Academic Research学术研究连载

走进中国工业品牌管理与竞争的新常态

Entering into the “IB and HB branding management Era”

                               by Dr. Yang XiaoTong

 Edited by Eric and authorized for release

OVERVIEW

In this part of our concluding chapter, we are going to reveal a handful of other key findings filled with widespread know-on implications for the corporate management of brand marketing in a real business world, especially when there exists a significant self-owned ingredient brand playing its role.                         

As our study suggests, equipment-making sector in China is still far from as mature as in advanced countries, especially in terms of how high-end brand is assessed in the right way. Consequenltly, acquiring high-end ingredient brand has been put at center of marketing for various competing host brands. Both previous research (Michael S. M & Donald G. N, 1999, pp271) and our findings here from illustrated analysis show that, ingredient brand can play a very significant part in boosting customer satisfaction and customer loyalty toward host brand in a situation where that host brand is rated only as of average performance. Similarly, customers’ willingness for purchase of host brand is increased. In B2B market, this point proves to be true as well, which makes the rationales from B2B market more widely applicable to other fields.

The final conclusion from our study is, ingredient brand affects perceived host brand quality in a positive way, and self-owned ingredient brand is even more powerful in this regard. Among a number of host brands that are capable of producing identical ingredient branded products, self-owned ingredient brand trust is much more appealing to affect customer satisfaction and customer loyalty. What relevant RBV theories keep us as host brand owners thinking of is, instead of focusing on how competitors come up with alternative products or solutions to increase competitiveness, serious consideration should be given to identifying and taking advantage of key manufacturing resources for better management of ingredient brand marketing, so as to improve all the essential elements associated with host brand, such as brand awareness, perceived quality, brand association and brand loyalty. For the marketing managers who routinely have their internal resources optimized and persist in exploring for more ideal model of brand marketing, a lot of positive difference will be made to them in terms of creating greater customer value and of making assessment of sustained brand advantage.

Another point we would like to make is that, as compared to singular competitions among different host brands, ingredient brand is considerably more beneficial to raise the profile of host brand with improved customer satisfaction and customer loyalty. The trust in self-owned ingredient brand works as a strong signal of quality orientation and makes massive positive impact on the perceived quality of host brand. Coincidentally, this is to some degree identical to what we can draw from previous research on B2C market, showing our findings is more widely applicable than thought before.

6.1.2 New concept developed from our study

Here we come up with a new managerial concept of Host Brand Development Trap.

A major challenge with brand research in B2B market came from the complicated process of data collection, which is quite difficult in practice to carry out. Currently, the only way we can make a generalized inference of the prospect for host brand to develop is to analyze how well ingredient brand resources is utilized and how intense competition among host brands is getting, based on what has been introduced in this article.

6.1.3 Implications from this study on practicing management

A vital part of marketing management for sustained business development is to make host brand more competitive on the market by meeting customers’ demand and retaining market share. Apart from revealing the results which are found to be interesting, we have also got some other findings that are valuable to offer guidance to how management should be practiced.

1. Care more about ingredient brand trust makes host brand more competitive

One of our findings here is, a proportion of critical ingredient brands are positively related to perceived host brand quality. Meanwhile, customer satisfaction and customer loyalty are also affected substantially as a result of it. This is to say, therefore, host brand owner is advised to give due consideration to identifying critical ingredient product along with its brand before incorporating it into the host machine, so as to carry out differentiated marketing to boost customer satisfaction and customer loyalty. It makes very much sense at this point.

2. Care more about the right path to upgrading brand makes sustained development happen

We also found that, self-owned ingredient brand makes significant contribution to increasing perceived host brand quality, and brand-driven business mode is directly linked with those most senior corporate executives (Dunn,M. And Davis, S.M.2004). For operating managers, this may shed light on making a strategic choice for future business development, deserving more attention from the top executives.

As the relevant theories to ingredient brand reveal, differentiated competitive advantages drive competitions among various host brands, which in return makes competitions of ingredient brand more diversified and inevitably ends up with the so-called Fiesco-Effect. Eventually, a number of independent ingredient brands which targets the high-end market take control of the whole market and dominate how well host brand performs financially. Allowing for the fact that many of our local host brands are actually taken advantage of as channel to deliver financial performance to those high-end ingredient brand owners, this is not allowed to continue any more.

