The unfortunate reality for many business-to-business (B2B) manufacturers is that their market value doesn’t even match the net total of their assets. Now, contrast that with companies in the S&P 500, where net assets account for only 22 percent of market value. What accounts for the difference? According to mounting research, it’s in the brand.
Although many B2B companies have recognized the value of branding in increasing sales revenues, many more continue to overlook the role of a brand in increasing overall enterprise value. In an era in which B2B manufacturers are haunted by increasingly fierce global competition, constant pricing pressures and the commoditization of products and services, branding should be much more than an afterthought.
Companies that overlook branding are missing out on extraordinary potential impacts. A company’s brand has been found to be among the top 10 factors impacting enterprise value. What may surprise you is that seven of the remaining factors can be improved directly or indirectly by strategic, brand-based communications. These factors include the strength of the management team, future growth potential and market share.
To realize any of these benefits, however, a company’s leadership must first understand what it means to build an effective B2B brand. Building an effective B2B brand isn’t just a matter of designing a unique logo and tag line. Instead, it’s about determining how your company needs to be known by all of its audiences – internal and external – in order to accomplish your short- and long-term business objectives. Then, it’s about communicating a clear, single, compelling message about your company at every opportunity.
The branding process should engage the chief executive officer and take into consideration the company’s vision, mission and go-to-market strategy. Understanding marketplace drivers and trends is also important to the process. Outside research to determine what customers value now, what they will value in the future and what you do better than your competitors, is essential to brand development.
This external research is critical to ensure that your brand speaks to the unique value of your offer in a meaningful and relevant way.
One example of a manufacturer that "gets" branding is Donnelly Custom Manufacturing of Alexandria, Minn. Since its inception, this plastic injection molder has focused on short-run injection molding, a niche most other plastics manufacturers consider unprofitable. The company previously positioned itself as a plastics injection molder, which did nothing to differentiate the firm from its competition.
Research and analysis unveiled the potential for this manufacturer to dominate the short-run space, allowing Donnelly to own the niche and simultaneously reposition its competition as followers.
Today, Donnelly operates under the moniker "How Short Run is Done." This brand premise has allowed Donnelly to set itself apart from the competition and clearly communicate its unique value. The positioning has helped the company succeed by leveraging opportunities in a market where long-run molding was moving overseas and the short-run market was underserved.
There are manufacturers who are winning in today’s complex business environment and increasing their enterprise value in the process. They’re doing so by redefining their value propositions, creating brands that differentiate them from the competition and communicating their unique value to their existing and potential customers, strategic allies, employees and recruits.