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Business & Industrial Marketing

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Business & Industrial Marketing

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  1. jbim cover (i).qxd 17/10/2007 08:54 Page 1 ISSN 0885-8624 Volume 22 Number 6 2007 Journal of Business & Industrial Marketing Branding in industrial markets Guest Editors: Michael Beverland, Adam Lindgreen and Julie Napoli www.emeraldinsight.com
  2. Journal of Business & Industrial Marketing Volume 22, Number 6, 2007 ISSN 0885-8624 Branding in industrial markets Guest Editors: Michael Beverland, Adam Lindgreen and Julie Napoli Contents 394 Branding the business marketing 354 Access this journal online offer: exploring brand attributes in 355 Guest editorial business markets Michael Beverland, Julie Napoli and 357 Being known or being one of many: Raisa Yakimova the need for brand management for business-to-business (B2B) 400 Sources of brand benefits in companies manufacturer-reseller B2B Philip Kotler and Waldemar Pfoertsch relationships Mark S. Glynn, Judy Motion and 363 Branding in B2B markets: insights Roderick J. Brodie from the service-dominant logic of marketing 410 Multiple roles of brands in David Ballantyne and Robert Aitken business-to-business services Jane Roberts and Bill Merrilees 372 Branding implications of partner firm-focal firm relationships in 418 The role of corporate brand image in business-to-business service the selection of new subcontractors networks ¨ ¨ Anna Blomback and Bjorn Axelsson Felicia Morgan, Dawn Deeter-Schmelz and 431 Executive summary and Christopher R. Moberg implications for managers and 383 The importance of brand in the executives industrial purchase decision: a case study of the UK tractor market Keith Walley, Paul Custance, Sam Taylor, Adam Lindgreen and Martin Hingley Access this journal electronically The current and past volumes of this journal are available at: www.emeraldinsight.com/0885-8624.htm You can also search more than 150 additional Emerald journals in Management Xtra (www.emeraldinsight.com/emx) See page following contents for full details of what your access includes
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  4. The second paper, “Branding in B2B markets: insights Guest editorial from the service-dominant logic of marketing” by David Ballantyne and Robert Aitken, builds on insights from the service-dominant logic of marketing. The authors explore what reciprocal application of resources, knowledge, and competencies for the benefit of another party means for brands and branding in a business-to-business context. Also, About the Guest Editors Michael Beverland is a Senior Lecturer in several managerial implications are identified as follows. Value Marketing at the University of Melbourne. He has published in several received comes from direct service interactions and journals including Business Horizons, European Journal of Marketing, serviceability of goods in use – and is a firm’s principal Industrial Marketing Management, Journal of Advertising, Journal of branding opportunity. Also, brand marks are transitional Business & Industrial Marketing, Journal of Business Research, Journal communicative devices, stimulating brand recognition and of Management Studies, and the Journal of Product Innovation reputation. The paper suggests that firms develop or support Management. brand communities (web-based), contribute to the service Adam Lindgreen is a Professor of Strategic Marketing at Hull cycle episodes experienced by customers by developing a University of Technology. He has published in several journals, including strategic branding approach, and co-create value by co- Industrial Marketing Management, Journal of Business Ethics, Business branding. Lastly, the paper argues that business-to-business Horizons, Journal of Marketing Management, and Psychology & marketing could be emotion-based and not merely logic- and Marketing, among others. rational-based. Julie Napoli is a Senior Lecturer in Marketing at the University of The third paper, “Branding implications of partner firm- Melbourne. She has published in several journals, including Business focal firm relationships in business-to-business service Horizons, International Journal of Advertising, Journal of Advertising networks” by Felicia Morgan, Dawn Deeter-Schmelz, and Research, Journal of Business Research, and Journal of Small Business Christopher R. Moberg, examines, through a conceptual Management. model, how customers evaluate firms in a strategic, business- to-business service outsourcing network, and how their assessment of firms involved in co-producing after-sales service affects their evaluations of a focal selling firm. Key Introduction to the special issue on factors influencing this relationship include focal brand branding in industrial markets strength and the strength of the relationship between the partner firm and the focal selling firm. Among the study’s Branding is gaining prominence among business-to-business findings are that post-sale business services provided directly marketers. However, extant research on branding in the to the customer – irrespective of whether those services are context of business-to-business marketing remains scarce, provided by the firm or its partners – play an important role with suggested conceptual frameworks lacking empirical in building a firm’s brand image and equity. As such, this is support. Current research suggests that brands play some one of few studies investigating the way customers evaluate role in purchasing decisions in business markets, and that service when it is performed by multiple partners, thereby brands provide a source of competitive differentiation. providing guidance on ways of improving the service Research also suggests that there are differences between experience of network customers. consumer and industrial brand management. While much The fourth paper, “The importance of brand in the literature has been published on consumer brand industrial purchase decision: a case study of the UK tractor management, we lack guidance on key industrial brand market” by Keith Walley, Paul Custance, Sam Taylor, Adam issues, however. Such issues include strategic brand Lindgreen and Martin Hingley, examines the role of branding management, brand architecture, brand building and in the industrial purchase of agricultural tractors in the UK. maintenance, brand repositioning, and tactical branding Following explorative interviews with farmers and farm issues. contractors, the study identifies through conjoint analysis This special issue of Journal of Business & Industrial the importance of five different attributes in industrial Marketing addresses some of the research lacunae identified purchasers’ decisions on tractor brand. Also, the importance above. of the attributes by tractor brand ownership is identified. Following our own Guest Editorial, the first paper, “Being Lastly, overall brand utility and brand utility by tractor brand known or being one of many: the need for brand management ownership are identified. Among the study’s implications are for business-to-business (B2B) companies” by Philip Kotler that manufacturers and distributors need to maintain a strong and Waldemar Pfoertsch, adds knowledge to the field of image. Also, they may charge higher prices for tractors, using business-to-business brand research by examining the need of the extra revenue to reinforce their brand image. On-farm branding for business-to-business companies and analyzing demonstration of new tractors could be an experiential the options for success by means of the stock performance. marketing strategy. Special attention should be given to the Long-term branding strategies, brand performance and firm’s location of dealers and the service they provide. business performance are found to be positively correlated The fifth paper, “Branding the business marketing offer: with stock increase. Business performance can be improved exploring brand attributes in business markets”, by Michael using current brand focus and guiding principles. Also, the Beverland, Julia Napoli and Raisa Yakimova, considers findings suggest that companies should not only focus on attributes for building strong brand identity: brand development, but rather adopt a long-term branding product; . strategy. service; . logistics; . Journal of Business & Industrial Marketing advice; and . 22/6 (2007) 355–356 adaptation. . q Emerald Group Publishing Limited [ISSN 0885-8624] 355
  5. Guest editorial Journal of Business & Industrial Marketing Volume 22 · Number 6 · 2007 · 355 –356 customers. Explicit communications to build trust are Two types of brands benefit from product benefits: high performance brands and ingredient brands. When a product identified relating to different phases of the selection is conceptualized in terms of product innovation or process. These communications are discussed in terms of leadership, brand identity is linked to a firm-level capability. content and source and are translated – in terms of Products may be augmented with services, suppliers may sell implications – to the subcontractors. services rather than products, and sub-contractors may Specific issues not dealt with in this issue include: what are provide service capabilities to customers. Logistics, current brand development practices in business marketing? consisting of capabilities and involving standardized and How is brand architecture managed in business markets customized components, are relevant for retailers seeking to (including corporate branding)? Also, what are brand- outsource category management. Suppliers of complex building and brand-repositioning capabilities in business services and product suppliers of heavy capital items may markets (the capabilities behind brand building, maintenance, pursue adaptation. Lastly, advice is relevant for advertising and growth)? What are brand extension and repositioning agencies, market research agencies, business consulting, and strategies? What is the role of integrated marketing product suppliers, among others. communications in business-to-business branding? What are The sixth paper, “Sources of brand benefits in important similarities and differences between branding in manufacturer-reseller business-to-business relationships” by business-to-business products and services? What are buyer Mark S. Glynn, Judy Motion and Roderick J. Brodie, receptions to business-to-business branding efforts such as the investigates, through a qualitative study of six grocery and importance, or lack thereof, of brands in the purchase liquor retailers, what the financial, customer, and managerial process? What is the role of salespeople in business branding? benefits of manufacturer brands are to resellers of packaged Are there different peculiarities of business-to-business brands goods. In so doing, the paper is one