The Hindu Business Line : The imperatives of B2B branding

Intel serves to illustrate the importance of branding in the B2B sector. (Above) CEO Paul Otellini speaks at the 2007 Oracle Open World conference in November 2007 in San Francisco.

D. Sampath Kumar

Buying ‘fasteners’ isn’t exactly what you would call the cutting edge of procurement function in an engineering organisation. It is, after all, at the periphery, constituting what may perhaps be best described as the nuts and bolts of a purchase department’s functions. You wouldn’t, for instance, find the General Manager in charge of the supply chain function having it put up on his customised home page of an ERP-driven management information system. The procurement is usually assigned to some lowly purchase assistant starting his career in the organisation. In the event, one doesn’t associate the phenomenon of a ‘brand’ pulling in demand from customers in much the same way fast moving consumer goods do through powerful brand appeal. That would be a folly.

That realisation dawned on me as my mind went back to a small episode in the formative years of my professional career. I had just then joined as a management trainee in a company manufacturing machine tools. In keeping with the best traditions of ‘Madrasi bonding’ I had struck up an acquaintanceship with a Tamilian working as an assistant in the company’s purchase department.

One day he was recounting to me the circumstances by which he had stumbled upon a scam in his department over the purchase of some fasteners. Apparently, the company had sent out an enquiry to a set of local dealers for supply of some fasteners of varying specifications. It was understood that the vendors (dealers in hardware) would be quoting for the ‘Unbrako’ brand of fasteners — a reputed brand of fasteners then manufactured by a Mumbai-based firm under licence from an American company which owned the trademark. The purchase order was placed on the supplier who had quoted the lowest rate but did not, however, specify that it was for the ‘Unbrako’ fasteners.

That was the opportunity the dealer had been looking for and so quietly slipped in an unbranded variety hammered out at some local blacksmith’s shop, which naturally would have cost a lot less.

As the order did not specifically indicate that it was for the ‘Unbrako’ brand of fasteners, the inspection team accepted the consignment based on dimensional accuracy and the stores issued a part of it for production use. My friend wasn’t directly involved in the purchase process as his role was restricted to merely keeping the paper work in order.

As this was the first order that he had processed he was keen to see it through to the end. When we went to the stores and inspected what remained of the consignment, he was horrified to realise that the company had been duped, possibly with the connivance of somebody in the purchase department. He wasn’t sure if he should make an issue of it. There was every chance it would be dismissed as of no consequence and he would be a marked man thereafter. He came to me, as I was the one supposedly with the requisite forensic skills, having been an audit assistant during my student days while training to be a chartered accountant.

As purchase department scams go this was, of course, of the garden-variety type. That there had been a lapse in purchase procedure is, no doubt, one aspect of it. In retrospect, two things strike me as significant. A rookie purchase assistant, with next to no knowledge of procuring engineering stores items, still knew enough to realise that in the fasteners category the brand ‘Unbrako’ meant something. He had not been an avid reader of trade journals. He had no technical knowledge in materials science.

The other thing is that such knowledge, not just about fasteners but other stores items as well, should be pervasive enough for somebody new to the job in an organisation to have absorbed it in the normal course of things. Clearly, there was some insidious process of organisational learning that sparked off a realisation in a junior purchase assistant that ‘Unbrako’ represented a dimension of quality in fasteners that others did not possess, at least not then. There was some sort of brand promotion, marketing communication and triggering of an emotive response — in short, the entire package processes that brand building traditionally involves.

“Brands’ clearly mean a great deal even in industrial products that enterprises sell to one another. In a recent research paper published online by the Harvard University, its business school professor, John Quelch, makes the point that brand-building ought to matter for businesses that produce goods for industrial consumers, too. How else do you explain the fact that four of Interbrand’s 10 most valuable global brands, namely Microsoft, Intel, IBM and GE, generate far more revenues from B2B sales than from the end-consumers, he asks. He then goes on to give specific examples of ‘ingredient brands’, a term he employs to convey the idea that B2B brands are products (ingredients) that go into the end product that mass end customers touch and feel.

Intel is, of course, the most famous example where a generation of computer users have been prompted to buy that brand of PC which has an Intel processor inside. DuPont too successfully promoted Nylon and Lycra yarn brands that went into apparel used by clothing manufacturers. Quelch also refers to the engagement of Tiger Woods in Accenture’s campaign titled ‘High performance delivered’, which is aimed at putting at ease thousands of employees who may be working in Accenture’s client establishments, as another example of B2B branding.

But, such examples apart, there are strong conceptual arguments as to why investing in a brand matters. The most obvious justification is that brand promotion is a means by which functional attributes are communicated to the downstream users. If an industrial customer thinks as credible whatever the brand communicates as its salient attributes, then you can expect the former to structure its manufacturing process to eliminate any uncertainty with regard to attributes claimed by the supplier. In the instant case, one could say that a company using the ‘Unbrako’ brand of fasteners does not have to check for the metallurgical composition or the tensile strength or whatever it is that is critical to its own manufacturing process if it is convinced that the particular brand does stand for those attributes.

Elimination of processes that have been rendered redundant because the supplier of a particular brand of merchandise has already put that in place at his end; has communicated the same in some manner that is accepted as credible by the customer, is a huge advantage. Enterprises now recognise that in an increasingly globalised world of products and services, constant innovations in cost efficiencies in manufacturing processes are the keys to success.

But ‘value’ to a consumer goes beyond communicating certain useful functional attributes of a product. It is only a matter of time before a product with unique proprietary value becomes a commodity. So companies have to invest in communicating such values that are hard to quantify but are nevertheless very important in the customer’s scheme of things. The problem becomes even more acute when a company deals in a variety of products meant for consumption across different user segments.

There is a need to emphasise a set of value propositions that can be regarded as a common thread running through the spectrum of products that a company manufactures. This is where company itself becomes a brand as IBM or DuPont or Intel has done. Such a communication cannot be left to the trade channel partners or individual product managers.

That brand-building is an essential element of businesses in industrial products is often not perceived simply because such products do not conform to the traditional metrics of promotion common in print ads and commercial spots in radio and television. A company manufacturing steam generating boilers can’t really say ‘Buy one get one free’.