B2B Brand Management - Philip Kotler PDF

368 Pages·2007·5.06 MB·English

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�� Foreword Brands are an important part of all cultures across the planet, as well as in the business world. Brands help people make decisions, small ones, as well as big ones. They enable you to trust the Bor- deaux you drink, the Mercedes you drive, and the GE Jet Engine that lifts the plane you count on to take you places. Brands are the ideas, perceptions, expectations and beliefs that are in the mind of consumers, your potential customers or any individual who can effect your enterprise. We live in an interconnected world, made more transparent by the proliferation of new communications technologies. Today, a person, a company, a brand, even a nation, is increasingly accessible and exposed to the observation of the citizens of the world. Strong brands go far beyond just creating awareness; they accurately expose the corporate soul and brand promise for all to see. I believe consumer understanding dominates everything in the business world. Today, consumers have greater access and control over the information from which their perceptions about a brand are created. The ideas and impressions we might hope the consumer to have about our brands are subject to the competing ideas, which are available for consumer perception. This is a new age of consumerism, one that has evolved into a higher order of brand relationship and accountability. It is a business world where examples like Enron have resulted in greater consumer mistrust of the information coming from brands and companies. It is a business environment I call ecologism – where a brand, a company or its leaders cannot hide behind inaccurate pre- tenses. The truth about your company will always be discovered. It VI Foreword is simply no longer an option to be silent about exposing what your company values, mission or relevancy is. While there are only local consumers, the accessibility of information, this transparency, makes all brands globally susceptible to scrutiny. The best brands consistently win two crucial moments of truth. The first moment occurs when customers choose, select or sign the contract to buy after having evaluated all other offerings of the competition. The second moment occurs at the customers’ homes, offices or production sites when they use the brand, when they experience it and are satisfied or not satisfied. Brands that consistently win these moments of truth earn a special place in the customers’ minds and hearts. These brands are remembered and the re-buy occurs more readily and more profitably. The value of trust earned between the brand promise and the brand experience realized has always been the simple foundation in any sustainable commercial endeavor. Some industrial brands focus intensely on winning these moments of truth. They do this by being in touch with their clients and customers, and by understanding not only their engineering and appli- cation requirements but also their brand expectations. We have learned that brands like IBM don’t stand only for mainframe com- puter servers or IT software, but for operating a bank or airline 24 hours and 365 days. Apple is more than its technology; it is a brand that continuously thinks differently. P&G goes beyond making eve- ryday household and personal care products, by touching lives, improving life. Nissan shifts things – a person, a life, the world, or simply the way you move through it. It’s no coincidence that many of these brands are thriving after their management has listened to the speeches or lectures of Philip Kotler or Waldemar Pfoertsch. Many have read the books and articles of the authors and come back to their workplaces inspired to apply their management principles. Their passionate belief in marketing and brand management is inspirational and effective. It is helping reinvent how we think about creating and fostering our own B2B brands. Foreword VII This first comprehensive book on B2B brand management will provide even the most experienced business manger with a new way of looking at B2B branding. It provides proven case studies that bring B2B brand management to life. It will provoke the reader to think about a systematic approach to branding, based on facts, rather than personal judgment. Focused branding moves you closer to your customers. Professors Kotler and Pfoertsch encourage us to look for more differentiation without neglecting the competition and they encourage us to get top management attention for the branding decisions on a continuous basis. In short, this is the ultimate book for managers and customers in the B2B2C value chain. Tim Love June 2006 Vice-Chairman Omnicom Group New York, NY, U.S.A. Adel Gelbert Managing Partner BBDO Consulting Munich, Germany Preface Brand building goes far beyond creating awareness of your name and your customers promise. It is a voyage of building a corporate soul and infectiously communicating it inside and outside the company to all your partners, so that your customers truly get what your brand promises. Although one of the authors wrote this statement many years ago, we are all still committed to it. The world around us has changed and is constantly changing – every year, every month, and every day. Technologies/products and services/marketplaces emerge, evolve, and disappear. Along with globalization and hyper competition has come the explosion of choices in almost every area. Busi- ness-to-Consumer (B2C) companies have identified and applied branding and brand management decades ago to adapt to these changes. Many Business-to-Business (B2B) companies still regard such effort as irrelevant for them. Recently though, B2B brand management has been given more and more attention by researchers as well as practitioners all over the world. Following up on this recent development, we offer the following central tenet: Brand management for industrial goods and services represents a unique and effective opportunity for estab- lishing enduring, competitive advantages. Whether you are selling products or services, a strong brand is