(1995) suggests that buyers are likely to place greateremphasis on interactions with suppliers when the stakes arerelatively high From the buyer’s perspective, the stake in arelationship with a particular supplier tends to be higher whenthe product or service being purchased is relatively moreimportant It is reasonable to expect that customers of aservice network will weigh those “core” or more importantservice components more heavily than other, more peripheralactivities Thus, the more important the service provided bythe partner, the more it will create feedback effects to the focalfirm

P5 The importance of the service provided by the partnerwill moderate the effects of partner performance oncustomer evaluations of the focal firm

Discussion

The primary contribution of this study is the development of

a model of the potential effects of partner firm performance

on customers’ evaluations of the focal firm in a B2Benvironment We have proposed that the network partner’sperformance will have a direct and positive effect on customerevaluations of the focal firm We have further proposed thatthis relationship will be moderated by:

Branding implications of partner firm-focal firm relationships

Felicia Morgan et al.

Journal of Business & Industrial Marketing Volume 22 · Number 6 · 2007 · 372 – 382

. the focal firm’s brand strength;

. the focal firm-partner firm’s relationship strength;

. the focal firm-customer relationship strength; and

. the importance of the service provided by the partner

firm

In developing this model we have addressed several gaps in

the literature, including the lack of research on B2B services

and B2B branding In addition, by testing this model of

service networks in a B2B context, we are extending the work

of Morgan and Tax (2004) and Morgan (2004), who explored

service networks in a B2C context Our conceptualization

holds implications for both managers and researchers

Managerial implications

Research within the B2C environment provides empirical

evidence that in service networks, partner firm performance

influences customer evaluations of the focal firm If this

finding holds in the B2B environment, then selling firms

would be advised to consider partner firms carefully, keeping

in mind that each brand touchpoint affects the focal brand

Firms with similar cultures that demonstrate a willingness to

cooperate and coordinate activities to achieve network goals

would be good candidates (Bucklin and Sengupta, 1993)

Practitioners should also recognize the important role

customer contact personnel play in brand image and equity

development, whether those contact personnel be from the

focal firm or a partner firm (Berry, 2000) Practitioners

representing the focal firm could, for example, share hiring

criteria and training modules with partner firms as a means of

ensuring more consistent service delivery

Our proposed model highlights the importance of a strong

brand name, particularly if partner firms under-perform

(Ahluwalia et al., 2000; Dube and Maute, 1998) Certainly a

strong brand name can be crucial to organizational success,

regardless of context Still, the strength of the brand takes on

greater importance when that brand could be affected by a

partner firm Industrial organizations participating in service

networks are therefore advised to be aware of the brand image

and the strength of that image, and to consider likely

ramifications if a partner firm delivers poor service to a

customer The focal firm also needs to be aware of the

strength of the brand relationships with partner firms If the

focal firm has faith in the partner firm and customers perceive

the link is weak, the focal firm might take steps to build that

relationship On the other hand, if the focal firm has less

confidence in the partner firm, the focal firm may wish to

keep the relationship weak and/or find a new partner firm

We have proposed that the importance of the service

provided by the partner firm will moderate the effects of

partner performance on customer evaluations of the focal firm

One can imagine, for example, the importance of call center

services to the customers of a B2B firm that has outsourced

these activities completely Because this service is of great

importance to the customers serviced by the call center, good

performance by the partner firm would likely result in positive

evaluations of the focal firm, whereas bad performance would

likely result in negative evaluations Alternatively, the

outsourcing of billing activities may have less of an effect, in

that customers may not recognize the importance of this

activity Practitioners will need a clear understanding of which

services are perceived important by their customers By

focusing on those service elements most important tocustomers, the focal firm will be in a better position tomanage brand strength and brand image effectively

Implications for future research

By developing a framework of B2B service networks we havetaken an important step in furthering theory development inthis new area of research Clearly the next step in the researchprocess involves testing the proposed model Is the modelreflective of B2B service networks, or are alternative modelspossible? Have we accurately conceptualized the moderatingvariables? Only further research can answer these questions

In addition to extending current theory on servicenetworks, we also extend theory on industrial branding, aconstruct that remains under-researched in the business-to-business literature (Lynch and de Chernatony, 2004) Yetindustrial firms increasingly are turning to branding todifferentiate both products and services (Shipley and Howard,1993) We suggest that brand strength of the focal firm willmoderate the relationship between partner firm performanceand customer evaluations of the focal firm, including brandimage Empirical tests of this relationship will add to ourunderstanding of the role business brands play in the minds ofindustrial customers Do organizational buyers perceive asingle experience as suggested by B2C service networkresearch (Morgan, 2004; Morgan and Tax, 2004)? Or, canorganizational buyers clearly delineate the service/brandoffered by the focal firm as compared to the partner firm?Research examining these questions is needed

We have argued that key relationship-building functionscomprising after-sales service and support are likely to beoutsourced to parties external to the B2B selling firm.However, one can find examples of B2C and B2B firms thathave brought previously outsourced services in-house due, inpart, to the focal firm’s negative experiences For instance,less than a year into the contractual relationship, Searsrecently terminated a ten-year, $1.6 billion outsourcingagreement with Computer Science Corp (CSC) based onallegations that CSC failed to perform certain obligations(Chain Store Age, 2005) Similarly J.P Morgan has notrenewed a $5 billion contract agreement with IBM, decidinginstead to begin performing many IT functions in-house(King, 2005) Under these conditions the B2B servicenetwork would become less complex; indeed, if alloutsourced functions were brought in-house, the B2Bservice network would cease to exist Experts have arguedthat examples such as those previously described do notindicate a counter-trend to the outsourcing movement (King,2005) Nevertheless, as a means to provide practitionersrelevant information, researchers might track these examples

to determine if a new trend is on the horizon Researchinvestigating the drivers of decisions to revert previouslyoutsourced service production in-house would also aid ourunderstanding of changes in service networks

Conclusion

Service networks represent an exciting new area of research

By developing a conceptual model of B2B service networks

we have addressed several gaps in the industrial marketingliterature, namely B2B services and branding, and extendedprevious literature on service networks (i.e Morgan, 2004;

Morgan and Tax, 2004) Although we have taken an

important first step in the investigation of these topics,

much work remains We hope our model will provide the

foundation for a research stream investigating service network

and branding issues in a B2B context

References

Aaker, D.A (1996), Building Strong Brands, The Free Press,

New York, NY

Ahluwalia, R., Burnkrant, R.E and Unnava, H.R (2000),

“Consumer response to negative publicity: the moderating

role of commitment”, Journal of Marketing Research, Vol 37

No 2, pp 203-14

Andreassen, T.W and Lindestad, B (1998), “Customer

loyalty and complex services”, International Journal of

Service Industry Management, Vol 9 No 1, pp 7-23

APQC International Benchmarking Clearinghouse (2001),

“Business-to-business branding: building the brand

powerhouse”, Consortium Learning Forum Best Practice

Report, American Productivity & Quality Center, Houston,

TX

Baron, R.M and Kenny, D.A (1986), “The

moderator-mediator variable distinction in social psychological

research: conceptual, strategic, and statistical

considerations”, Journal of Personality and Social

Psychology, Vol 51 No 6, pp 1173-82

Bendapudi, N and Berry, L.L (1997), “Customer’s

motivation for maintaining relationships with service

providers”, Journal of Retailing, Vol 73 No 1, pp 15-36

Berry, L.L (1995), “Relationship marketing of services:

growing interest, emerging perspectives”, Journal of the

Academy of Marketing Science, Vol 23 No 4, pp 236-45

Berry, L.L (2000), “Cultivating service brand equity”,

Journal of the Academy of Marketing Science, Vol 28 No 1,

pp 128-37

Berry, L.L and Parasuraman, A (1991), Marketing Services:

