Branding Services Companies: New Challenges, New Frontiers

Posted by Abhijit Telang in

 Marketing & Strategy

Sep 29, 2011 | Total views: 190

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Abhijit Telang
Marketing Manager - Product Engineering Services
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What makes branding ‘services’ so challenging and different from branding ‘products’? What principles should form the cornerstone of services brand strategy? What forces are disrupting the classical frontiers of branding Services and Products in Software?

When it comes to branding B2C products, the product brand represents a tangible value. A product brand is intended to represent and promise the value delivered and presented in a way that appeals to our senses, evokes happy memories, justifies its presence and makes us crave to have it in the future.

Given that such products are designed to touch and shape the lifestyle of consumers, branding seeks to epitomize the core aspect of that connection. What do you recall when you read “Connecting People” or “The Ultimate Driving Machine”?

But when it comes to services, however, the tangibility of experience is not so obvious. This is primarily because consumption of services delivers an experience that does not instill one of our primal instincts: a sense of ownership. What consumer craves for are the relevancy, quality and consistency of experience that a service provider promises to deliver. Consumer expectations are always the same irrespective of the variations in services offered. Regardless of whether it’s the Ground or the Priority method of transportation, consumers expect a similar promptness and quality of service offered by the staff and an assured delivery of the shipment within the agreed time.

In contrast, there are a few product companies which have relied on a strong organizational brand to span across their product portfolio in promising value. Sony, Microsoft, and Apple belong to that class of companies. This approach would work if a cautious attempt has been made in reflecting the organizational brand characteristics and personality traits in every product. For instance, consider the failure of Microsoft’s Zune in contrast with iconic status achieved by both Sony’s Walkman and Apple’s iPOD. Consumers simply failed to associate Microsoft with making a gadget as uniquely personal to them as they would have expected Sony and Apple to make.

Therefore product companies are compelled to offer value proposition in such a way that it appeals to desired segments, creating strong loyalty while not having to sacrifice profitability. B2C product categories and brands reflect this continuously evolving and optimizing ropewalk. They continuously strive to address the changes in lifestyle, some of them external and systematic such as socio-economical and demographic changes, while others are carefully designed to shape aspirations and evoke emotions. As a result, product brands typically evolve into brand hierarchies, each sub-brand and its family of products, representing expectations of a particular consumer segment.

Classical response of services companies has been very different and predictable. They have adopted the most common and perhaps easiest branding approach, which is to adopt a monolithic structure that essentially uses and extends an organization’s brand value to all of its service offerings. You can think of FedEx, UPS, or Sodexo in this context. They define, shape and promise not a tangible product but the overall consumer experience in consumption of their services.

This has worked mostly because successful companies have managed the direct consumer touch points and resulting interactions consistently well. If we consider the B2B software products and services market, the scenario is analogous to B2C market. The expectations about value delivery, consistency, and emotional wants are similar when it comes to owning products and consuming services.

Thus, quite predictably, software product companies have evolved brand hierarchies which comprise of co-brands, endorsements and sub-brands including version upgrades to target client segments. At the same time, software services firms have classically relied on defining their organizational brand around service quality, values, and consistency and have extended it to all of their offerings.

However, this may change due to a growing shift towards subscription and away from licensing software. According to an IDC study, by 2015, Software as a Service (SaaS) offering would claim 16% of global enterprise software market share. About 65% of new products by established ISVs will be delivered as a service. The adoption of cloud based delivery model has been a sequel to SaaS, and it will only accelerate subscription based consumption of infrastructure, software application products, and business processes in the near future.

The gradual shift away from on premise software procurement and installation is resulting in these products disappearing in clouds. In response, to retain their customer touch points, product companies are launching their own service offerings ranging from infrastructure management, to platform and tools to software application and business process choreography. To support service based models, they would need to adopt service branding principles that are focused on delivery experience management rather than product features.

As clients would increasingly deal with their service partners to assemble, configure and customize solutions for them, the software product features and performance conversations would be eclipsed by ones focused on business outcomes. This would further incline product companies to either partner with services firms or forward integrate into becoming services providers, with the much needed rebranding of capabilities.

On the other hand, traditional services firms are venturing into creating productized business solutions focused on target market segments, to gain entry into the once-elite group of high value IT consulting firms. A complimenting trend is growing to the extent of right-sourcing product engineering work, and in some cases, complete handover of product development work, from conceptualization to development and sustenance can also be seen.

Thus, services firms would need to increasingly rebrand themselves as being capable of engineering and launching products which are relevant to target markets. They will need to create logical, structured and relevant brand families that reflect the unique needs of client segments and industry verticals. This is happening currently in many of the Indian IT services firms.

There is a lot to learn from each other. Perhaps the change is in the air, just around us.