BtoB industry can be glamour, despite the lack of “brand recognition”

Brands are often considered paramount in today's marketing, to the point that monetary values are often assigned to them. This is obviously exceedingly difficult, not only because the concept of brand and what it entails is very vague, but also because of the subjectivity and changing tastes and constraints. For example, being environmentally and socially conscious is pretty much a requisite for a modern brand. It also raises questions such as "is it better for a brand to be well-known, or to have a high percentage of positive opinions?" Furthermore, the brand is closely related to the product, but public perception for a brand can sometimes be quite different from the product itself.

An opinion pollster, Interbrand, publishes each year a survey of "the 100 best global brands" (see here: http://interbrand.com/en/best-global-brands/best-global-brands-2008/best-global-brands-2010.aspx), and has an solid methodology, but interestingly, most people I showed it to had widely divergent views. Obviously, the survey represents an aggregate of opinions leaning towards a mean, but it's interesting to see how individuals have a very strong sense of the hierarchy each of them attributes to brand, to a level that can be considered equal, if not superior, to political opinions. For that matter, I have already argued that politics now includes many elements of branding, sales, and marketing, for good or ill.

This is what makes it so fiendishly difficult for a company to maintain a good brand image, especially at a time when technology allows information and criticism to flow so much faster and at little cost. Although the power of the internet should not be overestimated, as advertising and marketing use many different media, it does allow entities with small budgets, such as NGOs or individuals, to strongly criticize brand and bring their message to mass media. An example of that is the Greenpeace spoof on Volkswagen Star Wars' ad. It is also tempting to use a brand power to expand it, bur at the risk of diminishing the brand's image. Apple has successfully taken this risk by going into mobile phones and music sales, as seen in previous blog entries, without alienating customers.

That said, the main point of today's blog entry is how little recognition industrial brands have, in particular BtoB. It makes sense for reasons seen below, but is still worth discussing, as it strongly alters marketing techniques.

When teaching marketing, I did ask students to pick and follow a brand, building it themselves as a marketing exercise, explicitly stating that they could take either BtoB or BtoC. I argued that BtoB is comparatively easier to start with as it involves fewer variables: no focus groups, more long-term customer contact, more faithful customers due to long-term relationships, little or no advertisement. And yet, all the students picked consumer brands, preferably luxury and high-tech brands. Similarly, the only industrial companies whose brands truly register with people are BtoC, consumer-oriented brands. That reflects not only the higher visibility of those brands, but also the fact that most people notice mostly what they pay for as direct customers. For example, Getrag or Bosch are huge industrial car part suppliers, yet less known than even small automakers such as Fiat. Veolia has some brand value, mostly because it puts its name on buses and containers, but since it does business mostly with public collectivities, people do not see themselves as consumers, even though they indirectly are through their taxes.

While we could argue that BtoB brands do not need the same level of name recognition than BtoC brands, since their customer relationships are different, it still matters. Recruitment is one example, since graduates and job seekers may prefer well-known companies. Generating public sympathy is also a plus, as it can influence public policies, such as supporting a certain type of industry. Obviously, that point also depends on many other factors.

That said, should BtoB companies invest more in public relations in order to enhance their brand image? Considered the cost and the incertitude of returns on investment, investing in R&D, training, recruitment, and other such elements is most likely a better option, one chosen by most companies.

At the same time, I am impressed to see the efforts of industrial companies to adapt a business that is not very glamour, overcoming and evolving to changing regulations and long-term trends. Consumer fads do not matter as much as underlying changes, such as the necessity to hedge for national sales evolutions, environmental and industrial regulations (themselves led by end consumers and politicians), and fickle public officials. And those changes have an influence on our daily lives that is just as great as consumer technology improvements such as WiFi, GPS, or ESP.

For example, I have recently researched several companies. One recycles food processing industry leftovers, and turns them into fully usable products for sectors as diverse as bio-fuels, lipochemistry, and animal nutrition. Another is a traditional company that creates insulation materials, evolving to reduce its environmental impact, using more natural materials, and building “green roof structures”. A third builds heating systems and a fourth, electrical systems.

All have poured money, time, and the motivation of their staff into many improvements. They not only make the company more competitive, reducing costs and improving margins, complying with new regulations, but also fulfill an important environmental role. This is achieved through improvements in products, production methods, in the building themselves. External factors are also looked at, often with the partners involved: fewer deliveries cut fuel consumption and expenses at little extra inventory cost, while packaging is minimized and production leftovers recycled and re-used. Those incremental improvements, aggregated, have arguably more impact than large-scale projects in transportation systems and infrastructure, and yet generates far less publicity and debate.

Large multinational companies have had to adapt for a long time, but the recent wave of globalization has meant that even small companies now function internationally, either exporting their production, importing parts, or opening plants abroad. They do not have the legal resources of larger companies, yet adapt remarkably well, hiring more international staff and local agents in order to penetrate foreign markets. This has become essential for companies to survive and grow, as it opens not only new markets, but also hedges risks, regardless of the size of the manufacturer.

Environmentally conscious, important R&D budgets, open to international markets, flexible? I call that glamour.

Future entries may develop some of the themes introduced here, such as

• the influence of state and public policies on regulations and markets. They also include the impact of institutions and custom systems such as the EU, Mercosur, NAFTA, and so on.
• How public mood and opinion affects those policies on national and international levels
• consequences of the increased globalization on sales, recruitment and production

Comments and suggestions welcome