Managing and building B2B SME brands: an emerging market perspective

Abstract

Purpose

This paper aims to distil the management challenge pertaining to B2B SME branding strategy, communication and constraint in the emerging market context of Chinese manufacturing.

Design/methodology/approach

Complemented by 19 interviews, this paper adopted a novel methodological approach – netnographic analysis – to investigate a selection of Chinese manufacturing SMEs.

Findings

Findings revealed three managerial approaches to B2B brand management: conservative, flexible and integrated-exploratory.

Practical implications

Understanding the three approaches offers managerial implications for Chinese manufacturer SMEs to redesign their branding practice. Informed with a better understanding of the available option, they will be able to achieve high value-added production through branding to gain competitiveness. This study sheds light on B2B SME branding from an emerging market perspective, an area that has been largely neglected in the existing literature.

Originality/value

Findings make a novel contribution to B2B SME brand management literature by clarifying practical management issues pertinent to Chinese emerging market manufacturers in particular, and offering widely generalizable lessons for B2B brand management research.

Citation

Lin, F., Ansell, J., Marshall, A. and Ojiako, U. (2019), "Managing and building B2B SME brands: an emerging market perspective", PSU Research Review, Vol. 3 No. 3, pp. 191-214. https://doi.org/10.1108/PRR-04-2019-0010

1. Introduction

Literature has stated that a powerful brand helps a company to create a sustainable competitive advantage (Guenther and Guenther, 2019). Brands serve sellers to improve company reputation, and generate sales and profits in the consumer market; they also benefit consumers by assuring product quality and reducing purchasing risk (Keller, 2013). Brands also play a vital role in B2B markets by offering benefits to suppliers, buyers and industrial markets (Glynn, 2012; Kotler and Pfoertsch, 2006). B2B brands function as proxies for the relative risk levels associated with the choice to enter, maintain and jettison relationships with particular business suppliers and buyers (Anees-ur-Rehman et al., 2018; Cretu and Brodie, 2007; Michell et al., 2001); this increases buyer confidence and generates a higher level of satisfaction (Viardot, 2017; Ohnemus, 2009;). Brands also help firms, particularly small- and medium- sized enterprises (SMEs) to improve their industrial competitiveness, functioning as industrial barriers against potential competitors, and hence accomplishing financial rewards (Gromark and Melin, 2011; Anees-ur-Rehman et al., 2018).

Research on brands and branding has been well established in consumer markets by large organisations (LOs) but is comparatively under-developed in B2B contexts (Sheth and Sinha, 2015) by SMEs (Abimbola and Vallaster, 2007; Inskip, 2004; Odoom et al., 2017). In general, B2B branding is more complex than B2C branding, due to the extensive network of multiple stakeholders with a wide (and sometimes conflicting) range of demands and expectations in the B2B sector (Sheth and Sinha, 2015; Kotler and Pfoertsch, 2006). It is only recently that interest in B2B branding research has grown (Kumar et al., 2015; Yieh et al., 2018; Zhang et al., 2015). Moreover, existing evidence reveals that B2B branding studies from emerging markets is scarce (Seyedghorban et al., 2016). Recognising the sparseness of published work conjoining SME and B2B branding, questions arise about B2B SME branding: How do those involved perceive branding? How do SMEs promote their brands in the B2B context? What are the brand building strategies they employ? To understand these issues, the objective of the present study is to explore how B2B SMEs perceive branding, and to evaluate how they currently manage branding communication channels and branding strategies.

China, as the research context, was used to investigate branding issues from an emerging market perspective. China is the world’s largest emerging market and second largest economy, manufacturing 60-80 per cent of world commodity output across a range of products from air conditioning and mobile phones to shoes (The Economist, 2015). Chinese SMEs are strongly export-oriented. They tend to focus on low cost, labour-intensive production as a strategy for achieving prominence within global supply chains (Li, 2017), where global perceptions of Chinese brands matter enormously. However the literature suggests that, to date, only limited research has been done on Chinese B2B SME branding performance (Zhang et al., 2016).

This study adopts an innovative methodological approach – netnographic and interview evidence – to explore how B2B SMEs approach branding online and offline, and to provide insights on how these firms from emerging markets upgrade their branding practices. The most appropriate descriptors for the branding options are distilled and their effects on B2B brand management perceptions are explored. In this fluid and fast-changing business context, the descriptors for alternative approaches offer management sense-making value, not least by providing shared terms to establish shared meaning within the cultural spaces opened up by B2B co-working, thereby building trust in B2B management relationships. Through the view of Chinese B2B SMEs, our exploratory findings advance the existing knowledge on brand management from a B2B SME perspective, and contribute to the prior literature on B2B and SMEs branding. Furthermore, our research responds to the calls for more branding research to focus on an Eastern-related context (Sheth, 2011).

The present paper is structured as follows. First, we undertake a literature review of B2B SME branding in Section 2. Choice and sequencing of research methodologies is then discussed in Section 3, prior to describing and analysing the findings in Section 4. Findings reveal three brand management approaches: conservative, flexible and integrative-exploratory. The study concludes in Section 5 with a discussion and summary statement of the key findings and their implications for further research in the area.

2. Literature review

2.1 Brand, branding and B2B brand management

In spite of a considerable volume of literature on brand and branding, definitions of brand remain ambiguous and vague (Mitchell et al., 2012). There have been attempts to produce a consensual definition, but these have generally been unsuccessful (de Chernatony, 2009; Conejo and Wooliscroft, 2015; Wood, 2000).

A pioneering definition of brand was given by the American Marketing Association in 1960, defining a brand as “a name, term, design, symbol that identifies one seller”s good or service as distinct from those of other sellers.’ This differentiation-based definition reflects the product paradigm perspective of a brand (Conejo and Wooliscroft, 2015; Louro and Cunha, 2001), where the components of a brand are derived from its product attributes, such as logos, slogans and other identifiers (Mitchell et al., 2012). Such definitions also overlap with the trademark concept (de Chernatony, 2009). De Chernatony (2009) provides a more comprehensive explanation for the diverse brand definition; he developed an evolutionary brand spectrum that initiates from functionally oriented value in differentiation and positioning, to emotionally oriented value of personality and vision, and finally to the added-value level as the brand management sophistication level increases. This model provides a holistic view of how brand has been defined in various contexts.

