IBM is in the top 5 most valuable brands in the world. The company had its hard times and was very close to bankruptcy, but somehow managed to prevent it and even came back to business better and stronger.
IBM is a company with a long history. Incorporated in 1911 as a Computing- Tabulating- Recording (C-T-R) Company. In 1924 it was renamed International Business Machines Corporation. IBM is a perfect example of how to manage B2B brands and handle a crisis.
Crisis Time
IBM was performing well in the 1970s and 80s, due to its strong corporate culture and employee selection procedures. However, the high value had been placed on consensus-based decision-making. That turned out to be a weakness in the fast-growing minicomputer industry of the late 1980s and 1990s. Back then, the world made its first steps towards a commercial environment where rapid decision-making and entrepreneurial risk-taking are essential. It was hard for IBM to adjust, which resulted in dropping out of the run. Moreover, smaller companies such as Apple, HP, and Microsoft have overtaken it.
In 1981 IBM introduced its first PC and managed to increase its market share to 41% by 1985. Unfortunately, 3 years later the market share had dropped to 28%. The blame for this was seen in IBM´s unfocused marketing strategy- which exposed IBM to products cloned by cheap competitors. 1993 was the year of a negative peak for IBM, producing 8 billion US dollars loss. Many marketers believed that the company would fail and considered IBM a dinosaur in the market. IBM’s brand and its global image were in deep trouble. Moreover, the company lost its strength and almost became irrelevant. Nowadays, IBM dominates technology services, which in 2006 accounted for almost half of its revenues and more than half of its profits.
Brand´s Redefining
In 1993 the transformation of IBM took place. From a lumbering hardware manufacturing company IBM became a customer-focused service business. Redefinition from a product-oriented to a customer and market-oriented “builder of networks” also implied a renewed attention to brand management and advertising.
One of the first decisions was to shift huge amounts of resources to rebuild the IBM brand- to choose its master brand. The most important aspect was to focus on the quality reputation of all its products and services, as that was the most valuable. In the 1990s, IBM extended its brand portfolio relevance to take advantage of a market opportunity in information technology services and the Internet. Great market opportunities were further drivers of the later brand repositioning.
During the process of revitalizing IBM fired its 70 global agency partners and united all its global advertising business with Ogilvy & Mather (O&M) in 1994. This procedure resulted in more integrated, more effective marketing communications and uniform branding at much lower communications costs. To change the brand image, IBM invested in marketing and brand building. Positioned itself as a company that understands customers’ needs and that can provide a total portfolio of products, services, and consulting advice. The O&M 360-degree marketing communications strategy included TV, print, outdoor, events, sports sponsorships, online, and non-traditional media to communicate its brand positioning.
Reorganization Strategy
Furthermore, IBM was aware that to achieve real change, it not only needed to focus on its customers, but also employees. Educating and empowering their employees was one of the major steps towards the new IBM. Since then, new reps receive extensive initial training and may spend 15% of their time each year in additional training. In 2006 IBM switched 25% of the training from the classroom to e-learning, saving a great deal of money in the process.
In the 1990s, when many firms were attempting to be relevant to the Internet. IBM was a trend driver with its e-business position. The company ultimately spent over 5 billion US dollars building the eBusiness “label” after its introduction in 1996.
In 2003 , with the change of CEO, a dramatic turnaround has been detected, in part by making the synergy and technology of the organization work for the customers. The new strategy was based on the new value proposition: On Demand, meaning IT systems and resources would be available on-demand when needed. The same year another category has been created- eBusiness on Demand. Firms would develop an IT system that would encompass suppliers, customers, and partners and deliver information and computer resources on demand, when needed. Creating company-wide products and services that meet customers’ needs was unreachable by competitors.
For the year 2006, almost half of IBM´s annual revenues came from global services and because of that, IBM left the field of computer production and sold its PC Group to its joint venture partner Lenovo.
Campaigns
When it comes to IBM campaigns, the brand essence, “magic you can trust” captures the inspirational aspect of their products and services. It is combined with the trust generated by the company´s heritage, size, and competence. IBM also uses several taglines: “Solutions for a small planet” – for those with global vision, while “e-business” is relevant for those seeking help with e-commerce.
The IBM and O&M Software Evangelist campaign, known by the tagline- “It´s a different kind of world. You need a different kind of software”, helped IBM become the number one provider of “middleware”– “fundamental building blocks for e-business”. Moreover, it contributed to the company´s 13 billion US dollars in software revenue during 2000. Moreover, in 2001 the campaign was awarded a gold trophy in the Computer Software category.
Entering Small Business Marketplace
For many years IBM was perceived as relevant for big corporations but irrelevant for small businesses. IBM decided to break down this perception and managed to successfully re-brand itself for the small business marketplace. The company counts small businesses as 20% of its business. IBM has launched Express- a line of hardware, software services, and financing, for this market.
IBM´s Business Partner program provides a perfect example of how to get comparable third-party leverage in a B2B-complex purchase model. Moreover, the company´s PartnerWorld program provides extensive support for partners, and to the channel in key value-added areas such as marketing, sales, education and certification, technical support, and customer financing.
Key Takeaway
IBM is an example of a visionary company that holds a distinctive set of values, respecting individuals, customer satisfaction, and continuous quality improvement.
Source: Kotler, P., & Pfoertsch, W. (2006). B2B Brand Management. Springer Berlin Heidelberg.