Academic Research学术研究连载

走进中国工业品牌管理与竞争的新常态

Entering into the “IB and HB branding management Era”

                               by Dr. Yang XiaoTong

 Edited by Eric and authorized for release

WHAT WE KNOW ? -002

At present, China has become the second largest economy in the world since its open-up policy over 3 decades ago and rapid growth can be seen across all industries nationwide. Furthermore, it was a decade ago that China had got known as the ‘World Factory’ with a continuously improved industrial economy that is driven by a huge competence of equipment manufactures. Often considered to be reflective of how much industrial economy in one country is developed, equipment-making industry in China has been experiencing a rapid growth since many years ago and consequently contributes to a significantly raised quality of the entire economy across the nation. Meanwhile, we can see from this course of development an upward trend of this industry becoming increasingly brand oriented with raised professionalism to cater for the customer’s demand for upgraded quality that is driven by both technological advance and increased market competition. As the core of marketing, brand strategy is always playing a critical role in determining how well the performance and image of a company will be perceived by the customers it is designed to signal to (Bruhn, 2001). In the light of Made-in-China produces already being commonly perceived of inferior quality with low cost worldwide, we are still much less developed in terms of how to manage branding our industrial manufacturing through daily workings. Back to our domestic markets, differentiations among various brands on the market are not so clear and a majority of them are less competitive on global market. Since mid-1990s or more recently the global financial crisis that originated from the US in 2008, the world economy had been in a downturn as outside demand declines and inside competition increases, thus forcing the Chinese enterprises, particularly those involved in equipment-making businesses, to speed up or expand their involvement into the global high-end market by upgrading in multiple ways. Nowadays, economic globalization and more diversified free competition have led to an apparent shift in the ways marketing is conducted under more concentrated brand strategy. Brand is now of a huge significance to a company in many different aspects including sales performance, market competition and the value it will create for the company. The proof of it can be found in many of the biggest global manufacturers with brand often accounting for over a half of their total market valuations, fully indicating brand is undoubtedly a key to the success of a company to create values (Keller in 1998 and Linxweiler, 2001).

What already applied to a widespread range on B2C market is Brand marketing, on which a lot of research work has been done (Aaker, Keller, Simon and Sullivan, Rust, Zeithamal, Lemon, Cronin, etc). In practice, more concentrated brand strategy has an advantage of enabling a market entity to better cope with the inherent dynamic competitions so as to meet the ever-changing demands by both suppliers and customers. However, there are still a large number of companies not having clear knowledge of ingredient brand marketing and thus having little knowledge of how to market their products with ingredient brands (Anderson and Narus, 2004). Now it is proved that brand strategy can be very effective in terms of improved customer satisfaction, enhanced customer loyalty and both achieved economic and financial goals.

Based on what we have so far achieved in research on the subject of brand marketing, it is a long-term process of many domestic equipment-making enterprises to explore how to reinforce the competitive advantages of their host brands for raised customer satisfaction and loyalty. Ingredient Branding has been a commonplace to everyone’s daily life in the western world and is already also applied to the emerging Chinese market with many big names from the west. More importantly, Ingredient Branding starts to be adopted by more and more Chinese brands that target consumers at the end markets (Pfoertsch & Kotler, 2010).

Despite a decades-long discussion among various industries on branding industrial produces and many success stories we have seen, branding strategy hasn’t gained adequate attentions it deserves from those who study it. It is until recent years that this strategy started to attract attentions from industrial produce manufacturers after Ingredient Branding was introduced and subsequently became a part of Branding Strategy with industrial produces (Ludwig, 2000). As revealed by David A. Aaker, who became the first one to start a study on this subject, an end-user-oriented company is able to push its products to another group of consumers under Ingredient Branding, for expanding its applications. Provided the finished products are displayed with excellent performances from any elements they have, it is very likely that consumers will require that element be contained at time of purchase. Furthermore, they may also require OEM manufacturers and suppliers to live up to their expectations on quality by using that element as a must (Muehr in 2001).

A majority of the companies provide not only individual components, but also the finished products. A typical example to reflect this is with many multinationals, such as GE and Caterpillar, who are selling household appliances like washing machines to a large number of end users, and also are supplying key industrial components like turbo engine and diesel engine to aircraft manufacturers and shipbuilders as well. In the mean time, they are often self positioned as ingredient brand suppliers of many host brand customers that are involved in the same industry as they are, such as many ingredient brand suppliers of mining components to be incorporated into their host brand equipments. The indication from all above is, it is truly difficult for a specific company to determine what branding strategy it is going to adopt and is extremely difficult for it to obtain these sorts of data (Pfoertsch & Kotler, 2010).

According to an in-depth analysis by Rao & Rueckert (1994 to 1999) on the signaling effect of Co Branding, consumers often tend to make more positive assessment of the Co-Branded products than they do of the Mono-Branded products, as superior quality is signaled with the Co-Branded products in comparison. Under this sort of circumstance, how about the impact by a supplier with both host brand and ingredient brands and its branding strategy on the market and the consumers? More specifically, for instance, what impact will this sort of host brand product with self-owned ingredient brands has on those industrial consumers in terms of increased customer satisfaction and loyalty? And what impact it has on those industrial companies where product quality is strategically a primary precondition to their survival and further development on the market? When it comes to this point, we found no dedicated study was made with B2B markets and that will direct us to exploring more on this aspect.  

Waiting for next release…..

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

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