Competing through Quality, The Free Press, New York, NY

Bitner, M (1992), “Servicescapes: the impact of physical

surroundings on customers and employees”, Journal of

Marketing, Vol 56 No 2, pp 57-71

Bitner, M., Booms, B.H and Tetreault, M.S (1990), “The

service encounter: diagnosing favorable and unfavorable

incidents”, Journal of Marketing, Vol 54 No 1, pp 71-84

Bolton, R.N., Smith, A.K and Wagner, J (2003), “Striking

the right balance: designing service to enhance

business-to-business relationships”, Journal of Service Research, Vol 5

No 4, pp 271-91

Boulding, W., Kalra, A and Staelin, R (1999), “The quality

double whammy”, Marketing Science, Vol 18 No 4,

pp 463-84

Brass, D.J and Burkhardt, M.E (1992), “Centrality and

power in organizations”, in Nohria, N and Eccles, R.G

(Eds), Networks and Organizations, Harvard Business

School Press, Boston, MA

Bucklin, L.P and Sengupta, S (1993), “Organizing

successful co-marketing alliances”, Journal of Marketing,

Vol 57 No 2, pp 32-46

Burmann, C and Zeplin, S (2005), “Building brand

commitment: a behavioural approach to internal brand

management”, Brand Management, Vol 12 No 4,

pp 279-300

Cadotte, E.R., Woodruff, R.B and Jenkins, R.L (1987),

“Expectations and norms in models of consumersatisfaction”, Journal of Marketing Research, Vol 24 No 3,

pp 305-14

Chain Store Age (2005), “Sears axes CSC outsourcing pact”,Chain Store Age, Vol 81 No 6, p 57

Coviello, N.E., Brodie, R.J and Munro, H.J (1997),

“Understanding contemporary marketing: development of

a classification scheme”, Journal of Marketing Management,Vol 13 No 6, pp 501-22

de Chernatony, L and Dall’Olmo Riley, F (1999), “Experts’views about defining service brands and the principles ofservices branding”, Journal of Business Research, Vol 46

Dwyer, F.R., Schurr, P.H and Oh, S (1987), “Developingbuyer-seller relationships”, Journal of Marketing, Vol 51

No 2, pp 11-27

Dwyer, F.R and Tanner, J.F Jr (2002), Business Marketing:Connecting Strategy, Relationships, and Learning, McGraw-Hill Irwin, Boston, MA

Gittell, J.H (2002), “Relationships between service providersand their impact on customers”, Journal of Service Research,Vol 4 No 4, pp 299-311

Gro¨nroos, C (2000), Service Marketing and Management: ACustomer Relationship Management Approach, Wiley,Chichester

Gummesson, E (2004), “Return on relationships (ROR): thevalue of relationship marketing and CRM in business-to-business contexts”, Journal of Business & IndustrialMarketing, Vol 19 No 2, pp 136-48

Gupta, K and Stewart, D.W (1996), “Customer satisfactionand customer behavior: the differential role of brand andcategory expectations”, Marketing Letters, Vol 7 No 3,

pp 249-63

Hogarth, R.M and Einhorn, E.J (1992), “Order effects inbelief updating: the belief-adjustment model”, CognitivePsychology, Vol 24 No 1, pp 1-55

Ind, N (2003), “Inside out: how employees build value”,Brand Management, Vol 10 No 6, pp 393-402

Janiszewski, C and Van Osselaer, S.M.J (2000), “Aconnectionist model of brand-quality associations”,Journal of Marketing Research, Vol 37 No 3, pp 331-50.Jarillo, J.C (1988), “On strategic networks”, StrategicManagement Journal, Vol 9 No 1, pp 31-41

Keller, K.L (1998), Strategic Brand Management: Building,Measuring, and Managing Brand Equity, Prentice-Hall,Englewood Cliffs, NJ

King, W.R (2005), “Outsourcing becomes more complex”,Information Systems Management, Vol 22 No 2, pp 89-90.Kumar, P (1999), “The impact of long-term clientrelationships on the performance of business servicefirms”, Journal of Service Research, Vol 2 No 1, pp 4-18.Kumar, R and Kumar, U (2004), “A conceptual frameworkfor the development of a service delivery system strategy for

Branding implications of partner firm-focal firm relationships

Felicia Morgan et al.

Journal of Business & Industrial Marketing Volume 22 · Number 6 · 2007 · 372 – 382

