Benchmarking Services Branding

Journal of Marketing Management, 2006, 22, 717-758
Brendan J. Gray1
University of Otago
Benchmarking Services Branding

Practices
The results of research into the competitiveness of New
Zealand firms that provide professional and other
business services suggest that effective branding is a
key source of success. Brand strength appears to be
linked to four main practices: investing in marketing
communications to improve customer awareness and
understanding of corporate and product brand values;
contributing to the wider community to improve
corporate
reputation;
improving
internal
communications (internal marketing) so front-line and
professional staff are kept better informed about
customer needs, market changes and company
initiatives, thereby enabling staff to help customers
better; and improving service quality to improve
market positioning. The paper answers calls for the
development of an integrated theory of services
branding and concludes by positing three main
conditions for effective services strategies and
practices.
Introduction
The services sector accounts for up to three-quarters of the GDP of developed
economies, yet there has been relatively little research into identifying best
practices in services branding (de Chernatony and DallOlmo Riley 1999).
This lack of benchmarking data is surprising, given that branding appears to
be a cornerstone of successful services marketing (Berry 2000). The results of
the few empirical investigations of services branding practices are somewhat
equivocal. While the majority of authors conclude that branding the
company (or corporate branding) is more appropriate than branding
individual service products (e.g. Balmer 1995; Berry 2000; de Chernatony and
DallOlmo Riley 1999; de Chernatony and DallOlmo Riley 2000), others take
a contrary view (e.g. Onkvisit and Shaw 1989).
A leading American services marketing researcher has produced a model
1
Correspondence: Brendan J. Gray, Professor of Marketing, School of Business, University

of Otago, PO Box 56, Dunedin, New Zealand, Tel: +643 479 8733, Fax: 643 479 8172, Email: bgray@business.otago.ac.nz
ISSN1472-1376/2006/7-8/00717 +41
Westburn Publishers Ltd.
718
Brendan J. Gray
of brand equity formation based on interviews with 14 mature, highperforming service providers in the USA (Berry 2000). The author then
identifies four generic strategies to cultivate brand equity: dare to be
different; determine your own fame; make emotional connections; and
internalize the brand. Although the last point emphasises the important role
that staff play in services branding, these rather jingoistic terms appear to be
based more on anecdotal than empirical evidence, and could be as applicable
to the producers of tangible goods as to the providers of intangible services.
Prominent branding researchers in the UK have argued that the fast
moving consumer goods approach to branding needs to be adjusted for the
services sector, and that more research is required to produce a tailored
model of services branding (McDonald, de Chernatony and Harris 2001). The
current study takes a small step towards answering the call by McDonald et
al. by benchmarking the branding practices of successful professional and
business services providers in New Zealand. Implications for services
branding theory and practice are discussed.
Literature Review
The main theories and concepts that underpin this study are the resourcebased view of the firm (Wernerfelt 1984; Barney 1991; Fahy & Smithee 1999),
the sources-position-performance model of sustainable competitive
advantage (Day and Wensley 1988), and customer-based brand equity
(Aaker 1992a, 1992b and 1996; Keller 1993).
From a resource-based view, the capabilities that set service firms apart
from their competitors are based on intangible business processes, rather
than capital equipment. Intangible assets such as customer relationships,
industry relationships and unique competencies (Eriksson, Majkgard and
Sharma 1999), and brands with favourable, unique and strong associations
(Keller 1993), are likely predictors of service quality. A market-orientated
culture (Narver and Slater 1990) and related market information and
customer management practices (Jaworski and Kohli 1993) should enable
firms to utilise resources more effectively in the face of changing market
conditions, competitor actions and customer needs. Competitive positioning
of brands to account for customer needs and competitor actions should result
from this.
Although intangible business processes and assets may be difficult to
imitate, and may be highly contextual, benchmarking the marketing practices
of successful firms can still offer insights to researchers and managers into
ways of improving firm performance. Branding is a case in point.
Effective marketing requires the development of effective images, and it
could be argued that the intangible nature of services makes branding more
Benchmarking Services Branding Practices
719
critical for the success of service firms than for product firms (Onkvisit and
Shaw 1989). Brands are names, symbols or designs used by customers to
identify the providers of goods or services (Aaker 1992a and 1992b). Brands
create value for both consumers and brand owners. According to Aaker
(1996), the value of brands, or their equity, is based on brand name
awareness, brand loyalty, perceived quality and brand associations. These
associations are largely aesthetic and experiential, and express a set of values
that position the brand as unique and valuable (Salzer-Morling and
Strannergard (2004). However, there are disagreements in the literature over
how to measure brand performance. It has been posited, though, that success
is a multidimensional construct where business-based and consumer-based
criteria are interrelated and cannot be considered in isolation (McDonald, de
Chernatony and Harris 1998).
This leads to the following propositions:
P1 :
More highly market-oriented service firms are likely to invest more

resources in branding than less market-oriented firms.
P2: Service firms that invest more resources in branding (i.e. brand-oriented
firms) are likely to outperform those that invest fewer resources in
branding over a wide range of performance measures.
The generic features of services, particularly their intangibility,
inseparability, heterogeneity and perishability (Lovelock 1983), raise
branding challenges. Corporate (as opposed to service product) branding
appears to be better suited for intangible and complex offerings, such as
professional and financial services, because this emphasises the capabilities
of the provider, enhances consumer trust and acts as a basis of differentiation
(DallOlmo Riley and de Chernatony 2000; McDonald and de Chernatony
2001). Services staff play important roles in facilitating the brand experiences,
perceptions and relationships that customers may have with the firm. As a
result, training and communication are needed so that both employees and
customers know what the brand stands for, while a consumer delighting
culture helps to motivate employees to live the brand (de Chernatony and
DallOlmo Riley 1999, p181).
This leads to the following propositions:
P3 :
Brand-oriented service firms are likely to invest more resources in

personnel skills training.
P4: Brand-oriented service firms are likely to have higher customer skills
levels.
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Brendan J. Gray
These propositions only address the likely outcomes and characteristics of

