There are hundreds of examples of business-to-business companies that have dismissed brand value as something managed by the “business-to-consumer” companies only. Yet brand value can be the competitive and economic advantage B2B companies need to get ahead if they design it into their business model and invest in the right things. Sure, it requires building relationships with customers in a different way than consumer brand building. But the return on those relationships can be significant. Here are some examples taken from companies I’m familiar with.
Typically, buyers in the CPG industry try to put all vendors on the same “level playing field” so that they can select based on best price. An ingredient vendor to the CPG industry is not the low cost provider. It can differentiate itself from competitors by offering new product development services along with superior speed, quality, flexibility and delivery. This means their “brand” now brings additional value at contract time so they avoid being treated like a commodity.
Ditto for private label manufacturing. While everyone else competes for private label contracts from big retailers by offering the lowest price for products that meet specified quality and service standards, a PL manufacturer can build their brand by offering additional go-to-market services making it hard for retailers to select a lower cost alternative at contract time and say no to the value added services.
In an industry where a penny matters, a strong local “brand” for an ethanol company is the difference between paying top of the market prices for corn from local farmers or the low end of the market for the same corn; often a difference of 2-4 cents. Likewise, when selling distillers grains to local feedlots they can get a penny more. To build a local brand, the company can be in the community supporting and sponsoring local activities, hosting seminars on topics useful for their customers, or just offering free coffee and chatting at the local café.
That’s three examples of how companies can differentiate themselves to avoid being trapped in low cost price wars with competition. It requires strategy, a business model designed differently than competition, and a willingness to invest in relationships to build brand value. But the return on those efforts can be significant.