industrial systems and products”, Journal of Business &

Industrial Marketing, Vol 19 No 5, pp 310-9

Lele, M.M and Sheth, J.N (1987), The Customer is Key,

Wiley, New York, NY

Leuthehesser, L and Kholi, A.K (1995), “Relational

behavior in business markets: implications for relationship

management”, Journal of Business Research, Vol 34,

pp 221-33

Liljander, V and Strandvik, T (1995), “The nature of

customer relationships in services”, in Swartz, T.A., Bowen,

D.E and Brown, S.W (Eds), Advances in Services Marketing

and Management, JAI Press, Greenwich, CT

Lin, W.T., Hung, Y.H., Huang, C.T and Wu, C.C (2005),

“A performance evaluation of the after-sales service

information systems provided by the Taiwanese machine

tool industry”, International Journal of Management, Vol 22

No 1, pp 112-26

Loomba, A.P.S (1998), “Product distribution and service

support strategy linkages: an empirical validation”,

International Journal of Physical Distribution & Logistics

Management, Vol 28 No 2, pp 143-61

Lynch, J and de Chernatony, L (2004), “The power of

emotion: brand communication in business-to-business

markets”, Brand Management, Vol 11 No 5, pp 403-19

Mitchell, C (2002), “Selling the brand inside”, Harvard

Business Review, Vol 80 No 1, pp 99-105

Moberg, C.R and Speh, T.W (2004), “Third-party

warehousing selection: a comparison of national and

regional firms”, Mid-American Journal of Business, Vol 19

No 2, pp 271-7

Moberg, C.R., Speh, T.W and Freese, T (2003), “Supply

chain management: making the vision a reality”, Supply

Chain Management Review, September/October, pp 34-9

Morgan, F.N (2004), “Brand image formation and updating

across multiple-episode experiences within service

networks”, unpublished doctoral dissertation, Arizona

State University, Phoenix, AZ

Morgan, F.N and Tax, S.S (2004), “Toward a theory of

service delivery networks”, working paper, Arizona State

University, Phoenix, AZ

Mudambi, S (2002), “Branding importance in

business-to-business markets: three buyer clusters”, Industrial Marketing

Management, Vol 31 No 6, pp 525-33

Oliver, R.L (1997), Satisfaction: A Behavioral Perspective on

the Consumer, McGraw-Hill, New York, NY

Oliver, R.L and Bearden, W.O (1985), “Crossover effects in

the theory of reasoned action: a moderating influence

attempt”, Journal of Consumer Research, Vol 12 No 3,

pp 324-40

Padgett, D and Allen, D (1997), “Communicating

experiences: a narrative approach to creating service

brand image”, Jounal of Advertising, Vol 26 No 4,

pp 49-62

Parasuraman, A., Zeithaml, V.A and Berry, L.L (1985), “A

conceptual model of service quality and its implications for

further research”, Journal of Marketing, Vol 49 No 4,

pp 41-50

Petty, R.E and Cacioppo, J.T (1986), Communication and

Persuasion: Central and Peripheral Routes to Attitude Change,

Springer Verlag, New York, NY

Rao, A.R and Ruekert, R (1994), “Brand alliances as signals

of product quality”, Sloan Management Review, Vol 36

No 1, pp 87-97

Ritter, T and Gemunden, H.G (2003), “Interorganizationalrelationships and networks: an overview”, Journal ofBusiness Research, Vol 56 No 9, pp 691-7

Rodrigue, C.S and Biswas, A (2004), “Brand alliancedependence and exclusivity: an empirical investigation”,Journal of Product & Brand Management, Vol 13 No 7,

pp 477-87

Rogers, D.S and Daugherty, P.J (1995), “Warehousingfirms: the impact of alliance involvement”, Journal ofBusiness Logistics, Vol 16 No 2, pp 249-69

Schultz, D.E., Tannenbaum, S.L and Lauterborn, R.F.(1993), Integrated Marketing Communications, NTCBusiness Books, Lincolnwood, IL

Sheffi, J (1990), “Third party logistics: present and futureprospects”, Journal of Business Logistics, Vol 11 No 2,

by the company it keeps? Assessing the spillover effects ofbrand alliances on consumer brand attitudes”, Journal ofMarketing Research, Vol 35 No 1, pp 30-42

Singh, J (1991), “Understanding the structure of consumers’satisfaction evaluations of service delivery”, Journal of theAcademy of Marketing Science, Vol 19 No 3, pp 223-44.Smith, G (2004), “A brand is the sum of all touchpoints”,

available at: www.marketingprofs.com/print.asp?source ¼

%2F4%Fsmith1%2EaspSweeney, F (2002), “B2B brand management”, BrandStrategy, Vol 163, p 32

Tax, S.S., Brown, S.W and Chandrashekaran, M (1998),

“Customer evaluations of service complaint experiences:implications for relationship marketing”, Journal ofMarketing, Vol 62 No 2, pp 60-76

Thompson, K., de Chernatony, L., Arganbright, L andKhan, S (1999), “The buy-in benchmark: how staffunderstanding and commitment impact brand and businessperformance”, Journal of Marketing Management, Vol 15

No 8, pp 819-35

Tse, D.K and Wilton, P.C (1988), “Models of consumersatisfaction formation: an extension”, Journal of MarketingResearch, Vol 25 No 2, pp 204-12

Turnbull, P., Ford, D and Cunningham, M (1996),

“Interaction, relationships and networks in businessmarkets: an evolving perspective”, Journal of Business &Industrial Marketing, Vol 11 Nos 3/4, pp 44-62

van Birgelen, M., de Ruyter, K., de Jong, A and Wetzels, M.(2002), “Customer evaluations of after-sales service contactmodes: an empirical analysis of national culture’sconsequences”, International Journal of Research inMarketing, Vol 19, pp 43-64

Vargo, S.L and Lusch, R.F (2004), “Evolving to a newdominant logic in marketing”, Journal of Marketing, Vol 68

No 1, pp 1-17

Wiertz, C., de Ruyter, K., Keen, C and Steukens, S (2004),

“Cooperating for service excellence in multichannel servicesystems: an empirical assessment”, Journal of BusinessResearch, Vol 57 No 4, pp 424-36

Zeithaml, V and Bitner, M (2003), Services Marketing:

Integrating Customer Focus across the Firm, McGraw-Hill

Irwin, New York, NY

About the authors

Felicia Morgan earned her PhD in marketing at Arizona State

University in 2004 and is currently an Assistant Professor of

Marketing at Ohio University Her research publications and

presentations focus on services marketing and management,

services branding, and managing customer experiences Prior

to earning her doctorate, Felicia spent over 12 years working

in marketing, finance, and management within the services

sector She also enjoyed an early career as a professional

musician Felicia holds a Bachelor’s degree and an MBA from

the University of New Orleans Felicia Morgan is the

corresponding author and can be contacted at:

morganf1@ohio.edu

Dawn Deeter-Schmelz (PhD, University of South Florida)

is Associate Dean for Strategy and Operations, Marketing

Department Chair, and O’Bleness Professor of Marketing at

Ohio University Her research interests include customer

service teams, sales management and buyer-seller relationshipissues, business-to-business e-commerce, and scaledevelopment She has published in Journal of the Academy ofMarketing Science, Journal of Marketing Theory and Practice,Industrial Marketing Management, Journal of Supply ChainManagement, Journal of Personal Selling & Sales Management,Journal of Marketing Education, and Journal of BusinessLogistics, among others

Christopher R Moberg is the Robert H Freeman Professor

of Logistics Management in the Marketing Department atOhio University He received his DBA from Cleveland StateUniversity, and his research and teaching interests includelogistics and supply chain management, marketing strategy,business ethics, and services marketing His research has beenpresented at several national conferences and appeared inseveral journals, including the Journal of Business Logistics,International Journal of Physical Distribution & LogisticsManagement, International Journal of Logistics Management,Supply Chain Management Review, Annals of OperationsResearch, Mid-American Journal of Business, MarketingEducation Review, and Journal of Services Marketing

Branding implications of partner firm-focal firm relationships

Felicia Morgan et al.