of the first studies to in international markets (including global branding issues)? examine the role of brands in channel relationships. The Lastly, how can business-to-business brands be valued? findings help manufacturers to understand and manage their We would like to take the opportunity of thanking all those brands’ benefits and, in turn, enhance the relationships who have contributed towards this special issue of Journal of outcomes with resellers. These outcomes are satisfaction with Business & Industrial Marketing. First, we thank the reviewers the brand, commitment to the brand, trust in the brand, who have taken time to provide timely feedback to the dependence on the brand, and cooperation with the authors, thereby helping the authors to improve their manufacturer. Among the study’s managerial implications are that minor brands are also important to resellers, for manuscripts. The reviewing was a double-blind reviewing example in countering the strength of major brands in a process. We thank the following reviewers: product category. Michael Antioco (Eindhoven University of Technology); . The seventh paper, “Multiple roles of brands in business- Liliana Bove (Melbourne); . to-business services” by Jane Roberts and Bill Merrilees, Sonia Dickinson (Curtin University of Technology); . investigates, through a quantitative study of 201 retail tenants, Andreas Eggert (Paderborn); . the role of branding in the context of leasing mall space to Mike Ewing, Francis Farrelly, Samir Gupta, and Raisa . retail tenants. A four-stage process, which leads to renewal of Yakimova (all at Monash); mall lease, was identified as fitting the data. Brand attitudes Victoria Little (Auckland); . could be explained mainly by service quality. The study also Roger Palmer (Cranfield); . identified that brand performance played two major roles. Leyland Pitt (Simon Fraser); . First, brand performed a traditional role as a contributor to Pascale Quester (Adelaide); and . the re-buy or repurchasing decision. Second, brand Christine Vallaster (Innsbruck). . performed a role as a builder of relationship quality. As Second, we would like to extend special thanks to the editor such, this paper is one of the first to examine the multiple Wesley Johnston (Georgia State University) for giving us the roles that brands can play in business-to-business marketing. opportunity of guest editing a special issue of Journal of There are various practical implications of the study’s Business & Industrial Marketing. findings. For example, the study’s findings may be used by Last, but not least, we warmly thank all of the authors who industrial firms to build stronger brands and, in turn, to use submitted their manuscripts (not previously published these brands to build better relationships with their business elsewhere) for consideration of inclusion in Journal of customers. Business & Industrial Marketing. We appreciate and are Finally, the eighth paper, “The role of corporate brand grateful for the authors’ desire to share their knowledge and image in the selection of new subcontractors” by Anna experience with the journal’s readers – and for having their Blomback and Bjorn Axelsson, investigates why and how ¨ ¨ views put forward for possible challenge by their peers. We are corporate brand image plays a role in the selection of new confident that the articles in this Special Issue contribute to subcontractors. A qualitative study of three subcontractors our understanding of branding in business markets. and six of their customers allows for an examination of Michael B. Beverland, Adam Lindgreen and buyers’ and sellers’ considerations in sales and purchasing processes. Among the study’s findings is that the role of Julie Napoli brands is to gain interest, as well as provide trust to Guest Editors 356
  6. Being known or being one of many: the need for brand management for business-to-business (B2B) companies Philip Kotler Marketing Department, Kellogg School of Management, Northwestern University, Evanston, Illinois, USA, and Waldemar Pfoertsch Pforzheim University, Pforzheim, Germany and China Europe International Business School, Shanghai, People’s Republic of China Abstract Purpose – This analysis aims to examine the need of business-to-business companies for branding and analyzes the options for success by means of the stock performance. Design/methodology/approach – The paper consists of a qualitative and quantitative pilot study and a quantitative main survey. Findings – Long-term branding strategies, brand performance and firm’s business performance are found to be positively correlated with stock increase. Current brand focus and use of guiding principles can lead to improved business performance. Research limitations/implications – The study has possible location- and industry-specific limitations. Practical implications – Managerially, the findings encourage firms to adopt a long-term branding strategy, focusing not only on brand development. Originality/value – By systematically examining relationships between branding strategy and performance of the global firms, this study adds knowledge to the field of B2B brand research. Keywords Business-to-business marketing, Brand management, Marketing strategy, International marketing Paper type Conceptual paper electric motors, crystal components, industrial lubricants, or An executive summary for managers and executive readers can be found at the end of this issue. high-tech components are chosen through an objective decision-making process that only accounts for the so-called hard facts like features/functionality, benefits, price, service, Introduction and quality, etc. (Aaker and Joachimsthaler, 2000, p. 22; Pandey, 2007). Soft-facts like the reputation of the business, When talking about brands most people think of Coca-Cola, whether it is well known, is not of interest. Is this true? Does Apple, Ikea, Starbucks, Nokia, and maybe Harley Davidson. anybody really believe that people can turn themselves into These brands also happen to be among the most cited best- unemotional and utterly rational machines when at work? We practice examples in the area of business-to-consumer (B2C) don’t think so. branding[1]. For these companies their brand represents a Is branding relevant to B2B companies? Microsoft, IBM, strong and enduring asset[2], a value driver that has literally General Electrics, Intel, HP, Cisco Systems, Dell, Oracle, boosted the company’s success. Hardly any company neglects SAP, Siemens, FedEx, Boeing – they are all vivid examples of the importance of brands in B2C. the fact that some of the world’s strongest brands are B2B In business-to-business (B2B), things are different – brands. Although most also operate in B2C segments, their branding is not meant to be relevant. Many managers are convinced that it is a phenomenon confined only to consumer main business operations are concentrated on B2B. Then why products and markets. Their justification often relies on the are so many B2B companies spurning their fortune? fact that they are in a commodity business or specialty market Take Boeing, for instance. Only a few years ago a very and that customers naturally know a great deal about their interesting incident happened at the Boeing headquarters in products as well as their competitors’ products. To them, Seattle. Shortly after Judith A. Muehlberg, a Ford veteran, brand loyalty is a non-rational behavior that applies to started as head of the Marketing and Public Relations breakfast cereals and favorite jeans – it doesn’t apply in the Department, she dared to utter the “B” word in a meeting of more “rational” world of B2B products. Products such as top executives. Instantly, a senior manager stopped her and said: “Judith, do you know what industry you’re in and what company you’ve come to? We aren’t a consumer-goods The current issue and full text archive of this journal is available at company, and we don’t have a brand”[3]. Since then US www.emeraldinsight.com/0885-8624.htm aerospace giant Boeing has come quite a long way. Nowadays, Journal of Business & Industrial Marketing Philip Kotler and Waldemar Pfoertsch have recently published B2B Brand 22/6 (2007) 357– 362 Management (Springer, Heidelberg/New York, NY, 2006, ISBN 978-3- q Emerald Group Publishing Limited [ISSN 0885-8624] 540-25360-0); parts of this paper are from this publication. [DOI 10.1108/08858620710780118] 357
  7. Being known or being one of many Journal of Business & Industrial Marketing Volume 22 · Number 6 · 2007 · 357 –362 Philip Kotler and Waldemar Pfoertsch branding and brand management do matter in a big way to And that is what Pitney Bowes wants to achieve with its B2B customers. them. In 2000, the company’s first-ever brand strategy was The internet furthermore brings the full array of choices to formalized and integrated in an overall strategy to extend its every purchaser or decision maker anywhere with just one reach beyond the commercial-airplane business. Today, the mouse click. Without trusted brands as touchstones, buyers brand spans literally everything from its logo to corporate would be overwhelmed by an overload of information no headquarters. Even the plan to relocate its corporate matter what they are looking for. But brands do not only offer headquarters from Seattle to Chicago has been devised with orientation, they have various benefits and advantages for the Boeing brand in mind (Khermouch et al., 2001). In 2005, customers as well as the “brand parents”. They facilitate the Boeing introduced its new flagship aircraft. In a worldwide access to new markets by acting as ambassadors in a global campaign with AOL, they searched for a suitable name and economy (Khermouch et al., 2001). invented the “Dreamliner”, which was inaugurated by Rob Another important aspect of B2B branding is that brands Pollack, Vice President of Branding for Boeing Commercial do not just reach your customers but all stakeholders – Airplanes Marketing[4]. investors, employees, partners, suppliers, competitors, What is branding all about anyway? First of all we can tell regulators, or members of your local community. Through a you what it is not: it is definitely not about stirring people into well-managed brand a company receives greater coverage and irrational buying decisions. Being such an intangible concept, profile within the broker community (Pandey, 2007). branding is quite often misunderstood or even disregarded as Other than the biggest misconception that branding is only creating the illusion that a product or service is better than it for consumer products and therefore wasted in B2B, there are really is (Hague and Jackson, 1994). There is an old saying other common misunderstandings and misconceptions among marketers: “Nothing kills a bad product faster than related to B2B branding and branding in general. One good advertising” (de Legge, 2002). Without great products frequently mentioned branding