Branding is often regarded as a competitive advantage, which registers, in the first instance, in the consumer’s mindset when they are evaluating product or service quality. Traditionally, this topic mainly emerged from consumer markets in relation to large organisations (LOs). For instance, the first branding models were developed by Aaker (1991) and Keller (1993) in recognising components of brand equity, such as brand awareness, brand loyalty, perceived value and brand associations (Aaker, 1993); and customer-based brand equity, which is generated by the customer’s knowledge of a brand (Keller, 2001). Some studies have employed branding theory from consumer markets in the B2B fields (Viardot, 2017; Biedenbach and Marell, 2010), but in general, the existing branding literature shows limited focus on the B2B related domain. To understand the branding practice of B2B SMEs in more depth, Wong and Merrilees (2005) stated three types of brand-orientation in SMEs: minimalist, embryonic and integrated. To comment further on this teleological structure for brand management maturity, some SMEs engage in minimalist branding activities linked to short-term phases of centralised management. Others adopt embryonically systematised approaches, which drive more progressive market activities (Mitchell et al., 2015). More “integrated” management approaches are, by contrast, characterised by brand-centric management activity, which continually and systematically reflects on the interrelationships between branding, marketing and economic performance (Baumgarth, 2010). Generally, emerging B2B SME research reveals that brand-oriented firms have a higher impact on B2B marketing achievement (Mäläskä et al., 2011; Mitchell et al., 2015; Urde et al., 2013; Anees-ur-Rehman et al., 2018).

The existing literature on B2B SMEs brand management has explored a number of dimensions that can be theorised. For instance, Spence and Essoussi (2010) discussed brand strategy, brand identity, brand equity and organisational structure to form brand management dimensions; Leek and Christodoulides (2011) identified areas meriting further exploration, such as the role of B2B brands, B2B brand architecture, B2B brand communication and industrial brand equity. This research draw on the relevant dimensions of brand management by focusing on three important aspects relating to the B2B SME context – branding strategy, branding communication and branding constraints. The following sections root these key aspects of brand management approach within the relevant literature to clarify the basic unit of analysis for our research (i.e. to ensure that our “brand management approach” subject matter is clear).

2.2 B2B small and medium enterprises branding strategy

In general, there are three types of branding strategy that are relevant to B2B SMEs; these are corporate branding, product branding and ingredient branding (Leek and Christodoulides, 2011; Odoom et al., 2017). This section considers each in some detail.

A corporate or master brand operates on a meta level as a unifying theme covering all or most of a firm’s products or services. Hence, any heuristic or proxy value it provides stems from its simplifying representation of a firm’s total offering (Chang et al., 2015). Corporate branding integrates brand building with a firm’s strategic vision (de Chernatony, 2001), and enables the vision and culture of the whole organisation to be encapsulated within its uniqueness (Juntunen et al., 2010; Balmer, 2001). Corporate branding strategy has frequently been adopted in service industries (de Chernatony et al., 2006), and in retail SMEs (Kent, 2003; Burt and Sparks, 2002; Mitchell, et al., 2015). Corporate brand is also strongly associated with corporate value and uniqueness, communicating an overall impression of the organisation (Bengtsson and Servais, 2005). Therefore, it is less likely to be affected by the rapidly changing market environment (Inskip, 2004); in other words, any temporary dissonance experienced between pre-existing brand perception and actual experience may often be resolved in favour of the former.

Compared with a corporate brand, a product brand aims to create a unique and distinctive brand identity whose embeddedness within particular products means that it has less association with the parent organisation (Chang et al., 2015; Berens et al., 2005). Product branding strategy is more popularly applied in the consumer market, but is less fashionable in the B2B market, due to the nature of industry markets with brief product life cycles (Baumgarth, 2010). Nevertheless, a mixed branding strategy, spanning corporate and product brands, can help industrial firms to plan how they expand their brand portfolios and thus increase sales (Mark and Kay, 2006).

Ingredient branding refers to an essential ingredient or component of a product that has its own brand identity (Kotler and Pfoertsch, 2006), and is often adopted by LOs, such as Intel microchips or chipsets, which contribute much of the brand value to numerous brands of computer. Such branding often succeeds through a “pull strategy”, where a manufacturer experiences strong pressure to source a particular high-brand component to meet the expectations of the end market (Helm and Özergin, 2015; Swaminathan et al., 2012). This is more popular for modularised high-technology industrial goods with restricted application (Kotler and Pfoertsch, 2006), and is well illustrated by LOs such as the Intel Corporation, arguably the most successful brand to demonstrate the commercial power of ingredient branding (Norris, 1992; Kotler and Pfoertsch, 2010). The application of ingredient branding in SMEs, however, is less established.

Among these three types of branding strategy, a general assumption is that ingredient branding is most applicable where manufacturers find it in their interests to make themselves hostage to – and to actually become complicit in promoting – brand visibility at the ingredient level which gives their suppliers leverage over them (Kotler and Pfoertsch, 2006). Another general assumption is that product-branding strategies are often costly for SMEs in the manufacturing industry, and that they are, in general, more appealing for consumer markets where experience of the product is paramount, as it provides the lens through which consumers perceive firms. Corporate branding, by contrast, is more popular with B2B SMEs (Törmälä and Gyrd-Jones, 2017; Baumgarth, 2010). For the purposes of our study, we may conclude that this reflects the value brands offer as proxy indicators for the quality of prospective B2B partners. For Chinese SMEs seeking increasingly global and sometimes temporary B2B relationships, often across considerable geographical and cultural distances, it is clear that such proxy information matters greatly.

2.3 B2B small and medium enterprises branding communication

Keller (1993) states that while brand identities are integrated into firm marketing programmes (e.g. marketing-mix), communication can further enhance brand value, particularly when designed to reinforce brand identity. In the consumer world, the primary effort of brand communication is to build awareness through firm-brand associations, enhance brand recall, and provide a positive emotional experience to establish brand loyalty and thereby create value from the brand (Andersson et al., 2018; Aaker, 1993; Keller, 2013). In the B2B market, a key goal of brand communication is similarly to develop a successful buyer-seller relationship (Marquardt, 2013). Prospects for creating “brand-scapes” are relatively limited, and yet arguably no less important. The focus of SMEs in B2B brand management is to serve the customer’s needs in practical and pragmatic way; thus, it aims to provide helpful information in terms of product quality, functions and price, and ensures that the distribution channels employed are explicitly presented through communication tools.

