To invest, or not to invest, in brands? Brand relevance in B2B markets

Backhaus Klaus, Steiner Michael, Lügger Kai

Abstract

When allocating resources to brand investments, managers should consider the relevance of brands tothe purchase decision process. Past research on consumer markets shows that brand relevance generallyis driven by three functions: image benefits as well as information cost and risk reductions. This study isthe first to investigate these underlying mechanisms of brand relevance in a business-to-business setting.Our main contribution is that, in contrast with consumer markets, brand relevance in industrialmarkets depends primarily on risk and information cost-reducing effects. Therefore, business-tobusinessfirms should invest in their brands using tactics that support the reduction of risk and informationsearch costs for customer decision making. This article also demonstrates that brand relevance differsacross product categories, such that depending on the specific category, investing in brands may ormay not be a promising strategy.