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B2B branding project B2B branding project Document Transcript

  • XLRI SCHOOL OF BUSINESS AND HUMAN RESOURCESBRAND MANAGEMENT FOR B2B BRANDS – CORPORATE BRANDS A STUDY SUBMITTED TO PROF. Sharad Sarin B2B marketing BY GROUP # 6 Amit Kumar (G10006) Bharat Parikh (G10014) Hussein H Rassiwalla (G10020) Nikunj Verma (G10033) Vikash Chandra (G10059) JAMSHEDPUR, JHARKHAND 26 JANUARY 2011
  • Table of ContentsI. Overview ............................................................................................................................................... 3II. Marketing Communication for B2B ...................................................................................................... 3III. Recent Trends in Brand Management .............................................................................................. 4i. Mergers and Acquisitions (M&A) .......................................................................................................... 4ii. Use of Internet technology ................................................................................................................... 6a. Company Websites ................................................................................ Error! Bookmark not defined.b. Social Media .......................................................................................................................................... 6c. eMarketplace ......................................................................................... Error! Bookmark not defined.IV. Case Studies from Indian Context ..................................................................................................... 6i. MindTree ............................................................................................................................................... 6ii. MRF Tyres ............................................................................................................................................. 9V. Bibliography ........................................................................................................................................ 12 2
  • I. OverviewWhile a lot of B2C companies put considerable effort in building a brand very little attention hasbeen paid by managers of B2B companies towards creating a brand. Many managers areconvinced that it is a phenomenon confined only to consumer products and markets. Theirjustification often relies on the fact that they are in a commodity business or specialty marketand that customers naturally know a great deal about their products as well as theircompetitors’ products (Kotler and Pfoertsch 2007). According to a research carried out byChartered Institute of Marketing there is a lack of framework of best practice in industry and alack of explicit brand management.According to Sweeney (2002) some of the advantages provided by a brand in business contextare:  Brands build trust  Brands add value, even in commodity markets, enabling companies to command a premium price and to avoid getting into a price war situation  Brands build loyalty by creating stronger customer relationships and reducing customer acquisition expenseMoreover with similar production technologies being available to all players and entry barriersfor newer entrants falling the products and services are getting commoditized. Hence, creatingstronger brands has become imperative for companies to differentiate themselves and to cutthe clutter.Sweeney (2002) lists four important stages at which brands can influence the buying centerdecision in a business to business scenario:  Decision on tender list  Preliminary shortlisting for negotiation  Decision to purchase  Decision on supply and support servicesGiven the influence of brands on buying center it becomes important to understand howbrands are managed in a B2B situation. The rest of this document is aimed at providing anunderstanding of the B2B marketing communication, recent trends and advancements in thefield of B2B brand management and providing a couple of examples from Indian context.II. Marketing Communication for B2BB2B non-personal methods of communication, including advertising, catalogues, the internet,the trade shows, have a unique and often crucial role in the communication purpose.Advertising and sales promotion are rarely used alone in the business to business setting butare intertwined with the total communication strategy-particularly personal selling. Personal 3
  • and non-personal forms of communication interact to inform key buying influencers. Thechallenge for the business marketer is to create an advertising and sales promotion strategythat effectively blends with personal selling in order to meet sales and profit objectives. Theadvertising, online media and sales promotion tools must be integrated to achieve desiredresults.In a B2B scenario it is very difficult to measure direct sales increase in terms ofRs./Advertisement budget. Advertising goals can be measured in terms of brand awareness,recognition and buyers enquiry. It can be presumed achieving them stimulates sales volume forB2B marketers.Advertising media is selected on the basis of their circulation. The internet provides a powerfulmedium to communicate with target customers. Communicating the customers need is notonly relevant to but a necessity in B2B scenario. This is highlighted in following example:Caterpillar is a leading machine manufacturer of earth moving equipment. This space iscrowded by many heavy machinery factories like Komatsu, Hitachi, Volvo, New