The relative influence of functional versus imagery beliefs on brand sensitivity in B2B professional services

Highlights

• The effects of functional and imagery beliefs on brand sensitivity are examined.

• Functional and imagery beliefs affect brand preference and brand sensitivity.

• Brand sensitivity influences brand importance and customer engagement.

Abstract

Existing studies offer limited explanations regarding the determinants of business-to-business (B2B) brand sensitivity: the degree to which brand stimuli are actively considered during buyer deliberations. This research addresses this gap by comparing the relative influence of organizational buyers' functional versus imagery beliefs on brand outcomes in B2B professional service settings. Specifically, it compares the influence of buyers' perceived operational competence and prestige sensitivity on brand preference and brand sensitivity. Further, it evaluates the effect of brand sensitivity on brand importance and customer engagement, two particularly relevant outcomes in the B2B professional services setting. A qualitative pilot study was conducted to gain insight into the salient drivers of brand preference and brand sensitivity. Then, a survey of 324 CEOs and owner-managers of small and medium-sized firms was carried out to test the hypothesized model. The results confirm the importance of imagery beliefs in organizational buying decisions, but not at the expense of operational competence, a more fundamental functional belief.

Introduction

SAP, a leading enterprise software developer, boasts that “The best run businesses run SAP.” As evidence, its advertisements prominently feature clients with well-known brands including Callaway, Discovery Channel, Nestlé, and Hasbro. Accenture, a prominent management consulting firm, claims: “Over 300% growth in Asia Pacific and a mountain of success for Caterpillar” - a leading manufacturer of construction and mining equipment (Accenture, 2017). Also, Xerox, the foremost provider of document management solutions, highlights that it automates the global invoice process for Marriott, customizes Target's direct mail campaign, and digitizes P&G's documents (Elliott, 2010). When positioning its respective brands, each of these professional service firms promotes both functional and imagery-related factors by highlighting their high-profile clients in addition to their business acumen.

Business-to-business (B2B) researchers have established that strong, well-managed brands can provide both tangible and intangible benefits to firms (Elsäßer and Wirtz, 2017, Homburg et al., 2010, Nyadzayo et al., 2016). However, in spite of increasing empirical evidence (e.g. Brown et al., 2011, Zablah et al., 2010), many B2B marketers are still skeptical about the role of brands in organizational buying—convinced that buyers base their choices only on objective and functional attributes (Amonini, McColl-Kennedy, Soutar, & Sweeney, 2010). Consequently, the role of branding in the B2B sector “has received comparatively little attention in the academic literature due to a belief that industrial buyers are unaffected by the emotional values corresponding to brands” (Leek & Christodoulides, 2011, p. 830). Therefore, questions remain as to whether subjective, imagery-related factors are as impactful as objective, functional factors in influencing brand sensitivity: “the degree to which brand names and/or corporate associations are actively considered in organizational buying deliberations” (Zablah et al., 2010, p.251). When devising an effective branding strategy, should B2B firms emphasize: 1) objective and/or operational factors (e.g., technology, functionality, performance outcomes), or 2) subjective and/or imagery factors (e.g., their association with high-profile customers, reputation)? Which factor is most likely to influence a buyer's decision? Answers to these questions are essential as B2B marketers seek to understand whether and how strong brands can be best capitalized to achieve a competitive advantage in B2B service settings (Grewal et al., 2015, Lilien, 2016).

While extant B2B branding research has focused on industrial products within manufacturing contexts, the B2B service arena has been largely overlooked (Davis et al., 2008, Gomes et al., 2016, Roberts and Merrilees, 2007). This is a notable gap in the literature given the nuances of services (i.e., professional services) delivery (Biedenbach, Bengtsson, & Wincent, 2011). Indeed, B2B service brand equity is an important differentiator and a key factor that influences a buyer's purchase decisions (Berry, 2000, Dall'Olmo Riley and De Chernatony, 2000).

Legal, insurance, advertising, management consulting, IT, human resources and accounting firms typically comprise the professional services domain. Professional service firms compete in the fastest growing sector in the global economy (Amonini et al., 2010). They are characterized as knowledge-intensive with low capital intensity and a workforce that provides an array of specialized B2B services (Von Nordenflycht, 2010). In 2015,¹ there were nearly 900,000 professional service firms in the United States, generating a combined annual revenue in excess of $1.7 trillion (International Trade Administration, 2016). The ‘Big Four’ accounting firms—Deloitte, PricewaterhouseCoopers, Ernst & Young, and KPMG—represent not only global brands, but also the four largest professional service firms in the world, combining to generate over $100 billion in revenue in 2016 alone (Rapoport, 2017). Hence, professional service firms loom large over today's B2B markets (Hogan, Soutar, McColl-Kennedy, & Sweeney, 2011). Indeed, prior research has emphasized the role of a brand's tangible and intangible components in building brand equity (Keller & Lehmann, 2006). For instance, Keller's (2001) brand resonance model depicts the importance of both performance-related and imagery-related considerations in establishing strong brands. However, little is understood regarding how the functional and imagery beliefs associated with professional service firms might influence organizational buying behavior.

Given this background, this research examines the role of buyers' functional and imagery beliefs regarding a professional service firm on their brand attitudes, intentions and behaviors. A hierarchy-of-effects model is applied to account for the relative influence of functional (i.e., operational competence) versus imagery beliefs (i.e., prestige sensitivity), thereby explicating the role of objective and subjective evaluation factors on buyers' decision-making processes. Operational competence reflects buyers' beliefs related to “the competent execution of visible behaviors as an indication of service in action” (Sirdeshmukh, Singh, & Sabol, 2002, p.18). Prestige sensitivity captures a buyer's favorable beliefs about a brand name, based on “feelings of prominence and status” that the brand name can signal to others about the buyer's organization (Lichtenstein, Ridgway, & Netemeyer, 1993, p.236). Buyers' operational competence and prestige-sensitivity beliefs regarding a professional service firm are expected to influence the extent to which that firm brand is preferred. Brand preference, in turn, determines buyers' brand sensitivity which influences brand importance and customer engagement behaviors. Prior B2B literature identifies brand sensitivity as a key determinant of brand importance in organizational buying decisions (Zablah et al., 2010). Further, in the professional service firm context, customer engagement, including positive word-of-mouth behavior and increased customer-employee interactions, has been identified as an important performance outcome that could enhance brand equity (Biedenbach et al., 2011, Davies et al., 2010).

This research contributes to B2B branding and organizational buying literature by, first, exploring the relative influence of operational competence and prestige sensitivity on brand preference, brand sensitivity, and ultimately brand importance and customer engagement. It suggests that while imagery perceptions like prestige sensitivity do play a role in buying decisions, buyers' functional beliefs, and specifically operational competence, play the more prominent role in influencing brand sensitivity. Second, it introduces prestige sensitivity as a key determinant of brand preference in the nomological network. Prestige sensitivity is a potentially interesting construct in light of prior research suggesting that brand heuristics and subjective evaluation criteria play a vital role in organizational buying behavior (e.g. Brown et al., 2011). Third, it advances research that examines the role and influence of B2B brand phenomena within the professional services setting. Fourth, in testing a hierarchy-of-effects model, this research utilizes a mixed method approach that includes open-ended interviews along with a cross-sectional survey of CEOs and/or owner-managers of small and medium-sized enterprises. Subsequently, a number of theoretical and managerial insights are developed.