myth is the assumption that or services and an organization that can sustain them, there “brand” is simply a name and a logo. Wrong! Branding is can be no successful brand. much more than just putting a brand name and a logo on a Now you may wonder what branding really is all about. product or service. Scott Bedbury, author of the book A New Brand World puts it Take a moment and try to think about what “brand” means as follows: to you personally. Without a doubt certain products, brand Branding is about taking something common and improving upon it in ways names, logos, maybe even jingles, pop into your head. Many that make it more valuable and meaningful (Bedbury, 2002, p. 14). people think that this is all when it comes to defining brands. But what about the feelings and associations connected with Brands serve exactly the same general purpose in B2B these products, brands, companies? What about the articles markets as they do in consumer markets: they facilitate the you’ve read about them? What about the stories you’ve heard identification of products, services and businesses as well as about them? What experiences have you had with those differentiate them from the competition (Anderson and products, brands, companies? We could go on and pose more Narus, 2004). They are an effective and compelling means to questions like these. A brand is an intangible concept. To communicate the benefits and value a product or service can simplify it and make it easier to grasp is quite often equated provide (Morrison, 2001). They are a guarantee of quality, with the more tangible marketing communications elements origin, and performance, thereby increasing the perceived that are used to support it – advertising, logos, taglines, value to the customer and reducing the risk and complexity jingles, etc. – but a brand is so much more than that (Dunn involved in the buying decision (Blackett, 1998). and Davis, 2004; Knapp, 2000): Brands and brand management have spread far beyond the a brand is a promise; . traditional view of consumer-goods marketers. Brands are a brand is the totality of perceptions – everything you see, . increasingly important for companies in almost every hear, read, know, feel, think, etc. – about a product, industry. Why? For one thing, the explosion of choices in service, or business; almost every area. Customers for everything from specialty a brand holds a distinctive position in customers’ minds . steel to software now face an overwhelming number of based on past experiences, associations, and future potential suppliers. Too many to know them all, let alone to expectations; and check them out thoroughly. a brand is a short-cut of attributes, benefits, beliefs, and . For example, Pitney Bowes, one of the winners in Jim values that differentiate, reduce complexity, and simplify Collins’s book Good to Great (Collins, 2001), has recently the decision-making process. introduced a new branding campaign. After being on the success track for more than 15 years, they felt it necessary to Keeping all this in mind makes it clear that brands cannot be educate their customers about all their new products. built by merely creating some fancy advertising. If you Chairman and CEO Michael J. Critelli explained on internalize the concept of “brand” as a promise to your Bloomberg television how Pitney Bowes’s new business- customers it is quite obvious that it can only come to life if building brand campaign will fuel the company’s long-term you consistently deliver on that promise. Of course, your growth strategy, and his Chief Marketing Officer Arun Sinha brand promise needs to be clearly defined, relevant and elaborated that a brand is more than a product – it’s a meaningful, not to be mistaken with exaggerated marketing shorthand that summarizes a person’s feelings toward a promises. business or a product. A brand is emotional, has a personality, A further misconception of branding is that it is seen as a and captures the hearts and minds of its customers. Great small subset of marketing management. Wrong again! Since a brands survive attacks from competitors and market trends brand is reflected in everything the company does, a holistic because of the strong connections they forge with customers. branding approach requires a strategic perspective. This 358
  8. Being known or being one of many Journal of Business & Industrial Marketing Philip Kotler and Waldemar Pfoertsch Volume 22 · Number 6 · 2007 · 357 –362 simply means that branding should always start at the top of companies (see Figure 2) shows an even more drastic your business. If your branding efforts are to be successful, it situation[6]. is not enough to assign a brand manager with a typically The stock market success of the “over performers” was short-term job horizon within company (Aaker and even larger than in the first analysis. The top B2B brand Joachimsthaler, 2000). performers were: Building, championing, supporting and protecting strong Caterpillar; . brands is everyone’s job, starting with the CEO (Bedbury, GE; and . 2002). Active participation of leaders is indispensable because Hewlett Packard. . they are the ones who ultimately will be driving the branding Caterpillar increased its position in an exceptional way. The effort. Brands and brand equity need to be recognized as the “under performers” were: strategic assets they really are, the basis of competitive Intel; . advantage and long-term profitability. It is crucial to align IBM; . brand and business strategy, something that can only J.P. Morgan; and . effectively be done if the brand is monitored and Microsoft. . championed closely by the top management of an organization Aaker and Joachimsthaler, 2000, p. 19). To It is worth mentioning that between 2002 and 2005 Microsoft appoint a Vice President of Branding, someone who is continuously lost brand value. Even in 2002 when the crisis responsible solely for brand management, would be an hit strongly the brand did not lose too much stock value (only important step. No matter what the actual title, this person 2 6 percent, as compared with an average of 2 24 percent, should be the one person taking the required actions for and 2 36 percent for the “under performers”). These data keeping the brand in line. stress the notion that weak brands particularly suffer in Strong leaders demonstrate their foresight for the brand, difficult times and do not recover as quickly as strong brands. make symbolic leadership gestures, and are prepared to These findings also suggest that the brand strength of B2B involve their business in acts of world statesmanship that go companies clearly has an impact on financial market beyond the short term, and therefore require the sort of total performance. organizational commitment that only the CEO can lead. Ongoing analysis of the largest global companies using the Consider Nucor, America’s largest steel producer today. In same methods suggests that the Interbrand value (see 1972, about five years after facing bankruptcy, F. Kenneth Figure 3) is positively correlated with market capitalization Iverson as President and Samuel Siegel, Vice President of throughout the years 1999-2006[7], and that the Interbrand Finance, renamed the company and announced “Nucor sells value is significantly positively correlated with income and net steel to people who actually care about the quality of the income. We also showed that market capitalization is steel”. This announcement and all steps that followed significantly positively correlated with income and net propelled the company to the top of its industry. income. Market capitalization is not correlated with But do brands really pay off? Are they worth the effort and advertisements. time? Evaluating and measuring the success of brands and The definition, benefit, and functions of brands embrace brand management is a rather difficult and controversial every type of business and organization. In order to create and subject. Moreover, it is not always possible to attribute hard maintain the sustainable competitive advantage offered by the facts and numbers to them, which most marketers certainly brand, companies need to concentrate their resources, prefer. As a result, there are only a restricted number of structure, and financial accountability around this most research project and analysis dealing with the actual return on important asset. Businesses with a strong brand positioning investment for brands. are benefiting from clarity of focus that provides them with Current research results[5] highlight the power of branding. more effectiveness, efficiency, and competitive advantage To visualize the effect of brands and branding on share price, across operations (Clifton and Simmons, 2003). they compared the financial market performance of 23 of the B2B brand advocates underline that the real importance of 30 German DAX companies (see Figure 1). The obvious brands in B2B has not yet been realized. McKinsey & result of the enormous difference in performance accentuates Company is one of them. Together with the Marketing the general importance of brands. Companies with strong Centrum Muenster (MCM), one of the best known German brands have recovered significantly faster from the stock research institutes, they investigated and analyzed the market “slump” in the wake of the 9/11 terrorist attacks than importance and relevance of brands in several German B2B weaker brands. Strong brands provide companies with higher markets. They revealed that the most important brand return. functions in B2B are (Caspar et al., 2002, p. 13): Companies that once measured their worth strictly in terms increase information efficiency; . of tangibles such as factories, inventory, and cash have to risk reduction; and . revise their point of view and embrace brands as the valuable value added/image benefit creation. . and moreover equally important assets they actually are Since these functions are essential determinants of the value a (along with customers, patents, distribution, and human brand can provide to businesses, they are crucial in regard to capital). Companies can benefit tremendously from a vibrant determining brand relevance in certain markets (Caspar et al., brand and its implicit promise of quality since it can provide 2002). The above mentioned brand functions are also vital to them with the power to command a premium price among B2B markets. customers and a premium stock price among investors. Not Nobody can guarantee that a business will realize only can it boost your earnings and cushion cyclical immediate benefits after implementing an overall brand downturns, it can even help you to become really special (Khermouch et al., 2001). The analysis of the largest DOW strategy. Since branding requires a certain amount of 359
