There are significant differences between B2B and B2C decisions. But also a number of similarities. One example is that “status” is equally important for some decision makers buying for the company as for some buying as a consumer. Think about the CEO proudly stating “together with McKinsey” or why most of us go the Gold lounge if we have a Gold card even if it is much more crowded than the business lounge…
Some time ago, I published a summary of a meta study showing which factors drive sales in B2B. The meta study was carried out by Niklas Bondesson and Johan Anselmsson at the Lund Brand Management Group. Over many years of research, Johan and Niklas have developed a unique analytical tool to determine exactly which brand associations drive sales (volume premium) and justify higher prices (price premium).
If you want to understand your brand’s full potential, you need to know which associations with the brand actually makes people want to buy it and pay more for it. It is not enough that the brand is generally well-known and well-liked (even though that is of course a good starting point). Saab, for example, was both well-known and liked by many, but far too few wanted to buy the car. The brand was simply known and liked for the wrong things—those that did not drive sales.
In parallel with the B2B meta study, Niklas and Johan conducted a corresponding B2C study based on about 100 different brands. Even though this blog is about B2B marketing, I think it’s interesting to compare drivers for selecting a certain brand.
The B2C meta-study analyzes 24 general brand associations shown to be important in brand research. The results are not based on what consumers say is important when choosing a brand, but on a statistical analysis of what actually drives revenue in the form of willingness to buy and willingness to pay more.
The five most revenue-driving brand associations in B2C are:
- Sense of quality
- Reliability
- Status
- Reputation
- Meets basic needs
These are therefore the associations that most strongly drive both the willingness to buy (volume premium) and the willingness to pay more (price premium). For example, associations such as “environmentally friendly” (rank 14), “product range” (15), and “design” (8) are less important to brand choice than the level of status that the brand is perceived to convey.
Since different brand associations drive price respectively volume premium, it is important to adjust your message depending on whether your main challenge is to win or defend market share (volume premium) or to justify why your goods and/or services cost more than competitors’ (price premium).
That “sense of quality” ranks highest is surprising, because this association seldom comes out on top in individual brand analyses. However, after reviewing all cases, it turned out that “sense of quality” had almost always ranked in the upper half of the most revenue-driving associations. In other words, “sense of quality” appears to be the “lowest common denominator” for brands that consumers prefer to buy and are willing to pay more for –brands that can be considered strong.
However, it should be added that sense of quality, or the perception of quality, is primarily decisive when the choice is between a leading/stronger brand and a smaller/weaker one, and not to the same extent when the choice is between different leading/strong brands. In other words, the association can explain why you choose Felix over Lidl but not why you choose Felix over Heinz.
“Meets basic needs” means that the brand is perceived to satisfy a kind of core utility in the category – for example that the food tastes good, the TV provider has good channels, etc. In short: that the brand is perceived to be good enough compared to the alternatives. That this association ranks highly is not very surprising. In most cases, and especially with fast-moving consumer goods (FMCG), we humans simply do not have the time or energy to optimize every choice. Instead, we try to avoid making bad choices – or choices that make us look bad.
Similar as in the B2B meta study, different brand associations make people want to buy (drive volume premium) versus accept a higher price (drive price premium).
The three associations that have the strongest impact on volume premium (willingness to buy) are:
- Sense of quality
- Reliability
- Meets basic needs
The strongest impact on price premium (willingness to pay) comes from:
- Status
- Sense of quality
- Sophisticated
These rankings are not surprising. But further down in the lists are more interesting and distinct price- and volume-premium associations. For example, “sense of community,” “uniqueness,” and “liked advertising” strongly drive price premium (getting people to accept a higher price) but have weak impact on volume premium. The opposite is true for, among others, “service/staff,” “simplicity,” and “range breadth” – associations that drive volume premium (getting people to want to buy) but do not justify a higher price.
Finally, even though there are general patterns in which brand associations drive sales, you should not view them as absolute truths. In every industry and every market, unique conditions may apply, meaning you must find out what is true in your specific category and for your specific brand.
What is always true, however – whether you operate in B2B or B2C – is that your brand is not strong until it contributes to selling more or justifying a higher price. Without exception.
Do you want to discuss how you find out what drives sales in you industry just reach out to ulf@sfinxagency.com
