18.104.22.168 Brand functions
It is imperative to understand the most important brand functions in B2B environments. McKinsey and MCM have performed an empirical survey of more then 750 deciders in 18 representative German business markets. Despite of the German impact the approach and general implications can be applied on international level. Apparently risk reduction is the most important brand function (45%), closely followed by information efficiency (41%). Image benefit will close the group with a minor 14% (Kotler & Pfoertsch, 2006:46-47). See figure 5.
Figure 5. Importance of brand functions in B2B versus B2C (Kotler & Pfoertsch, 2006:47).
Brands reduce risk involved in the buying process and increase information efficiency for the purchase of (very) complex and capital intensive products. Image benefits become important as soon as the purchase involves publicly visible products and services.
The brand relevance in B2B varies across the different buying situations: market structure, buying cycles, DMU, and visibility. See figure 6. The sum of the brand relevance criteria provides management information about the relevance of brand investment and ROI (Kotler & Pfoertsch, 2006:49).
Figure 6. Brand relevance according to context factors (Kotler & Pfoertsch, 2006:49-50).
Kapferer addressed several brand functions which justify the attractiveness and value of the brand from a customer perspective (Kapferer, 2007:22-23):
- Primarily a mechanical function to make sure that the brand is clearly seen and recognized. Identification concerns the essence of the brand and facilitates the purchaser in his/her decision process and consideration set; swift choice and gain time.
- Primarily a mechanical function to make sure that the brand is practical and recognized. Practicality concerns the essence of the brand and facilitates the purchaser in his/her purchase process for rebuy and straight rebuy; swift choice and gain time.
- The base brand guarantee function is to reduce the perceived risk irrespective of the place and time of purchase and consumption.
- The base brand optimization function is to reduce the perceived risk by offering the best product against the lowest total cost of ownership, the best solution in its category.
- The base brand badge function is to reduce the perceived risk by confirmation of self image and/or brand image.
- Continuity is an emotional satisfaction function created by brand intimacy over a long period of time due to loyalty.
- Hedonistic is an emotional satisfaction function; pleasure created by brand attractiveness, its logo, its communication and experiential remuneration.
- Ethical is an emotional satisfaction function towards the brand responsibility related to its stakeholders and environment.
Allocation of organizational resources to release brand potential plays an important factor to establish a brand leadership position. Building a strong sustainable brand can lever long term business development tremendously. From a brand function perspective Kotler and Pfoertsch have outlined eight different roles of B2B brands to conquer a unique position in the mind of stakeholders (Kotler & Pfoertsch, 2006:52). See figure 7.
Figure 7. The role of B2B brands (Kotler & Pfoertsch, 2006:52).
The eight brand roles are situated in the outer circle of the brand functions. The core represents the functions and value for the consumer where the outer circle the value towards the brand represents. The roles are linked to each other; developing one will leverage the others. Effective differentiated marketing strategies will create specific brand preferences and brand image by delivering what is promised. For that the brand will differentiate it self on the market and develop brand loyalty. The brand has enabled itself to command a premium market price with high margins. As a result of that and loyalty to the brand, it will secure future business and increase brand equity in a sustainable manner (Kotler & Pfoertsch, 2006:51-54).