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Brands in business markets

Brands are often thought to be the preserve of consumer markets, but even for commodity products where products are apparently purchased on price, brands have an important place in business marketing.

In business markets, purchasers are often buying the quality of supply, rather than just the product itself, and often pass on the quality of component brands as evidence of quality to their own customers. Establishing a brand, and reputation for quality of delivery, are essentials part of successful business to business marketing.

Brand thinking is often focused on consumer and FMCG (fast moving consumer goods) markets. Business markets, so the theory went, are based on rational purchasing focusing on functional benefits and technical specifications. Brands were not seen as important in business contexts.

However, when a company is signing a large contract with a supplier, it has to take it on trust that the supplier can deliver on its promises, it has to believe that the supplier will be someone you can work with, it has to believe that the supplier will be able to provide service and support in the event of problems.

The purchase focus moves beyond raw price to the overall quality of supply which is crucial in supply chain purchasing - can you deliver on-time, in-full, and cope with issues of delivery flexibly, with good cheer. And at an individual level, no purchaser wants to find they have made the wrong decision about a supplier on a large contract, no-one wants to buy from someone who does not deliver. As IBM salesmen used to say in the 70s "No one ever got fired for buying IBM".

Consequently brands can be, and are used very successfully in business markets. They offer both the opportunity for reassurance about quality of supply and simplify complex technical decision making.

Secondly, brands in business markets can be used to enhance the prestige and visibility of the purchaser to their customers. Quality parts enhancing perceptions of a quality supplier.

Famous examples of these component brands that reach through the supply chain, are Intel and Du Pont (Lycra and Corian), but there are many other examples such as Shimano on bicycle gears, Dolby on sound systems or Nutrasweet in food, or Bosch engine parts for instance.

Component brands offer opportunities to manufacturers to reinforce the quality of the finished product to their customer's customer, while also provide leverage for the component manufacturer to support higher margins.

Thus B2B brands can have a dual role - as a point of reassurance and reputation for purchasers, and as a signal of quality to end users at the end of the supply chain.

This dual role requires creating the right brand experience supplier-to-supplier, while also developing communication to customers further down the supply-chain who might not be actual direct purchasers. Although, in some sectors, component branding can also have a secondary effect of building an aftermarket for parts and service.

Whereas in consumer markets brands are often reinforced through advertising, branding in B2B markets often involves a businesses staking out an area of expertise, not just supply, showing knowledge and skill through industry leadership, trying to become 'the first place you call'.

Branding based on leadership can be enhanced with partnership branding where two separate companies use the combined strengths of their brands to allow them to enter or control a particular market segment. For example Intel and Microsoft for computers where the combination of brands is stronger and more effective than individual brands.

Consequently, in practical terms, brands in business markets go beyond simple reassurance about reliability or supply and as with consumer markets, rely on understanding what the customer values, and how customers perceive and value the brands and businesses that they deal with.

In all these cases, planning a brand strategy, including the level of investment needed, means of reaching the right market and then monitoring, protecting and building value through the brand require careful attention to customers and the delivery of service.