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

OVERVIEW

In this part, we will look into the significant influence quality orientation has on dictating what sort of branding strategy in an industrial context. Based on RBV theory, then a discussion will follow to work out why ingredient branding, with self-owned ingredient brands in particular, has gained increased popularity in a recent Chinese settings.

2.2.2 Research on the Relationships of Quality Orientation to Market Brand

Two successful business strategies which are used most by many firms are market orientation and quality orientation. Accordingly, a large amount of research work has been focused on both. What can not be ignored is, however, most of these workings are grounded in those advanced countries featuring US, the UK, Germany or extras. As a primary competitive resource to support sustained business development, the quality of products is definitely a major factor to consider when branding or other sorts of marketing strategies are to be implemented. It is particularly the case with B2B markets where purchase is always subject to more rational decision to be taken through complex organizational processes. For this very reason, industrial manufacturing has a tendency to be quality centric so as to meet a given threshold when assessed. On one hand, quality orientation can be helpful to boost overall business performances at organizational levels, for instance, in terms of ROI, profit margins, sales volumes, market shares and sales growth (Mohr-Jackson, 1998). The findings from Douglas and Judge in 2001 further proved that quality-oriented business strategy is closely related to a firm’s performance. On the other hand, with reduced customer costs from improved quality, such a practice started to receive more popularities and developed into a dominating business philosophy in manufacturing, amid a trend of customers demanding higher or superior quality and performance from the product itself. (Fornell, Huff & Andersen, 1994). In a growing market which is also highly competitive, brand managers found it imperative to satisfy customers’ needs at time of purchase if they don’t want their customers to go elsewhere (Rice, 1990). Unfortunately, it is common for us to see many firms still reaped poor or non-growing performance despite much more inputs already in terms of the quality of products. Traditional business concept of quality bringing success was even called into question by many corporate executives when they came under huge pressure from customers’ stiff request of costing to be reduced, which was part of the reason why market and quality orientations attracted attention from many scholars. Another research also pointed out that, a firm which is concentrated on improved quality of product apparently will achieve a superior business performance over others. Similarly, a firm that is market oriented is also able to outperform its competitor which is relatively less market oriented. Therefore, based on that argument, we can reasonably expect unique competitive advantages derived from differentiated business resources from a firm which is able to combine both strategies into one for synergy effects. By disregarding other types of business strategies like market orientation and customer orientation, we will take quality orientation alone as variables for modeling purpose in section three to explain how it is defined and differentiated.

2.2.3 How Branding Strategy relates to RBV Theories

It is well known that both marketing and RBV theories are mainly focused on how to create and hold competitive advantages for competitive survival from a firm’s perspective. Except for the prior efforts made by a small number of scholars (Bharadwaj, Varadarajan & Fahy, 1993; Capron & Hulland, 1999; Day, 2001; Hunt, 1997; Hunt & Morgan, 1995; Wernerfelt, 1984), relatively speaking, few marketing scholars have ever applied RBV theories to marketing research for further analysis (Srivastava, Fahey & Christensen, 2001), let alone extended research into brand marketing. In terms of strategic management, despite the increasing popularity received by RBVF literatures for over the last two decades, marketing scholars are meanwhile making efforts to developing a variety of core concepts in relation to marketing management. Some typical examples are Capability (Day, 1994), Market Focus (Kohli & Jaworski, 1990), Knowledge (Glazer, 1991), Market-Based Assets (Srivastava, Shervani & Fahey, 1998) and etc. However, these results didn’t incorporate what was suggested in RBV theories. In practice, branding strategy and marketing management is a process involving decision to be made dependent on how various investment-acquired resources are identified and maximized through marketing efforts to make sustained competitive advantage. As revealed in RBV theories, the rarer a resource is, the more likely it is to transform into a sustainable competitive advantage for a given firm (Barney, 1991; Peteraf, 1993). When it comes to those self-owned ingredient brands, ingredient branding is thought to be an ideal option to the host brand owners but requires a precise identification of what scarce resources and capabilities they already have. In some cases, mergers & acquisitions maybe necessary to obtain basic resources before ingredient branding is implemented. There is a strong tendency with the manufacturing of industrial equipments in China that many firms are getting obsessed about developing independent ingredient products to their host machines, so as to make themselves less reliant on outside suppliers or equally important to make breakthrough against manufacturing constraints. A perfect reflection of such a phenomenon is the fact that many of the Chinese host brand owners are also operating on the market as suppliers of some key components to the host machines. The bad thing is, few of us can have a full understanding of self-owned ingredient branding and of how it can be implemented. So research work in this aspect is far limited for us to make reference to.

An analysis framework combining RBV theories with marketing principles (Srivastava, Fahey & Christensen, 2001) is already devised to give you a full understanding of how the process is intended to operate in real business world.

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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