brand-oriented service firms. The actual branding practices of highperforming firms are less well understood. An earlier review of the services
branding literature suggests that although the marketing practices of
business to business service providers may have lagged behind the norm for
goods, the marketing of consumer services appears to be as advanced as for
tangible products, with the complexity and intangibility of services well
understood by marketers and accommodated in their positioning and
delivery strategies (Dibb & Simkin 1993). However, this conclusion appears
to be largely based on the observation that prominent consumer services
firms often use catchy slogans to promote their organisations and/or service
products, and ignores the underlying strategies and practices that may guide
these communications.
A recent study in the USA, based on interviews with 250 executives and
staff in 14 high performing service firms (Berry 2000), and an oft-quoted UK
study, based on interviews with 20 brand experts (de Chernatony and
DallOlmo Riley 1998a, 1998b, 1999) have tried to address this knowledge
gap. Although these later studies provide insights into how traditional
product branding approaches can be adapted to account for the particular
nature of services and to improve service brand equity, the drivers behind
the generic strategies suggested by these studies are less well understood.
This indicates that further research is needed, particularly in market contexts
outside the USA and UK, to investigate best practices in services branding.
This benchmarking data could then be used to help develop a more
generalisable, integrated theory of services branding.
Although the extant literature tends to emphasise the use of corporatelevel (rather than product-level) branding in many services, the relationship
between corporate branding and a related concept, corporate reputation, has
not been adequately researched in the either the goods or service firm
contexts. Bickerton (2000) posits that corporate reputation and corporate
branding are closely linked, and that the brand incorporates reputation,
product/service performance, the portfolios of products offered and
customers served, and the organizations networks. He argues that the
starting point for corporate branding should be customer value (a bottom-up
strategic marketing approach), although this also needs to be guided by an
appropriate vision and strategy (a top-down approach).
Numerous benefits may accrue from a strong and positive corporate
brand. According to Gregory and Wiechmann (1998) corporate advertising
can be used to build public awareness and a favourable position, to pre-sell
to target markets, to assist in managing crisis situations, and to attract and
retain good employees. There is some evidence that corporate image or
reputation may also influence customer intentions to buy services (Yoon,
721
Guffey and Kijewski 1993). However, the relationship between corporate

branding and reputation is still confused, and further research is needed to
clarify the particular roles that each plays in improving customer and other
stakeholder relationships.
This leads to a major research question, to be addressed in the qualitative
phase of the present study:
Q1: What practices do top-performing service firms use to manage their brands
and/or corporate reputations?
The benchmarking evidence from New Zealand, a small, open economy,
could then be contrasted with evidence of best practices from larger
economies such as the USA and UK to help develop a more generalisable
theory of services branding and corporate reputation management.
Research Design
Strategic marketing management research has tended to focus on firms that
produce goods rather than services. Therefore, there is a need for further
clarification of the degree to which theories developed in the goods sector
can be applied to the services sector and vice-versa. For example, the model
of sustainable competitive advantage (Day and Wensley 1988) that guided
this project was first adapted for services by Bharadwaj, Varadarajan and
Fahy (1993), but not tested empirically in the business services sector before
the present study. After preliminary testing, the model was adapted further
to guide the current research (see Figure 1).
Reinvestment in Resources & Skills
Sources of
Advantage
- market
orientation
- branding
- innovation
- info tech
- resources
- service skills
Performance
Positional
Advantages
-differentiation
-cost
effectiveness
Environment
Figure 1. Services Competitiveness Research Model
- satisfaction
- loyalty
- revenue
- profitability
- brand equity
- reputation
- innovation
success
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Brendan J. Gray
The first stage of the current study involved developing a survey

questionnaire to measure the strength of the relationships between particular
firm and market characteristics and superior performance in service firms.
Likely predictors of superior performance and competitiveness were
deduced from a review of previous studies of company performance and
competitiveness.
The questionnaire was operationalised through the use of scales adapted
from empirical studies that informed the various parts of the research model.
For example, scales that measure sources of competitive advantage were
derived from studies that investigated:
The adoption of market-oriented business practices (Gray et al. 1998);
The development of effective and efficient service innovation
processes (de Brentani 1991, 1995);
Investment in services branding and corporate reputation (Aaker
1991, Keller 1993, Gregory and Wiechmann 1998);
Use of Web-based marketing (Adam and Deans 2001); and
Reinvesting profits in resources and skills to sustain sources of
advantage (Day and Wensley 1988).
Investment in these sources of competitive advantage should lead to
positional advantages in the marketplace (Day and Wensley 1988). Single
item scales were deduced from the Day and Wensley study to assess how
well firms had achieved the following advantages (in comparison to their
nearest competitor):
Differentiated service products or service delivery methods based on
superior quality or innovative features; and/or
Cost advantages based on more efficient service production and
delivery methods.
In turn, it can be posited that competitive market positioning should lead to
performance advantages. Performance was measured using a range of
commonly-used, single-item, subjective, relative measures (i.e. how well
firms perform compared to their nearest competitor on a variety of criteria).
Performance outcomes include:
Sales revenues and profitability;
Customer satisfaction and loyalty; and
Brand equity and corporate reputation.
It is worth noting that the market environment can have both a direct effect
723
on performance, and also moderate the relationships between sources of

advantage, positional advantages and organisational performance (Gray et
al. 1999). The main environmental influences on performance are likely to be:
Market turbulence (changing customer needs and preferences);
Technological turbulence (technological obsolescence, developments,
barriers and opportunities);
Competitive intensity;
Market growth; and
Barriers to market entry.
Market and technological turbulence were measured using multi-item scales
and the remaining three environmental influences measured using singleitem scales derived from the Gray et al. (1999) study.
Validity and reliability checks using exploratory factor analysis and the
Cronbachs alpha test indicated that the multi-item scales utilised in the
study were reliable and valid.
Survey Sample Frame
This paper discusses the results of the first and second phases of a five-stage
study supported by the Public Good Science & Technology Fund to
investigate ways of improving the competitiveness of New Zealand service
businesses. The first phase involved a comprehensive survey of service
providers to identify key sources of competitive advantage (see Figure 1).
The second phase involved in-depth interviews with owners or senior
executives of 37 top-performing firms and 10 lower performers to identify
examples of best practice in various business management areas, including
branding and corporate reputation.
For the purposes of this paper, analysis and discussion will be limited to
branding and associated corporate reputation and customer service activities,
as these were identified in both the survey and follow-up interviews as key
sources of competitive advantage.
The bulk of the sample frame for the first, quantitative phase of the study
consisted of senior managers on the Marketing Performance Centre (MPC)
database. At the time of the study, the MPC, based at the University of
Otago, had a regularly updated database of more than 3,000 senior managers
in New Zealand companies who were willing to participate in marketing
research. Approximately half of the database consisted of managers who
worked for service enterprises, and these service sector managers formed the
bulk of the sampling frame. An additional 500 service firms were sourced
from the Kompass Business Directory, resulting in a total of 2034
724
Brendan J. Gray
questionnaires being posted.

Respondents received a personalised cover letter, the survey
questionnaire and a reply-paid envelope. A username and password was
also supplied to enable respondents to complete the survey on-line if
preferred. A free copy of the resultant research report was offered as an
incentive.
A reminder letter was sent to non-respondents two weeks after the initial
mailing. Questionnaires received after this date were classified as second
wave respondents. Response bias was checked through analysis of the mean
responses of early versus late wave respondents (Armstrong and Overton
1977), as well as a fax survey to 100 non respondents encompassing a one
page selection of questions from the survey. The analysis found no
significant differences between earlier and later groups or between
respondents and non-respondents. The main reason for not responding was
lack of time.
Survey Results
A total of 82 questionnaires were returned unopened, mainly because
managers had moved, leaving 398 usable questionnaires (a response rate of
20.3%). Initial examination of completed surveys identified a group of 43
respondents whose organisations were predominately involved in
manufacturing and these responses were removed from the analysis (leaving
355 questionnaires for further analysis).
A wide range of service sectors were represented in this survey (see Table
1), with the largest groups being property, business and consulting services
(14%), transport and storage (13%), finance and insurance (12%), building,
mechanical and other trade services (8%). The types of markets served by
these organisations were predominantly business-to-business (46%) or
consumer (39%) markets.
The majority of organisations (55%) were small, employing fewer than 50
employees, with 35% employing fewer than 10 staff. More than 44% earned
pretax profits of less than half a million dollars in the previous year. A wide
variety of ownership types were represented, with the largest group by far
(47%) being New Zealand controlled private companies. This may also reflect
the small size of the majority of firms in the sample.
The respondents were usually the most senior marketing decision-makers
in their organisations. Most carried the titles of Marketing Manager or CEO.
The average time respondents had been in their current management
position was just under 8 years, with the average time spent in the
organisation nearly 11 years (see Table 2). Those in marketing positions had
nearly 10 years experience on average. This suggests that most respondents
725
had significant management experience and could be expected to have fairly

good knowledge of their organisations marketing and other business
activities. Respondents tended to be between 41 and 50 years old (36%), and
80% were male.
Table 1. Organisation Demographics
Which of the following best describes your service sector?

