B2B Branding
Haas School of Business
UC Berkeley
Fall 2008
Week 8
Zsolt Katona

• Case Discussion: Barco
• Case Discussion: Intel Inside
• A few thoughts on B2B Branding
•How to measure brand equity? Conjoint analysis

1.
Brand
Coca-Cola
2. (3.) IBM
3. (2.) Microsoft
4.
5.
GE
Nokia
6.
7.
Toyota
Intel
McDonald’s
8.
9.
Disney
10. (20.) Google
Value (million $)
66,667
59,031
59,007
53,086
35,942
34,050
31,261
31,049
29,251
25,590
Change
2%
3%
1%
3%
7%
6%
1%
6%
0%
43%

Sales
0
Marketing Budget

1.
Brand
Coca-Cola
2. (3.) IBM
3. (2.) Microsoft
4.
5.
GE
Nokia
6.
7.
Toyota
Intel
McDonald’s
8.
9.
Disney
10. (20.) Google
Value (million $)
66,667
59,031
59,007
53,086
35,942
34,050
31,261
31,049
29,251
25,590
Change
2%
3%
1%
3%
7%
6%
1%
6%
0%
43%

6

• B2B buyers are rational and not influenced by brands
• B2B purchases are about the relationship, only sales reps matter
• Price is the only thing that matters
• B2B products are too complex
• B2B companies sell to few customers

• Buyers are people with emotions
• People do not even know that their emotions are affecting their decisions
• They may face an overwhelming choice
• Purchasing department may not be as technically sophisticated as engineers (high-tech)
• Relationship benefits are hard to objectively measure
• Signaling quality

• Greater willingness to try
• Greater likelihood that the product is purchased
• Willingness to pay a price premium
• Less sensitive to price increases
• Less inducement to try a competitive offer

• Customer risk is a bigger factor (“ You never get fired for buying IBM ”)
• Buyer is usually not a single decision maker
• Brand loyalty is usually higher in B2B, but
• Building brand equity takes more time
• Special case: hybrid brands (microsoft, GE)

• Acme Brick – brick manufacturer
• $1.5 million marketing – mostly image building
• Partnerships with sports celebrities, PR, charity events
• 100-year product guarantee (ind. stand.: 3 to 5)
• 84% brand preference
• Estimate: brand is worth 10% price premium
• Sales: $200 million, brand is worth $20 million annually

• The CEO is a brand cheerleader
• Understanding how a strong brand reduces commercial risk (customers’ customers)
• Efforts are focused on a global corporate brand, not individual products
• Coordination of company appearance
• Rigorously measure the payback on marketing expenditures

Conjoint Analysis
Goal:
To estimate consumers’ preference structure (valuation of attributes) by forcing them to trade-off product attributes.
Major uses:
Measure brand value, New product design, Design modification, Pricing,
Price discrimination, Benefit segmentation.

CONSUMER NONDURABLES
Bar soaps
Hair shampoos
Carpet cleaners
Synthetic-fiber garments
Gasoline pricing
Panty hose
Lawn chemicals
FINANCIAL SERVICES
Branch bank services
Auto insurance policies
Health insurance policies
Credit card features
Consumer discount cards
Auto retailing facilities
High-tech maintenance service
INDUSTRIAL GOODS
Copying machines
Printing equipment
Facsimile transmission
Data transmission
Portable computer terminals
Personal computer design
OTHER PRODUCTS
Automobile styling
Automobile & truck tires
Car batteries
Ethical drugs
Toaster/ovens
Cameras
Apartment design
OTHER SERVICES
Car rental agencies
Telephone services & printing
Employment agencies
Information-retrieval services
Medical laboratories
Hotel design
TRANSPORTATION
Domestic airlines
Transcontinental airlines
Passenger train operations
Freight train operations
International Air Transportation Association
Electric car design

• Define Product Concept
• Define relevant attributes (focus groups, interviews)
• Define levels for each attribute based on input from
– R&D
– Saturation effects (focus groups)
• Collect data
– Full profile procedure
– Trade-off matrix
• Interpret data
– Attribute level valuations
– Attribute importance
– Simulate scenarios
– Price, market share

Assume alternative laptops only differ in three characteristics (each having two possible levels):
1. Brand (Lenovo or Dell)
2. Weight (3lb or 5lb)
3. Price ($1000 or $2000)

Task 1.
Rank order the following combinations
(1= most preferred, 8= least preferred)
Once finished, assign a rating to the alternatives. (100 is highest, 0 is lowest)
RANK RATING Product
_____ _____ Lenovo, 5lb, $1000
_____ _____ Dell, 3lb, $1000
_____ _____ Dell, 5lb, $2000
_____ _____ Lenovo, 3lb, $2000
_____ _____ Lenovo, 3lb, $1000
_____ _____ Dell, 5lb, $1000
_____ _____ Dell, 3lb, $2000
_____ _____ Lenovo, 5lb, $2000
Pick one level of one attribute. What is the average rating for it? Do the same for all 6 attribute levels.
Lenovo
Dell
3 lb
5 lb
$1000
$2000
Average rating:
_______
_______
_______
_______
_______
_______ How much is 1 unit of rating worth?

Task 2. Assume “customer utility” is linear and additive.
What is the customer utility of a Dell PC weighing 4 lbs for $1500?
V(Dell) =
V(4 lb) =
V($1500) =
V(Dell, 4, 1500) = V(Dell) + V(4lb) +V($1500)
=
Assume market share is proportional to “value”.
What is this PC’s market share if it competes with a Lenovo,
3 lb, $2000 machine and a Dell, 5lb, $1000 machine?
V(Dell,4, 1500) =
V(Dell, 5, 1000) =
V(Lenovo, 3, 2000) =
--------------------------------------
Total:
MS(Dell, 4, 1500) =

Task 3 . Calculate attribute importance by taking the maximum difference in average attribute ratings dividing it by the sum of all the differences in attribute scores.
V max (brand) =
V max (weight) =
V max (price) =
Importance of brand: ______
Importance of weight: ______
Importance of price: ______

Relative importance of features in car choice (%)
Brand 35
40 35
45
40
50 50 50
Engine 15
15
20
10
Price 20 20
10
Warranty 20
10
5 5
5
10
15
10
15
5
Exterior spec
Interior spec 5
5
10
15
5 5
10
15
Financial transaction
Jewellery Personal possession transporter
Performance emblem
20
10
15
5
5
10
15
5
10
10
10
15
15
5
15 label
Good value
21

• Always use a professional market research firm.
• A key issue is finding the relevant attributes
• Consumers need to be familiar with the category (e.g.
Electric car)
• There can only be a few attributes and levels
• Can include abstract attributes (e.g. brand)
• Does additive utility model make sense?
• What about interaction between attributes?

• Branding is a basic way to protect one ’ s market from commoditization
• In business markets, beyond product benefits, the brand also summarizes
– Process benefits (e.g. MIS systems, delivery)
– Relationships benefits (partnership, responsiveness … )
• Branding works because “ perceptions matter ”
• Branding has a strategic role in terms of
– Resource allocation (R&D vs. marketing)
– Going to market strategy (push or pull)
– Competitive strategy (positioning)