the most important and sustainable asset your company can have. Your brand strategy should always be the guiding principle behind every decision and every action. This book aims to put B2B brands and branding into their actual context. It describes current thinking and X Preface best practice, draws comparisons and highlights differences to B2C, and ventures thoughts about the future of B2B. Branding is not only about creating fancy names and logos. To equate branding with such superficial cosmetic effort is like judging a book merely by its colorful cover. It is absolutely crucial to understand that there is more to brands than meet the eye. Just take one moment and try to imagine a world without brands. There would be no Porsche, Mercedes-Benz, BMW, Volvo, Chrysler, and no Ford, just a variety of automobiles that are more or less alike. Which would you buy? Which company would you trust? On which attributes would you make your purchasing decision? Such a world would lack much more than just fancy brand names and logos – it would lack one of the most important factors that simplify our life in an increasingly complex environment: Orientation. Brands differenti- ate, reduce risk and complexity, and communicate the benefits and value a product or service can provide. This is just as true in B2B as it is in B2C! Philip Kotler June 2006 Evanston, IL U.S.A. Waldemar Pfoertsch Pforzheim, Germany Acknowledgements Our cumulative experience with marketing, branding and brand management amounts to more than 70 years. Nonetheless, this book wouldn’t have been possible without the help and guidance of various people. When we started work on this book, some people asked us why we wanted to write a book on branding, an area al- ready inundated with many valuable publications. When we clari- fied that our focus would be on business-to-business and not on business-to-customer brand management, a few surprised seconds of silence were followed by a storm of questions. Judging from the nature of these questions, we realized that there was a great need from managers to understand this area in a practical way without reducing the complexity of the subject matter. Our understanding of marketing and branding, acquired through years of research, teaching and listening to people, forms the foundation of this book. Additional reading, and even more research was necessary to come up with a running theme for this book. Thanks to Jim Collins’ most successful book Good to Great – Why Some Companies Make the Leap … and Others Don’t, we got the inspiration to create guiding principles, a step-by-step approach for achieving or maintaining a successful brand management for B2B companies. Creating this book has been a demanding task: the subject is a complex and moving one, drafted in a global environment, researched on three continents: America, Asia, and Europe, and produced in real-time through Internet platforms or constant e-mail communication. Microsoft Word reached its limit many times and drove us up XII Acknowledgements the wall many times – if they are interested, we have some good advice to contribute. We would like to recognize and acknowledge the valuable insights and observations contributed by the following individuals: At the publishing company Springer, Dr. Martina Bihn, Dr. Werner Mueller, Heidelberg, and Paul Manning, New York, who enthusias- tically supported this project from the beginning and helped us to go through the various high and low phases of this project. There are a number of people who have inspired and supported our work; some have even reviewed the manuscript and have provided their commentary to help improve it. We want to thank them wholeheartedly for their valuable time and counsel. They are: David T. Krysiek, Managing Director, The Brandware Group, Inc., Atlanta GA, U.S.A.; Dr. Karsten Kilian from markenlexikon.com, Lauda-Koenigshofen, Germany; and Paul Hague, B2B International Ltd, Manchester, U.K. for unconventionally providing us with valuable information. We are also want to express deep thanks to our colleagues and friends at Kellogg Graduate School of Management: Alice Tybout, Harold T. Martin Professor of Marketing, Chair of the Marketing Department; James C. Anderson, William L. Ford Distinguished Pro- fessor of Marketing and Wholesale Distribution; Mark Satterthwaite, A.C. Buehler Professor in Hospital & Health Services Management, Professor of Strategic Management & Managerial Economics; Ed Zajac, James F. Bere Distinguished Professor of Management & Or- ganizations; Daniel F. Spulber, Elinor Hobbs Distinguished Profes- sor of International Business, Professor of Management Strategy, and Professor of Law at IIT Illinois Institute of Technology; Jay Fisher, Director, Ed Kaplan Entrepreneurial Studies; and M. Zia Hassan, Professor and Dean Emeritus and acting Dean at Stuart Graduate Business School IIT. At UIC: Shari Holmer Lewis, Dean and Director, University of Illinois at Chicago College of Business Administration Office of Executive MBA Program; Joan T. Hladek, Coordinator Executive MBA Program; Doug Milford, Associate Di- rector of Academic Services; John McDonald, Dean of the Liudat Graduate Business School UIC; and Joseph Cherian, Professor Mar- Acknowledgements XIII keting and e-Commerce; Chem Narayana, Lecturer and Professor Marketing University of Iowa (Emeritus). At Pforzheim University: Prof. Dr. Joachim Paul, International Business; Prof. Dr. Konrad Zerr, Marketing; Prof. Dr. Gabriele Naderer, Market Research. We had many fruitful discussions with business leaders, friends and colleagues, some late into the night. In particular, we would like to mention John Park, ex CFO Orbits, now CFO Hewitt Associ- ates Inc., Lincolnshire, Ill.; Scott Bruggerman, Partner, Innovation Center; Michael Kalweit, Principal, EMK Advisory Group, Chicago; Gisela Rehm, BoschSiemens Appliance, Munich; Simon Thun from Noshokaty, Döring & Thun, Berlin; Helmut Krcmar, Professor at the Technical University Munich. Special thank you goes to companies and individuals who provided us with information or wrote the foreword for the first edition, Tim