Holland,Caterpillar, etc. All of these manufacturers produce qualified products. But, Caterpillar leads thesales. Its products are used everywhere in the world. The customer might use the machinery injungle or in the middle of the sea. Caterpillar knows and understands this unique need of thecustomer. The company communicates the assurance of spare part availability at hard to reachplaces through following tagline: “48 Hours Part Service Anywhere in the world or CaterpillarPays”. This assurance of spare part availability has instilled great confidence into its customersand differentiated Caterpillar’s offerings from its competitors.III. Recent Trends in Brand Managementi. Mergers and Acquisitions (M&A)Hsiang-Ming Lee, Ching- Chi Lee and Cou-Chen Wu have examined the effect of M&A on brandimages and brand equities of the merging companies. The study focused on M&A cases wherethe acquirer-dominant is affiliated to a weak brand image and the acquired one has a strongerbrand image. The result of the research study indicates that greater the perceived differencesbetween acquirers and acquired brands, the more the brand equity of the acquirer willincrease. In addition, all the dimensions of brand equity for the brand with a superior imagedecrease significantly.The study cites example of Tata Motors Limited from India acquiring Jaguar Cars Limited andLand Rover in 2008. This acquisition by Tata Motors was not only aimed at entering luxury carsegment but also was a strategic move to create a global brand presence and further enhanceits brand image in India. 4
  • The total number of M&A deals executed in India between the months of January to May inyear 2007 was 287. There was a monetary transaction of US $47.37 billion involved in thesedeals. Out of the 287 M&A deals, there have been 102 cross country deals with a total valuationof US $28.19 billion. Apart from the acquisition done by Tata Motors some of the otherprominent deals witnessed are Hindalco acquiring Canada based Novelis, Dr. Reddy’s Labsacquiring Betapharm, Ranbaxy Labs acquiring Terapia SA, Bharti Airtel acquiring Zain Africa etc.M&A is an inorganic growth strategy adopted by many organizations to increase their capacityand competitiveness. According to Schweizer (2005) M&A can enable the acquiring company toobtain:  Complementary technologies of the acquired company  New products  Distribution channels of the acquired company  Desirable market positionsIn addition to reaping above mentioned benefits an organization can strategically acquire acompany which can provide brand extension to the acquirer and provide following benefitsrelated to branding:  Provide a readymade brand in an established market thus reducing the “time-to- market” for acquirer  Provides a better understanding of the target market in terms of brand preference and buying behavior  Can act as an entry point in a market which is outside acquirer’s country (cases of cross country M&A)  Boosts the brand image of the existing brands that are present in acquirer’s portfolio  Provides an opportunity for rationalization of brand portfolioWith M&A providing these branding related benefits in addition to the other strategic benefitsit remains a preferred alternative for B2B companies to manager their brands. 5
  • ii. Use of Internet technology a. Social Media b. eMarketingIV. Case Studies from Indian Contexti. MindTree Amongst Indian IT companies that are taking their growth forward without yielding to the financial pressure faced from all corners MindTree Consulting is leading the pack. MindTree is a medium sized company and has shown tremendous growth in the IT space. Even though it started in 1999, it went public in just 7 years (2006), all due to its growth strategies. Its focus has been on reducing costs and improving operational efficiency, with an eye toward staying lean and in shape to be able to compete effectively. It was always conscious about its positioning and MindTree brand through the years has been as the “best mid-size company out of India.” As per MindTree’s management Brand is a very emotional topic. Most of its top management has essentially been with the Company since day one (August 1999). This is not an exaggeration: not only are all 10 co-founders still with MindTree, but of the first 150 people to join, they’ve lost only 2 or 3 “MindTree Minds”. The stability they’ve had makes the brand discussions very personal. MindTree’s Visual Identity: The Logo There is one thing that strikes a common chord with all the employees. And that is MindTree’s commitment to social responsibility. The depiction of MindTree’s DNA begins from the company’s logo. MindTrees logo was created by a student, Chetan K.S., who has cerebral palsy. The visual identity for MindTree and its facility is replete with digitally expanded drawings of the students of the Spastic Society of Karnataka’s School with which MindTree has a longstanding relationship. In the logo the red stands for action. The bright yellow bubbles represent joy something which is followed in its true spirit. The decisive skyward, blue brush stroke is Chetans way of communicating imagination. No wonder, MindTree minds promote the tradition of being 6