Journal of Business & Industrial Marketing Volume 22 · Number 6 · 2007 · 372 – 382

To purchase reprints of this article please e-mail: reprints@emeraldinsight.com

Or visit our web site for further details: www.emeraldinsight.com/reprints

The importance of brand in the industrial purchase decision: a case study of the UK

tractor market

Keith Walley, Paul Custance and Sam Taylor

Harper Adams University College, Newport, UK

Design/methodology/approach – Various attributes, together with levels of these attributes, were identified from the literature and a series of structured interviews with three farmers and farm contractors Subsequently, conjoint analysis was employed to reveal how purchasers made theirpurchase decision A total of 428 farmers and farm contractors (a 28.7 per cent response rate) ranked 25 cards that had been constructed to profilevarious hypothetical tractor designs

semi-Findings – Five attributes appeared from the literature review and interviews – brand name, price, dealer proximity, quality of dealer’s service, andbuyer’s experience of the dealer The conjoint analysis revealed that brand accounts for 38.95 per cent of the purchase decision, ahead of price (25.98per cent) and service (14.90 per cent) The importance of brand varies according to the tractor brand Also, the overall utility varies, with John Deere andNew Holland brand names appearing as marketing assets and Valtra, Massey Ferguson, and Case IH as marketing liabilities Among the study’s otherfindings are that UK tractor buyers are brand loyal

Research limitations/implications – The study focuses on tractors in the UK, so while it provides an insight into the role of branding in an industrialpurchase situation, further research is required in other product categories before the findings can be generalised

Practical implications – Manufacturers and distributors need to maintain a strong image Also, they may charge higher prices for tractors, using theextra revenue to reinforce their brand image On-farm demonstration of new tractors is suggested as an experiential marketing strategy Specialattention should be given to the location of dealers and the service they provide

Originality/value – Research concerning branding in an industrial purchase context is limited, dated, or contradictory This article contributes withempirical findings on industrial brand management in an important and relevant context

Keywords Brand management, Marketing, Purchasing, Tractors, United Kingdom

Paper type Research paper

An executive summary for managers and executive

readers can be found at the end of this issue

Introduction

The basis for above-average corporate performance in

business and industrial marketing is a significant competitive

advantage (Porter, 1985) The sources of such a competitive

advantage are many and varied Some organisations base their

competitive advantage on physical assets such as a

manufacturing facility, some on their employees, and some

on their distribution networks (Kotler, 2000) Many others,however, seek to attain a competitive advantage fromintangible assets such as their reputation or the brands thatthey own (Beverland, 2005; Keller, 1993; Low and Blois,2002) Yet, research to date on branding in business andindustrial marketing has been limited (Beverland et al., 2006;Low and Blois, 2002; Mudambi et al., 1997; Nilson, 1998)

We address the fundamental question of how organisationsmanage their brands in a systematic, meaningful, andinformed manner, thereby responding to calls for empiricalstudies on industrial brand management (cf Beverland et al.,2007; Webster, 2000)

The current issue and full text archive of this journal is available at

The authors gratefully acknowledge the support and assistance provided

by Valtra UK Ltd and Profi International, as well as Sandra Turner and Sue Taylor (Harper Adams University College) in carrying out this study and preparing this article The authors contributed equally to this paper.

Branding has been subject to considerable research and

debate in recent times (e.g Aaker and Joachimsthaler, 2000;

Bendixen et al., 2004; Brodie et al., 2002; Gordon et al., 1993;

Hutton, 1997; Low and Blois, 2002; Michell et al., 2001;

Mudambi, 2002; Shipley and Howard, 1993; Webster and

Keller, 2004) Despite this interest, however, there remain some

areas where research is limited, dated, or contradictory (Glynn

et al., 2007) One such area relates to the role of branding in an

industrial purchase decision (Blomba¨ck and Axelsson, 2006)

Our article seeks to address this situation by reporting on the

findings of a study that sought to assess the relative importance

of brand as a factor influencing new tractor buyer behaviour in

the UK, and to differentiate the major tractor brands according

to their image amongst farmers and farm contractors The

analysis of branding in this context is paramount because the

reduction in the sales of tractors in the UK has meant that the

market has become increasingly competitive, and that

manufacturers and distributors have sought original means by

which to achieve competitive advantage With brands known to

play an important role in business customers’ decisions

(Bendixen et al., 2004; Michell et al., 2001), one strategy in

the UK tractor market – identified in our exploratory

semi-structured interviews – appears to have been based on a better

understanding of the purchase decision of farmers and farm

contractors, as well as the role of the tractor brand However, a

thorough investigation of the use of branding in this market is

needed Our findings are derived from a multi-attribute

conjoint analysis of data collected from 428 UK farmers and

farm contractors

Our article is structured as follows First, to guide the study

we provide a review of the brand literature In particular, this

section examines branding in industrial marketing including

the UK tractor market, which constitutes the study’s context

The next section describes the research methodology with

particular emphasis being given to an explanation of the

conjoint analysis Our findings, together with the results of the

conjoint analysis, are presented and then discussed in relation

to three hypotheses before the article arrives at a number of

managerial implications The article finishes with a

consideration of the research limitations and directions for

future research

Branding

There are numerous definitions of the term brand found in

the literature One of the more pragmatic definitions is

proffered by The American Marketing Association (cf

Kotler, 2000, p 404), which defines a brand as “a name,

sign, symbol, or design, or a combination of them, intended

to identify the goods or services of one seller or group of

sellers and to differentiate from those of competitors” A

useful model for explicating the various components of a

brand uses the various definitions of brand to identify what

are believed to be the key themes (De Chernatony and

Dall’Olmo Riley, 1998) The model, illustrated in Figure 1,

views a brand as a multi-dimensional construct matching a

firm’s functional and emotional values with the performance

and psychological needs of consumers

In line with this model, a brand has been viewed as

essentially being a seller’s promise to deliver a specific set of

features, benefits, and services consistently to the buyers

(Kotler, 2000) Therefore the brand is not just a name; the

challenge is to develop a deep set of positive associations for

the brand – a strong brand image The most successfulbrands have created wealth by attracting and retainingcustomers as a result of combining an effective product,distinctive identity, and added values in the mind of thecustomer (Doyle, 1998)

The message about a brand that a firm seeks tocommunicate is known as brand identity (Aaker, 1991,1996) This communication is undertaken via the product,the brand name, symbols and logos, historical roots, thebrand’s creator, and advertising (Kapferer, 1998) However,the message that a firm seeks can be quite different to thatwhich the customer perceives, which is referred to as thebrand image Brand image is a perception and is notnecessarily fact Buyers may assume, or expect, things about afirm without any objective evidence; they will hold an opinion(Hague and Jackson, 1994) The buyer’s perception of qualitywill directly affect purchase decisions and brand loyalty,especially when a buyer is not motivated, or able, to conduct adetailed analysis (Aaker, 1991) Brand awareness refers to thestrength of a brand’s presence in the consumer’s mind Itrelates to consumers memory of the brand, which can bemeasured in different ways (Aaker, 1996) Essentially, brandawareness can be determined by measurement of either brandrecognition, brand recall, or both (Keller, 1993)

A brand that is established and has the patronage ofconsumers is said to possess “brand loyalty” Brand loyaltyhas been formally defined as “a strongly motivated and longstanding decision to purchase a product or service to theextent that buyers become loyal to a specific brand” (Dibb

et al., 2001, p 271) It can be extremely advantageous to aseller because it is often much cheaper to retain customersthan to attract new ones (Lindgreen, 2001, 2004; Sheth andParvatiyar, 2000) The brand loyalty of the customer base isoften the core of a brand’s equity, the one indicator that isdemonstrably linked to future profits, since brand loyaltytranslates into future sales (Aaker, 1991) If customers areunconcerned with the brand, and buy with respect to features,price, and convenience, then there is likely to be little equity;however, if customers continue to purchase the brand in theface of competitors with superior features, price, andconvenience, considerable value exists in the brand (Aaker,1991)

Brand equity is especially important in industrial marketing.This is because often alternatives in industrial purchase are

“toss-ups”, meaning that the decisive factor can turn uponhow a buyer perceives a brand (Aaker, 1991) However,despite this claim, research relating to industrial products hastended to focus on the dynamics of organisational buyingbehaviour, buyer-seller relationships, and industrialsegmentation (Mudambi et al., 1997) Particularly in recenttimes, there has been little research carried out explicitly intoindustrial branding (McQuiston, 1989; Michell et al., 2001;Mudambi et al., 1997; Rosenbroijer, 2001; Shipley andHoward, 1993) The study on which this article is based,therefore, seeks to add to the limited contemporary researchrelating to the role of the brand name in industrial purchasedecisions

Branding in an industrial purchase decision context

There are a number of characteristics that are suggested todifferentiate industrial markets from consumer markets:

The importance of brand in the industrial purchase decision

Keith Walley et al.