The application of brand communication strategies varies in B2B and consumer markets. B2B firms apply different brand communication strategies, including direct marketing, trade exhibitions, sales promotion and personal selling (Kotler and Pfoertsch, 2006; Anees-ur-Rehman et al., 2018). The application of personal selling dominated the early research into B2B brand communication strategy (Hutt and Speh, 2001), while nowadays, most firms consider various combinations of hybridised and individualised brand communication strategies employed by SMEs in B2B markets. In consumer markets, most LOs integrate branding with marketing communication strategy, and deliver branding messages in a consistent and coherent fashion (Melewar et al., 2017; Krake, 2005; Madhavaram et al., 2005). An integrative brand communication strategy helps to develop the customer’s brand awareness, build a positive brand image, and drive competitiveness in the market (Madhavaram et al., 2005). Promotional channels such as television, print advertising, and large-scale sales promotion are largely used by LOSs in building brand image and conveying communication messages, but the effectiveness of such techniques for SMEs remains unclear (Wong and Merrilees, 2005).

Due to the resources constraints, the heterogeneous nature of SMEs demands an application of mixed and hybridised branding strategy (Krake, 2005). One common SME practice involves imitating and mimicking the branding communication practices of LOs (Spence and Essoussi, 2010). Some research on SME brand communication has found that a firm’s interaction with customers is key, as such encounters lead to the spread of Word of Mouth (WOM) communication, and thus generate and disseminate brand awareness (Anees-ur-Rehman et al., 2018; Berthon et al., 2008). In retailing industries, SMEs adopt experiential marketing tools in their approach to brand communication strategy by conceiving of the store environment as a “brand-scape”, where interaction between customers and the firm can be designed to inculcate brand awareness through affective customer experience (Hollenbeck et al., 2008; Mitchell et al., 2015).

In summary, the key purpose of brand communication for B2B SMEs is to provide offers that meet the buyer’s demands, with a central focus on the advantage of products and services (Kotler and Pfoertsch, 2006).

2.4 B2B small and medium enterprises branding constraints

Despite the benefits and importance of branding to stakeholders in the B2B field for quality evaluation and profitability (Keller and Kotler, 2012), the application of branding in the B2B SME sector remains under-exploited (Lynch and de Chernatony, 2004; Ohnemus, 2009). Prior research has listed a number of constraints that B2B SMEs have encountered, such as perceiving branding as less important for B2B SMEs (Wong and Merrilees, 2005) due to the complexity of the B2B market (Keller and Kotler, 2012) and the limited resources and capabilities to support branding (Leek and Christodoulides, 2011). In reviewing the existing literature, we found three types of constraints to provide possible explanations for this state of affairs: perceptual constraints, market constraints and resource constraints (Leek and Christodoulides, 2011; Mitchell et al., 2015; Centeno et al., 2013).

The perceptual aspects of constraint is about what brands meant to SMEs in the B2B market. B2B SMEs may see branding as not important nor significant (Hirvonen and Laukkanen, 2014). The profit-oriented business mind that often predominates within B2B management is therefore less likely to be influenced by extravagant and costly adverts (Keller and Kotler, 2012). Thus, the prevailing emotional approach to B2C branding may often be one of wilful disregard or healthy suspicion, both of which reflect critically on any affective responses that the brand has been designed to foster (Leek and Christodoulides, 2012).

The B2B market constrains branding to some extent, as the industrial nature consists product variations that impede the development of tailored brand positions (Bendixen et al., 2004). The B2B purchasing decision hub commonly comprises a great number of entities, revealing a complex socio-psychological aspect within buying behaviour and showing that branding must be carefully targeted and focused (Glynn, 2012). Both perceptual and market aspects bring a high level of risk in branding. Some scholars advocate that a firm should acquire more knowledge and information on the positive branding application for B2B SMEs. For instance, Lynch and de Chernatony (2004) claimed that the B2B buying decisions should be protracted if necessary, to address “the emotional” in addition to the “rational” processes associated with buyer deals (Andersson et al., 2018). Leek and Christodoulides (2012) found a positive correlation between perceived decision uncertainty and perceived brand importance. That is, as the degree of uncertainty in a complex buying situation increases, firms consider their brands to hold more significance in the purchasing decision process (Bengtsson and Servais, 2005; Reijonen et al., 2015). Accordingly, we can conclude that, in such circumstances, a higher risk premium can be charged for the brand (Zablah et al., 2010).

Resource constraint is another key constraint that directly affects the use of branding by B2B SMEs. Branding requires long-lasting involvement; however, the lack of short-term financial reward reduces SME motivations towards branding in B2B markets (Leek and Christodoulides, 2011). Traditional issues faced by B2B SMEs that affect branding are: limited financial and resource support, weaknesses in innovation and technological development, constrained entrepreneurial capabilities, low productivity and regulatory burdens (Spence and Essoussi, 2010; Mäläskä et al., 2011). Furthermore, SME ownership often determines brand spending within these broader contexts of resource scarcity (Spence and Essoussi, 2010). It is the SME owner who often makes the decision on whether to spend heavily on developing a brand, bearing in mind other related factors such as product life cycles and levels of innovation diffusion (Krake, 2005; Abimbola and Kocak, 2007; Mitchell et al., 2012). Deficiency in the influence of marketing professionals remains a major issue for SMEs in their brand building, as is frequently manifested in the heavy concentration of functions among a limited number of people, including the owner (Odoom et al., 2017; Khan and Ede, 2009). Brand spending therefore very often suffers where there are perceived to be more urgent spending needs, particularly where highly concentrated management specialisms exclude or marginalise the marketing profession for reasons of resource scarcity.

Taking stock of the relevant literature, it appears that relatively few academic studies exist within the B2B SME branding area to provide a theoretical underpinning for understanding B2B brand management (Ohnemus, 2009). This suggests a need for further investigation of how B2B SMEs approach branding (Hirvonen et al., 2016; Leek and Christodoulides, 2011; Spence and Essoussi, 2010). In this research, we are particularly concerned with the issues discussed in the literature on the three aspects of B2B SMEs branding – namely, branding strategy, branding communication and branding constraints – to investigate its practical application in greater depth.

