TheBrandCalledUs. Market Analysis. Strategic Market Statements. Recommendations

Transcription

1 TheBrandCalledUs Market Analysis Abstract: IT providers view alliances as vehicles to extend their brands. Too often, however, cobranding becomes a euphemism for simply trying to sell more. By Christine Adams Strategic Market Statements The act of co-selling does not equate to joint brand value creation more frequently the opposite is true. IT service providers require tighter control than IT product companies over comingled brands, because the action of their partner's people must live up to their own brand promise or risk damage to brand perception. Recommendations Know yourself. Before you can assess partners' impact on your brand promise, you must be clear as to what that promise entails. Operationalize with partners. Your partners should know what your brand promise is and be prepared to act upon it. A partner that cannot or does not operate as an effective representative of your brand is not a partner you want. Plan for the long term. As outsourcing and other long-term contract vehicles become more common, partners and their brands may be locked together on deals for five to 10 years. Publication Date:8 January 2004

2 2 The Brand Called Us Introduction Every day, hundreds of IT product and service providers comingle their brands and brand promises by going to market with or through partners. Forms of partner-based branding include the following. Cobranding Under cobranding, two brands combine with the goal of improving or extending brand reach and relevance, typically in a new offering or market segment. Opposites can attract as well. IBM/Linux is an example of a successful cobranding effort involving two different brands. Ingredient branding Ingredient branding is a form of cobranding wherein one company's offering is a branded ingredient of another company's branded offering. Intel Inside is a well-known example. Partner brands and sub-brands Sometimes providers choose to separately brand or sub-brand their partnering organization as a means of creating a unique identity for part of their activities. Sun's iforce, Oracle's Oracle Partner Network (OPN) and IBM's PartnerWorld are all examples of partner sub-brands. New brands These can arise from strategic relationships. Avanade, the Microsoft and Accenture joint venture, is an example of a newly created brand. Certifications Certifications are the most common form of partner-based branding in IT. Providers certify their partners to sell, deliver and support their offerings under their imprimatur. Certifications are thought to convey an added dimension of quality assurance and credibility. Logos and trademarks The use of logos and trademarks is another popular vehicle through which partner brands are shared. As the phrase implies, one partner authorizes the other to use its brand identity under a prescribed set of circumstances. Subsuming one brand under another This is becoming more common as companies see the advantages of being a "private label" component of another company's solution. The major advantage is lowered sales cost because of reduced sales staff and overhead, as well as higher yields. To understand more about IT alliance builders' attitudes toward "the brand called us," Gartner Dataquest queried companies about their views as part of its annual alliance best-practices study. Participants in the study included Microsoft, Oracle, Hewlett-Packard, CGE&Y, BearingPoint,Deloitte,SunMicrosystems,EDS,CSC,Symbol Technologies,ARC,CGI,Kanbay,Infosys,Wipro,CiscoSystems,T- Systems, Novell, Siemens SBS, Getronics and Unisys. Their aggregated views as to the value of alliances as a brand building tool are discussed later Gartner, Inc. and/or its Affiliates. All Rights Reserved. 8 January 2004

3 Alliances Are Viewed as Brand Extenders With one exception, every participant in the best-practices study used alliances to build or extend their brands. This was no surprise. While increased brand reach is seldom the sole motivation for partnering in IT, it is an expected ancillary benefit. As shown in Figure 1, awareness and reach were the primary brand-extending benefits participants sought from alliances. This was equally true for powerful technology brands, such as Microsoft, Oracle and HP, as it was for less-well-known participants. This too is unsurprising. While much attention is focused on the "halo effect" a smaller player garners in associating with a powerful technology brand, the benefits are not one-sided. In some markets, it is the established brand that is the liability. In a recent survey asking midsize businesses their perception of large, well-known IT brands, the reaction of most was that these brands are too expensive and too big (see "SMB IT Services Buying Trends and Preferences, 2003" ITSM-NA-UW-0111). Close association with small and midsize business partners and brands is essential to overcome the perception of being a poor fit for this market. Despite the common wisdom that holds hat alliances are a cost-effective means of building or extending brands, few participants indicated they sought this benefit. Further, only participants with revenue in excess of $1 billion indicated cost-effectiveness was a primary concern. Gartner Dataquest observes that IT providers seldom think of partnering and branding as related activities. Because participants in this study represented their organizations' alliance effort, cost-effective brand building simply may not have been their area of focus or interest Gartner, Inc. and/or its Affiliates. All Rights Reserved. 8 January 2004

4 4 The Brand Called Us Figure 1 Primary Brand Benefits Sought From Alliances Increased Brand Awareness Increased Brand Credibility Brand Reach or Stretch Increased Customer Affinity for the Brand Cost Substitution (for Other Brand-Building Activities) Cost-Effectiveness (Relative to Other Brand-Building Activities) Percent Note: Multiple responses were permitted. Source: Gartner Dataquest (December 2003) Coselling Seen as Most Effective When asked to rate the relative effectiveness of various alliance marketing activities in building or extending partners' brands, participants' opinions ran contrary to conventional wisdom (see Figure 2). Participants viewed certifications, marketing training and other things widely perceived to be valued by potential partners as relatively ineffective. Notably, participants of all types and sizes shared this view. It is important to remember, however, that any industrywide conclusions would require a larger, more-representative sample of partnering organizations of various sizes. In general, Gartner Dataquest research and ongoing discussions with IT alliance builders suggest that smaller players value marketing training and certification, while larger, branded providers are more likely to view certification as an alternative revenue stream for the partner Gartner, Inc. and/or its Affiliates. All Rights Reserved. 8 January 2004