Agriculture, mining, quarrying, manufacturing services
Electricity, gas, water supply services
Building, mechanical trade services
Wholesale
Retail
Cafes, restaurants
Tourism, accommodation
Transport, storage
Communication services
Finance, insurance
Property, business services (including consulting)
Government administration, defence
Education
Health, community services
Cultural, recreation services
Personal services
Other service activities
No response
TOTAL
N
22
6
30
21
8
2
10
47
22
43
50
3
15
5
3
9
46
13
355
%
6.20
1.69
8.45
5.92
2.25
0.56
2.82
13.24
6.20
12.11
14.08
0.85
4.23
1.41
0.85
2.54
12.96
3.66
100.00
Customer type
Consumer
Business to business
Government
Other
No main customer type
No response
TOTAL
138
163
10
11
16
17
355
38.87
45.92
2.82
3.10
4.51
4.79
100.00
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Brendan J. Gray
Table 2. Manager Demographics

Years spent in organisation and position
Your current management position
Marketing (if applicable)
This organisation/firm
Age of respondent
under 30
31 - 40
41 - 50
51 - 60
61 and older
No response
Sex of respondent
Male
Female
No response
Mean
7.76
9.95
10.73
%
9.01
23.66
36.06
24.23
2.82
4.23
100.00
%
80.28
16.62
3.10
100.00
N
331
188
302
N
32
84
128
86
10
15
355
N
285
59
11
355
Exploratory factor analysis and Cronbachs alpha tests of the multi-item

performance, market orientation, investment in branding and corporate
reputation, new service development and web marketing scales (see Table 4)
indicated that their component items could be incorporated into variables
that represent overall scores for each of these dimensions. These global
measures were then used as inputs for subsequent correlation analysis (see
Table 3) to test the relationships posited in the research model, including the
links between market orientation and investment in branding and the links
between brand orientation and performance.
The results indicate fairly strong relationships between the degree of
market orientation and level of investment in branding and corporate
reputation, and between investment in branding and overall organisational
performance. This provides some support for Propositions 1 and 2. In other
words, those organisations which get closer to their customers and react
more effectively to market changes and competitor actions are much more
likely to build strong and successful service brands. Interestingly, the
significant correlations between market orientation, investment in branding
and the adoption of more formalised new service development (NSD)
management practices suggests that market-oriented and brand-oriented
firms may also be more innovative.
The correlation analysis also indicates a fairly strong relationship between
investment in branding, investment in skills training and the actual skills
727
levels of service personnel, offering some support for Propositions 3 and 4

(see Table 3). This implies there may be a link between the quality of staff
and the quality of the brand. The strong relationship between organisational
performance, investment in skills and actual service skills levels also suggests
a recursive relationship: i.e. better-performing firms tend to reinvest more of
their profits in their people, as prime resources, who in turn help the firm to
sustain its sources of competitive advantage.
However, the results of the one-way analysis of variance of the mean
responses of those firms who invest above average resources in branding and
corporate reputation management and those who invest below average
amounts suggest that the relationships between branding, personnel
strengths and performance may be more complex than the results of the
correlation analysis imply.
Table 3. Correlations Between Branding Investment & Firm Characteristics
PERF MO
Performance 1.000
BRAND NSD
Market
orientation
0.385* 1.000
Branding
investment
0.473* 0.572* 1.000
New service 0.361* 0.518* 0.417*

development
Web
marketing
0.069
0.107
0.192*
Differentiation
0.439* 0.212* 0.206*
0.397* 0.209* 0.175*

Costeffectiveness
Skill levels
0.546* 0.257* 0.236*
WEB
DIFFER COST SKILL TRAIN
1.000
0.127
1.000
0.284* 0.033
1.000
0.197* -0.087 0.260*
1.000
0.251* 0.066
0.339* 1.000
0.453*
0.531* 0.263* 0.404* 0.319* 0.142 0.270* 0.206* 0.325* 1.000

Training
investment
* Pearson correlations are significant at the 99% confidence level.
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Brendan J. Gray
The brand orientation of firms was assessed by investigating whether they

invested significantly in branding and corporate reputation activities. Fivepoint Likert-type scales (from 1 = strongly disagree to 5 = strongly agree)
were used to measure respondents relative levels of investment. Exploratory
factor analysis indicated that the five items that were measured (see the list
of items in Table 4) tended to factor together into a single variable accounting
for 59% of the variance explained, suggesting a reasonable degree of
convergent validity. The Cronbachs alpha score of 0.83 also indicates a
reasonably high level of internal reliability. The sample was then split into
above and below average investors (roughly 50/50) and ANOVA used to
compare the characteristics of each group (see Table 4).
The top branders exhibited significantly greater investment in all aspects
of brand and corporate reputation management, and also invested more in
personnel skills development, offering further support for Propositions 1 and
3. However, there was no significant difference in the service skills levels of
below and above average brand managers, meaning that Proposition 4 was
not supported by this analysis (and was counter to the support for this
proposition implied in the correlation analysis). There may be three reasons
for this. First, the correlation analysis could indicate that requisite skills
levels are a prerequisite for survival, and therefore this variable may not be a
good discriminator between firms that invest above or below average
amounts in branding and corporate reputation. Second, the cross-sectional
nature of this phase of the research may not take into account any time lags
between investment in training and evidence of superior skills levels. Third,
the situation may be more complex than the quantitative analysis implies,
which suggests that the links between branding, human resources and
performance need to be explored in greater depth in qualitative analysis.
A breakdown of the performance dimensions (see Table 4) offers only
partial support for Proposition 2 and shows that the higher overall
performance (compared to the nearest competitor) associated with firms that
invest more in branding and corporate reputation is due mainly to superior
branding performance (brand awareness and equity, and corporate
reputation), which is understandable given the extra investment in this area.
Again, the cross-sectional nature of the research may mask lags between
investment in branding and subsequent improvements in customer
performance (awareness and loyalty) and financial performance (total
revenue, profitability and profitability growth over the previous three years).
The lack of significant positional advantages (cost effectiveness and/or
differentiation) in the marketplace would appear to lend weight to this
argument.
729
Table 4. Characteristics of Top Branders