Love, Vice-Chairman from Omnicom Group, New York; Burckhard Schwenker, Chief Executive Officer, Roland Berger Strategy Consult- ants, Hamburg; Adel Gelbert, Managing Partner BBDO Consulting, Munich, and Isabel von Kap-herr; Torsten Oltmanns, Roland Berger Strategy Consultants, one truly B2B Chief Marketing officer (CMO); and Christiane Diekmann. We appreciate the support of the various capacities which provided us insight in their companies for the write-up of the case studies. This includes: William J. Amelio, President and Chief Executive Officer, and Mark McNeilly, Pro- gram Director Branding & Marketing Strategy of Lenovo; Dr. Klaus Kleinfeld, Chief Executive Officer of Siemens and his team; Lanxess CEO, Dr. Axel C. Heitmann; José de J. Alvarado Risoul, Corporate Brand Director, Cemex; Samsung Vice Chairman and CEO, Jong- Yong Yun. The Mexican success story of Cemex wouldn’t have been possible without the valuable insights contributed by Alberto Oliver Murillo. Many thanks also to Gunjan Bhardwaj, who helped to put together the Indian case study about Tata Steel, as well as Oliver Kong, for helping with the Lenovo case. We believe that although far from being perfect, this book makes a meaningful contribution to increasing the knowledge of B2B branding. We hope you share this opinion. Contents Foreword .................................................................................................. V Preface ..................................................................................................... IX Acknowledgements .............................................................................. XI Chapter 1 Being Known or Being One of Many.................................................. 1 Chapter 2 To Brand or Not to Brand..................................................................... 15 2.1 B2B � B2C ................................................................................... 20 2.2 B2B Brand Relevance ................................................................ 34 2.3 Power of the Business Brand ................................................... 50 Chapter 3 B2B Branding Dimensions .................................................................. 65 3.1 Brand Distinction ...................................................................... 73 3.2 Brand Communication ........................................................... 106 3.3 Brand Evaluation..................................................................... 123 3.4 Brand Specialties ..................................................................... 124 Chapter 4 Acceleration Through Branding........................................................ 157 4.1 Brand Planning........................................................................ 160 4.2 Brand Analysis......................................................................... 163 4.3 Brand Strategy ......................................................................... 168 4.4 Brand Building......................................................................... 181 4.5 Brand Audit.............................................................................. 191 XVI Contents Chapter 5 Success Stories of B2B Branding...................................................... 207 5.1 FedEx......................................................................................... 209 5.2 Samsung ................................................................................... 215 5.3 Cemex ....................................................................................... 224 5.4 IBM ............................................................................................ 232 5.5 Siemens..................................................................................... 239 5.6 Lanxess...................................................................................... 246 5.7 Lenovo ...................................................................................... 249 5.8 Tata Steel................................................................................... 261 Chapter 6 Beware of Branding Pitfalls .............................................................. 277 Pitfall No. 1: A Brand Is Something You Own............................ 278 Pitfall No. 2: Brands Take Care of Themselves........................... 280 Pitfall No. 3: Brand Awareness vs. Brand Relevance................. 282 Pitfall No. 4: Don’t Wear Blinders ................................................ 285 Pitfall No. 5: Don’t Let Outsiders Do Your Job........................... 289 Chapter 7 Future Perspective............................................................................... 297 7.1 Corporate Social Responsibility ............................................ 299 7.2 Branding in China ................................................................... 302 7.3 Design and Branding .............................................................. 314 7.4 Lovemarks and Brand Leadership........................................ 321 About the Authors............................................................................... 327 Bibliography......................................................................................... 331 Company and Brand Index................................................................ 343 Subject Index........................................................................................ 351 CHAPTER 1 Being Known or Being One of Many “It is a capital mistake to theorize before one has data. Insensibly one begins to twist facts to suit theories, instead of theories to suit facts.” Sir Arthur Conan Doyle (1859-1930), Sherlock Holmes 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. For these companies their brand represents a strong and enduring asset, 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 commod- ity 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 or high-tech components are chosen through an objective decision-making process that only accounts for the so-called hard facts like features/functionality,

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