3. Research design

This research uses an exploratory approach with a qualitative method as the most appropriate to explore brand management in depth (Spence and Essoussi, 2010). The sample was drawn from Chinese SMEs in the manufacturing industries. As the largest emerging economy, China’s SMEs contribute significantly to the national economy development (Hussain et al., 2006), and understanding how Chinese B2B SMEs approach brand management offers some findings that are generalizable to SMEs from other emerging nations. The definition of Chinese SMEs differs from that of other countries. A SME is commonly defined as having below 250 employees in most countries (Ayyagari et al., 2007), whereas a Chinese SME in the industrial sector contains a maximum of 2000 employees (Liu, 2008). This would be considered as large firms in other economies. Following the Chinese SME ceiling of 2000 employees, we mediated the size of company, which allowed us to capture more of the management complexity than might be visible in studies of SMEs in other countries.

A combination of netnography and interviews was used to collect the qualitative data. Figure 1 details the data collection process. This began by utilising a netnography study with the objective of interpreting the views and insights of Chinese SMEs, and exploring the complexity of the B2B brand management in the Chinese context. Previous netnographic research indicates that a combining of netnography with other methods can be effective in providing triangulation and complementarity so as to enhance the overall reliability of findings, particularly where a combination of netnography and interviews is adopted (Wang et al., 2017; Janta et al., 2012; Kozinets and Handelman, 1998). In line with existing studies, the interview method was used following the netnographic exploration.

One thing to note is that, rather than focusing on a particular product or industry, we wanted to understand the Chinese manufacturing industry as a whole; therefore, both the netnographic and interview data collection tools were designed to covered B2B brand management issues over for a wide range of industries. We achieved this by using the selected website as a “familiarising forum”, both for developing awareness of the issues and for sourcing interviewees who were active in contributing to the forum, and represented a broad range of industrial sectors. The general relevance of the issues raised and carried forward into the interviews could thus be assured.

3.1 Netnography study

During Stage One, netnography was used upon discovering that B2B SMEs were active contributors to online forums. Chinese B2B SMEs promote business activities online, passing on exporting experience and looking for international buyers through exporting forums and chatrooms. Hence, their online behaviour generates rich qualitative data of relevance to the present study (Kozinets, 2006). Netnography, as a marketing research technique, uses information that is publically accessible, and is deemed to be a faster, simpler, naturalistic and unobtrusive method (Kozinets, 2010), but its application in B2B fields is scarce. Therefore, the use of netnography contributes to methodological diversity at the interface of B2B and SME strands of literature.

In the process of data collection, we first selected the most appropriate exporting forum for study. We combined suggestions from industrial practitioners and a Chinese engine search (baidu.com), and selected one of the most popular exporting forums for SMEs (FOBshanghai). This forum focuses on creating a global trading online community in China, and it has been highly regarded by SMEs as the main platform to access B2B exporting information. The forum meets the site selection criteria in terms of being relevant, active, interactive, substantial, heterogeneous and data-rich (Kozinets, 2010), and seemed to be the most suitable forum to address the research questions.

We adopted a non-participatory approach to gain more naturalistic data, thanks to the unobtrusive nature of the study. This entailed reading through discussion threads, which had proven successful in drawing B2B SMEs online communities together from across multiple industrial sectors, and then collecting and interpreting relevant archival data. Relevant topics were highlighted, and key words such as “SMEs brand/branding”, B2B brand/branding’, “brand management” and “brand development” were explored. A total of 85 threads, spread across a six-year timespan, were deemed relevant.

3.2 Interview

Equipped with an objective to have a better understanding of what are likely to be the most important live issues in B2B brand management, in Stage Two, 19 interviews were conducted with Chinese manufacture SMEs. The sequencing we followed was to ensure that information gathered from the netnographic setting could then be used to stimulate more meaningful exchanges in the interviews. This is a widely recognised approach to producing more valid findings than can be gleaned from artificial interview settings alone (Sherry, 1990; Wang et al., 2017).

During the data collection process, potential interviewees were initially approached through a professional exporting chatroom from the selected forum. Research agendas were introduced to the participants, together with an invitational message that explained the research purpose. After having exchanged information, 12 potential interviewees agreed to participate in the interview. The majority were international sales executives with three to 15 years’ sales experience. Their wealth of knowledge on a broad range of industries offered great insights into branding performance in industrial markets. To further enrich the data by broadening the range of industrial sectors represented, we generated a second group of seven SME business owner interviewees through guanxi (personal relationships) access facilitated by the first 12 interviewees. Assurances were provided that all 19 represented firms fitted within the Chinese B2B SME category (Liu, 2008).

Interview questions were organised in three parts:

1. to understand SMEs’ current theoretical knowledge of branding;

2. to examine their own brand-building and promotion processes; and

3. to ascertain the evaluative perceptions and constraints of branding practices and their constraints.

This semi-structured protocol allowed the informants to talk openly about their views on the topic. In particular, the third set of questions generated views on the affective aspects of B2B brands that were more visible to the interviewer. The 19 interviews were conducted over telephone and Skype, each lasting 43 minutes on average. Details of the interviewees are provided in Table I. The company names have been disguised to ensure confidentiality. Due to the setting of data collection, a few respondents were from the same industries; for instance, F3 and F19 were both oral care product manufacturers, and F9 and F13 were LED producers. Overall, a broad range of industries was represented. We also noticed that the size of our respondents’ sample was relatively small compared with the standard definition of Chinese SMEs, which is a maximum of 2,000 employees. Our sample size was more in line with the international standards of 250 employees (except for three firms of over 250). We thus consider that our sample was a valid representation of SMEs in the field of branding exploration.

3.3 Data analysis

Both netnography and interview data were analysed with a general inductive approach, entailing qualitative data analysis (Bryman and Burgess, 1994; Dey, 1993). Detailed reading of raw data was undertaken to discern any recurrent concepts, themes or models which might be used to structure findings regarding B2B branding practices and their perceived effects (Thomas, 2006). Data deemed relevant were refined through a process of cleaning, close reading of text, coding and thematic categorising. The analysis of netnographic and interview data aimed to discern multiple perspectives, which helped to ensure the reliability and validity of the findings (Sekaran and Bougie, 2010), and provided greater insights to understand how Chinese SMEs in B2B markets perform their branding.