Significant
difference?
(99% level)
yes
Mean scores for

below average
branders
(1 low, 5 high)
2.21
Mean scores for

above average
branders
(1 low, 5 high)
3.61
yes
2.58
4.08
yes
2.93
4.21
yes
yes
1.85
1.80
3.29
2.97
yes
1.92
3.48
no
3.74
3.93
yes
2.98
3.55
no
174
347
Market Orientation (alpha =0.88) yes

Customer orientation (0.72)
yes
Competitor orientation (0.75)
yes
Interfunctional co-ordination (0.78) yes
Responsiveness (single item)
yes
Profit emphasis (0.78)
yes
3.21
3.74
2.86
3.21
3.32
2.84
3.73
4.23
3.60
3.69
3.63
3.43
Innovation Management
(alpha=0.90)
Organisation
Synergy
Process
Team Level
yes
2.98
3.31
yes
no
yes
no
3.40
3.16
2.28
3.07
3.76
3.41
2.70
3.36
Information Technology
(alpha=0.78)
E-mail is important to business
Intranet is important to business
Extranet is important to business
no
3.64
3.94
no
no
no
4.01
3.12
2.94
4.28
3.43
3.37
Brand Management (alpha =0.83)

We invest significantly in
Managing and promoting our
service brand(s)
Managing and promoting the
reputation / image of our firm
Customer loyalty programs
Research into internal perceptions
of brands (frontline staff, core
service providers, management)
Research into external perceptions
of brands (customers,
intermediaries, suppliers)
Resources & Skills
Service skills levels compared to
nearest competitor
Investment in personnel skills
development
Number of employees
Contd
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Brendan J. Gray
Significant
difference?
(99% level)
E-commerce increasingly
important to business
no
Mean scores for

below average
branders
(1 low, 5 high)
3.95
Mean scores for

above average
branders
(1 low, 5 high)
4.23
Overall Performance
(alpha=0.79)
Financial Performance (0.68)
Total revenue
Profitability
Profitability change last 3 years
Customer Performance (0.74)
Customer satisfaction
Customer loyalty
Brand Performance (0.81)
Brand equity
Brand awareness
Corporate reputation
yes
3.29
3.66
no
no
no
no
no
no
no
yes
yes
yes
yes
3.32
3.07
3.43
3.39
3.67
3.65
3.68
3.12
3.04
3.06
3.47
3.56
3.33
3.66
3.67
3.79
3.82
3.78
3.74
3.63
3.68
3.91
Positional Advantages
Differentiation
Cost-effectiveness
no
no
3.58
3.47
3.73
3.61
Market Characteristics
Competitive intensity (0.71)
Market turbulence (0.66)
Technological turbulence (0.78)
Market growth
Market-entry barriers
Supplier bargaining power
Buyer bargaining power
yes
no
no
no
no
no
no
3.11
3.08
3.66
2.86
2.77
2.58
3.57
3.64
3.28
3.86
3.00
2.72
2.77
3.73
The findings, therefore, offer partial support for previous studies which
indicate that training and communication are needed so that both employees
and customers know what the brand stands for (e.g. de Chernatony and
DallOlmo Riley 1999). However, there is less evidence that staff in top
branding firms have actually internalized the brand (Berry 2000) or that these
organisations have developed a consumer delighting culture that can help
facilitate the brand experiences, perceptions and relationships that customers
may have with the firm (de Chernatony and DallOlmo Riley 1999).
In fact, all firms in the sample (i.e. both above and below average groups)
invest significantly less in researching internal brand perceptions (i.e. the
731
views of frontline staff, core service providers and management) than

researching the perceptions of external stakeholders such as customers,
intermediaries and suppliers. It may be that branding efforts are driven more
by the actions of competitors, rather than the need to match the needs of
customers with the capabilities of staff, given that those who invest more in
branding and corporate reputation appear to operate in significantly more
competitive markets than firms that invest less in branding
Regardless of the strategic drivers, there is some indication that corporate
reputation and corporate branding practices may be closely linked, as
Bickerton (2000) posited. However, the way these are linked and the ways
that complementary branding and corporate reputation practices are
operationalised in the context of service firms can only be assessed through
analyzing the interviews that make up the second phase of this study.
Interview Methodology
The top 50 firms from the initial survey were identified, based on their selfassessed performance scores for brand awareness, brand equity, customer
satisfaction and loyalty, sales, profitability and profit growth compared to
their nearest competitor. Previous analysis had shown these performance
areas were closely interrelated. A smaller group of 20 less well-performing
firms was selected to contrast their marketing and management practices
with the best practices adopted by the top performers.
Of the firms selected, 27 top performers (54% of the firms approached)
and 10 lower performers (50%) agreed to take part. Where possible, multiple
interviews were held in the larger organisations, to insure a consistent
managerial view, while single interviews were held in the smaller and
medium-sized firms (often with the owner or managing partner in smaller
enterprises). A total of 44 interviews, between 1 and 2 hours in length, were
conducted by teams of 2 interviewers using a semi-structured format. All
interviews were taped and transcribed, and one of the two interviewers also
took notes to verify the transcriptions.
Group training sessions were conducted for all interviewers and coders.
Although the protocol required teams of two researchers to conduct the
interviews, an attempt was made to involve the lead researcher in 80% of all
the interviews to ensure consistency. The interview tapes were
independently transcribed and each interview analysed initially by two
coders to establish initial classification categories for the responses. To ensure
inter-coder reliability, each pair of classification categories was compared
and any differences resolved through discussions between the coders and the
lead researcher to ensure there was at least a 90% agreement. The lead
researcher then analysed the categorised data further and synthesised the
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Brendan J. Gray
responses into aggregated tables of indicative responses (with a record of the

number of interviewees who responded in a similar way). These
categorisations reflected commonalities and differences between managers
views (both within and between the better performing and less well
performing groups of firms). These aggregate interview data tables, which
reflect the major themes that emerged from the interviews, form the basis of
the discussion of best practices in services branding in the second part of this
article.
In each interview, respondents were first asked open-ended questions to
describe their firms, to offer their unprompted (top of mind) views on what
made their firms successful and what they considered to be their main
sources of competitive advantage. This was followed by a more structured
phase, where managers were asked to comment on a report card of how
well they performed in various areas compared to other firms in their
particular sector, based on their answers to the initial survey. Managers were
asked to elaborate on examples of marketing and management practice
related to the generic sources of competitive advantage identified by the
survey. They were also asked to elaborate on areas they may have raised in
the opening questions, but which were not covered in the survey. All
interviews followed the same protocol.
Interview Sample
Table 5 summarises the demographics of those who took part in the
interviews. The sample covers a wide range of firm sizes and service
industry sectors. Larger firms (49%) tend to be over-represented, though. The
main focus of this study is on professional firms, the financial services sector
and other firms providing business services, rather than those providing
personal services (e.g. hairdressers, gymnasiums, primary health services,
etc), or hospitality or tourist services. However, feedback from those
attending the technology transfer workshops that followed the two initial
phases of the study suggests that the results are also applicable to these other
sectors, as well as the public and not-for-profit service sectors.
The largest groups of interviewees were functional managers in sales or
marketing (43%); followed by those with board level authority and titles
such as owner, managing director or principal partner (27%); and senior
business managers with titles such as CEO, general manager or practice
manager (16%).
733
Table 5. Summary of Interview Participants

