Much of the extant work on brand equity in business markets has focused on predicting brand loyalty, as in what brand image elements that make buyers prefer to buy a brand. The question what drives buyers to pay more or less for brands has however been somewhat overlooked, despite price premium being a distinct and economically important outcome of a favourable brand image. In an attempt to answer this question, this paper suggests that the corporate brand image determinants of price premium can be conceptualised into six dimensions: brand familiarity-, product solution-, service-, distribution-, relationship- and company associations. Findings from a small-scale qualitative investigation, based on interviews with buyers of corrugated packaging, are used to illustrate this model as well as to explore its microelements and demonstrate why they can be assumed to be mentally related to buyers' willingness to pay.
Brand image has been defined as the information linked to a brand in customer memory (Keller, 1993), a definition based on theories on psychology, and most importantly on the “associative network memory model” (see also Collins & Loftus, 1975). Basically any specific information that exists in the minds of customers with respect to a brand is relevant as an image element, regardless of whether it is related to tangible or intangible elements, or whether it is based on an actual experiences or expectations. In brand management literature, an underlying assumption has always been that a favourable, strong, and unique brand image constitutes a sustainable competitive advantage that will deliver attractive economic returns ( Aaker, 1991; Keller, 1998). As such, brand image is a highly interesting concept, both from a managerial and theoretical perceptive. To understand how brand image is assumed to deliver profits, it can be put in a broader brand equity context.
The concept of brand equity has an explicit focus on extracting the tangible economic value from brands and is today a broad field that can be subdivided into a brand equity chain (see Fig. 1) with three components: brand image, brand strength and brand value (see similar chains in Srivastava and Shocker, 1991, Feldwick, 1996, Keller and Lehman, 2003 and Kapferer, 2004). The visualised causal principle states that how target customers perceive a brand's specific attributes (brand image), will influence how they globally evaluate and behave towards the brand in the marketplace (constitutes the strength of a brand), which will influence the long-term economic value that the brand generates to the brand-owning firm (brand value). There are mainly two distinct dimensions of brand strength. The most common one is brand loyalty, empirically captured with such measures as preference and purchase intention ( Yoo and Donthu, 2001, Taylor et al., 2004 and Cretu and Brodie, 2007). Less commonly measured in business markets is price premium (customers willingness to pay for products or services from a brand compared to similar products or services from other relevant brands), although it is acknowledged at the conceptual level and used as a distinct and important brand strength indicator in several B2C studies ( Netemeyer et al., 2004, Kalra and Goodstein, 1998, Sethuraman, 2000 and Ailawadi et al., 2003).
The general or formal theoretical contribution from this study to the industrial branding field is the refinement of a highly detailed B2B brand image model. In this model, six main dimensions comprise brand image: brand familiarity, product solution, service, distribution, relationship and company. To a large part, the study empirically confirms the relevance of elements that are occurring in existing models (c.f. Mudambi et al., 1997 and Van Riel et al., 2005), thereby contributing with one step towards a more general theory of B2B brand equity. Keeping in mind the small-scale explorative character of this investigation, it does however also bring some unique contributions to the table by: (1) focusing on price premium as a specific and economically highly interesting form of brand strength; and by: (2) identifying a great number of brand image elements at a highly detailed level. Few of these specific elements identified in the explorative interviews can be said to be completely new discoveries in a broader relationship marketing context, and many of them have been more or less addressed in previous B2B brand equity work (Beverland et al., 2007, Mudambi et al., 1997, Van Riel et al., 2005 and Kuhn et al., 2008). The uniqueness of this paper is however the specific focus on understanding mental associations that are mentally linked to customers' willingness to pay a price premium. The model developed (Fig. 2) is an attempt to propose how customers think of premium business brands, and what makes them pay more for some brands. As most previous work instead have focused on the volume side of a brand's strength (often by using different forms of loyalty, see for example Mudambi et al., 1997, Wiedmann, 2004, Kuhn et al., 2008, Van Riel et al., 2005 and Han and Sung, 2008), a price focus can help build a more comprehensive theory of B2B brand image.
In the following discussion, some of the elements in the model will be further discussed: relationship-, product solution- and brand community associations. Not because they are new discoveries per se, but because this explorative investigation indicates they may be more important than what extant work has shown. Possibly because they have a stronger impact on price premium than loyalty, which in that case would make them particularly interesting for firms striving for higher margins rather than larger volumes.