4. Findings

Combining both netnographic and interview data, the findings reveal that the demand for branding varied among the B2B SMEs, with some appreciating branding and others regarding it as unnecessary. The level of awareness in brand building was also varied among Chinese B2B SMEs. We present the findings as follows: Part One describes the SMEs’ general knowledge and perceptions about manufacturing branding. In Part Two, we developed three categories of attitudes according to firms’ branding perceptions, namely, conservative, flexible and integrative exploratory categories.

4.1 Part 1 B2B small and medium enterprise perceptions on branding

We first present the findings regarding general perceptions towards brands. Initially, we investigated what branding meant to manufacture SMEs. The conflicting perspectives that emerged broadly reflected the conflicting perspectives within the related academic literature. Branding literature claims that the process of branding starts with market positioning and analysing the company’s core values (Aaker, 2004; Keller, 2013). It requires an in-depth understanding of an organisation’s culture, vision and mission (Keller, 2013). Our data show that many Chinese firms similarly perceived that branding was a process of creating a name, logo, trademark or other visible brand elements representing the company and its product, while the core values of brand culture and brand symbolic identity remained undefined. Hence, when branding related questions were posed to the interviewees, participants were more likely to associate the branding process with creating or promoting the brand name:

“[…] branding? Like your own brand name? […] Like someone franchises your brand? […]” (F4).

“[…] about branding […] we have not thought about it […] we haven’t registered the name […]” (F9).

This reveals that branding was a relatively novel topic for manufacture SMEs in China. Many firms possessed a basic knowledge of branding and recognised the benefits of branding to a business, but were reluctant to commit to any systematic approaches to brand development, or to implement branding within their strategic plan.

These general perceptions led us to refocus on what might motivate a B2B SME to develop its branding practices using formalised management approaches. The benefits of a brand have been well established in the literature. Kotler and Pfoertsch (2006) stated that a powerful brand helps a firm to differentiate its products, increase its sales, and secure future business; and hence helps it to command premium pricing. The research data revealed widespread acknowledgement of these benefits; nonetheless, we found that the most salient motivation for B2B SME brand development was that which was typically conceived in terms of financial success. More fully, the quote below illustrates how some participants conceived of the financial success achievable through branding as a simple lesson to be learned from commonplace variation in Chinese B2C export practices:

China has been the world factory for many years to produce non-branded products. As a manufacturer, we clearly understand that producing a normal T-shirt, the price can go up two dozen times by putting a ‘swoosh’ logo on it. It seems simple and exciting, but this is the effect from branding. (GS-Frank 2011-8-11 11:44; Fob-Shanghai, 11.08.2011).

Hence, interest in B2B branding in part reflects a desire to draw the B2C brand premium upstream within supply chains, such that it becomes relevant in B2B deals. This view recognises that Chinese manufacturers often operate on the lowest rung of the supply chain, with only a low margin. They routinely witness the price differences from manufacturing to retailing, and regard these both as an equity (i.e. fairness) issue, and as an opportunity cost they must too often bear. Other salient motivations for brand development, discerned from the data, included the desire to increase sales and improve company reputation. Tentatively, we might regard these motivations as being meaningful to at least some participants in terms of their instrumental value vis a vis the above broad goal of capturing greater brand premium in the B2B marketplace.

Further exploration revealed a tendency to juxtapose recognition of branding benefits alongside the realisation that few firms could afford the heavy investment often required to achieve them. Similarly, for SMEs whose business focus was on OEM (original equipment manufacturing) production, we were able to discern the commonplace view that investment in brand development eats up sales revenue and sacrifices business earnings. This view regarded brand development as only worthwhile for the most well-resourced firms, able to absorb its short-term costs, as typified in the following quote:

My previous company has also tried branding. We put a lot of effort into building our own brand, and were hoping that one day we can catch up with the industry leaders. Nevertheless, when the business orders in OEM come, we choose to compromise. Overall, bread (sustaining business) is more important than jewellery (branding). (Guangzhou – doctor 011-11-24 11:54; Fob-Shanghai, 24.11.2011).

Notably, the OEM business model requires the contracting firm to provide specific information about product design and specification, particularly in relation to the retail branding (Chu, 2009). Faced with severely limited prospects for linking brands to products, it is unsurprising that OEM firms did not perceive branding as an immediate priority; however it is also worthy of note that, rather than disregarding brand development altogether, they still tended to regard it as an important source of value, and well worth reconsidering if resources allowed it in the future.

4.2 Part 2 branding approach

Our findings suggest that the preferred approaches to brand management could be categorised into three broad groups. First, the “conservative” approach was characterised by the belief that branding was either unnecessary, risky or a waste of time, or perhaps as something that emerged spontaneously through B2B management interaction, requiring little or no management cultivation. Second, a “flexible” approach was also discernible, acknowledging the importance of branding, and being open to branding opportunities, but taking little action in practice. This essentially builds on the first approach by treating brands as assets that deserve to be managed with whatever resources are available if, or when they emerge spontaneously through B2B practice. Third, the “integrative-exploratory” approach was also discernible from the data. This builds on the previous two approaches by considering brand management as an issue of design rather than of spontaneous emergence, yet also focuses on the interplay between the two. Viewing brand management as key to competitive advantage, it actively seeks to integrate brand management in key areas of business operations. Furthermore, it explores brand development and redesign opportunity in the light of B2B experience, by not only harnessing customer and market insights from across the business but also by taking a proactive-exploratory approach towards interacting with customers and testing markets to cultivate such insight and thereby gain competitive advantage.

Recognising the fundamental importance of these three categories, we grouped the interview firms accordingly for the purpose of structuring and presenting the remaining findings. Table II provides a detailed description of how the three groups were organised. It indicates the general view of branding, the current forms of brand management and communication, and the views on branding constraint, which we consider constitutive for each of the three brand management approaches.

4.2.1 A conservative brand management approach.

Eleven out of the 19 interviewed firms revealed a prevailing view of branding as a needless strategy which wasted resources for little reward. They showed little or no desire to brand-build; instead, they often focused on routinely integrating other brand labels within their OEM production. Some asserting, “We don”t have a brand […]’, or “we have a corporate name, but no brand.” (F1, F2). However, we found that they did tend, as one would expect, to use their corporate names as business promotion. In their view, some limited or haphazard promotion of the established corporate name was of itself a low expense and is a practically convenient branding strategy to increase sales.