  9. Being known or being one of many Journal of Business & Industrial Marketing Volume 22 · Number 6 · 2007 · 357 –362 Philip Kotler and Waldemar Pfoertsch Figure 1 Branding’s effect on DAX companies’ share price Figure 2 Branding’s effect on DOW companies share price investment, it is more probable that it will see a decline in net brand its processors. Because of the accelerating pace of profits in the short run. Brand building is aimed at creating technological change as well as constantly growing sales rates in long-term non-tangible assets and is not meant for boosting the consumer market, the company decided to focus on end short-term sales. Michael J. Critelli, CEO of Pitney Bowes users. They realized that establishing a brand was the only way (Sinha, 2003) is aware of this and ran re-branding efforts over to stay ahead of the competition. Today, Intel is a leader in a period of many years to ensure his company’s future success. semiconductor manufacturing and technology, supported and In the 1980s, personal computers gradually entered the powered by their strong brand, an almost unbeatable homes of consumers. At that time the highly recognized brands competitive advantage, due to the ingredient branding in the industry were those of computer manufacturers like IBM, approach and the “Intel Inside” campaign, an approach Apple, and Hewlett-Packard. Back then, only the most which will be important for increasingly sophisticated sophisticated computer users knew what kind of customers (Kotler and Pfoertsch, 2007). microprocessing chip their machines contained, let alone who It is also not the intention to claim that B2B branding is the made them. All that changed in 1989, when Intel decided to answer to all your company’s problems. Just as there are 360
  10. Being known or being one of many Journal of Business & Industrial Marketing Philip Kotler and Waldemar Pfoertsch Volume 22 · Number 6 · 2007 · 357 –362 Figure 3 Correlation between Interbrand brand value versus market The essence of this concept is to infect B2B companies with capitalization of DOW companies the branding virus – empowering them to make the leap to becoming a brand-driven and more successful company. There are many ways to measure overall company success, such as sales increase, share value, profit, number of employees, mere brand value (index), etc. To keep it simple and to limit alterations that may have been influenced by various sources other than the actual 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. In our constantly changing business environment of new technologies, globalization and market liberalization, alert companies are presented with great opportunities. Winning companies will discard old practices and innovate new practices to exploit the major trends. With no thought B2B branding and brand management will become increasingly important, and the future of brands is the future of business – probably the only major sustainable competitive advantage. Companies who are driving in this direction are on the right track. Other future aspects are branding and social responsibility. Also, branding in China is in a stage of leapfrogging into the world market. For decades, China has limitations in the B2C branding world, limitations also exist in enjoyed a dominant place in world manufacturing because of B2B. These restrictions still have to be identified and its low-cost labor. Chinese businesses today are pursuing examined thoroughly in the following years. aggressive branding strategies involving internal growth or To lead you through B2B branding exercises we suggest a acquiring foreign brand icons and managing them. Both set of “guiding principles” (see Figure 4) that illustrate approaches could lead to world success. Consider design and visually the different stages on the branding ladder[8]. It can branding as an increasingly important tool for differentiation. literally be seen as the path companies have to follow in order Relevance, simplicity, and humanity – not technology – will to achieve brand success. The beginning of the path is marked distinguish brands in the future. by the decision whether or not to brand your products, To be successful in the B2B world, a holistic branding services, or business. If a company, especially the people at approach is required that covers everything from the the top, is not convinced that it is the right thing to do, it development and design to the implementation of marketing doesn’t make any sense to continue (“B2B Branding programs, processes, and activities that are intersecting and Decision”). After making the decision to brand, you have to interdependent. Marketing and brand management will be figure out how you are going to do it. But deciding on the best critical to a company’s success in the future. brand portfolio that fits your respective business/industry is not enough to ensure your company’s brand success. Notes Therefore, the next stage addresses all the factors in practice that make branding successful (“Branding 1 B2C companies have for years dominated the Interbrand Dimensions”). If the right decisions are not taken ranking of the 100 best global brands by more than 80 (“Acceleration through Branding”) or the execution falls percent, and most of the article is about them (see Berner short, branding pitfalls can occur! But there could also be and Kiley, 2005). future perspectives. 2 According to our calculations, in 2005 the total brand value for all 100 best global brands reached more than $1 Figure 4 Guiding principles for B2B brand development trillion. 3 As quoted in Khermouch et al. (2001). 4 The Boeing Company (internet), cited August 2005. 5 In 2005, a qualitative and quantitative pilot study was conducted with the 30 largest German DAX companies; of these, ten were B2B companies. 6 For this analysis the Interbrand Global Best Brand data were used to characterize the brand performance. 7 The Interbrand brand evaluation started in 1999 and is available annually. In our research we compiled all internationally available data, which led to a total of 130 companies. Further research is needed to qualify the findings. 8 We understand the Guiding Principle as the leading idea and guiding help to follow our thinking and the structure of B2B brand management. 361
  11. Being known or being one of many Journal of Business & Industrial Marketing Volume 22 · Number 6 · 2007 · 357 –362 Philip Kotler and Waldemar Pfoertsch References Dunn, M. and Davis, S.M. (2004), “Creating the brand- driven business: it’s the CEO who must lead the way”, Aaker, D.A. and Joachimsthaler, E. (2000), Brand Leadership, Handbook of Business Strategy, Vol. 5 No. 1, pp. 241-5. The Free Press, New York, NY. Hague, P. and Jackson, P. (1994), The Power of Industrial Anderson, J.C. and Narus, J.A. (2004), Business Market Brands, McGraw-Hill, London. Management: Understanding, Creating, and Delivering Value, Khermouch, G., Holmes, S. and Ihlwan, M. (2001), “The Pearson Prentice-Hall, Englewood Cliffs, NJ, p. 136. best global brands”, Business Week, 6 August. Bedbury, S. (2002), A New Brand World, Viking Penguin, Knapp, D.E. (2000), The Brand Mindset, McGraw-Hill, New New York, NY. York, NY, p. 7. Berner, R. and Kiley, D. (2005), “Global brands”, Business Kotler, P. and Pfoertsch, W. (2007), Ingredient Branding: Week, July, pp. 86-94. Making the Invisible Visible, forthcoming. Blackett, T. (1998), Trademarks, Macmillan, Basingstoke. Morrison, D. (2001), “The six biggest pitfalls in B-to-B Caspar, M., Hecker, A. and Sabel, T. (2002), branding”, Business2Business, July/August, p. 1. “Markenrelevanz in der Unternehmensfuehrung – Pandey, M. (2007), “Is branding relevant to B2B?”, 27 Messung, Erklaerung und empirische Befunde fuer B2B- January, available at: brandchannel.com Maerkte”, p. 13, available at: www.marketing-centrum.de/ Sinha, A. (2003), “Branding in a deregulated environment”, ias/conpresso/_file/AP_B2B_3010.pdf Keynote Address, Post-Expo 2003, available at: www.pb. Clifton, R. and Simmons, J. (2003), Brands and Branding, com/bv70/en_us/extranet/contentfiles/editorials/downloads/ Profile Books, London, p. 5. ed_pres_arun_css_ed_pres_arun_brand_speech_arun.pdf Collins, J. (2001), Good to Great: Why Some Companies Make the Leap and Others Don’t, Random House, New York, NY. de Legge, P. (2002), “Brand version 2.0: business-to-business Corresponding author brands in the internet age”, Marketing Today, available at: www.marketingtoday.com/marketing/1204/brand_v2.htm Philip Kotler can be contacted at: pkotler@aol.com To purchase reprints of this article please e-mail: reprints@emeraldinsight.com Or visit our web site for further details: www.emeraldinsight.com/reprints 362
  12. Branding in B2B markets: insights from the service-dominant logic of marketing David Ballantyne and Robert Aitken University of Otago, Dunedin, New Zealand Abstract Purpose – This paper aims to explore how the service-dominant (S-D) logic of marketing proposed by Vargo and Lusch impacts on business-to- business branding concepts and practice. Design/methodology/approach – Vargo and Lusch argue that service interaction comes from goods-in-use as well as from interactions between a buyer and a supplier. Their key concepts are examined and the branding literature critically compared. Findings – Goods become service appliances. Buyer judgments about the value-in-use of goods extends the time-logic of marketing. The exchange concept is no longer transaction bound. Service-ability (the capability to serve) becomes the essence of a firm’s value propositions. Service experience becomes paramount in developing and sustaining the life of a brand. Research limitations/implications – S-D logic highlights the need for rigour and clarity in the use of the term “brand”. It also opens up for consideration a variety of previously unexplored contact points in the customer service cycle, expanded to include customer assessments of value-in- use. Practical implications – S-D logic encourages extending brand strategies into a wider variety of communicative interaction modes. Originality/value – Some of the issues raised are not new but currently compete for attention in the shadow of media-dominant approaches to branding. Keywords Brand image, Value added, Value-in-use pricing, Marketing, Knowledge management, Relationship marketing Paper type Conceptual paper knowledge and competencies for the benefit of another party. An executive summary for managers and executive The emphasis in S-D logic on value-in-use is potentially readers can be found at the end of this issue. paradigm challenging but the foundational principle of interaction resonates well with much of contemporary Introduction marketing thought in services marketing, relationship marketing and B2B marketing. The service-dominant (S-D) logic of marketing proposed by Understanding what S-D logic means in particular for Vargo and Lusch (2004a) emphasises that customers make brands and branding in a B2B context is the intent of this critical value assessments when goods are in use, based on article. We start with