Journal of Business & Industrial Marketing Volume 22 · Number 6 · 2007 · 383 – 393

. fewer, larger buyers;

. more people involved;

. closer buyer-seller relationships;

. products often need customising to customers’ needs;

. purchases are negotiated less frequently;

. extended negotiations;

. greater loyalty;

. more rational buying behaviour;

. better informed buyers; and

. existence of second-hand markets (De Chernatony and

McDonald, 1998; Kotler, 2000)

This list has recently been expanded with other factors such

as the personal goals of buyers (Kotler et al., 2001), new

features (Nowlis and Simonson, 1996), compatibility with

future purchases (Shaw et al., 1989), and elimination of risk

(Foxall, 1979)

One study that produced findings which are of particular

interest in the context of our study was conducted by Kool

(1994) He surveyed 878 farmers concerning the purchase of

a range of agricultural inputs, including machinery, and

concluded that much of the farmers’ buying behaviour was

influenced by the desire for simplification This in turn meant

that habitual purchase was common, and that brand loyalty

was important as a buying factor The fact that brand loyalty

is an important factor in the purchase decisions of farmers

may well be down to a lack of motivation or ability to conduct

a detailed analysis of the alternatives (Aaker, 1991)

Some differences between consumer and industrial brand

management are evident In industrial markets the brand

name is often the firm name because the small size of market

segments does not justify the promotion of different brands

(Hague and Jackson, 1994) This differs from consumer

markets, which comprise multiple segments so that

companies develop a number of brands to target a range of

customers in these segments This observation has important

consequences Brand managers in consumer markets place

more emphasis on individual rather than corporate brands,

and direct their efforts toward minimizing the size of the

brand portfolio, while maximizing coverage This is in

contrast to brand managers in industrial markets who tend

to focus on building the brand at the corporate level, with

some experimentation at the product level, and gradually

working toward increasing the size of the portfolio through

acquisitions (Beverland et al., 2006; Mudambi, 2002)

In industrial marketing the brand appears to play an

important role (Doyle, 1998; Michell et al., 2001; Mudambi

et al., 1997; Shipley and Howard, 1993) Frequently, manyindustrial products within any given market have nearlyidentical physical and performance specifications, anddifferentiation can be difficult to achieve However, there isoften one product that maintains high market share, even at apremium price (Mudambi et al., 1997) It would appearreasonable to assume that this differential has been achieved

on the basis of brand name, albeit the brand name may besupported by a corporate name (Saunders and Watt, 1979).Overall, Michell et al (2001, p 424) found that “industrialfirms perceive several important features as being associatedwith strong brands, namely perceived quality, recognisableimage, market leadership, and differentiated position”.Brands, it would appear, reduce the industrial customer’sperceived risk by providing reassurances regarding price andquality of the product, and when this trust becomesentrenched then there is a reluctance to try differentproducts, and an inertia develops

The UK tractor market

In the UK, brand names are widely used, and are perceived to

be important buying criteria by industrial companies (Shipleyand Howard, 1993) In the tractor market, for example, aninvestigation into farmers’ tractor purchase decisionsconcludes that “farmers’ buying decisions for tractorsparallel the behaviour of professional buyers inmanufacturing and service industries” (Foxall, 1979, p 307)

As such, the UK tractor market would seem to represent agood basis for conducting research into the influence ofbrands in industrial purchase decisions

Agriculture in the UK has undergone continuous changesince the Second World War, requiring all related industries,including tractor manufacturers, to adapt to meet the needs ofthe farming population (Bourlakis and Weightman, 2004;Eastham et al., 2001) The supply of agricultural tractors inthe UK is controlled by national distribution subsidiaries such

as Valtra UK Ltd Each firm has a network of franchiseddealerships Until recently, dealers generally sold only onebrand of tractor, but developments since December 2001have seen some dealers taking on a second tractor franchise Anumber of dealerships have become “dual-franchised” andwill, for example, sell McCormick tractors alongside theirexisting Valtra range (Profi International, 2002)

Dealers are vitally important to the manufacturers for sales

of new products and the rapid supply of parts and service inFigure 1 Twelve key themes of brand definitions

the event of a machinery breakdown (Key Note, 1997) A

decrease in the UK machinery sales in the last ten years, an

increase in the mobility of customers, and a greater freedom

of choice brought about by improvements in communication

links have resulted in rationalisation and the resulting closure

of many agricultural machinery dealers Although recently

there has been a small recovery, the market for tractors in the

UK in 2002 (unit sales about 15,000) was considerably

smaller than in 1995 (unit sales about 20,000)

The significant decrease in the number of new tractors sold

can, to a large extent, be attributed to a fall in the output

prices of agricultural commodities such as milk and grain,

which has been translated into reductions in farm income

levels (Department for Environment, Food and Rural Affairs,

2002) The reductions in income levels have led producers to

reduce their costs through economies of scale by farming

larger areas of land This has led to the purchase of fewer, but

larger tractors, requiring less labour Massey Ferguson, Fendt

and Case IHA, New Holland, and John Deere are the four

brands with the largest share of the UK market A profile of

these and other UK tractor brands is provided in Table I It is

important to note that the market for tractors comprises not

just farmers, but also farm contractors who supply machinery

services to the farming industry

Our study was designed to test the following three

hypotheses:

H1 Brand name is not an important factor in the choice of

tractors by UK farmers and contractors

H2 UK tractor buyers are not brand loyal

H3 The major tractor brands available in the UK are

perceived in a relatively similar way

Methodology

There have been numerous studies that have sought to

measure some aspect of brand value, strength, loyalty, or

importance (e.g Hague and Jackson, 1994) However, many

adopt a direct approach to questioning, which requires

respondents to make an assessment of a brand somewhat

independently of other factors This is a difficult approach, as

when making actual purchase decisions, customers would

consider a number of factors together To overcome this

apparent methodological weakness we employed the

multivariate technique known as conjoint analysis

Conjoint analysis is used to reveal how people make complexjudgements and is based on a number of assumptions One isthat purchase decisions are not based on a single factor, but onseveral factors “considered jointly” (American MarketingAssociation, 1992) Another assumption is that products orservices are made up of a series of features or attributes, forexample brand and price (Chisnall, 1997), about whichrespondents can make judgements by stating their preferencefor the various attribute combinations by ranking them inpriority order of purchase or rating the importance of attributesagainst one-another The more dominant the interest in aparticular attribute, the higher the satisfaction or utilityascribed to it by the respondents As such, conjoint analysisprovides an insight into the relative importance of productattributes and how they relate to each other