  • socially sensitive and nurture values.For strong brands Customer’s experience and internal alignment is very importantIn today’s context Branding is more about making a promise and creating a culture within theorganization that allows a fulfillment of this promise fostered. Branding can therefore beviewed as an experience of the customer and other key stakeholders. People branding orinternal branding initiatives are especially relevant to knowledge based industries such as ITand BPO as people are the brand ambassadors with the maximum influence on how thebrand is perceived. This is one idea which MindTree adopted from its initial days.For a branding strategy to be successful, MindTree realized that it is imperative that itsemployee management be well-aligned with the company’s overall business objective. TheMission, Vision and Values that shows the direction in which a company should move forwardalso has this philosophy imbibed. It reads “We will deliver business enabling softwaresolutions, by creating partnership with our customers, in a joyous environment for ourpeople”, a mission that places people (employees) at a strategic position in the organization.At MindTree branding starts from within: People PracticesA company that has successfully built a brand from “within” is MindTree Consulting. Knownfor its people friendly processes, MindTree was ranked among the top employers for (twoconsecutive years, 2003, 2004.) Not surprising, MindTree likes to address its employees asMindTree Minds. At the core of the People Practices at MindTree are its Values & DNA. Thevalues of Caring, Learning, Achieving, Sharing and Social Responsibility (CLASS) were craftedby the employees of MindTree.Since employees are a critical part of this “customer experience”, it is imperative that theyhelp reinforce the brand at every point of interaction. To make this possible the company hasto make the employees buy-in to the promise to deliver. So, how did MindTree achieveemployee buy-in? Surprisingly, it is the same set of HR processes that help employees buy-in.The difference, however, lies in the implementation. The HR practices, in all possible ways,communicate what the company stands for, i.e. its promises and how valuable the employeesare for the company. The take away from MindTree’s experience is that success comes fromtaking care of the fundamentals, taking care of the details and adopting a holistic approach toa situation.Brand with a Conscience 7
  • MindTree is committed to the pursuit of better living for people with disabilities andenhancement in the quality of primary education. Working on the leading edge of technologyinnovation, MindTree firmly believes it can add significant value through assistivetechnologies in achieving these goals. MindTree Foundation provides the platform tochannelize these initiatives. The core mission of this non-profit organization is to ‘Supportprimary education and the cause of differently-abled people by leveraging MindTree’sleadership, values, and resources’.MindTree Foundation’s charter supports 3 broad initiatives:a. People with disabilities (with specific focus on Assistive Technologies)MindTree support the development and dissemination of assistive technologies to addressthe needs of people with different types of disabilities – muscular, visual, hearing and learningdisabilities. The initiative was launched with an engagement with Spastics Society ofKarnataka (SSK). The foundation will also work closely with educational institutions like IITs,identify promising technologies available in their labs and help bring these technologies to themarket by leveraging MindTree’s engineering capabilities and partner ecosystem.b. Primary EducationBy focusing on primary education, MindTree believes that a higher impact can be achieved inbuilding a better foundation for future. The charter provides a formal platform to executesuch an initiative. The company has been supporting schools for their infrastructure,curriculum development, and employment of additional teaching staff and training ofteachers.c. MindshareMindshare is an initiative across MindTree’s global footprint. Wherever they are on the map,this initiative helps them identify specific areas where MindTree Minds can contribute to thesociety. Each location is anchored by a Catalyst who will identify and connect MindTree Mindsto volunteer with social sector organizations. The significant aspect of this program is that thiswill ensure each MindTree Mind who volunteers for this program personally interacts withthe beneficiary. The objective is to share time, attention, and affection with these people tomake them feel special.Managing Brand starts with Managing BusinessFor a brand to really resonate with its customers apart from strong branding it’s veryimportant to live up to the expectation that a strong Brand brings. This can’t be done better 8
  • than by delivering on promises on business front and exceeding expectations of your customers. MindTree Consulting is an international IT-consulting company that delivers affordable business and technology solutions through global software development. It designs enterprise applications, using a world-class methodology, for business-to-business and business-to-consumer applications. These applications are built to leverage emerging and classic communication channels. It is into defining business needs to building an e-solution using best-of-breed tools and technologies It truly lives up to its tagline: “Deliver business-enabling solutions and technologies by creating partnership with our customers in a joyous environment for our people”ii. MRF Tyres MRF (Madras Rubber Factory) is the market leader among tyre manufacturers in India, with a 24% share terms of revenues. Its leadership position, coupled with its strong brand recall and high quality, MRF commands the price-maker status. MRF has a strong presence in the T&B segment, the largest segment of the tyre industry, and commands