a commentary on the S-D logic thesis. their service-ability. Put another way, goods become service Next, we offer a critical examination of current thinking on appliances and customers judge the worth of the service they brand marks and brand meanings. Then, we examine the experience from goods as value-in-use. Thus “service” contribution of S-D logic to understanding B2B branding. according to S-D logic includes the service experience From this, the role of marketing communication in all its derived from interacting with goods in use as well as from forms becomes clear as a source of brand meanings. Finally, service interactions with a supplier. So, by extending the we draw some conclusions that we believe have important temporal dimension of marketing to cover the service implications for practitioners. experiences derived from goods, and by aligning exchange thinking around value-in-use, the concept of marketing Commentary on S-D logic becomes service-dominant, and exchange is no longer transaction-bound. Every value proposition is an offer of The catalyst for the current interest in an S-D logic for service. Every business becomes a service business. marketing was the publication of an award-winning article by This brief introduction shows that the S-D logic of Vargo and Lusch (2004a) entitled “Evolving to a new marketing has both radical components and also familiar dominant logic for marketing”. In the same year, another associations for business-to-business (B2B) marketers. article by Vargo and Lusch (2004b) appeared, directly “Service interaction” is broader in concept and extended in challenging the validity of the characteristic differentiators time. It involves the reciprocal application of resources, between services and goods (intangibility, heterogeneity, inseparability and perishability), which had been established The current issue and full text archive of this journal is available at more than 20 years earlier (see Fisk et al., 1993). In 2005, the www.emeraldinsight.com/0885-8624.htm University of Otago in New Zealand invited a number of leading international academics to The Otago Forum[1] to debate the issues. A selection of papers from the Forum, together with commentaries, later appeared as a special issue Journal of Business & Industrial Marketing 22/6 (2007) 363– 371 of Marketing Theory (Aitken et al., 2006). Also, Lusch and q Emerald Group Publishing Limited [ISSN 0885-8624] Vargo (2006a) published an editorial selection of articles by [DOI 10.1108/08858620710780127] 363
  13. Branding in B2B markets: the service-dominant logic Journal of Business & Industrial Marketing Volume 22 · Number 6 · 2007 · 363 –371 David Ballantyne and Robert Aitken leading scholars early in 2006. The Journal of the Academy of the time logic of marketing exchange becomes open-ended, from pre-sale service interaction to post-sale value-in-use, Marketing Science will publish a special issue on S-D logic in with the prospect of continuing, as relationships evolve 2007. (Ballantyne and Varey, 2006). The idea behind the Vargo and Lusch thesis is simple, but Until quite recently, exchange in a marketing context was the effects are far reaching: S-D logic asserts that service is synonymous with a market transaction. Under such logic, what customers are hoping to buy, anywhere, any time. Of derived from mainstream goods logic and with origins in the course, service interaction in business markets is not new but neo-classical economic paradigm, any “value added” for under S-D logic, goods purchased become service appliances. customers is also a cost to the firm. This linear logic has been In other words, a supplementary form of service experience under constant challenge in B2B marketing and services comes from goods, as buyers interact with those goods. If marketing domains due largely to the influence of relational goods become valuable to customers, as mechanisms for perspectives entering the literature over the last 20 years (see service, it follows that the value of the experience derived for example, Anderson and Narus, 1990; Axelsson and from goods is determined at time of use by customers, as Easton, 1992; Berry, 1995; Christopher et al., 1991; Dwyer value-in-use[2]. This applies equally in an industrial setting as ˚ et al., 1987; Gronroos, 1990; Gummesson, 1987; Hakansson ¨ goods (resources) become part of a customer’s own value and Snehota, 1995). creating inputs, whether in manufacture, assembly or Lusch and Vargo (2006b) have recently outlined a lexicon distribution. of terms for the S-D logic which indicates the kind of Service activity, of course, comprises a greater proportion of cognitive shift involved in rethinking the scope of marketing GNP than goods in many countries, but this is not the action (see Table I). This is clearly a provisional list that “service-dominant” meaning of Vargo and Lusch. Instead, invites further work. For example, under S-D logic, customers they seek to show that service is the undeniable core of every engage in buying “service solutions” to solve problems rather marketing interaction. This is not a mainstream marketing than buying product benefits or features. But what if there are way of thinking but it has been emphasised by others, for no problems? Why should marketing innovation be restricted example, in services marketing by Gronroos (1990), in ¨ to problem solving? Also, “promotion” is a limited form of relationship marketing by Christopher et al. (1991), and – marketing communication. Dialogue is by far a superior way which may surprise some – in an early text by Kotler (1976). of learning together. Both would seem to have their place as However, Vargo and Lusch (2004a) extend their service- part of a more interactive concept of integrated marketing centricity further. The essential points in summary are these: communications (Varey and Ballantyne, 2005). S-D logic emphasises that customers are the arbiters of . What is absolutely clear under S-D logic is that any value value in service interaction, either directly in interaction judgment at point of purchase by a customer is necessarily with suppliers or through service interaction derived from provisional. Thus, the capability to perform and the reliability goods. of the firm become critical aspects of the firm’s value S-D logic also emphasises the potential for co-creation of . propositions. With the function of goods seen as service value and sharing of competencies and other knowledge appliances, value-in-use will confirm or disconfirm these resources between customers, suppliers and other market provisional judgments. There are important implications for actors. Again, value is derived from the service experience branding here. We believe it works this way: The brand (as a of the particular actors in interaction. tangible mark) serves to signify the nature of the firm’s S-D logic supports the notion of relationship development, . promises and implicit obligations, and customers and other through which all kinds of communicative interaction and stakeholders project these or any other values they see fit back co-created value might emerge over time. This forces into the brand (as a socially constructed value system). This marketing innovation to the fore, in the sharing of new “brand morphing” is examined in the next section. ideas and knowledge within the firm, and between the firm and its customers and suppliers. Marks and meanings critically examined S-D logic proposes that what a supplier firm essentially . does in its marketing activity is offer value propositions Coverage of branding issues in the B2B literature has been (promises) and marshal resources together for customers. sparse (Michell et al., 2001). A natural enough tendency has This puts a new perspective on selling activity, marketing been to associate branding with fast moving consumer goods communication and brand management, as will be and so branding in this domain dominates the research discussed later. picture. However, there are notable exceptions, for example S-D logic requires a managerial focus on the customer . Baldauf et al. (2003), Bendixen et al. (2003) and Mudambi interaction processes, and attention to monitoring the et al. (1997). Yet, while brands are one of the most researched productivity and value potential of the continuous activity topics in the marketing literature, ambiguity rather than flows. Rather than firms marketing to customers they clarity of understanding has been the outcome. market with customers (an interaction process). The Ambiguity and complexity begin with the almost universal bottom line is that marketing exchange becomes a set of habit of using the single word “brand” in at least three interactive episodes across time and is no longer different marketing contexts. First, when “brand” means a transaction-bound. name or identifier, and second, when “brand” means a Overall, S-D logic has the potential to shift strategic product and its characteristics. Then there is a third and more marketing attention away from a point-of-sale selling focus obtuse way of using “brand”, and that is as a symbolic to a service relationship focus, and in so doing, to rearrange framing device for utilitarian and non-utilitarian values that marketers’ notions of efficient resource allocations. Put customers and others may see as attributes belonging to the another way, to reveal the challenging aspect of this agenda, brand, as if these values were embedded characteristics of the 364