Demographics
Number (%)
Top performing companies (in terms of relative financial, customer
& branding performance compared to nearest competitor)
27 (73%)
Below average performers
10 (27%)
Main market: Banking, finance, insurance

Accountancy, law
Transport
Wholesale, retail, importing, distribution services
Communications, media
Advertising, marketing, management consulting
Engineering, building, architecture, trade services
Design, innovation
Business support services
Agricultural consultants, agricultural services
IT training
5
3
4
5
5
3
6
1
1
3
1
Firm size:
18 (49%)
9 (24%)
10 (27%)
Large (over 200 staff)

Medium (50 200 staff)
Small (1 49 staff)
Job titles:
Owner, Managing Director, Principal Partner

CEO, General Manager, Practice Manager
Marketing, Sales, Account Manager
Personnel Manager
Accountant, new business manager
NB - A total of 44 people were interviewed in 37 organisations.
(13.5%)
(8%)
(11%)
(13.5%)
(13.5%)
(8%)
(16%)
(2.5%)
(2.5%)
(8%)
(2.5%)
12 (27%)
7 (16%)
19 (43%)
3 (7%)
3 (7%)
Results of Interviews
Unprompted Perceptions of Sources of Advantage
At the start of each interview, managers were asked, unprompted, to
describe their firms major sources of competitive advantage (see Table 6).
These top-of-mind responses suggest that managers perceive branding
(mentioned by managers in 44% of the top performing firms where
interviews were conducted) and staff motivation, skills and competencies
(mentioned by 44% of top-performers and 10% of lower performers) to be the
two major sources of advantage. The next most important source of
advantage was having a strong organisational culture with a clear vision,
mission, values, energy and passion to guide staff behaviour (33%; 10%).
Other important sources of advantage were utilising information technology
to improve marketing and business performance (30%; 10%), and two factors
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Brendan J. Gray
Table 6. Managers Perceptions of Sources of Competitive Advantage

Unprompted views of most important sources of % of top
advantage for service firms
firms
(N=27)
44%
Strong brands
% of lower
firms
(N=10)
0%
Corporate image, reputation, social responsibility, public

service
11%
10%
Product/service quality
30%
10%
Staff motivation, skills, competencies
44%
10%
Vision, mission, values, energy, passion
33%
10%
Market orientation - responding to customers needs &

competitors actions
15%
0%
Managing customer relationships, key client account

management
30%
70%
Distribution channel relationships
11%
0%
Innovation culture
22%
0%
Continuous innovation
15%
0%
Willingness to experiment, take risks & make mistakes
15%
0%
Utilising information technology
30%
10%
Partnerships and alliances
26%
0%
Little hierarchy, flat structure
15%
10%
Community ownership
11%
0%
Market (segment) coverage
30%
0%
Geographic spread, location
26%
0%
Internationalisation
11%
0%
0%
15%
Size, critical mass, market share, growth
NB - Percentages relate to the number of firms whose managers hold these views,
rather than the percentage of managers interviewed
735
related to market scope: covering a broad number of market segments (30%;

0%) and a wide geographic area (26%; 0%). Utilising partnerships and
alliances to leverage sources of advantage (26%; 0%) and having a culture
which encouraged innovation (22%; 0%) were also important.
Although managers in 30% of the top-performing firms mentioned
managing customer relationships and key client account management as
important sources of competitive advantage, 70% of lower performers also
mentioned this. It would appear that good customer relationships are
necessary for survival, rather than superior performance. In line with the
market orientation concept (Narver and Slater 1990, Jaworski and Kohli
1993), managers need to understand not only what their customers want, but
also what choices their competitors are offering.
Managers unprompted perceptions of major sources of advantage can be
grouped into a number of interrelated business practices. The best practices
in branding, corporate reputation/image and quality management are
summarised in Table 7. The relevant responses by interviewees to illustrate
these practices are detailed in Appendix 1.
Brand strength appears to be linked to several key practices (see Table 7).
These include:
Investing in marketing communications to improve customer

awareness and understanding of corporate and product brand values
(e.g. Weve put on a set of clothing in the form of the brand. And we
manage to extract a price premium of at least 30% and sometimes 50% or
more in the markets around the world. So its the way we position that and
the way we support it with in-market structures. We have very competent
support from our promotional program, globally, unlike our competitors).
Contributing to the wider community to improve corporate
reputation or image (e.g. We tend to hold celebrations [for our wider
community]; were just helping to fund these people because most of them
are community organisations, volunteer organisations; they are the heroes of
it).
Improving internal communications (internal marketing) so front-line
and professional staff are kept better informed about customer needs,
market changes and company initiatives, thereby enabling staff to
help customers better (e.g. Staff didnt feel empowered to talk for the
organisation, so we focused on communications, including a video
programme regularly produced and sent out to staff, and a corporate
intranet. We had spent a lot of money investing in technology for the
customers, but it didnt provide the staff a lot of value, so the corporate
intranet [now] allows people to keep up to date with whats going on).
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Brendan J. Gray
Improving service quality (e.g. Our philosophy is to provide better

services than anyone else. From a variety of perspectives service quality,
management systems were perceived as one of the industry leaders. And
that is a result of setting exceedingly high standards right from day one and
developing on them).
Table 7. Branding and Service Quality Practices [unprompted responses]

Sources of advantage
Best practices
Branding, positioning, Strong brands (mentioned by 44% of the 27 top-performing

corporate reputation
firms; but no lower performing firms)
Positioning based on service quality, value, trust (15%; 10%)
Positioning based on attractive shopping environment (4%;
0%)
Emphasis on corporate image/reputation, public service
(11%; 10%)
Improving internal communication (7%; 0%)
Word of mouth (7%; 20%)
History, longevity (7%; 0%)
Personal networking, selling (7%; 10%)
Political lobbying (4%; 0%)
Loyalty programs (15%; 10%)
Quality management
Improving service quality (30%; 10%)

Benchmarking (7%; 0%)
Prompted Perceptions of Sources of Advantage

Following the unprompted discussion, managers were then asked to
comment on a report card that summarised their performance on a number
of dimensions compared to their nearest competitor (based on the results of
the earlier survey they had participated in). This part of the interviews
included prompted questions about firms investment in branding and
corporate reputation.
The results suggest that top performers are more likely to invest in
737
branding their organisations and service products than lower performers.

