Brand Management in Industrial Goods Markets
The Strategic Importance of Brand Management
Brand and brand management have gained considerable importance in recent years, both in scientific research and in corporate practice.
The importance of brand tends to be emphasized more in the consumer goods industry and in services. However, when considering industrial goods markets, significantly less importance is attached to the topic of brand. In this case, brand management is very narrowly defined and reduced to corporate design (logo, etc.) and advertising/communication.
The marketing department and its scope of tasks in these companies are often structured accordingly “simply.” Responsibility is reduced to operational marketing implementation (e.g., advertising, internet communication, trade fair appearances, etc.). Strategically, the topic of “brand” is only anchored in rare cases; strategy development projects often completely exclude the topic. This reduction is usually justified by the assertion that rational decision-making processes prevail in industrial goods markets, and therefore emotional topics like brand have no relevance for the company’s success.
A study conducted in Germany across four central industrial goods markets (automotive supplier, chemical, electrical, and mechanical engineering industries) (Markus Richter: Brand Significance and Management in the Industrial Goods Sector, Gabler Verlag, 2007) strongly questions these assumptions. We have summarized some of the key findings here and derived what we consider to be the central consequences for strategy development processes.
Brand Management – Its Influence on Business Success
In this study, Markus Richter investigated which aspects of brand management have a particularly strong influence on economic success. The influence was examined at three different levels:
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Influence of brand management on customer loyalty
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Influence of loyalty on aspects of market success such as customer satisfaction, acquisition of new customers, success rate in new product launches, achievable price levels, etc.
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Influence of market success on the company’s economic success in terms of the return on sales achieved over the last 3 years compared to relevant competitors
Within the framework of brand management, four central influencing factors emerge for loyalty, market success, and thus also the economic success of companies. These four areas should be given particular attention and strategically designed by industrial goods companies.
OUR CONCLUSION
From the multitude of possible aspects of brand management, both at the strategic and operational levels, these central building blocks stand out according to the study results from Germany. If industrial companies succeed in anchoring these success factors within the company in the medium term, positive results can be achieved regarding customer loyalty and thus market success and the company’s economic success.