Conjoint analysis was developed within the fields ofmathematical psychology and psychometrics and popularised

in an article by Luce and Tukey (1964) The technique wassubsequently used to measure consumer purchase decisions(Green and Rao, 1971; Green and Srinivasan, 1978; Green andWind, 1975) For examples of applications of conjoint analysis

in relation to consumer purchase decisions we refer to Bowditch

et al (2003), Steenkamp (1987), Walley et al (1999), andWeiner (1994), among others

A full factorial design was employed based upon tractorattributes and the levels of these attributes (Table II) Theattributes were identified in two ways Firstly, a literaturereview suggested that price, dealers and sales representatives,after sales service, past experience, technical performance,and other farmers were important brand attributes (cf Foxall,1979) Secondly, a series of semi-structured interviews (witheach interview lasting between 60 minutes and 90 minutes)with two farmers and one farm contractor partly confirmedthis review The result of this approach was that five attributeswere kept:

1 brand name;

2 price;

3 dealer proximity;

4 quality of dealer’s service; and

5 buyer’s experience of the dealer

The decision as to which attributes to use is particularlyimportant in conjoint analysis as the technique works bestwith a relatively small number of attributes, which shouldaccount for the majority of the purchase decision (Green andSrinivasan, 1978; Auty, 1995)

Table I Profile of the major UK tractor brands in 2000

Brand Parent company UK market share Most recent merger/acquisition

Massey Ferguson AGCO 13.6 per cent combined Bought by AGCO, 1994

Case IH CNH Global 15.4 per cent Merged with New Holland by Fiat, 2000New Holland CNH Global 22.4 per cent Merged with Case IH by Fiat, 2000John Deere Deere & Co 29.0 per cent Sold in UK under Deere & Co since 1966

McCormick Landini N/A Bought by Landini as part of CNH deal, 2001Valtra Partek 3.5 per cent Acquired by Partek, 1997, and Kone, 2002Renault Renault Global 3.9 per cent Sold in UK under Renault SA since 1977Notes: Adapted from Agricultural Engineers Association (2002),Profi International (1997, 2001), Currie (2001), John Deere (2002), Key Note (1997),Kutschenreiter (1996), Partek (2002), and Roberts (2000)

The importance of brand in the industrial purchase decision

Keith Walley et al.

Journal of Business & Industrial Marketing Volume 22 · Number 6 · 2007 · 383 – 393

The information generated via the interviews was used to

construct 25 cards profiling various hypothetical tractor

designs as determined via an orthogonal array SPSS software

was used to generate the orthogonal design, as well as to

analyse the data collected, calculate the attribute importance,

and establish the utility values of the various attributes and

levels Subsequently, the survey was piloted on ten farmers

and farm contractors, who were asked to rank the cards in

terms of their preference for the profiles and record the

ranking, along with some background information, on a

questionnaire

Results

The sample frame for the study was the database of a major

tractor manufacturer that comprised the names and addresses

of 15,000 farmers and farm contractors (this list was not a

customer list) Of the 1,492 randomly selected farmers and

farm contractors who were sent a questionnaire in the post,

usable replies were received from a total of 428 The response

rate of 28.7 per cent was achieved with the aid of an incentive

of a subscription to Profi International, which is an agricultural

machinery publication This number of responses ensured

that the survey had a 95 per cent level of confidence (^ 4.7

per cent accuracy) A profile of the respondents is shown in

Table III This profile was considered a reasonable

representation of the target population based on type of farm

The overall results of the conjoint analysis are shown inFigure 2 It is readily apparent that brand name is the mostimportant factor when purchasing a tractor as it accounts for38.95 per cent of the decision This is significantly ahead ofprice, dealer proximity, and the quality of dealer service thataccount for 25.98 per cent, 14.56 per cent, and 17.90 per cent

of the decision; the buyer’s experience of the dealer onlyaccounts for 5.61 per cent of the decision

When broken down by “brand owned” (Figure 3) theimportance of the brand varies from 45.31 per cent for JohnDeere owners through to 39.68 per cent, 38.02 per cent, and35.35 per cent for Massey Ferguson, New Holland, and Case

IH owners, and, lastly, to 31.16 per cent for Valtra owners Inthe latter case brand name is not as important a purchasefactor as price

In terms of the overall utility that respondents attached tothe brands (Figure 4) there was a range of scores, with John

Deere receiving þ 2.7318 and Valtra 2 2.4654 It wouldappear, therefore, that the John Deere and New Holland(utility of 0.3252) brand names are marketing assets while theValtra, Massey Ferguson (utility of 2 0.4551), and Case IH(utility of2 0.1364) brands are marketing liabilities

However, when the same data is broken down by “brandowned” (Figure 5), the vested interest of the brand ownersbecomes clear, as they attach a strong positive utility score tothe brand that they own Whether this latter phenomenon isthe reason the respondents purchased the brand that theyhave or has developed post purchase is impossible to saywithout further research The strong positive utility scoresattached to the John Deere brand by all groups of respondentssuggest that this is the “Rolls Royce” brand of the tractormarket and provides additional support to the contention that

in industrial markets there is often one brand that achieves asignificant competitive advantage on the basis of branding(Mudambi et al., 1997)

Discussion of findings

The study produced a wide range of interesting results, butthe discussion will focus on addressing the three hypotheses.H1 Brand name is not an important factor in thechoice of tractors by UK farmers and farm contractorsThe literature does not provide a clear picture as to theimportance of branding in an industrial context Althoughbased on a small sample the study of tractor purchase byFoxall (1979) suggested that the most important factor wastechnical performance (see Table III) Interestingly Foxall’sstudy did not include “brand name” as a purchase factor,probably because at the time it was not perceived as beingimportant Indeed, some of the respondents involved in theexploratory phase of our study suggested that the primary

Table II Attributes and levels employed in the survey

Brand name Case IH; John Deere; Massey Ferguson; New Holland; Valtra

Dealer proximity 0-15 miles; 16-30 miles; over 30 miles

Quality of dealer service Average; good; very good

Buyer’s experience of the dealer Never bought a tractor from the dealer before; bought one or more tractors from the dealer before

Table III Respondent profile

Characteristic Sub-characteristic

Sample(per cent)

Population(per cent)Farm type Mixed farmers 49.8 46.9

John Deere 132Massey Ferguson 207New Holland 142

Nature of business Farmers 70.1

Farmers/contractors 24.1Contractors 5.8Source: Adapted from Department for Environment, Food and Rural Affairs

(2003)

Figure 2 Overall attribute importance

Figure 3 Attribute importance by brand ownership

Figure 4 Overall brand utility

The importance of brand in the industrial purchase decision

Keith Walley et al.