  14. Branding in B2B markets: the service-dominant logic Journal of Business & Industrial Marketing David Ballantyne and Robert Aitken Volume 22 · Number 6 · 2007 · 363 –371 Table I What’s happening to marketing concepts? Goods-dominant logic concepts Transitional concepts Service-dominant logic concepts Goods Services Service Products Offerings Experiences Feature/attribute Benefit Solution Value-added Co-production Co-creation of value Profit maximization Financial engineering Financial feedback/learning Price Value delivery Value proposition Equilibrium systems Dynamic systems Complex adaptive systems Supply chain Value chain Value-creation network/constellation Promotion Integrated marketing communications (IMC) Dialogue To market Market to Market with Product orientation Market orientation Service orientation Source: Lusch and Vargo (2006b) product (see, for example, the seminal paper by Levy, 1959; Any brand image in our view is essentially socially ˚ also Lindlof, 1988; Salzer-Morling and Strannegard, 2004). ¨ constructed (see Berger and Luckman, 1967; Gergen, 1994; This three-mirrored view of brands, we hope, is more Hackley, 1998). This means that brand image is not just the revealing as an explanation than that offered by the American sum of individual perceptions but a shared reality, Marketing Association (AMA), who state that: dynamically constructed through social interaction. If this perspective is accepted, the meanings attached to a particular A brand is a name, term, sign, symbol, or design, or a combination of them, intended to identify the goods and services of one seller or group of sellers brand are located in the minds of its customers, and the wider and to differentiate them from those of competitors (Kotler, 2000, p. 404). community of opinion makers and stakeholders. It will likely differ from the hoped-for perspective of the marketer or brand Variants of this AMA definition occur in all major manager. Also of note, the usage of the term “brand” to cover introductory marketing texts and also in more specialist multiple meanings is a recipe for ongoing confusion and treatments of brands and branding (see, for example, Aaker, manipulation. In a related way, Varey and Ballantyne (2005) 1991, 2004; Wilson et al., 1995). have argued that advertising as the dominant form of Brands at a fundamental level certainly are marks or marketing communication declares its motives but often symbols, the marketing purpose of which is to identify and to conceals its methods. In the traditional logic of branding the differentiate one product from another, or one firm from same applies, but here methods concealment potentially another. A brand, however, is much more that its brand-mark. extends to those who use them, a case of branding myopia. Any firm hopes that its stakeholders and target markets, both So far, we hope to have shown that the logic of branding customers and future prospects, will find its brand mark to be inherited from mainstream (consumer) markets is ambiguous memorable and associated with positive values about the at least, and we have tracked the source of confusion to the product or the company. However, Aaker and Joachimsthaler semantics of the term “brand” itself, and to the current (2000) comment bleakly that, within the traditional branding paradigmatic tension over where the brand “resides”, i.e. model, the brand is a tactic used to drive short-term results. either in the strategic plans of the marketer or in the heads of Even more problematically, many firms assume that the the users and indeed other stakeholders. meanings associated with the brand mark are something they We now explore what the S-D logic of marketing means for uniquely own and control. We take the contrary view that says brands and branding, especially in a B2B context. suppliers and their customers and other stakeholders co-create brand meanings, that is to say, brand meanings are socially constructed and in the public domain. It follows that diverse Branding logic seen from the perspective of S-D interactions, discussions and opinions generate and logic regenerate any firm-based notions of brand value. The analysis that follows draws from the fundamentals of the Some authors make a distinction between the firm’s brand Vargo and Lusch (2004a) thesis. However, an elaboration of identity and its brand image (see, for example, De branding strategy is not specifically part of their thesis, a point Chernatony, 1999). We find the identity/image distinction also made by Brodie et al. (2006). helpful in describing some aspects of brand thinking. The S-D logic has the useful potential to shift strategic distinction works this way: a firm’s brand identity is an marketing attention away from a point-of-sale selling focus idealised set of firm-generated propositions communicated to to a service and relationship development focus, and in our customers and other parties by whatever communicative view, important implications follow for branding strategy. means available. This notion of brand identity is by no means Under S-D logic, any brand value judgments at point of automatically accepted by target audiences because the purchase by customers are provisional, awaiting testing in collective thoughts and feelings that individuals and industry action. Service-ability (as the service capability derived from groups hold at any time about the brand-mark meanings are goods) thus becomes a critical risk factor in fulfilment of the ultimately of their own determination. Hence, we come to firm’s value proposition. Put another way, brand value is brand image as representative of perceptions within the market place, and beyond. confirmed or disconfirmed in-use, at time of use, as 365
  15. Branding in B2B markets: the service-dominant logic Journal of Business & Industrial Marketing Volume 22 · Number 6 · 2007 · 363 –371 David Ballantyne and Robert Aitken firm in marketing communication (brand identity) and customers confirm or disconfirm the value proposition. As has been discussed, the time logic of marketing exchange under S- accepted by target audiences (brand image). With this latter D logic is open-ended. The open-ended nature of brand perspective, the responsibility for the brand is assumed to relationships means that individual perceptions of brand (the reside totally with the marketing department (Davis, 2002), meanings that become associated with a brand mark) are part so the focus becomes more tactical and reactive than strategic of a brand’s wider stakeholder associations, whether based on and visionary (Aaker and Joachimsthaler, 2000). This is a direct first-hand experience (value-in-use), or through difficult position to sustain in S-D logic terms as it ignores the indirect experience shared or circulated in communicative value-in-use derived from a product by a customer over time, interaction, media-based or otherwise. and also the word-of mouth communicative effects generated What are the specific B2B brand management implications from within brand communities (see, for example, Andersen, of this S-D logic? 2005; Muniz and O’Guinn, 2001). In our view, developing brand image solely by traditional media message-making in a A brand-mark is a relational asset whose value to the B2B context (indeed in any context) is like trying to capture firm is contingent on past, present and future someone’s attention by clapping with one hand. interactions with various firm stakeholders A firm rightly controls its brand-marks, which are the tangible Brand strategies can impact positively or negatively on evidence of its brands. They also control the trademarks and the strategic positioning of firms within business copyrights that support the brands. Brands have histories and hopefully futures. However, marketers cannot naively assume networks of relationships that they have sufficient brand power or market dominance to ˚ The concept of network positioning (Hakansson and Snehota, control the meanings ascribed to their brands by others. 1995) is not to be confused with brand positioning. The point Many trade journal commentaries on brands and branding here is that many brand strategies develop with the customer obfuscate the identity and image meanings associated with a specifically in mind, and yet the branding implications extend brand mark. Difficulties arise when marketing managers, to resellers and other stakeholders. The latter group includes without reference to product defects that will impinge on employees who must fulfil the brand promises made to customer value-in-use experiences or firm-to-firm customers as value propositions in S-D logic terms, and interdependencies, seek to develop marketing resellers who co-create value with their customers from a communication programs to improve “brand image”. Such diversity of upstream sources and resources. Managing often split-task thinking can lead to a branding logic that pays more conflicting stakeholder requirements requires particular attention to communicating the value proposition than coordination skills and a developed cognitive framework to product efficacy (improving product service-ability). Both, assist in the task (Payne et al., 2005). of course, are aspects of customer relationship development. De Chernatony (1999) has suggested that employees are major stakeholders in brand building efforts. He suggests that A brand-mark is an aid to memory the brand should represent the vision and culture of the firm, The brand-mark offers communicable evidence of the and this necessarily involves employees and staff in shaping product and past value-in-use experiences, and is an index and representing a firm’s values. Corporate branding has for customers to cognitively file such brand meanings, undergone similar shifts in emphasis to encompass employees especially the customer’s inferred reputation of the “brand” as stakeholders in recent years (Hatch and Schultz, 2003). (in all its variety of meanings). For example, Keller’s (1993, 2003) Customer-based brand equity (CBBE) model could be adapted for use in a B2B environment. Defining CBBE as Branding is essentially a form of communicative “the differential effect that brand knowledge has on consumer interaction responses to the marketing of that brand”, he states that the An important question for firms is: at what point does the model is based on the belief that “the power of a brand lies in awareness of a brand and its assumed meaning actually begin? what customers have learned, felt, seen and heard about the The formulation of brand perceptions and the non-specific brand as a result of their experiences over time” (Keller, nature of their timing fit closely with the S-D logic emphasis 2003, p. 59). on value and its creation, past, present and future. There is There is a contrary point of view that says a brand-mark is room for an expansion of media-driven branding where not essential to create brand meaning. For example, a “no- brand-marks serve to represent the firm’s product benefits and name” brand is sometimes successful where the strategy is to projected values, necessarily modified by the efficacy of the cultivate a trendy anonymity within a word-of-mouth product and its value-in-use, and opinion generated by word- generated community of users (Ballantyne, 2004a, p. 423). of-mouth in the target markets and in the business Nevertheless, the more common position is that brand-marks community at large. serve to represent (or stand in for) the product or firm. A useful framework for re-focussing corporate branding that fits with S-D logic is presented by Hatch and Schultz Only by coupling the brand-mark and product (or firm) (2003). In this structure, three elements are central: reputation together is it appropriate to talk of brand 1 strategic vision; meaning (the brand as a symbolic framework for 2 organisational culture; and indexing meanings) 3 corporate image. It may seem trivial to make this point but it takes social However, if the gap between the projected image and the interaction and product use together to sustain brand reality of the customer experience widens, customers smell meanings, unless it is argued (as many do) that the dominant source of brand meaning is that projected by the hypocrisy. Reputation matters. 366
