The power of the Corporate brand in the B2B market

B2BPhilip Kotler claims in his book “B2B Brand Management” that B2Bfirms tend to underestimate the power of the company’s name and image and therefore underinvest in their brand.

It is common in the business-to-business world for firms to think that brands are a very important competitive factor in the consumer market but less crucial in their own market. There is a general trend to dismiss brand loyalty as an emotional facet of consumer-product buying decisions and not nearly so decisive in the purchasing of products and services in the B2B world, where buying choices are ostensibly much more rational and objective. Indeed, B2B purchasing decisions are assumed to be based solely on objective data, largely ignoring more subjective factors like the brand of the supplying firm. Is this really true?

Let’s look for a moment at the main features that distinguish the B2B market from the consumer market. Firstly, the market is made up by a much smaller clutch of clients, sometimes boiling down to only a score or so of companies or institutions. This is the case, for example, of GMV, which is world leader in the telecom satellite control center market, comprising a small number of space agencies and satellite operators.  The size of each sales operation is also much greater, sometimes adding up to tens or hundreds of millions of euros. Moreover, the purchasing operation is very unwieldy and ideally governed by purely objective and rational criteria that aim to obtain the best possible price-value ratio. Theoretically, this would be determined solely by playing off technical requirements against the characteristics and performance of products and services, economic terms and conditions, delivery times, service and warranties and the company’s track record and certified references. Another standout feature, finally, would be the forging of long-term relations between supplier and client, mainly held in place by the cost of change for the client.

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In view of these component features we might well indeed conclude that the tendering firm’s corporate brand plays no important part. B2B markets are very complex, however, and the human factor is upfront in all of them. This means the brand is much more influential than might be thought at first sight.

Firstly, getting through to target clients is tricky. Secondly, the portfolio of products and services offered to clients is fiendishly complex not only in terms of characteristics but also the sheer technical diversity of the products and services offered. Finally, the purchasing process itself is time-consuming and unwieldy, involving as it does several people within the client’s set-up, many of whom have to report their decisions to third parties (unlike the end consumer).

Ideally the purchasing process is open to the whole supply on offer and is objective, rational and very technical; in practice, however, the situation is very different. This process is conducted by people subject to all human virtues and failings, so the final process may not be as open and objective as might at first be thought. Decision stakeholders are often very chary of the risk involved in assessing the field: a good bid is not enough. Decision-makers might well eschew good bids from companies with little reputation or recognition, to cover their backs if things go wrong in the future. They might often choose to minimize their personal risk within the organization and would prefer to “make a mistake” with a worse bid from a recognized firm than take the plunge with a better bid from someone barely known. The more complicated is the product or service at stake, the greater is this hedging effect. It should also be borne in mind here that internet has opened up a much wider B2B supply for clients: the whole available supply is just one mouse-click away and brands help clients cherry-pick their way through this glut of information.

In sum we can safely claim that supply-side proliferation, globalization and complexity, time pressures and risk aversion all weigh heavily in the search and assessment phases, cutting down the possibilities of any bids not backed up by brands with instant purchaser recognition.

Just as Kotler says, brands serve exactly the same purpose in B2B markets as in consumer markets. They provide a distinctive sign of the attributes, benefits and values of any bidding firm, cutting down the perceived risk and complexity while simplifying the whole decision-making process. They create a sense of trustworthiness, dependability and predictability in the product or service in question, bringing out its advantages and, above all, endorsing the decision maker.

Author: Miguel Ángel Martínez

Chief Business Development & Marketing Officer


Las opiniones vertidas por el autor son enteramente suyas y no siempre representan la opinión de GMV
The author’s views are entirely his own and may not reflect the views of GMV
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