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Impact of component supplier branding on profitability

Author

Listed:
  • Stefan Worm

    (GREGH - Groupement de Recherche et d'Etudes en Gestion à HEC - HEC Paris - Ecole des Hautes Etudes Commerciales - CNRS - Centre National de la Recherche Scientifique)

  • Rajendra K. Srivastava

    (SIS - Singapore Management University)

Abstract

In recent years, many business-to-business (B2B) component supplier (CS) firms have added branding to their marketing toolbox. By extending the logic of ingredient branding to B2B components, they aim to create "pull" from B2B end customers by building a strong CS brand image among their customers' customers. In contrast with the established "push" approach of building strong relationships with original equipment manufacturers (OEMs), it is unclear whether and under which conditions CS branding is a worthy strategy. On the one hand, anecdotal evidence suggests that suppliers can leverage strong CS brand image in negotiations with increasingly powerful OEMs to enhance their financial performance. On the other hand, many B2B managers believe that branding does not work in their industry context and erodes profitability. We build a data set consisting of survey measures and archival data across a broad set of industries. Our results indicate that the financial outcomes of CS branding largely depend on the characteristics of the CS and OEM industries. Unlike dyadic OEM–CS relationships, which enhance profitability invariably across industry contexts, CS branding is effective only in well-defined situations. CS branding initiatives can enhance return in CS industries with substantial levels of product differentiation and technology intensity. However, unfavorable results may arise in industry contexts in which OEM–end customer relationships or OEM brands are important.

Suggested Citation

  • Stefan Worm & Rajendra K. Srivastava, 2014. "Impact of component supplier branding on profitability," Post-Print hal-01097597, HAL.
    • Handle: RePEc:hal:journl:hal-01097597
    DOI: 10.1016/j.ijresmar.2014.05.005
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    Citations

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    Cited by:

    1. Mullins, Ryan & Swain, Scott & Friend, Scott B., 2023. "How and should firms motivate salesperson effort across a Multi-Brand Portfolio?," Journal of Business Research, Elsevier, vol. 158(C).
    2. Nguyen, Hang T. & Feng, Hui, 2021. "Antecedents and financial impacts of building brand love," International Journal of Research in Marketing, Elsevier, vol. 38(3), pages 572-592.
    3. Xina Yuan & Zhaoyang Guo & Jin Won Lee, 2020. "Good connections with rivals may weaken a firm’s competitive practices: The negative effect of competitor ties on market orientation practices and innovative performance," Asia Pacific Journal of Management, Springer, vol. 37(3), pages 693-718, September.
    4. Casey E. Newmeyer & R. Venkatesh & Julie A. Ruth & Rabikar Chatterjee, 2018. "A typology of brand alliances and consumer awareness of brand alliance integration," Marketing Letters, Springer, vol. 29(3), pages 275-289, September.
    5. Elisabeth Albertini & Fabienne Berger-Remy, 2019. "Intellectual Capital and Financial Performance: A Meta-Analysis and Research Agenda," Post-Print hal-02139763, HAL.
    6. Watson, George F. & Worm, Stefan & Palmatier, Robert W. & Ganesan, Shankar, 2015. "The Evolution of Marketing Channels: Trends and Research Directions," Journal of Retailing, Elsevier, vol. 91(4), pages 546-568.
    7. Anca BUTNARIU, 2017. "Ingredient Branding - A Growth Opportunity?," SEA - Practical Application of Science, Romanian Foundation for Business Intelligence, Editorial Department, issue 13, pages 101-107, May.
    8. Anja Plumeyer & Pascal Kottemann & Daniel Böger & Reinhold Decker, 2019. "Measuring brand image: a systematic review, practical guidance, and future research directions," Review of Managerial Science, Springer, vol. 13(2), pages 227-265, April.
    9. Stefan Worm & Sundar G. Bharadwaj & Wolfgang Ulaga & Werner J. Reinartz, 2017. "When and why do customer solutions pay off in business markets?," Journal of the Academy of Marketing Science, Springer, vol. 45(4), pages 490-512, July.
    10. Abolfazl Shahabadi & Shiva Amjadian & Samineh Ghasemifar & Masoume Shafieian, 2023. "The effect of the national brand on high-tech exports in selected countries," Journal of Innovation and Entrepreneurship, Springer, vol. 12(1), pages 1-19, December.

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