This group of firms tended to prefer certain brand communication modes. Most popular was communicating through the established website by explicitly displaying their offers; furthermore, promotion through packaging or other e-commerce platforms (e.g. madeinchina.com, Alibaba.com) was popular. These communication channels required limited resources and involved less risk.

If the customer does not have a specific requirement, we will promote our brand on the package. We also offer cheaper price if the customer is willing to buy a product with the factory’s logo. Also, we promote our brand on the company website (F5).

We further explored the constraints perceived by this group to offer some possible explanations for the clear lack of interest in branding. Three key constraints were found:

1. the nature of the product;

2. lack of interest from managers; and

3. business size and resourcing.

First, the nature of product ingredients and components constrained the firm’s desire to brand. The perception of firms taking a conservative approach to brand management was that brands should ideally be based on creative and innovative products that can offer added value; nevertheless, the nature of the products they produced was well standardised with low value-added, which reduced their interest in branding. For instance, Firm 2 produced natural stone, Firm 4 made screw caps and other fastener products, Firm 11 produced soundproofing materials, and Firm 5 manufactured disposable medical gloves to a standardised design. As F4 asserted:

[…] our product is a screw cap […] this kind of product is very unlikely to be branded, we are not doing that. We think it is a waste of time to brand, the product will eventually disappear in the final goods, and I don’t see the point in branding it (F4).

Second, we found a strong association between managerial personality and brand orientation, which we identified as an important driver of brand management activity for those firms taking a conservative brand management approach. This finding echoes earlier studies (Krake, 2005; Spence and Essoussi, 2010) which reveal the significant influence of an entrepreneur’s personality and character on brand building and related decision-making. It further aligns with the view that branding can contribute to developing social capital by cultivating a distinctive personality-based business style, as illustrated here:

We will not consider it (branding) in the near future. We have our own name (the corporate name), but we have not promoted it widely, not yet at this moment. We have been in this industry for a number of years and our old customers know us. It is possible to gain more deals by promoting our brand, but I do not want to push myself too hard on this. I am quite content with the current situation […] (F14).

The relevance of firm size and business scale were also clear from the data. A few firms (F7, F16 and F19) expressed this as follows: “We are a small firm, we don”t need branding’, “branding is for big and large firms; we are a small company.” It was clearly discernible, then, that firms operating on a smaller scales tended to focus more on manufacturing productivity than on brand building, simply due to limited resources. It was particularly notable that such firms, overall, tended towards negative views of brand building.

4.2.2 A flexible brand management approach.

We classified six out of 19 firms (F3, F8, F12, F13, F17 and F19) as a group revealing a more flexible approach to brand management. These firms were more receptive to the perceived benefits of branding, regarding it as a future solution for Chinese B2B firms. Yet they were also realistic about the current manufacturing situation that prioritises productivity over brand building. To strike an effective balance between the two, they maintained an open mind towards various brand management options. While maintaining a largely passive approach to brand management, they nonetheless remained vigilant to exploit any opportunities that might arise. This was clearly illustrated as follows:

We have our own branded product with the company name on it. If the buyer has no special requirement on products, we will sell them the company branded products […] (F17)

Perhaps as a reflection of its pragmatic openness, this “flexible” approach favoured mixed branding strategy as a means to gain market share. Accordingly, these firms also seek efficiencies. For example, in addition to pursuing their corporate branding strategy, they may develop product brands for the domestic market, partly to practise their branding skills for future international competition. Hence, for example, both F3 and F12 had separate brand names for international and domestic markets:

OEM orders are for international markets; we have developed a separate product brand for the domestic market […] It is a matter of time to develop a good brand […] we have invested so much in this business […] we are trying our best in building a reputable brand, so that we can go out (overseas market), but it is a hard process that cannot be achieved overnight […] (F3)

OEM is the major business for us; all big customers come with OEM deals. We also sell own brand products to small buyers and in domestic markets […] (F12).

For firms in this “flexible” category, brand communication channels predominantly focused on packaging and advertising through B2B online platforms, and they occasionally attended local trade shows, e.g. Canton Fair, to promote their products and brands.

Most firms in this category claimed that the major constraint to branding was the homogeneous industrial product, which lacked added value. They perceived that, ideally, a branded product should comprise certain types of competitive advantage contained within the product itself, which was most likely in high-tech and particularly disruptive-innovative products, which lead and shaped markets.

If you want to build your brand, you must have the added value (from the product), this is the key reason that you can sell it at a premium […] all successful brands in the market have been developed for many years, we cannot compete with them. (F19).

Other branding constraints identified from the data for this category included lack of financial support and level of firm competence in R&D and industrial designing. These can be viewed as factors that firms used as touchstones for reflecting on pragmatically and flexibly about when to invest more deeply in brand management:

Just like I said, your managerial and design capabilities cannot compete with competitors, you don’t have competitiveness. I think the company must improve these capabilities first, then you can build and promote your brand. (F8)

Accordingly, we can conclude that the flexible approach is essentially long-termist in character, linking prospects for investment in brand management to long-term prospects for the company in general.

4.2.3 An integrative-exploratory brand management approach.

We found only two firms (F6 and F10) that were actively engaged in branding practice, and which could be labelled as having “integrated” approaches to brand management insofar as they had coordinated branding within their business strategies. Both firms viewed branding as the key underlying factor for successful future competition. Krake (2005) refers to a very similar category comprising SMEs entrepreneurs, described as visionary individuals who actively pursued brand value and identity creation, reminding us that the “integrated” approach at issue here may usefully be conceived of as leadership driven, particularly where strong leader personality can both supply and drive a model for the preferred brand.

We further label this category “exploratory”. Similar to the companies preferring a “flexible” approach, this category was characterised by preferences for mixed branding strategy, combining corporate branding and product branding strategies to acquire branding skills from domestic markets. Their branding communication approach was notably very market-focused. By actively engaging in the international markets, this category was able to explore prospects for improving marketing competence by drawing upon their accumulated experience and knowledge of market contexts. Similarly, they adopted branding communication channels in proactive, exploratory ways – for example by attending international tradeshows to interact with international buyers, or by visiting the direct markets to explore market trends. F10’s comment “Go out and see” neatly illustrates their exploratory business approach. More fully, F10’s view reflects the logic of actively seeking marketing insight as a source of competitive advantage:

The traditional Chinese way is sitting in the office and waiting for the product’s design image from buyers. It is better that we proactively go out to study and learn what the market wants, to understand their (the market) taste, their style. We learn and study it, then sell it back to them […] (F10).

