B2B Brand Management Philip Kotler ´ Waldemar Pfoertsch B2B Brand Management With the Cooperation of Ines Michi With 76 Figures and 7 Tables 12 Philip Kotler S. C. Johnson & Son Distinguished Professor of International Marketing Kellogg School of Business Northwestern University 2001 Sheridan Rd. Evanston, IL 60208, USA p-kotler@kellogg.northwestern.edu Waldemar Pfoertsch Professor International Business Pforzheim University Tiefenbronnerstrasse 65 75175 Pforzheim, Germany waldemar.pfoertsch@pforzheim-university.de ISBN-10 3-540-25360-2 Springer Berlin Heidelberg New York ISBN-13 978-3-540-25360-0 Springer Berlin Heidelberg New York Cataloging-in-Publication Data Library of Congress Control Number: 2006930595 This work is subject to copyright. All rights are reserved, whether the whole or part of the material is concerned, specifically the rights of translation, reprinting, reuse of illus- trations, recitation, broadcasting, reproduction on microfilm or in any other way, and storage in data banks. Duplication of this publication or parts thereof is permitted only under the provisions of the German Copyright Law of September 9, 1965, in its current version, and permission for use must always be obtained from Springer-Verlag. Violations are liable for prosecution under the German Copyright Law. Springer is a part of Springer Science+Business Media springeronline.com ° Springer Berlin ´ Heidelberg 2006 Printed in Germany The use of general descriptive names, registered names, trademarks, etc. in this publica- tion does not imply, even in the absence of a specific statement, that such names are exempt from the relevant protective laws and regulations and therefore free for general use. Hardcover-Design: Erich Kirchner, Heidelberg SPIN 11408604 43/3100-5 4 3 2 1 0 ± Printed on acid-free paper 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 con- sumers, 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 busi- ness world where examples like Enron have resulted in greater con- sumer 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 ex- perience 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 oc- curs 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 cus- tomers, 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 pro- vide 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 com- pany 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 compe- tition 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 man- agement 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 under- stand 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 foun- dation 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 com- plex 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 communica- tion. Microsoft Word reached its limit many times and drove us up [...]... Through Branding Branding Dimensions B2B Branding Decision Branding Pitfalls Time Fig 2 Guiding principle (structure of the book) B2B Branding Decision – First of all, we are going to bombard you with arguments and evidence that clearly highlight the importance and relevance of brands in B2B markets whether you already have brands or if you are looking for guidance with the decision to brand Brands... 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... 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... holistic brand approach, companies can accelerate and increase their overall success Numerous, very successful B2B brands are the “smoking gun” for this theory While some of them tapped into branding rather by accident, the majority made a conscious decision for B2B branding They identified the great potentials that a well-managed B2B brand can offer them at an early stage 16 To Brand or Not to Brand. .. and misconceptions related to B2B branding and branding in general One frequently mentioned branding myth is the assumption that brand is simply a name and a logo Wrong! Branding is much more than just putting a brand name and a logo on a product or service Take one moment and try to think about what brand means to you personally Without a doubt certain products, brand names, logos, maybe even... brand, we chose sales over time as measurement for a company’s success in our Guiding Principle The transition point represents a company’s rise to the challenge of building a B2B brand Summary Branding is just as relevant in B2B as it is in B2C Brands like Microsoft, IBM, Intel, Dell, SAP, Siemens, FedEx, Boeing are vivid examples of the fact that some of the world’s strongest brands do exist in B2B. .. proof that branding efforts in B2B can be successful some business companies would probably never think of creating brands themselves In this chapter we will provide you with some insights into strongly branded B2B companies from various industries Although no company can be successful by imitating the brand management of another business it can gain valuable information and hints for their own brand Important... brand can offer them at an early stage 16 To Brand or Not to Brand Company Success Future Perspective Success Stories Acceleration Through Branding Branding Dimensions B2B Branding Decision Branding Pitfalls Time Fig 3 Guiding principle B2B branding decision Holistic Branding If you are wondering what is meant by the holistic approach that we are advocating in this book, the answer to your question is... work? We don’t think so Is branding relevant to B2B companies? Microsoft, IBM, General Electric, Intel, HP, Cisco Systems, Dell, Oracle, SAP, Siemens, FedEx, Boeing – they are all vivid examples of the fact that some of the world’s strongest brands are B2B brands Although they also operate in B2C segments, their main business operations are concentrated on B2B Then why are so many B2B companies spurning... if the brand is monitored and championed closely by the top management of an organization.17 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, . 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. 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. 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