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Is Branding a Smart Investment for Your Organization?

May 31, 2012|Ona Koehler

In an ideal world, b-to-b buyers would be perfectly rational and their decisions would always be based solely on the objective attributes of the product or service under consideration. Welcome to the imperfect world, where buyers often reach a point of information overload and resort to heuristics that include brand cues to make decisions.

In an ideal world, b-to-b buyers would be perfectly rational and their decisions would always be based solely on the objective attributes of the product or service under consideration. Welcome to the imperfect world, where buyers often reach a point of information overload and resort to heuristics that include brand cues to make decisions.

In their paper “What factors influence buying center brand sensitivity?” Dr. Brian Brown and his co-authors introduce the notion of information processing efficiency gained through brand cues. One of the study’s focal points is determining when brands are most likely to influence buyers, which can provide insights into the investment required for brand development.

The paper examines how the usage of brand information depends on purchase complexity and purchase importance, as perceived by the buying center. The results obtained explain 41 percent of the variance in brand sensitivity, at a confidence level of at least 95 percent. Brand sensitivity showed an inverted U-shaped relationship to purchase importance, with brand playing a bigger role in the decisionmaking process as the purchase importance moves from low to moderate, but then falling sharply for purchases of moderate to high importance.

On the other hand, the relationship of brand sensitivity to purchase complexity was found to be significant only when the product under consideration was intangible or the buying firm size was small. More specifically, purchase complexity and brand sensitivity are positively related when the buying firm is small, and the relationship between the two is U-shaped when the product under consideration is intangible.

Based on these results, investment in branding appears likely to provide the highest return for purchases that, while deemed of moderate importance, are highly complex – and involve intangible products or are being made by small companies.

For b-to-b marketers, understanding how buyers perceive the importance and complexity of a potential purchase can provide insight into how significant a role the brand will have in the decisions. This insight can inform the mix of informational materials provided to buyers, as well as the level of investment required for building brand equity.

Ona Koehler

Ona Koehler is Senior Benchmarking Manager at SiriusDecisions. She works with clients to gather and review key sales and marketing spend and performance data. Follow Ona on Twitter

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