We have just registered our brand (a name) and we plan to put the name in every product we produce. And our designer will go aboard every year. They will visit European countries to see the popular styles and colours in the market, and visit the American market too. They learn it and bring the knowledge back to us. We then develop new products together […] (F10).

At this point, the interrelatedness of the “integrated” and “exploratory” descriptors which we used for this category becomes clearer. Because of firms’ proactive, exploratory, experience-seeking approach to cultivating marketing insights, brand management was perceived as inextricably bound to all management processes that participated in the accumulation and flow of knowledge, thus making possible insight and related strategic change.

What makes this view of particular interest is as follows. Current marketing literature linking the cultivation of marketing insight to knowledge production and strategy draws heavily on the management metaphor of “environmental scanning” (Smith and Raspin, 2008, pp. 109-142) to explain where the data and information for knowledge production should come from. Accordingly, it could be argued that related marketing insight practice sometimes suffers from a reliance on passive monitoring, this being connoted by the scanning metaphor typically used to describe it. Improvements to such practice may exist, but only in cases where the cultivation of knowledge and insight is explicitly aligned with far more proactive information gathering practices, such as those commonly associated with marketing, business or competitive intelligence practice (Wright and Calof, 2006). Taking stock, we believe that the integrated-exploratory approach to brand management, which we discerned within our third category is aligned with enlightened approaches to marketing insight and marketing intelligence. This emphasises the need for active exploration of markets and networking opportunities to gain competitive advantage.

These two firms within the third category possessed an enlightened approach to branding, although their branding journey was not without its recognised barriers. We found a few constraints illustrated by both firms. For instance, F6 was more concerned with repositioning themselves in the market, due to product transition from webcam to computer assembly. They struggled with their market repositioning and found it difficult to align with market demand in the context of high R&D pace in the electronics industry. Firm 10, however, was constrained by intense competition and imitation in the market. Working in the artwork industry, they found that branding could help them to get a foothold in the marketplace. The key driving force in this industry, they believed, was the creativity and design work required to lead the market and stay ahead of the many imitators waiting to seize what market share they could. Accordingly, they viewed branding as an important component of the integrated approach required for gaining and maintaining market leadership and eventual dominance.

5. Discussion and conclusion

SME branding remains a fruitful domain for empirical investigation (Mitchell et al., 2015; Spence and Essoussi, 2010; Odoom et al., 2017), particularly in the B2B field (Leek and Christodoulides, 2012; Zhang et al., 2015; Kumar et al., 2015). We combined literature studies on B2B SME branding with the empirical evidence from Chinese manufacturing industries. The principal conclusion is that three ideal types of SME brand management approaches emerged from the study as useful for interpreting the findings. However, we can also draw conclusions (Figure 2) about the basic business realities facing Chinese SME manufacturers in emerging markets, which all respondents appeared to agree on.

5.1 B2B small and medium enterprises brand perception

Our research provides practical evidence in understanding how B2B SMEs from the emerging market evaluate their brands. By applying de Chernatony’s (2009) evolutionary spectrum of brand management approaches to understand how B2B SMEs value their brand, our research revealed that the majority of SMEs placed brand value at a functional application level, referring to a brand as a name, logo or slogan to create differentiation from competitors (Yieh et al., 2018), which is in line with the “logoization” level of understanding of a brand as a key product attribute (Louro and Cunha, 2001). Only a few SMEs had escaped the “logoization” mentality and shifted their focus on market needs through upgrading products. We found no evidence to support an evolutionary progress into the emotional level of branding which has been extensively recognised in B2B domains (Leek and Christodoulides, 2012; Andersson et al., 2018). Our research thus provides empirical evidence to support de Chernatony’s (2009) brand evolutionary theory.

5.2 B2B small and medium enterprises branding strategies

To guide such effort, it is worth reiterating the finding that corporate brand was the most popular and applicable branding strategy in this B2B study context. This finding echoes earlier studies showing that a corporate brand was a convenient branding strategy to apply, as it presents an overall impression of an organisation (Juntunen et al., 2010). Our research also aligns with other studies (Odoom et al., 2017; Spence and Essoussi, 2010) acknowledging that a mixed branding strategy incorporates product branding with corporate branding and is recognised as a popular branding practice for manufacture SME in general. More specifically, though, an important consideration for our emerging market study context is that corporate branding strategy was employed to serve sales growth in the international market, while firms applied product brands more as an experiment to access demand within local markets.

We also found that the SMEs generally considered ingredient branding as an unnecessary waste of time, confirming the limited usage of ingredient branding in industrial markets as recognised by earlier studies (Norris, 1992; Kotler and Pfoertsch, 2006).

5.3 B2B small and medium enterprises brand communication channels

Branding is communicated in various ways, and choosing an effective channel to deliver a message has become a key to business success. Early research (Hutt and Speh, 2001) indicates that personal selling has dominated B2B marketing. With the increasing popularity of online platforms availability, e-commerce has become a major branding channel for B2B SMEs. We found that firms actively engaged in B2B online platforms, e.g. promoting through international trading websites (such as Alibaba.com and madeinchina.com), designing their own website, as well as promoting through professional forums and chatrooms for direct and indirect exports. The data indicates that online marketing had been the major brand communication media for B2B SMEs due to its low cost and wide reach. Trade shows were one of the most effective ways to promote an SME’s brand and business, although they were costly for small firms with limited financial support. The key purpose of communicating through various marketing tools was to build a sustainable buyer–seller relationship, and hence generate more sales.

5.4 B2B small and medium enterprises branding constraints

Our study also highlights a number of constraints faced by B2B SMEs. First, branding management was likely to matter far more when design innovation was a source of competitive advantage. Second, entrepreneurship and leadership provided important models upon which brands could either be built or emerge spontaneously (Reijonen et al., 2015; Nolan, 2005; Khan and Ede, 2009). Third, there was of course the homogeneous nature of industrial products to consider (Kotler and Pfoertsch, 2006; Bendixen et al., 2004). Finally, our study has revealed that resource availability mattered greatly (Mitchell et al., 2015; Leek and Christodoulides, 2011). For example, only a few SMEs could afford to attend international trade shows regularly, even though trade exhibitions were highly cost-effective ways to promote their brands and businesses.

