To Whom is Branding Important in B2B Markets?

Business-to-business marketers are increasingly asking if branding is important, and if so, to whom. The short answer is that branding is not important to every business customer. My research on industrial branding has shown that some buyers are more receptive to branding than are others. Even if only some of your customers care about brands, then it is worthwhile to try to understand the role branding plays in business markets.

My research has identified three firm segments: branding receptive, highly tangible, and low interest. The “branding receptive” segment accounted for 30 to 40% of business customers. Branding receptive firms rated certain aspects more highly than did other firms, such as how well known is the manufacturer/service provider, the general reputation of the manufacturer/service provider, and brand purchase loyalty. Branding receptive firms also placed higher importance on service quality and the nature of the working relationship.

In contrast, the "highly tangible" segment accounted for 40 to 50% of business customers. These buyers rated aspects such as price and physical properties of the product more highly than did other buyers. The remaining 10 to 20% of business customers can be described as “low interest." These folks are not that interested in branding attributes, but they are not greatly interested in price and quality either. They just need to get the order placed, and this purchase is not an important decision to them.

My findings are based on in-depth research in product areas such as bearings and circuit breakers. More broadly, interviews across many industries also appear to support the existence of these three clusters of buyers. In a given market, there is often a group of buyers who focuses on price and physical specifications, a group who seems open to branding and intangible aspects, and a group who is simply not interested in thinking about the purchase decision much. Can you identify these three customer clusters in your own marketplace?

Branding importance has been shown to be helpful in dividing customers into three segments, yet most businesses segment their customers in traditional ways, such as by type of industry or by size of purchases. Interestingly, the research has found that you cannot predict how branding receptive customers are by looking at their line of business, or by how much they buy.

So, how then can you describe who is receptive to branding? Sometimes branding receptive buyers seem like a moving target. A buyer may be “branding receptive” one day and “low interest” the next. To get a better handle on branding importance, one must describe the buyer, the purchase situation, and the buying process. Branding receptive buyers are generally sophisticated, highly knowledgeable, well-educated, and accustomed to high-volume purchases. A branding receptive purchase is often risky and highly important to the firm. A branding receptive purchase process is very thorough, but conducted in an open-minded way, with consideration of a range of options.

It is certainly true that branding is not important to everyone, or in every situation. It is also true that branding matters to some of your most important customers. The lack of a clear industrial branding strategy sends a message that your products are no better than anyone else's. This leaves price as the only thing to talk about (and that should be a scary thought). Instead, managers need a strategy to build and deliver ongoing value to customers, with the goal of providing customers with a continuing reason to do business with them.