  16. Branding in B2B markets: the service-dominant logic Journal of Business & Industrial Marketing David Ballantyne and Robert Aitken Volume 22 · Number 6 · 2007 · 363 –371 The limits of advertising as a source of brand among admirers of brands” (p. 412). Brand communities share a number of core characteristics that include shared meaning rituals and behaviours, and a sense of moral responsibility Brand advertising is a dominant and favourite communication between members that relates to brand values, as they see medium for making branding messages in fast-moving them. consumer goods (FMCG) industries. However, to the An allied concept of brand community provided by Cova extent that brand advertising promises are persuasive, (1997) suggests that post-modern society is characterised by studies of product diffusion and communication show that tribal affiliations that function to develop a series of people are more inclined to act on mass-media messages if communal linkages. Individuals today are not only looking confirmed by word-of-mouth from trusted relationship for service which enables them to be free but also something sources (see, for example, Rogers, 1995). This does not which can link them into a community of others, as if in a mean that trusted sources are always correct: it means that tribe (Cova, p. 311). There seems to be no reason to suppose they have a higher status of reliability. that this tribal logic does not to some extent also apply to Marketing communication today still basically operates as a industrial buyers (remembering it was once said with one-way, media-based message making system (Varey and conviction that “Nobody ever got sacked for choosing Ballantyne, 2005). This hegemonic message-making logic IBM”). S-D logic and its emphasis on service experience dominates in marketing texts, and in use, notwithstanding the rather more than the service promise, on co-creation of value emergence of more interactive perspectives represented by and mutual updating of knowledge, all make sense in this integrated marketing communication (e.g. Duncan and context. Moriarty, 1998; Gronroos and Lindberg-Repo, 1998). ¨ S-D logic calls for a broadening of marketing However, even integrated marketing communication communication modes used between exchange parties, from perspectives give limited cover on how to co-create informational, through communicational to dialogical. No meaning, acquire knowledge or achieve flashes of inspired one modality need take precedence, but certain business understanding. contexts and situations will call for certain communicational We think it limiting to consider interaction and responses. However, S-D logic particularly supports dialogue communication as separate processes. Any form of as a means of learning in interaction together, in the context interaction between buyer and supplier acts as a source of of ongoing business relationships. brand meaning, whether this is direct experience with a product or supplier firm, or derived experiences passed on Conclusions from other users, advertising messages, and news media including such new forms as internet weblogs. Branding under S-D logic becomes a communicative It is possible to put communication and interaction back interaction process whereby firms attempt to support the together again by combining three useful and traditional intended meanings of their value propositions. However, we forms (see Table II). Communication can be informational, go further and say that brand value is confirmed or communicational, and dialogical (Varey and Ballantyne, disconfirmed in use, at the time of use, as customers 2005). The informational mode includes message-making, confirm or disconfirm the value propositions in play. Let there which has the useful intention to inform. Next, much of be no doubt that value propositions are essentially promises to integrated marketing communication’s (IMC) aspirations are perform. Customers will make their most important grounded in the communicational mode, where listening and judgments of value received through direct service informing are key aspects of interaction. Finally, dialogue is a interactions with supplier firms and on service-ability of process of learning together and it works in support of goods-in-use. Put another way, the time-logic of marketing innovation and the co-creation of value[3]. The purpose of exchange is open-ended, from pre-sale service interaction to dialogue is always open-ended, learning-oriented and value- post-sale value-in-use (Ballantyne and Varey, 2006). This creating (Ballantyne, 2004b; Ballantyne and Varey, 2006). alone completely rearranges branding opportunities and The concept of brand community fits this broadened possible impacts. communicative context for creating brand meaning. S-D logic further suggests that it is the service experiences of According to Muniz and O’Guinn (2001), a brand customers that most commonly impact on brand value, community is a “specialised non-geographically bound through brand awareness and brand memory. Indeed, given community that is based on a structured set of relationships the potential longevity of brand preferences and brand Table II A classification of forms of interaction Form of “market” system Mode of social association Underlying decision practices Source of value governance Promised by selling the benefits Informational: persuasive Controlling and coercing Power inequivalence (perceived as message making domination) Communicational: informing Ethical communication with Co-produced by making and keeping Relational norms (perceived as promises and being informed stakeholders equitable exchanges) Emergent in learning together: co- Dialogical: a bias to learning Finding a voice in co-determination Networked (perceived as spontaneity) created and integrated Source: Ballantyne and Varey (2006), revised from Varey and Ballantyne (2005) 367
  17. Branding in B2B markets: the service-dominant logic Journal of Business & Industrial Marketing Volume 22 · Number 6 · 2007 · 363 –371 David Ballantyne and Robert Aitken memory derived from historical experience, the importance of product characteristics. That is to say, buyers make the service-ability of goods becomes paramount in sustaining judgments about the future efficiencies, effectiveness, and the life of a brand (in all meanings of the term). All product networking competencies of various suppliers (Moller and ¨ experiences and service perceptions meld with brand Torroen, 2003). Also, Golfetto and Gibbert (2006) report ¨¨ associations over time, and this helps to consolidate the in their recent work on “competence-based marketing” reputation of firms in both their internal (employee) and that they found industrial buyers selecting suppliers by external (customer) markets. These dynamical changes also profiling and evaluating supplier resources and impact on the perceptions of the wider community of a firm’s competencies. This process was not limited to marketing stakeholders. communication and was often initiated by a buyer in a We are confident in asserting that S-D logic opens up new pre-contractual phase to align supplier competencies with branding research opportunities. First, it will demand that buyer’s business processes, and later, with the renewed rigour and clarity in the use of the term “brand”, supplier and buyer experientially working together to and second, it will open up for consideration a variety of deliver these competencies to fit the buyer’s business communicative interaction modes beyond (but including) processes. advertising and packaging. S-D logic also gives rise to the This matches well with the S-D logic and its emphasis practical possibility of experimenting with time-based on communicative interaction, reciprocal servicing, customer contact points, and with strategies aligned more resource sharing, solution orientation and the co- closely to customer value-in-use assessments. Some of these creation of value. Of special interest in the context of issues are not new to branding scholars but they currently this article, the assessment of brand value is a shifting compete for attention in the shadow of media-dominant process rather than an act, and begins “upstream” with approaches to branding. These new S-D branding assessments of the competencies available to the buyer perspectives seem to us to be amenable to use in a B2B firm, backed by the reputation of the supplier firm. Any context. assessment of defined tangible product characteristics comes later again. It does seem to us that B2B buyer Implications for practitioners behaviour strategy is more akin to a service orientation than consumer goods. And when the appropriate focus for Great customer service is a B2B firm’s principle branding . branding activity is reflectively considered, it is likely as opportunity. This comes in two forms – direct service not the B2B firm that is brand-marked, rather more than interaction with a buyer company and indirect service its products. interaction through goods-in-use. Media advertising should Explore strategic opportunities for developing or supporting . have a useful but support role in brand building in most B2B brand communities using web-based media sites as well as call- companies.. With S-D logic, the service experience of centres and perhaps direct marketing as appropriate to customers (direct or indirect) leads in varying degrees to enhancing knowledge exchange in value-in-use contexts. positive or negative trust in the supplier firm and/or its Traditionally, industrial markets have not shown much goods and services. It follows that judgments of value-in- interest in developing brand communities of the consumer- use and resultant word-of-mouth effects are the primary based variety, like those of Harley-Davidson and Saab communicative sources of brand awareness and meaning. described by McAlexander et al. (2002) and Muniz and Notwithstanding, media advertising over the last 50 years O’Guinn (2001), respectively. However, the potential has carried the weight of brand building, and still does positive impact of encouraging web-based brand today. This is the conventional branding logic, even to communities in industrial markets could be even greater some extent for service brands (Berry, 2000, p. 135; than in consumer markets, according to Andersen (2005), however, see also Berry and Lampo, 2004). because business and professional users may have a more That said, marketing communication can play a varied committed interest in exchanging product-related and useful support role in any service-oriented brand information with the supplier company and amongst development, especially in creating awareness of the themselves. offering, stimulating trial, and providing appropriate Develop a strategic branding approach contributing to the cycle . language and imagery to help position a brand in its of service episodes experienced by customers. S-D logic offers market (Berry and Lampo, 2004). But if value-in-use opportunities to connect with customers in new ways, (experiential) judgments are out of line with media- based on the specific use to which goods are put in a mediated messages, customers will place trust in their own buyer’s value creating processes. This could mean new experience and the word-of-mouth of trusted colleagues dimensions of post-sale service and logistics service and friends. support. The concept of the cycle of service from services View brand-marks as transitional communicative devices . marketing fits well, where the interaction process is which over time stimulate brand recognition, reputation and characterised as a sequence of episodes, moments of truth, other meanings associated with the variety of interactions and or critical incidents (see Albrecht, 1990; Ballantyne et al., exchanges between a firm, its customers and other stakeholders. 1995; Carlzon, 1987; Vandermerwe, 1993). B2B marketers in our view should always explore the full The central S-D logic idea of goods as service range of branding opportunities from media messages to applications means that tracking the service experience explanatory brochures and distinctive packaging through of customers over time and contributing additional service to communicative interaction in the form of trade fairs support is an open-ended opportunity. These ideas are not and other forms of dialogical interaction. That said, task new in service industries but are less common in B2B capability seems to be uppermost in buyer consideration in many industrial markets rather more than developed contexts. 368