5.5 Theoretical implications

This research provides theoretical implications. Past papers have empirically investigated SME branding (Mitchell et al., 2015; Khan and Ede, 2009; Berthon et al., 2008) and B2B branding (Leek and Christodoulides, 2012; Zhang et al., 2015; Kumar et al., 2015), and the growing interest in combining both contexts (Mäläskä et al., 2011; Spence and Essoussi, 2010; Hirvonen et al., 2016; Abimbola and Kocak, 2007). In line with such research, this paper contributes to the branding literature in both SME and B2B settings. We have offered a comprehensive understanding of how the value of a brand is perceived by B2B SMEs, and provided a roadmap for branding value development (de Chernatony, 2009). Research reveals that in the manufacturing environment, SMEs recognise a brand as its functional level which overlaps with the concept of trademark. The major purpose of B2B SMEs’ branding practice is to increase sales and differentiate products in markets. However, high value branding engagement in terms of emotional attachment and value-added is still absent. These findings are in line with earlier studies showing that branding practice is less popular with SMEs in the B2B context than LOs from consumer markets (Aaker, 1993; Keller, 2013). Moreover, our findings, based on the archetypes of branding approach, proposed a progressive schema for B2B SMEs to follow, which aligns with the early studies on brand orientation (Wong and Merrilees, 2005; Mudambi, 2002).

5.6 Managerial implications

Our findings provide a comprehensive picture to understand branding application in an industrial environment. First, managers should be aware of the current misconceptualisation of branding in the manufacturing environment. Findings indicate that the perception of brand value from B2B SMEs is located at a basic functional level, which is synonymous with trademark. A roadmap to the branding indicates an evolution from a functional level interpretation to an emotional attachment, extending to value added branding. Manufacturers wishing to uplift their branding practice should move away from the product functional focus to an emotional connection by adding personality and vision to the brand (de Chernatony, 2009; Andersson et al., 2018). This requires both long-term investment and visionary planning to integrate with branding practice.

Second, to consider which brand strategy is most appropriate for industrial SMEs, managers need to investigate the number of branding strategy options available, and examine these in a relation to their firms’ values and market conditions. This research suggests that corporate branding is the most popular strategy for B2B SMEs, and it comes with a concentrated marketing plan that links a firm’s value with individual products. Corporate branding is less costly, but it may make a business vulnerable to the total offerings of firms in terms of reputation building (Kotler and Pfoertsch, 2006). We suggest that corporate branding is particularly suitable for resource constrained B2B SMEs. Managers, however, should be vigilant and cautious in the application of corporate branding strategy. Any reckless decisions will directly affect a corporation’s reputation and image. This requires prudent alignment with an organisation’s strategic plan and marketing activities, as well as high expectations of product quality.

Third, the findings of the three branding approaches (conservative, flexible and integrative-exploratory) illustrate a progressive process, and offers directions for SME managers to follow. We suggest that B2B SME managers who are interested in developing branding strategy should take the branding constraints into consideration, and adopt corporate branding as an initial branding strategy to mitigate the cost (Kotler and Pfoertsch, 2006). As a firm gains more experience in branding, a combination of corporate branding and product branding can be considered to accomplish business expansion and product intention.

5.7 Limitation and future research

This study should be viewed alongside acknowledgement of its limitations. First, we have focused on B2B manufacturing firms from various industries; this may limit an in-depth understanding of industry-specific behaviour. Future research might examine the branding practice within a specific industry, such as the electronics industry. Second, brand management literature reveals a number of dimensions, while our research has shed light only on three prevailing branding elements. The exploratory nature adopted here may have impeded in-depth exploration within each category. Future research could take this further by examining one or more elements in more depth. For instance, future work could investigate to what extent corporate branding strategy is applied in the B2B SME context.

Figures

Figure 1.

A multi-stage data collection process

Figure 2.

B2B SME branding framework

Table I.

Interviews and interviewees

Firm	Interviewee position	Interview access	Industry	Exporting history (years)	Firm size (No. of employees)	Duration (in min)
F1	Sales executive	Chatroom	Bathroom lighting	4-5	<50	40
F2	Business owner	Chatroom	Natural stone	8-9	<50	30
F3	Business owner	Guanxi	Oral care products	5-6	<100	40
F4	CEO assistant	Guanxi	Fasteners	9-10	<300	34
F5	Sales executive	Chatroom	Disposal medical supplies	3-4	<150	40
F6	Sales executive	Chatroom	Computing	10	<500	25
F7	Business owner	Guanxi	Packaging processing	5	<50	20
F8	Sales executive	Chatroom	Speakers	7-8	<200	55
F9	Sales executive	Chatroom	LED devices	8-9	<100	30
F10	Sales executive	Chatroom	Creation artwork	6	<500	90
F11	Sales executive	Chatroom	Sound-proofing material	10	<50	70
F12	Sales executive	Chatroom	Electronic chargers	3-4	<100	30
F13	Sales executive	Chatroom	LED devices	7	<50	50
F14	Business owner	Guanxi	Industrial accessories	9-10	<150	25
F15	Sales executive	Chatroom	Electronic devices	8	<150	50
F16	Business owner	Guanxi	Promotional textiles, e.g. flags	11	<150	20
F17	Sales executive	Chatroom	Stainless steel tubes	5	<100	50
F18	Business operator	Guanxi	Computer server cases	4	<150	25
F19	Business partner and sales executive	Guanxi	Oral care products	10	<250	52
Total						821

Table II.

Three attitudes on branding

Management approach	Interview firms	General views	Branding strategy	Branding communication	Branding constraints
A conservative approach	F1, F2, F4, F5, F7, F9, F11, F14, F15, F16, F18	Branding is unnecessary; too risky; waste of time	Corporate branding	Packaging; website advertising	Standardised products, e.g., ingredient and component; entrepreneur management style; small business scales
A flexible approach	F3, F8, F12, F13, F17, F19	Approve the importance of branding; open to branding; little actions in branding practice	Mixed branding	Discount for own brand; packaging; website advertising; local tradeshows	Lack of added value and competitiveness; limited finance resources; lack of relevant skills
An integrated-exploratory approach	F6, F10	Branding as main competitive advantage in marketplaces; actively engaged in branding activities	Mixed branding	International trade shows/exhibitions; actively exploring foreign market	Weak in R&D and product positioning, and creativity; intensive market competition