Journal of Business & Industrial Marketing Volume 22 · Number 6 · 2007 · 383 – 393

consideration in the choice of a tractor is the required size and

specification However, later works do acknowledge that

brand is an important factor in the buying decision (e.g

Michell et al., 2001; Shipley and Howard, 1993), with

Mudambi et al (1997) going so far as to claim that the role of

“brand” is more important in complex buying decisions

What none of this literature states is that brand is the most

important factor in the industrial purchase decision In our

study, however, brand accounted for 38.95 per cent of the

purchase decision and was therefore the most important

influencing factor As a consequence, H1 is rejected as brand

name is an important factor in the choice of tractors by UK

farmers and contractors

It is quite likely that the high importance rating given to

“brand name” in this survey could be as a result of “inertia”,

which refers to purchases based on habit where customers buy

a particular brand because they have always bought that

brand (Hague, 1987) They are familiar with the brand,

satisfied with its performance and as a result repeat purchase

of that brand is perceived as the safe option

Closely related to purchase of products on the basis of

“inertia” is purchase on the basis of risk reduction Risk

reduction is generally believed to be a key factor in industrial

purchase decisions (Anderson and Narus, 1999; Foxall, 1979;

Shipley and Howard, 1993) Indeed, it is likely that the

common practice in industrial markets of using the

manufacturer or company name as the brand, with products

being identified by sub-brand names and numerical

designations (Hague and Jackson, 1994; Saunders and Watt,

1979), is intended to reassure prospective customers

Examples are provided in Table IV

H2 UK tractor buyers are not brand loyal

The literature concerning the influence of brand loyalty on

purchase decisions in industrial markets is somewhat

inconclusive For example, for some products brand loyalty

is weaker today due to economic pressures, but for others the

opposite is true as buyers place greater reliance and trust in

suppliers as a means of reducing risk or maintaining trade-invalue (Aaker, 1991) In addressing H2, this study attempted

to establish the role of brand loyalty in relation to tractorpurchase

With the exception of those respondents owning MasseyFerguson tractors, the tractor owners all award the highestutility scores to the brand that they own (Figure 5), whichsuggests that tractor owners are very brand loyal Theanomaly concerning Massey Ferguson could be explained by

a number of factors First, there have been problems with thereliability of Massey Ferguson tractors, which might causetheir owners to rate them low Secondly, negative publicitysurrounding the closure of the AGCO manufacturing plantwhere Massey Ferguson tractors are made might cause asimilar effect Last, the fact that Massey Ferguson tractorswere market leaders in the 1990s means that there are stilllarge numbers on farms despite farmers having bought othertypes of tractor more recently As such, respondents to thesurvey might be classified as Massey Ferguson owners eventhough they would have scored the brand bought morerecently better than the Massey Ferguson tractor

Figure 5 Brand utility by brand ownership

Table IV Selected UK four-wheel drive tractor prices

Brand Model Horse power List price (£)

Valtra Mezzo 6300X 90 29,500

Source: Market Guide (2002)

Interestingly, the two brands with the highest utility ratings

from their owner groups were John Deere and Valtra These

are the two brands that achieved the highest rebuy scores in

the 2001 “Top Agrar” survey (Vale, 2002), which adds

further support for the contention that tractor buyers are

brand loyal, and that H2 therefore must be rejected

The findings of this study concur with previous studies that

concluded that brand loyalty is an important factor

influencing tractor buying (Foxall, 1979; Kool, 1994)

Indeed, when the findings are related to the customer

loyalty ladder (Christopher et al., 1991), John Deere would

appear to have buyers who are “committed” to the brand

while all the other brands seem to fall within the top three

bands and command some degree of loyalty However, there

would also appear to be evidence to suggest that some buyers

are also more sensitive to price and do not demonstrate

particularly strong brand loyalty

H3 The major tractor brands available in the UK are

perceived in a relatively similar way

The brand utility values shown in Figure 4 clearly indicate

differences in the perceived importance of the various brand

names John Deere has a strong positive value while, at the

other extreme, Valtra has a substantial negative value It is

interesting to note that the ranking of the brand names in this

study matches the ranking of the same brands according to

UK market share (Table I) It would appear, therefore, that

the John Deere brand represents a valuable marketing asset

while the Valtra brand name is something of a marketing

liability

The literature provides several suggestions as to why buyers

might attach substantially different utility values to each of the

brands These explanations range from those that are

firm-specific (Hague and Jackson, 1994; Michell et al., 2001;

Shipley and Howard, 1993; Vandenbosch and Weinberg,

1997) through to more general explanations of buying

behaviour relating to branded products (Mudambi et al.,

1997)

John Deere is marketed in the UK as a quality brand The

John Deere product range is promoted extensively in the

literature on the basis of superior reliability, and this is used to

justify a policy of premium pricing Indeed, the high UK

market share held by the brand would suggest that buyers are

prepared to pay for the quality of John Deere products

(Hague and Jackson, 1994; Michell et al., 2001; Shipley and

Howard, 1993; Vandenbosch and Weinberg, 1997)

Another explanation for the John Deere brand attracting

the highest utility score may be due to its position in the

market That is, some industrial buyers feel that they gain

prestige or status by buying from a market leader and that

large size and market share can inspire confidence in buyers

(Mudambi et al., 1997)

Confidence in a brand is generated in part by its history and

in particular its longevity and continuity (Hague and Jackson,

1994) In the case of John Deere there has been very little

change associated with the firm and the brand for the last 20

years However, this is not the case with the other four brands,

which have undergone quite considerable change Massey

Ferguson was taken over by AGCO in 1994, Ford was taken

over by New Holland and Fiat, and has now merged with

Case IH, while Valtra has undergone a “bewildering” (Profi

International, 2001) series of name changes during the same

period As previously stated, brand name serves to provide

customers with trust and confidence, and this industry wouldappear to be a good example of the benefits of ensuringconsistency of brand name

It would seem, therefore, that the image held by the buyers

of the brand will undoubtedly impact upon their choice(Aaker, 1991), and that the results of our study support theproposition that brand names are used to differentiate similarproducts (Sullivan, 1998) It would seem logical, therefore, toreject H3

Managerial implications

The study found that brand name is important in the choice

of tractor, tractor buyers are brand loyal, and that the majorbrands of tractor available in the UK are not perceived in asimilar way because of the brand component These findingshave important implications for the manufacturers anddistributors of tractors in the UK In the first instance, thefact that brand image does influence the purchase of tractorsmeans that manufacturers and distributors need to maintain astrong image in the mind of the customer Takeovers andmergers appear to alter and weaken brand image

While for some customers price is the most importantpurchase factor, for most it is not, so manufacturers anddistributors may be able to exploit this finding via higherprices particularly given the wide range of prices charged forthe various products (see Table IV) Indeed, the extra revenuemight be used to reinforce the brand image

Brand loyalty is strong amongst tractor buyers Priorexperience of a product through ownership can be criticalwhen a product is being considered for purchase.Manufacturers and distributors are therefore advised tomarket their current offerings to existing customers anddevelop marketing strategies that will give potential newcustomers experience of their product offerings One example

of an experiential type marketing strategy are the on-farmdemonstrations that some manufacturers and dealers alreadyundertake