  18. Branding in B2B markets: the service-dominant logic Journal of Business & Industrial Marketing David Ballantyne and Robert Aitken Volume 22 · Number 6 · 2007 · 363 –371 the development of economic thought around these Co-creation of value under S-D logic enhances opportunities for . co-branding. The relationship between a supplier and a themes, see Vargo and Morgan (2005). Tangible goods customer or another stakeholder evolves around a mutual of course won out as the dominant logic. See also an earlier and reciprocal understanding of where value resides. Value historical review by Ramirez (1998) which emphasises a is mutual when it has benefits for all involved and value co-production framework at variance with that reciprocal when value is co-created. S-D logic lends itself commonly associated with industrial production. 3 Dialogue is not given any depth of treatment in the to all forms of value creation through co-operation, such original S-D logic thesis, although there are supportive as through co-design, co-production, co-delivery, and especially in the context of this article, co-branding. The references (Vargo and Lusch, 2004a, pp. 13-14). For a opportunity for a more integrated communication fuller treatment of the application of dialogue in various approach is thus broadened and deepened. This in turn marketing contexts, see Ballantyne (2004a, b), Varey supports the development of an enhanced brand image. (2002), and Varey and Ballantyne (2005). 4 For a perceptive commentary on how marketing For example, Intel, as an industrial component provider, interaction works in time, see Medlin (2004). has enhanced its brand image through association with computer hardware manufacturers and assemblers, and the highly visible placement of its brand mark on their References products. A common view is that branding in consumer markets is based . Aaker, D.A. (1991), Managing Brand Equity, The Free Press, on emotional appeals while branding in B2B markets is based New York, NY. on logic and rationality. We recommend testing the validity of Aaker, D.A. (2004), Brand Portfolio Strategy: Creating this assumption in specific contexts. Consumer-oriented Relevance, Differentiation, Energy, Leverage and Clarity, The firms (such as IBM, Apple, Coca-Cola, and Toyota) use Free Press, New York, NY. emotional brand appeals to differentiate and position Aaker, D.A. and Joachimsthaler, E. (2000), Brand Leadership, themselves uniquely in their markets. Such emotional ties The Free Press, London. are thought not to exist in B2B settings. However, Aitken, R., Ballantyne, D., Osborne, P. and Williams, J. understanding the emotional and cognitive interplay that (2006), “Editorial for the special issue on the service- impacts on any brand image might be a matter of assessing dominant logic of marketing: insights from The Otago the degrees of emotional relevance, rather than assuming Forum”, Marketing Theory, Vol. 6 No. 3, pp. 275-329. that absolute rationality applies. It is possible to monitor Albrecht, K. (1990), Service Within, Dow Jones-Irwin, and track brand image over time in terms of performance Homewood, IL. criteria, so we recommend firms test the validity of Andersen, P.H. (2005), “Relationship marketing and brand assumptions about the emotional appeal of brands in involvement of professionals through web-enhanced brand particular market contexts. The idea that emotion as a communities: the case of Coloplast”, Industrial Marketing social well-spring can be bracketed out of B2B marketing Management, Vol. 34 No. 1, pp. 39-51. decisions seems extreme to us, especially when B2B Anderson, J.C. and Narus, J.A. (1990), “A model of marketing logic acknowledges the benefits of social distributor firm and manufacturer firm working relationships as a basis for generating trust and partnerships”, Journal of Marketing, Vol. 54 No. 1, pp. 2-58. commitment with customers and other stakeholders. Axelsson, B. and Easton, G. (Eds) (1992), Industrial Networks – A New View of Reality, Routledge, London. Future directions Baldauf, A., Cravens, K.S. and Binder, G. (2003), “Performance consequences of brand equity management: S-D logic encourages us to think differently about the fluidity evidence from organizations in the value chain”, Journal of of brand connections between firms, their B2B customers and Product & Brand Management, Vol. 12 No. 4, pp. 220-36. stakeholders, and the excessively constrained communication Ballantyne, D. (2004a), “Communicating through interaction logic that may exist in B2B settings. S-D logic also asks us to and dialogue”, in Gabbott, M. (Ed.), An Introduction to break out of the narrow role specifications of marketing Marketing: A Value Exchange Approach, Pearson Education exchange and to explore the untapped potential for co- Australia, Frenchs Forest, pp. 418-45. creating brand value. Perhaps the most exciting challenge of Ballantyne, D. (2004b), “Dialogue and its role in the the S-D logic is its potential for extending the time-logic of development of relationship specific knowledge”, Journal marketing exchange[4], beyond its still current transactional of Business & Industrial Marketing , Vol. 19 No. 2, straitjacket, in exchanges of service for service, legitimized by pp. 114-23. a marketing logic that emphasises communicative interaction, Ballantyne, D. and Varey, R.J. (2006), “Creating value-in-use relationship development and the generation of knowledge through marketing interaction: the exchange logic of competencies adequate to serve our fast developing post- relating, communicating and knowing”, Marketing Theory, industrial society. Vol. 6 No. 3, pp. 335-48. Ballantyne, D., Christopher, M. and Payne, A. (1995), Notes “Improving the quality of services marketing: service (re)design is the critical link”, Journal of Marketing 1 The Otago Forum web site is available at: www.business. Management, Vol. 11 Nos 1-3, pp. 9-10. otago.ac.nz/Marketing/Events/OtagoForum/ Bendixen, M., Bukasa, K.A. and Abratt, R. (2003), “Brand 2 This emphasis on value-in-use resonates with pivotal equity in the business-to-business market”, Industrial debates in classical economics as to the comparative utility of goods and services. For a revealing historical account of Marketing Management, Vol. 33 No. 5, pp. 371-80. 369
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  20. Branding in B2B markets: the service-dominant logic Journal of Business & Industrial Marketing David Ballantyne and Robert Aitken Volume 22 · Number 6 · 2007 · 363 –371 Vargo, S.L. and Lusch, R.F. (2004a), “Evolving to a new Wikstrom, S. and Normann, R. (Eds) (1994), Knowledge and dominant logic for marketing”, Journal of Marketing, Vol. 68 Value: A New Perspective on Corporate Transformation, No. 1, pp. 1-17. Routledge, London. Vargo, S.L. and Lusch, R.F. (2004b), “The four service marketing myths: remnants of a goods-based About the authors manufacturing model”, Journal of Service Research, Vol. 6 David Ballantyne is an Associate Professor of Marketing at No. 4, pp. 324-35. the University of Otago in New Zealand and an International Vargo, S.L. and Morgan, F.W. (2005), “Services in society Fellow at the Centre for Relationship Marketing and Service and academic thought: an historical analysis”, Journal of Management, Hanken Swedish School of Economics in Macromarketing, Vol. 25 No. 1, pp. 42-53. Helsinki. He was convener of the first wide-ranging Wilson, R.M.S., Gilligan, C. and Pearson, D.J. (1995), international dialogue on S-D logic, The Otago Forum, Strategic Marketing Management, Butterworth-Heinemann, held at the University of Otago in November, 2005. He is also Oxford. a co-author with Martin Christopher and Adrian Payne of Relationship Marketing: Bringing Quality, Customer Service and Further reading Marketing Together (1991), the first text published Christopher, M., Payne, A. and Ballantyne, D. (2002), internationally in this field of marketing inquiry. A second Relationship Marketing: Creating Stakeholder Value, 2nd ed., edition was published in 2002 as Relationship Marketing: Butterworth-Heinemann, Oxford. Creating Stakeholder Value. David Ballantyne is the Dixon, N. (1998), Dialogue at Work, Lemos and Crane, corresponding author and can be contacted at: London. dballantyne@business.otago.ac.nz Gummesson, E. (2002), Total Relationship Marketing, 2nd ed., Robert Aitken is a Lecturer in the Department of Butterworth-Heinemann, Oxford. Marketing at the University of Otago. His academic and Nonaka, I. and Takeuchi, H. (1995), The Knowledge Creating research interests include advertising, consumer behaviour, Company: How Japanese Companies Create the Dynamics of teaching and learning, communications and the media. He is Innovation, Oxford University Press, New York, NY. lead author of the Marketing Theory 2006 special issue Storbacka, K. and Lehtinen, J.R. (2001), Customer “Service-dominant logic of marketing: insights from The Relationship Management: Creating Competitive Advantage Otago Forum”. He is a constructivist who is interested in how through Win-win Relationship Strategies, McGraw-Hill, people make sense of the world and an idealist in wanting to Singapore. know how we can make it a better place. To purchase reprints of this article please e-mail: reprints@emeraldinsight.com Or visit our web site for further details: www.emeraldinsight.com/reprints 371

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