Importance of industrial brands


(Written by Zhang Yiwen)

Changes in the market environment for industrial products in recent years have forced industrial enterprises to reevaluate their brands to maximize value during strategy adjustments.

Globalization has changed the competitive environment for industrial products. Kotler pointed out industrial enterprises under the impact of globalization would have to face several new challenges: a sharp increase in similar products and services, growing complexity, and incredibly high price pressure. Due to the global financial crisis, industrial enterprises had to cope with weak demand for export products and dwindling domestic purchases. Many companies found it difficult to survive the conditions. Enterprises had to find new inherent growth points and explore ways out of the crisis.

At the same time, a series of government policies provided strong support to help industrial enterprises adjust and take part in international competition, as well as strengthen rebuilding efforts. In January 2009, the State Council announced 10 plans to reinvigorate different industries. The plans covered industries such as iron and steel, equipment manufacturing, petrochemical, nonferrous metals, and electronics and information industries. At the beginning of March, details of the rejuvenation plan were published, showing the government’s determination to reinvigorate industry and promote the development of markets for industrial products. On March 26, with the announcement of tax rebates for exports by high-end industries, the government clearly showed its intention to encourage industrial enterprises to “go global” and take part in international competition. Industrial enterprises took full advantage of these support policies, formulated competitive market strategies and stood ready to enter the international market.

Thanks to these preferential policies, enterprises now have an opportunity to build their brand competitiveness.

The “going global” efforts can help industrial enterprises improve publicity efficiency, reduce risks, increase value and build image. In fierce market competition, brands play a crucial role and often determine the fate of enterprises. For industrial enterprises, however, branding has always been a weak link. It was common for industrial enterprises in many industries to ignore brand building. Decision-makers at industrial enterprises who were aware of the importance of brand building were often puzzled by various misconceptions about the process.

The principles for brand building for consumer goods cannot be copied to industrial brands. Compared with the consumer goods market, industrial products have the following features: inelastic demand, large purchase amounts and single purchase values, close relationships between supplier and purchaser, and complex purchase decisions. Copying brand-building practices for consumer goods will not work for industrial products and cannot help industrial enterprises survive the new market environment.

Unique methods must be created to build industrial brands. It is urgent for industrial enterprises to make brand building a top strategic priority. Creative methods should be applied to build industrial brands, since conventional practices are ineffective.

Learning from others can be a shortcut. Chinese industrial enterprises can draw experiences from overseas counterparts and leaders in industrial brand building. They can serve as role models for Chinese industrial enterprises. At the same time, Chinese industrial enterprises should not ignore the unique characteristics of Chinese industrial brands.

Enterprises must learn to adapt to the changing and complex global market environment. Chinese enterprises must recognize the competitive landscape to cope with an uncertain future. The most reliable way for industrial enterprises to survive is to develop industrial brands.

Originally published in Reference of Brand Management, a periodical magazine, in 2009.

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