While brand image, price, and brand loyalty play the keyroles in many tractor purchase decisions manufacturers anddistributors should note that dealers may act as importantintervening factors Both the location of the dealership andthe quality of the service provided can enter into a customer’spurchase decision and serve as important influencing factors.Lastly, while these results apply to the purchase ofagricultural tractors, it would appear reasonable to assumethat this case is reasonably representative of industrial markets

in general and that the findings may be applied on a moregeneral basis As such, it would appear possible to concludethat branding can play an important role in industrialpurchase decisions

Research limitations and future research

As in most research, this study has certain limitations thatimpact our interpretation of the results, while at the sametime suggesting directions for future research Theselimitations must therefore be considered First, the scope ofthe study is limited to the UK tractor market While the studydoes provide an insight into the role of branding in anindustrial purchase situation, further research is required inother product categories before the findings can begeneralised Second, the profile of the survey respondents is

The importance of brand in the industrial purchase decision

Keith Walley et al.

Journal of Business & Industrial Marketing Volume 22 · Number 6 · 2007 · 383 – 393

mostly similar to that of the general population, except that

farm sizes of 51-100 ha and 101 þ ha are over-represented in

the study, while beef and sheep farms are under-represented

The discrepancy concerning farm size is probably explained

by a trend for large farms to own tractors with smaller farms

contracting-in tractors when required, and a tendency for

non-owners not to reply to the survey That difference

between the sample and general population could impact the

generalisability of the study’s findings Future research should

investigate this issue

The limitations mentioned above should be kept in mind

when considering our results Despite the limitations,

however, we believe that we have made a step toward

understanding branding in the industrial purchase decision

References

Aaker, D.A (1991), Managing Brand Equity: Capitalising on

the Value of a Brand Name, The Free Press, New York, NY

Aaker, D.A (1996), Building Strong Brands, The Free Press,

New York, NY

Aaker, D and Joachimsthaler, E (2000), Brand Leadership,

The Free Press, New York, NY

Agricultural Engineers Association (2002), “Economics News

Sheet”, Agricultural Engineers Association, Peterborough,

15 February

American Marketing Association (1992), Conjoint Analysis: A

Guide for Designing and Interpreting Conjoint Studies,

American Marketing Association, Chicago, IL

Anderson, J.C and Narus, J.A (1999), Business Marketing

Management: Understanding, Creating and Delivering Value,

Prentice Hall, Englewood Cliffs, NJ

Auty, S (1995), “Using conjoint analysis in industrial

marketing: the role of judgement”, Industrial Marketing

Management, Vol 24 No 3, pp 191-206

Bendixen, M., Bukasa, K.A and Abratt, R (2004), “Brand

equity in the business-to-business market”, Industrial

Marketing Management, Vol 33 No 5, pp 371-80

Beverland, M.B (2005), “Creating value for channel

partners: the Cervena case”, Journal of Business &

Industrial Marketing, Vol 20 No 3, pp 127-35

Beverland, M.B., Lindgreen, A and Napoli, J (2007),

“Guest editorial: introduction to the Special Issue on

branding in industrial markets”, Journal of Business &

Industrial Marketing, Vol 22 No 6, pp 355-6

Beverland, M.B., Napoli, J and Lindgreen, A (2006),

“Industrial global branding: a capabilities view”, Industrial

Marketing Management

Blomba¨ck, A and Axelsson, B (2006), “The role of

corporate brand image in the selection of new

subcontractors”, Journal of Business & Industrial

Marketing, Vol 22 No 6, pp 418-30

Bourlakis, M.A and Weightman, P.W.H (Eds) (2004), Food

Supply Chain Management, Blackwell, Oxford

Bowditch, A., Gurrieri, G and Henry, B (2003), “The use of

combined conjoint approaches to improve market share

predictions”, International Journal of Market Research,

Vol 45 No 3, pp 389-404

Brodie, R.J., Glynn, M.S and Van Durme, J (2002),

“Towards a theory of marketplace equity: integrating

branding and relationship thinking with financial

thinking”, Marketing Theory, Vol 2 No 1, pp 5-28

Chisnall, P.M (1997), Marketing Research, 5th ed., Hill, Maidenhead

McGraw-Christopher, M., Payne, A and Ballantyne, D (1991),Relationship Marketing, Butterworth-Heinemann, Oxford.Currie, E (2001), “McCormick name is relaunched asagreement with Case IH means CX and MX-C are to bebuilt at Doncaster”, Tractor and Farm Machinery Trader,

No 217, p 8

De Chernatony, L and Dall’Olmo Riley, F (1998), “Defining

a ‘brand’: beyond the literature with experts’interpretations”, Journal of Marketing Management, Vol 14

No 5, pp 417-43

De Chernatony, L and McDonald, M (1998), CreatingPowerful Brands in Consumer, Service and Industrial Markets,Butterworth-Heinemann, Oxford

Department for Environment, Food and Rural Affairs (2002),

“Economics and statistics”, available at: www.defra.gov/esg/econfrm.htm (accessed 11 March 2002)

Department for Environment, Food and Rural Affairs (2003),

“Agricultural census data: results”, available at: www.defra.gov.uk/cs/farmstats_data/DATA/nuts_data/

nuts_query_results.asp (accessed 4 August 2003)

Dibb, S., Simkin, L., Pride, W.M and Ferrell, O.C (2001),Marketing: Concepts and Strategies, 4th ed., HoughtonMifflin, Boston, MA

Doyle, P (1998), Marketing Management and Strategy, 2nded., Prentice-Hall, Harlow

Eastham, J.F., Sharples, L and Ball, S (Eds) (2001), FoodSupply Chain Management, Butterworth-Heinemann,Oxford

Foxall, G.R (1979), “Farmers’ tractor purchase decisions: astudy of interpersonal communication in industrial buyingbehaviour”, European Journal of Marketing, Vol 13 No 8,

pp 299-308

Glynn, M.S., Motion, J and Brodie, R.J (2007), “Sources ofbrand benefits in manufacturer-reseller B2B relationships”,Journal of Business & Industrial Marketing, Vol 22 No 6,

pp 400-9

Gordon, G.L., Calantone, R.J and di Benedetto, C.A.(1993), “Brand equity in the business-to-business sector”,Journal of Product & Brand Management, Vol 2 No 3,

pp 4-16

Green, P.E and Rao, V.R (1971), “Conjoint measurementfor quantifying judgemental data”, Journal of MarketingResearch, Vol 8 No 3, pp 355-63

Green, P.E and Srinivasan, V (1978), “Conjoint analysis inconsumer research: issues and outloook”, Journal ofConsumer Research, Vol 5 No 2, pp 103-23

Green, P.E and Wind, Y (1975), “New way to measureconsumers’ judgements”, Harvard Business Review, Vol 53

John Deere (2002), “Company information”, available at:

www.deere.com/deerecom/uk/About þ Us/default.htm

(accessed 22 February 2002)