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 ? -004

Generally speaking, coal-mining equipments are referred to as specialized industrial facilities with complicated manufacturing processes, demanding quality, long service life and most remarkably high value as capital assets. Influenced profoundly by the extensive economic globalization for many years, we have witnessed in China competition for market shares in the mining equipment manufacturing sector is getting tougher and tougher with a number of major recognized host brands already well matched with each other on the market. To survive it, a majority of those host brand suppliers are using all means to attract and retain their customers by offering improved products with more after-sales services plus reduced lead time for delivery. As the price for host machines continues to fall, unavoidably a serious problem has emerged with corporate profits getting eroded gradually by outsourced ingredient brands owners who are often in constant supply of some critical components to them. Over the previous decade, a fact was found that we haven’t seen a significant rise in the average corporate profits for a vast majority of our host brand suppliers. For industrial customers, their preference of big purchase to be made often tends to be stable over quite a period of time leading to strong recognition with familiar brands that have been thought of having reliable quality, good performance and high level of services. A differentiated ingredient brand under such a circumstance can be a better way of contributing to integral purchasing and even to making itself a benchmark for making comparison to competing ones. More importantly, it would be better known and recognized by the customers to help in developing more habituated purchasing which in return can create a huge market demand for independently branded spare components to host machines. Ingredient branded products has been around for some time and can be configured into the process of OEM manufacturing, which is already a common practice by many coal-mining host machine manufacturers. Intangible assets of various forms, like customer loyalty and brand, are attracting more and more attentions from company executives and among them, brand is considered unanimously to be the most valuable company asset (Kotler & Pfoertsch, 2010). In this sense, it is actually a chance of the host brand owners to stay ahead of the competition in intermediate market by means of optimized company resources and implementing branding strategies with ingredient branding strategy included.

What impact will it have on host brand if ingredient brand, or particularly a self-owned ingredient brand, is to be introduced? And how much would the impact be in such a case? With host brand being present and quality-driven strategy of development already in place, how could ingredient brand, including self-owned ingredient brand, act as a more significant factor or an inherent one that will contribute to improved satisfaction level and increased customer loyalty? Lastly, how likely is self-owned ingredient brand to bring more sustainable competitive advantages to the host brand owners? In order to answer all the questions above, we did a survey on the classic Chinese coal-mining equipment manufacturers utilizing both host brands and ingredient brands, including those of their own for marketing, as an effort to demonstrate the role systematic marketing management with customer trust gained from both host brands and ingredient brands, with self-owned ones, will play in forming an internal mechanism that functions to shape and determine the relationships between the buyers and the sellers on B2B markets.

1.2 What this study is about

The changes of competition both inside and outside a company are always what create market opportunities aw well as customer value (Drucker, 1986). As we are already in a new stage where brand has become the driving force of business development, a common challenge facing every one of the company executives has formed with decision-making on what sort of branding strategy to be adopted and how to manage the way a certain branding strategy is implemented. This is a critical process to enable a company to create more customer value based on its existing resources that host brand brings. Continuing with the research in this aspect to make more contribution theoretically, this study will be based on an all-round analysis we did on the customers to some of our mining-equipment manufacturers here in China. Through a comprehensive study on the whole process of how purchasing decision is to be made within a number of those major coal-mining corporations nationwide, we will be presenting a full report which is to explain how host brand and ingredient brand, including self-owned ingredient brand, work to demonstrate that, in B2B market, ingredient brand, with self-owned ingredient brand in particular, can have significant impact in boosting customer satisfaction and customer loyalty, and in enhancing the perceived host brand quality ultimately. It is our hope this study will be valuable in providing corporate executives with practical guidance to making competition assessment of implementing ingredient brand marketing strategies.  

1.3 Objective of the study

It is in B2C domains where dominating brands have long been proven to be powerful in setting up competitive advantages. However, changes are happening nowadays to these traditional markets and even with more professional B2B markets getting involved, where saturated competitions are commonly seen among different brands and de-branding starts to appear as a result of that trend (Kotler and Pfoertsch, 2010). In this case, configuration requests on various critical components to the host machines are raised constantly by the customers and one unintended result of that is some of the high-end ingredient brands being more powerful in penetrating the equipment-making market which was previously controlled by most host brand owners. Getting ingredient products branded is always necessitating professional marketing operations that are designed for catering to more diversified market demand, thus presenting us a good opportunity for brand competitiveness to be viewed from a different angle. As far as the whole equipment-making industry in China is concerned, this study could be a meaningful as guidance to how host brands along with ingredient brands can be integrated into branding strategy for shaping differentiated competitive advantages.

With those purchasing mangers from some of the major coal-mining companies in China as the subject of our study, we did an empirical research following a survey on the customers of both host brands and ingredient brands. What the study is motivated to achieve are as follows,

Academically

This study is to provide some fundamental principles that explain how ingredient brands, with self-owned ingredient brands included, interact with host brands and how that correlation affects customer’s satisfaction level and customer loyalty. As a case study on industrial B2B markets, it will explore more to demonstrate the influence host brand has on a company’s business performances and also the impact other associated factors, such as quality of products and customer trust gained from ingredient brands or self-owned ingredient brands, have on customer’s satisfaction level and customer loyalty.

With the Chinese host brand manufacturers in particular, the study will be presenting some basic theories on how to maintain increased competitiveness in a differentiated way through selection of appropriate host branding strategy and brand marketing of critical ingredient products.

This study is also to give a fundamental guidance to the Chinese host-brand manufacturers from B2B markets on how mergers and acquisitions should be targeted and carried out from a perspective of brand marketing. We all know that branding strategy is important for a company to develop in a sustainable way, and ingredient brands as part of that strategy can be of more significance to putting host brand into a differentiated advantageous position if further applied in a sensible way. It thus a more effective way to judge how a company’s future performance looks like in a competitive environment. For this reason, we will explore more theoretically on how a number of the following company-specific elements relate to each other during the course of its business development: identified internal resources that are dependent on host brand, or input resources for mergers and/or acquisitions to be carried out and a particular marketing strategy to brand ingredient products.

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

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