They also tend to be more sophisticated in their approach (see Table 8 for a
summary of best practices and Appendix 2 for detailed comments). When
prompted to elaborate on their branding activities, top performers
emphasised the following practices:
Developing strong, competitive branding positions by integrating the

various marketing communication tools to improve communication
efficiency and effectiveness (e.g. We spend a lot on brand awareness
with advertising, sponsoring sports programs on TV, billboards, a web site,
celebrity golf matches with clients, charity donations and sponsorships,
writing a book on financial planning).
Branding people rather than products, where possible, to personalise
the organisation (e.g. Our campaign last year involved staff fronting ads
and interacting with real customers. The advertising process involved trust
and commitment from senior management, as well as staff, because we didnt
know what staff or customers would say in the ads there was no script to
be fine-tuned).
Using internal marketing to encourage staff buy into the corporate
vision, understand market changes and new service and/or
marketing initiatives, and improve customer relations (e.g. Our whole
organisation structure is extremely flat, with about 65% of our total staff
dealing with customers. And our internal support staff fully understand that
our internal customers are just as important, and their primary role is
meeting the needs of the front line staff who are meeting the needs of
customers).
Careful use of umbrella (corporate) branding, where appropriate, to
insure consistency in quality and positioning over a range of service
products, and even divisions in larger organisations (e.g. Our
corporate umbrella brand gives a lot of credibility to new products and
services).
Linking corporate or product brands with sponsorships and other
community support activities (e.g. There are a number of promotional
events that we started which relate [to our major sponsorship] a mix of
things like prizes in scholarship and an annual lecture where we bring an
international speaker and have a public speaking event which generate a
certain amount of news [publicity]. One of the branding outputs is to look at
our sponsorship and see what were doing and how we can leverage it
more).
Investing in formal market research to track perceptions of corporate
and product brand values and market positioning relative to
competitors brands (e.g. We research our brand continuously, and quite
heavily, on a month-by-month basis, in terms of advertising brand points.
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Brendan J. Gray
Brand performance is one of the key KPIs that the bank measures itself on.
We measure the ability of customers to recognise our brand and various
attributes which measure ad performance versus competitors focused round
three areas community, service and technology. And we measure the
stickiness of our brand and other brands attraction and retention).
Table 8. Services Branding Practices [prompted responses]

Best practices
Brand investment,
positioning and
integration
Investing in brand equity (mentioned by 48% of top

performers and 30% of lower performing firms; however,
30% of lower performers also made little or no investment in
branding)
Competitive brand positioning (19%; 0%)
Corporate/umbrella branding (11%; 0%)
Integrated marketing communications (15%; 0%)
People focus
Branding people in the organisation, rather than services

offered (22%; 10%)
Internal marketing (15%; 0%)
Community relations
Associating brand with community events (7%; 0%)

Sponsorship, PR and other below the line promotions (7%;
0%)
Customer relations
Personal selling, account management, relationship

management (11%; 50%)
Loyalty programs (11%; 10%)
Customer newsletters (11%; 20%)
Encouraging positive word of mouth (7%; 50%)
Quality
Product/service quality as implicit promotion (19%; 20%)
Feedback
Brand auditing, research (19%; 0%)
Lower performers and top performers both make some use of loyalty
programs and customer newsletters to encourage repeat purchases and to
739
publicise people, products and community support. They also rely to some
extent on service quality as an implicit form of promotion, realising that they
need to deliver on promises if they are to retain credibility and customer
support.
Lower performing firms are also more likely to rely on personal selling,
key account management and relationship management as ways of
promoting their brands, again reflecting a lower investment in more formal
above the line communication methods. As the poorer performers
interviewed tended to be smaller, with limited financial and personnel
resources, this could also explain their lower investment in advertising and
market research, and may help explain their greater concern with short-term
profits.
Both lower and higher performers attempt to manage their corporate
images or reputations, and appreciate that a good reputation improves
perceptions of honesty, trustworthiness and service quality (see Table 9 for a
summary of best practices and Appendix 3 for detailed comments). This is
important, given the intangible nature of services and the difficulties that
prospective, new or existing customers may have in assessing service quality.
Reputation comes from providing excellent service, being a good and safe
employer, and being seen to support the organisations wider community.
All these activities are likely to improve positive word-of-mouth.
There are obvious overlaps between corporate branding and corporate
image or reputation practices. For many firms, branding practices appear to
be primarily concerned with improving perceived customer value, while
corporate image/reputation practices appear to be more concerned with
improving the perceived value that service organisations provide to other
stakeholders, including the wider community. However, things get murky
when firms link sponsorships with their corporate or service brands (e.g.
Both of them [corporate reputation and branding] are essential. Reputation is very
much about how we interact with our customers. And sponsorship is not so much
about trying to demonstrate youre a good corporate citizen and hope to improve
awareness its about augmenting the concept of trusted expert to our target
groups. We track how people perceive our sponsorships in light of: Does it make me
feel that [company] is the trusted expert for me in financial services? That manifests
differently for different customer segments).
Sponsorship and other forms of community relations were mentioned in
the contexts of both branding and image/reputation management, which
adds to the confusion. Further, better performers were more likely to link
corporate reputation and branding activities (e.g. Corporate identity and brand
image go hand in hand; you need to be a fair employer, reliable, and address health,
hygiene and safety areas. At the consumer level, the brand of the store is more
important [than the parent company]. The latter [parent company] is better known
to suppliers).
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Brendan J. Gray
While some top-performing firms appeared to be more altruistic, they

were still wary of anything that might conflict with their corporate and/or
brand values (e.g. We want to see our staff more involved in the community. We
need to find a vehicle to do that [since pulling out of major sport sponsorship because
of a conflict with brand positioning] its a new challenge). However, the major
differences between better and less well-performing firms appears to be
related more to the latters lack of resources and expertise to proactively and
strategically manage corporate image and reputation, rather than a lack of
social conscience. Even some better performers lacked the resources to
support sponsorships with the additional advertising and PR investment that
is often necessary to create awareness and to leverage stakeholder support
(e.g. Sponsorship [of major events, organisations, appeals] is always one of these
things where, unless youre prepared to commit the same amount of money again in
supporting the sponsorship [with advertising & PR] then you might as well not do
it. And weve never had the financial resources to do that, so weve tended to steer
away, unless there were some very clear advantages to us).
Top performers were more likely to ensure a good fit between community
support activities and desired brand image (e.g. We try to leverage the brand
through sponsorship; its nice to be able to support one charity nation-wide which
does a lot for needy children; we offer scholarships for underprivileged children in
Auckland; supporting children and families fits in well with our customers), and
were slightly more likely to participate in professional organisations and
industry awards to improve their reputation among their peers.
It is worth noting that, before this study was undertaken, the relationship
between corporate branding and corporate reputation had not been
adequately researched in the either the goods or service firm contexts. Many
of the managers interviewed in this study appeared to use the terms
interchangeably and/or argued that they were inexorably linked, supporting
Bickertons (2000) argument about the close relationship between these two
concepts. Bickerton also posited that the corporate brand incorporates
reputation, as well as product/service performance, the portfolios of
products offered and customers served, and the organisations networks.
However, the results of this study suggest that corporate reputation may be
the over-arching concept that incorporates both corporate and service
brands, meaning that corporate reputation is the yard stick by which
customer value creation practices, as well as activities aimed at creating
value for other internal and external stakeholders, are measured.
This appears to be because the generic features of business, financial and
professional services, particularly their intangibility and heterogeneity
(Lovelock 1983), as well as their complexity, make it difficult for customers to
assess service quality, and so they must rely, in part, on surrogate cues such
as the overall impressions created by corporate reputation, to make
741
judgments about the quality, honesty and trustworthiness of the firms they
choose to deal with.
Table 9. Corporate Image/Reputation Practices [prompted responses]
Proactive strategies
Best practices
Managing corporate identity & image (mentioned by 26% of
top performers; 20% of lower performers)
Supporting branding activities (22%; 0%)
Involvement in professional organisations (7%; 0%)
Participating in industry awards (7%; 0%)
Promoting public image of CEO, principal (7%; 10%)
Promoting public image of managers, staff (4%; 10%)
Community relations
Involvement in community events (26%; 0%)