5 5 Coselling, and not any explicit brand building activity, was seen as most effective in achieving desired brand benefits. Gartner Dataquest believes that IT providers often equate brand value with sales. While cobranding rated highly in terms of effectiveness, Gartner Dataquest observes that only a handful of alliances actually pursue formal cobranding activities. This could also be a reflection of the strong sales orientation wherein any comingling of partners' brands in a joint sales call is thought to be cobranding. Figure 2 Effectiveness of Alliance Marketing Offerings in Extending Brands Coselling Joint PR Cobranding Joint Advertising Joint Solution Centers Joint Presentations Use of Partners' Logo White Papers Named-Partner Tiers Partner Marketing Training and Support Awards Branded-Partner Program Certifications Rating Note: Rated on a scale of 1 to 10 in which 1 = not at all effective and 10 = highly effective. Source: Gartner Dataquest December Gartner, Inc. and/or its Affiliates. All Rights Reserved. 8 January 2004

6 6 The Brand Called Us Certification is a Mixed Bag Certification, the most enduring and popular brand-building offering, emerged as the most controversial. As shown in Figure 2, certification was viewed as the least-effective marketing offering for building or extending partners' brands. When asked who benefited most from certification, participants responded as follows: Twenty-nine percent of participants indicated that the provider issuing the certification benefited most. Another 33 percent said that provider and the partner benefited equally. The largest group, 43 percent, said the company receiving the certification benefited most. Two-thirds of participants indicated certification disproportionately benefits one partner over the other. This antagonism is consistent with findings from earlier Gartner Dataquest research on the merits of certification. Gartner Dataquest Perspective Given the many ways IT brands interact in the marketplace, it might seem reasonable to expect that providers would factor brand strategy and compatibility into their selection of partner relationships. However, Gartner Dataquest research and discussions with partnering organizations indicates the opposite tends to be true. Consideration as to how the brand is used and represented frequently stops with strict provisions around use of logos and issuance of joint press releases. Stewardship of the brand promise and how that promise might be enhanced or diminished by association with partners receives far less attention. Much of what happens in IT is actually de facto branding. This occurs as company brands collide often haphazardly in joint marketing and selling activities and, of course, in client engagements. Whether intentional or not, partnering affects a company's brand promise. Consequently, every IT product and service provider that partners as part of its go-to-market strategy must consider the implications of cobranding. Regardless of how you use your brand with partners, Gartner Dataquest recommends the following. Know yourself. Before you can assess partners' impact on your brand promise, you must be clear as to what that promise entails. Unclear or unformed brands and brand promises have contributed heavily to the popularity of de facto branding in IT Gartner, Inc. and/or its Affiliates. All Rights Reserved. 8 January 2004

7 Augment, don't substitute. Gartner Dataquest notes that many smaller or emerging companies rely entirely on branded partners to create credibility, reach and customer pull. While cobranding and other strategies can be powerful tools to extend brands, there must be something to extend in the first place. Every company that pursues brand strategy should expect to invest in building and sustaining its brand independent of partners. Operationalize with partners. Do your partners know what your brand promise is? Do they know how it is operationalized in day-to-day actions and with clients? These insights should be built into partner negotiations, business planning and training. They should also be conditions of a continued relationship. A partner that cannot or does not act in the interests of your brand is not a partner you want. Measure and reinforce. Customer satisfaction and loyalty should be regularly and rigorously employed measures of partnering success that help to determine whether partners are effectively representing your brand. It's also useful to include questions on partners and partnered offerings in brand awareness and perception testing. For those companies considering cobranding or other substantial (and risky) partner-based branding activities, Gartner Dataquest adds the following guidance: Choose partners carefully. Branding expert David Aaker calls cobranding "a classic search for synergy." As in most classic searches, results are also elusive. The same considerations you would give to choosing a strategic partner overall cultural fit, commitment to work together and shared values are important in identifying a partner with which to cobrand. Be vigilant. A major risk of cobranding or ingredient branding is that one brand in the relationship changes course (through change in strategy, or merger or acquisition) or loses its footing in the marketplace. Ingredient branding is especially vulnerable to this risk because the brands are interwoven in a single offering. Contractual arrangements need to be forged carefully to protect the brand and provide for appropriate remedies and exit strategies when a course change occurs. Plan for the long term. As outsourcing and other long-term contract vehicles become more common, partners and their brands may be locked together on deals for five to 10 years. Are you prepared to entrust your brand to a partner for this period? If not, consider subcontracting or another vehicle to minimize risk to your brand. Key Issue How do companies manage their brand in a service partnership? Gartner, Inc. and/or its Affiliates. All Rights Reserved. 8 January 2004

8 8 The Brand Called Us This document has been published to the following Marketplace codes: ITSV-WW-DP-0570 For More Information... In North America and Latin America: In Europe, the Middle East and Africa: In Asia/Pacific: In Japan: Worldwide via gartner.com: Entire contents 2004 Gartner, Inc. and/or its Affiliates. All rights reserved. Reproduction of this publication in any form without prior written permission is forbidden. The information contained herein has been obtained from sources believed to be reliable. Gartner disclaims all warranties as to the accuracy, completeness or adequacy of such information. Gartner shall have no liability for errors, omissions or inadequacies in the information contained herein or for interpretations thereof. The reader assumes sole responsibility for the selection of these materials to achieve its intended results. The opinions expressed herein are subject to change without notice