around 19% market share in the segment. It is the leader in the two/ three-wheeler segment and tractor front tyres, and holds second place in the passenger cars and tractor - rear tyres. Exports account for around 12% of the gross sales in MRF. Products MRF is the leading manufacturer of tyres for almost all segments. Being driven by technology and product innovation, every tyre that comes out is of the highest standards and tested to weather the toughest conditions on any road. With more than 85 tyre variants, MRF holds the highest market share of 22% in terms of sales volume in the tyre industry. Apart from tyre manufacturing tyres, MRF also manufactures its MUSCLEFLEX brand of Conveyor Belting at one of the most advanced, State of the Art, Facilities in India. Incorporating the latest manufacturing techniques, MUSCLEFLEX-Conveyor Belting has gained rapid acceptance in markets worldwide. MRF PRETREADS is yet another innovation from MRF Industries which is the most advanced pre-cured retreading system in India. MRF forayed into retreading as far back as 1970. Today, MRF has perfected the art of recurred retreading with its extensive knowledge in tyres and rubber. MRF’s diverse business interests also include Paint and Coats, and Toys. 9
  • Brand recognition and brand recallWhen it comes to top-of-mind brand recall, MRFbeats the rest of the competition hands down.Unlike Bridgestone India, MRF has for longconcentrated on aggressive brand promotion.Sports celebrities and event endorsements havebeen a major vehicle for their brand promotionactivities. From signing on three sportsheavyweights at one go (Sachin Tendulkar, BrianLara, and Steve Waugh), to endorsing nationalrally circuits, to founding the MRF pacefoundation, MRF has been at the forefront ofaggressive brand building, one reason why MRFcommands more brand recognition thanBridgestone India, despite the latter’s superiorquality and international credentials.The MRF mascot, the MRF muscleman, clearly states the category membership MRFsubscribes to. MRF communicates to the customer its superior endurance and strength. The company sponsors a number of sports such as cricket and rally racing, to position its tyres as high endurance and sporty. Its slogan “Tyres we race, are the tyres you buy” stands testimony to their category membership 10
  • MRF: The Advertising WayMRF uses advertising as the primary medium to reach out to its customers. The companyinvests heavily on print, TV and outdoor media, to drive its brand into the minds of thecustomer. MRF is credit with devising some of the most creative ads ever made for an Indiantyre company. It allots a huge budget outlay for advertisements and other promotionalactivities. Its mascot, the MRF muscleman along with its slogan “Tyres with muscle” was onceone of the most recognizable advertising campaigns in Indian advertising history. It wasspecially devised at Lintas by its CEO, Alyque Padamsee himself. Allyque and his teampainstakingly surveyed scores of truck drivers at road side dhabas to understand their needsand wants.MRF takes care to promote its tyres as tough, reliable and high endurance. This is because itsmain share of customers comes from the Light and Heavy Commercial vehicles segment.Truck and bus owners in this segment consider strength and endurance as the No.1 factordesirable in a tyre. For the passenger and two-wheeler segment, MRF promotes itself as ahigh quality and high performance tyre manufacturer. MRF is also well known for founding the MRF Pace Foundation, which is today one of the premier training institute for India’s budding pace bowlers. Though cricket, given its cult like status, gave MRF a lot of publicity, it was its sponsorship of auto-racing projected its slogan, “Tyres with Muscle” and outlined the quality of its tyres and allied products. 11
  • J.D. Power Asia Pacific 2011 India Original Equipment Tire Customer Satisfaction Index (TCSI) Study SM has revealed MRF to be the most satisfying OEM tire company in the country. The study, now in its eleventh year, measures satisfaction among original equipment tire owners during the first 12 to 24 months of ownership. The study measures overall satisfaction by examining four factors (listed in the order of importance): appearance, durability, traction/handling, and ride. Overall satisfaction in 2011 averages 822 on a 1,000- point scale, an improvement of 24 points compared with 2010. MRF has improved by 23 points from 2010 by achieving a score of 833 & performing well in the appearance factor. Apollo follows MRF in the rankings with a score of 830.V. BibliographyPublished ResourcesKotler, Philip and Pfoertsch, Waldemar (2007), “Being known or being one of many”, Journal of Business& Industrial Marketing, Vol. 22 No. 6, pp. 357-362.Lee, Hsiang-Ming; Lee, Ching-Chi and Wu, Cou-Chen (2011), “Brand Image Strategy Affects Brand Equityafter M&A”, European Journal of Marketing, Vol. 45, Issue 7/8.Schweizer, L. (2005), “Organization integration of acquired biotechnology companies intopharmaceutical companies: The need for a hybrid approach”, Academy of Management Journal, Vol.48No.6, pp.1051-1074.Sweeney, Brian (2002), “B2B brand management”, Brand Strategy, September IssueWWW Resources 12
  • http://www.economywatch.com/mergers-acquisitions/india.htmlhttp://www.mindtree.com/about-us/mindtree/about-mindtreehttp://www.mindtree.com/blogs/the-true-%E2%80%9Cbrand%E2%80%9D-of-a-companyhttp://www.mindtreefoundation.org/Pages/Home.aspxhttp://www.karmayog.org/csr2010/csrall/csrdetails.aspx?id=459http://www.thehindubusinessline.com/companies/article1487056.ece 13