Sponsorship (41%; 20%)
Conclusions
Several conclusions can be drawn from this research. The survey results
suggest that the research model (see Figure 1) appears to capture many of the
important drivers of sustainable competitive advantage in service firms,
particularly the importance of greater investment in service branding and
corporate image/reputation management.
Four propositions related to the model were tested in the quantitative
phase of the study:
P1: More highly market-oriented service firms are likely to invest more resources
in branding than less market-oriented firms.
P2: Service firms that invest more resources in branding (i.e. brand-oriented
firms) are likely to outperform those that invest fewer resources in branding
over a wide range of performance measures.
P3: Brand-oriented service firms are likely to invest more resources in personnel
skills training.
P4: Brand-oriented service firms are likely to have higher customer skills levels.
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Brendan J. Gray
The results of the correlation analysis (Table 3) and one-way analysis of

variance (Table 4) supported the first proposition indicating, in line with the
resource based theory of the firm (Wernerfelt 1984; Barney 1991; Fahy &
Smithee 1999) and theories of customer-based brand equity (Aaker 1992a,
1992b and 1996; Keller 1993), that brands are indeed valuable assets of
service firms. The expected consequence of this investment that the
branding practices of market-oriented firms, because of their superior
customer and competitor knowledge and strategies (Narver and Slater 1990;
Jaworski and Kohli 1993), would lead to positional advantages that would
result in a wide variety of performance benefits was only partially
supported (i.e. by the correlation analysis but not the analysis of variance).
This may have been because of the cross-sectional nature of the study and
time lags between investment in branding and expected customer and
financial performance benefits. The analysis of variance did indicate,
however, the superior brand awareness, brand equity and corporate
reputation of firms who invest more in branding, which suggests these
outcomes may be important lead indicators of future marketing and financial
performance.
The sources-position-performance theory posits that competitiveness is
only sustainable if firms reinvest in their sources of advantage (Day and
Wensley 1988). Although the correlation analysis (Table 3) offered some
support for Propositions 3 and 4, the one-way analysis of variance (Table 4)
only supported Proposition 3. However, the mixed findings that despite
greater reinvestment in skills training, top branders did not have
significantly higher service skills than below average branders could have
been related to the same cross-sectional research limitations and the masked
lead and lag effects related to Proposition 2 (i.e. it takes time for investment
in training to be manifested in superior skills).
The results of the quantitative analysis suggested that relationships
between investment in branding and corporate reputation and the skills that
service personnel need to live the brand (de Chernatony and DallOlmo
Riley 1999, p181) in order to improve customer and firm performance are
complex, suggesting a need for in-depth qualitative analysis. This led to the
second phase of the study, and an important research question that needed
to be addressed:
Q1: What practices do top-performing service firms use to manage their brands
and/or corporate reputations?
The results of the unprompted (top of mind) part of the interviews suggest
that having strong brands and skilled and motivated staff are the two most
743
important sources of competitive advantage. Brand strength, in turn, is

linked to four main practices: investing in marketing communications to
improve customer awareness and understanding of corporate and product
brand values; contributing to the wider community to improve corporate
reputation or image; improving internal communications (internal
marketing) so front-line and professional staff are kept better informed about
customer needs, market changes and company initiatives, thereby enabling
staff to help customers better; and improving service quality to improve
market positioning.
The results of the prompted part of the interviews suggest that the most
successful branding practices relate to: developing strong, competitive
branding positions by integrating the various marketing communication
tools to improve communication efficiency and effectiveness; branding
people rather than products, where possible, to personalise the organisation;
using internal marketing to encourage staff buy into the corporate vision,
understand market changes and new service and/or marketing initiatives,
and improve customer relations; careful use of umbrella (corporate)
branding, where appropriate, to insure consistency in quality and
positioning over a range of service products, and even divisions in larger
organisations; linking corporate or product brands with sponsorships and
other community support activities; and investing in formal market research
to track perceptions of corporate and product brand values and market
positioning relative to competitors brands.
Taken together, these insights provide an initial step towards answering
the call to develop a tailored theory of services branding (McDonald, de
Chernatony and Harris 2001). The results suggest there three key ingredients
of successful services branding. The first requirement is integration. This goes
beyond the integration of traditional marketing communication tools (e.g.
advertising and PR) to the integration of communication and service
innovation and delivery strategies, and the integration and harmonization of
communication strategies aimed at different stakeholder groups, including
customers, staff, professional peers and the wider community. Because
communication should be a two-way process, this means that on-going
market research is essential to ensure quick response to changing customer
needs and perceptions of service quality and satisfaction and to gain
optimum market positioning for both the firm and is service products.
The second requirement of successful services branding is investment in
people. This includes internal marketing and personalization of the brand to
help overcome the inherent problems of intangibility and complexity,
particularly in the case of professional and business services, as well as
investment in skills training. Together these practices also help to improve
perceptions of service quality and satisfaction, as well as improved
744
Brendan J. Gray
interpersonal relations with a variety of stakeholders, which are

