Impact of Component Supplier Branding on Profitability

Worm, S., & Srivastava, R. K. (2014). Impact of component supplier branding on profitability. International Journal of Research in Marketing, 31(4), 409-424.

49 Pages Posted: 24 Mar 2017

See all articles by Stefan Worm

Stefan Worm

BI Norwegian Business School

Rajendra K. Srivastava

Singapore Management University - Lee Kong Chian School of Business

Date Written: January 15, 2014

Abstract

In recent years, many business-to-business (B2B) component supplier (CS) firms have added branding to their marketing toolbox. By extending the logic of ingredient branding to B2B components, they aim to create “pull” from B2B end customers by building a strong CS brand image among their customers’ customers. In contrast with the established “push” approach of building strong relationships with original equipment manufacturers (OEMs), it is unclear whether and under which conditions CS branding is a worthy strategy. On the one hand, anecdotal evidence suggests that suppliers can leverage strong CS brand image in negotiations with increasingly powerful OEMs to enhance their financial performance. On the other hand, many B2B managers believe that branding does not work in their industry context and erodes profitability. We build a data set consisting of survey measures and archival data across a broad set of industries. Our results indicate that the financial outcomes of CS branding largely depend on the characteristics of the CS and OEM industries. Unlike dyadic OEM–CS relationships, which enhance profitability invariably across industry contexts, CS branding is effective only in well-defined situations. CS branding initiatives can enhance return in CS industries with substantial levels of product differentiation and technology intensity. However, unfavorable results may arise in industry contexts in which OEM–end customer relationships or OEM brands are important.

Keywords: Business-to-business brands, Ingredient branding, Component supplier branding, Brand performance, Financial performance

Suggested Citation

Worm, Stefan and Srivastava, Rajendra K., Impact of Component Supplier Branding on Profitability (January 15, 2014). Worm, S., & Srivastava, R. K. (2014). Impact of component supplier branding on profitability. International Journal of Research in Marketing, 31(4), 409-424., Available at SSRN: https://ssrn.com/abstract=2940167

Stefan Worm (Contact Author)

BI Norwegian Business School ( email )

Nydalsveien 37
Oslo, 0442
Norway

Rajendra K. Srivastava

Singapore Management University - Lee Kong Chian School of Business ( email )

469 Bukit Timah Road
Singapore 912409
Singapore

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