The findings we have made on marketing of self-owned ingredient brand can offer a good guidance to the corporate executives from those major home manufacturers of industrial equipment, as to what specific measures should be taken to get through a transition phase from middle market to high-end market. That is, looking ahead over a longer term, to give serious consideration to setting a specific self-owned ingredient branding strategy and take all necessary actions to execute it, for breakthrough in upgrading host brand.

With respect to the competitions among differently branded host machines in B2B market, ingredient brand plays an active role in bridging the reputational gap between individual host brands (No further discussion is going to be made in our study as our focus is not on those brands associated with high-end manufacturing of industrial equipment). Technically, ingredient branded products can be representative of some key advances that are required to keep host machine ahead of competitions in physical quality or functionality, which are fundamental to take perceived host brand quality to the next level and have nothing to do with how host brand is developed.

3. Stay focused on internal advantages in manufacturing of self-owned ingredient product, for practice of innovative brand management

It has been fully proven that, ingredient brand, regardless of whatever forms, is quite positive to improve the perceived host brand quality. Despite the situation that many domestic equipment manufacturers are still not capable of going overseas for resources acquisition, making transition for brand upgrade is a must-taken step for constant adaptation to the ever-changing market environment, where change is necessary for sustainable competitiveness and higher profit margins. In this process, sufficient time is needed for acquiring intangible assets, either patented technical know-how or brand, as it can not happen overnight. Among them, self-owned ingredient brand is worth noting as it offers a practical way brand marketing can be implemented. A key point you need to know is, a good understanding of the potential impact executing marketing of self-owned ingredient brand will have on the market plus reasonable consideration given to the current situations inside and outside your company, will reward you by making you know better about how market competition will be going over the time your branding strategy is carried out. With that knowledge, you can get the most out of that strategy which is designed to maximize the the value of marketing from the self-owned critical component products, a right way of brand upgrade with long-term development.

4. To the managers of large-and-medium-sized home manufacturers of host machine, we raise the concept of Host Brand Development Trap for better positioning with brand strategy

In our study, we get a number of the major home manufacturers of host machine positioned as Moderate Quality Level and raise a concept of Moderate Brand Development Trap (See figure 18), for the purpose of better positioning and analysis for brand management by those managers. As a variety of relevant brand theories (Zeithaml,1988; Rust et al.,1994; Fornell,Huff & Anderson,1994; Mohr-Jackson,1998; Michael and Norris,1999; Douglas & Judge,2001; etc.) and the result from our study argue, ingredient brand has a strong influence when host brand is perceived low in quality, and that influence will gradually diminish as the perceived host brand quality continues to improve. So it is to say, ingredient brand may lose much of its positivity in raising the profile of host brand when that host brand is transformed into the high-end status. Another indication from that argument is, industrial customers tend to switch their attention away from ingredient brand to other areas as host brand pushes through into high-end market. In this sense, competition among individual host brands in high-end market is actually not about how ingredient brands compete against each other in terms of differentiated quality. It is reflective of and determined by the trust customers have in quality orientation at corporate level. In nature, ingredient brand is aimed for putting host brand into an advantageous position over its competitors. When already positioned with high-end image in the market, host brand will change its direction of competition into non-quality aspects, which feature pricing and service life.

For those mid-end host brands, a common situation facing them is, the high cost of purchasing quality ingredient brand and low-price competition of host brand are easy to squeeze out the profit margins for host brand owner, while leaving ingredient brand owner the genuine beneficiary. Currently, host brand construction has entered into a new phase with more diversified perceptions to brand quality, requiring the brand owners to be more proactive in preparing for sustainable brand strategy. As demonstrated in the analysis to our sub-samples (n=121), self-owned ingredient brand is shown to be strongly positive in improving the perceived host brand quality and in boosting customer satisfaction and customer loyalty, suggesting development of self-owned ingredient brand could be an effective way of making competitions less fierce with increased brand credibility. In current times, many mid-end host brands are more susceptible to the Host Brand Development Trap due to fatigued awareness and image of host brand, which are caused by customers’ firm trust in those high-end ingredient brands.

It is possibly quite a long period when brand trust can be built up through stiff competition.

Thank you awaiting our next release…..

For contact with the author, please email to shanshan@towermind.com;

For contact with the editor, please email to yangls@skiplifting.com