Wednesday, November 16, 2016
Note, this is Part 4 of Anova’s 5 part series: Understanding Decisions. For an overview of the research methodology, Click Here. Be sure to come back at the end of the month for the last post examining sales effort.
Brands are everywhere around us. In markets driven by consumers, a brand can be a powerful differentiator and the reason someone might choose to drink Coke instead of Pepsi, or drive a BMW instead of a Mercedes. In the B2B world however, the importance of brand can be less clear.
Does a decision-maker weigh the impact of brand equity when signing off on a premium product over a less-expensive option? Will the owner of a small business factor in the notoriety of using the software from a prominent technology vendor instead of a less-known start-up which offers a more advanced user interface?
Here’s what we do know: Brand was mentioned as a reason for choosing a vendor twice as much in Mature market situations (33%) than in Growth market decisions (16%). Why would brand be seen as twice as important in these more established industries?
In the financial services world, buyers are more likely to choose a provider with a trusted brand. Longevity, stability, and organizational strength all make a person feel safe and protected so that he may turn over his assets. Even when you look at the dictionary definition of the names of some leading financial services companies you find: faithfulness, loyalty, the ability to make someone stronger, leading in new ideas, act in confidence. These names are designed to promote trust and confidence, and when we look at the data and see 1/3rd of all decisions from Mature markets include brand in some capacity, it is evident emotional ties are important.
Anova’s Mature market classification does not include all financial services companies, however. There are other corporations we included who exist in markets in which the competitive landscape is stable and market share is largely held by only a few select providers. In these scenarios, market leadership and the widespread reputation as a top provider is often cited as a reason for selecting those companies.
On the flip side, Growth markets can be too fast-moving for brands to really take hold and factor into decisions. Disruptive new products or M&A activity leads to ever-changing marketplaces. In these Growth market decisions, it is not uncommon to see a smaller company with breakthrough technology take on a large conglomerate and win a deal. While 16% of buyers do end up choosing a vendor based on their reputation, without the same need for trust that Mature market buyers have, Emerging market decisions largely do not involve brand.
A company’s brand can distinguish itself as unique but it doesn’t always influence final buying decisions. In Anova’s research, brand was twice as important in final purchase decisions in Mature markets, largely due to the importance of stability and reputation in the financial services arena. In Growth areas, the constant transforming of the competitive landscape upends the ability for brands to resonate deep enough in buying decisions.