acknowledged aspects of successful service brands (DallOlmo Riley and de
Chernatony 2000; McDonald and de Chernatony 2001).
The third requirement is to develop a respected corporate reputation. Some
researchers have argued that corporate (umbrella) branding, rather than the
promotion of individual product brands, is more appropriate for service
firms, particularly those providing professional and business services.
Posited benefits include: enhanced perceptions of the capabilities,
trustworthiness and differentiation of the provider (DallOlmo Riley and de
Chernatony 2000; McDonald and de Chernatony 2001); public awareness,
favourable positioning, assisting in crisis management, and attraction and
retention of good employees (Gregory and Wiechmann 1998); and
encouraging sales (Gregory and Wiechmann 1998; Yoon, Guffey and
Kijewski 1993). However, insights gained from the corporate image and
reputation practices of top performing service providers who participated in
this study suggest that corporate reputation management may be the overarching concept that incorporates both corporate and service branding
strategies and practices. This means that a positive corporate reputation
provides the yard stick by which customer value creation practices, as well as
activities aimed at creating value for other internal and external stakeholders,
are measured.
The results suggest that reputation comes from providing excellent
service, being a good and safe employer, and being seen to support the
organisations wider community. All these activities are likely to improve
positive word-of-mouth. This means that reputation springs from providing
superior value to customers as well as other stakeholders, including staff and
the wider community. Sponsorship and other forms of community relations
were mentioned in the contexts of both branding and image/reputation
management. Further, better performers were more likely to link corporate
reputation and service branding activities and were wary of any corporate
reputation activities, such as sponsorships, that might conflict with their
corporate and/or brand values. Managers also tended to use the terms
corporate identity, image, reputation and branding interchangeably and/or
argued that they were inexorably linked, supporting Bickertons (2000)
argument about the close relationship between these concepts. This
reinforces the conclusions that managers of top-performing service firms
consider customer perceptions to be central to the development of corporate
reputation, and that corporate and service product branding strategies
should contribute to over-arching reputation objectives.
745
Implications
The results of this study have important implications for both service
managers and marketing researchers. The findings suggest that successful
New Zealand professional and business firms have developed reputation
and branding strategies and practices that help improve customers levels of
awareness and perceptions of the trustworthiness of the organisation and its
personnel, and heighten perceptions of the quality of its offerings. The results
support the findings of previous research by authors such as Gregory and
Wiechmann (1998) that corporate advertising can be used to build public
awareness and a favourable market position, and also support Bickertons
(2000) proposition that corporate reputation and corporate branding are
closely linked.
The survey results suggest that added value can accrue from corporate
reputation and corporate and service product branding activities (e.g. greater
brand equity relative to competitors), while the interview results emphasise
the need to improve communications and relationships with customers, staff
and the wider community to improve organizational performance.
The study answers calls for the development of an integrated theory of
services branding (McDonald, de Chernatony and Harris 2001) and
concludes that the essential components are the integration of
communication, service innovation and delivery, and personnel management
strategies and practices, the importance of investment in people and the need
for service branding strategies and practices to be guided by over-arching
corporate reputation objectives.
Further research is needed in other country-markets to investigate
whether the best practices of top-performing New Zealand service providers
can be generalized to other firm and market contexts. Despite the insights
gained from this study, the relationship between corporate branding and
reputation requires further clarification, and is an area worthy of future
research.
Future research should also investigate whether there are major
differences in branding approaches between service firms and those involved
in primary and secondary (i.e. manufacturing) industries. The starting point
here would not be how traditional product branding strategies can be
adapted for services, but instead what lessons goods manufacturers can learn
from successful service branders.
Finally, there is also a need for more research on customers perceptions of
value (Ponsonby 2001) to determine what value service reputation and
branding activities provide and whether positive perceptions improve the
service experience. This would be in line with Bickertons (2000) contention
that the starting point for corporate branding (and by extension, corporate
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Brendan J. Gray
reputation) should be customer value (a bottom-up strategic marketing

approach), although this also needs to be guided by an appropriate vision
and strategy (a top-down approach). This paper has adopted the latter
perspective. However, the former area urgently requires further research if
firms are to improve the service experiences they offer consumers and to gain
insights into how to position their firms and their service offerings more
effectively.
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748
Brendan J. Gray
Appendices
Appendix 1. Branding and Service Quality Advantages [unprompted responses]
Branding,
reputation
Strong brands
(mentioned
by 44% of the
27 topperforming
firms; but no
lower
performing
firms)
Illustrative Statements
Weve put on a set of clothing in the form of the brand. And we
manage to extract a price premium of at least 30% and sometimes
50% or more in the markets around the world. So its the way we
position that and the way we support it with in-market structures.
We have very competent support from our promotional programme,
globally, unlike our competitors.
Our advertising agent and marketing people coined the phrase and
developed the icon, and thats the genesis for the whole marketing
philosophy for the company, the whole service attitude of the
company.
The first mover brand stands for reliability, keeping promises; people
are the brand.
We have high brand recognition stable, strong, heavy R & D
investment, a broad range of very strong products.
The credibility of our brand affects performance.
Positioning
based on
service
quality,
value, trust
(15%; 10%)
From a strategic positioning point of view, we measure three key

things: community, service and technology. These three areas can
impact the most on customer relationships as well.
We became involved in benchmarking exercises so that we can get
feedback to ensure that we provide very competitive, cost-effective
dollar services compared to other international schemes and
programmes, and to review them accordingly.
Research tells us we are seen as competitive, trustworthy, loyal, but
also old fashioned, a government service. Our brand is the most
preferred brand, but also the most rejected. Because service products
are becoming more commodity-based and price-driven and there are
more companies in the market, we have to get better positioned in
the publics minds.
Positioning
based on
environment
(4%; 0%)
We are trying to improve the feel good factor, to be interesting

visually, exciting; we want people to stop and browse and shop;
were making the environment a lot more customer slash userfriendly so it becomes more of an experience as opposed to just
purely shopping in a self-help environment.

Emphasis on
corporate
image/
reputation,
public service
(11%; 10%)
749
We tend to hold celebrations [for our wider community]; were just

helping to fund these people because most of them are community
organisations, volunteer organisations; they are the heroes of it.
Profits are given back to the community, which improves community
pride.
Our shareholder [the government] is not as demanding as a public
shareholder; maybe we are [partly] here to fulfill the governments
social obligations; we have social obligations to reinvent ourselves,
otherwise half our workforce could be unemployed in 5 years.
Internal
communication
(7%; 0%)
Staff didnt feel empowered to talk for the organisation, so we

focused on communications, including a video programme regularly
produced and sent out to staff, and a corporate intranet. We had
spent a lot of money investing in technology for the customers, but it
didnt provide the staff a lot of value, so the corporate intranet [now]
allows people to keep up to date with whats going on.
We have frequent management meetings [to keep people better
informed].
Word of
mouth
(7%; 20%)
Our distinctive competency is what people say about us; if they

really want to win and not get stuffed up, then employ us
[company]. {strong brand, but below average relative performance
because nearest competitors also strong}
History,
longevity
(7%; 0%)
Weve been around for a long time and been consistent in our
approach.
A large number of people have worked here for 30 or 40 years. We
never get the high innovation score of later entrants; customers want
evolution, not revolution, from this type of business; we are a trusted
third party.
Networking,
selling
(7%; 10%)
Lobbying
(4%; 0%)
Weve got a network that stretches into all sorts of places.

We dont advertise; we identify who they [potential clients] are and
just get out and talk to them; it may take 3-4 years to get a good
client. {lower performer}
We work hand in hand with politicians to help make the [financial
services] future.
750
Loyalty
programs
(15%; 10%)
Brendan J. Gray
If youre talking about the low end of the market, there is no such
thing as loyalty, its price driven, and thats the bulk of the
passengers. However, with First and Business Class travellers, yes
there is a huge factor of loyalty. They develop, through Frequent
Flyer programmes, points which generate loyalty.
The [premium store brand] card is based on discount at points of
sales. So every week there are 2 000 products that people can get
additional savings on by presenting their card. So its not a true
loyalty programme, but obviously the idea is that it gets the customer
coming back into the store. It has a high level of penetration - 90% of
our customers have a card accounting for over 80% of our sales.
People have got into the habit of using it. There is certainly so much
more it could offer [store] given the chance to develop it further.
There are no Flyby points or other loyalty card for [discount store
brand] because customers are used to every day low prices.
[As with one of our banking and finance competitors] weve got this
[joint venture] points/credit card, where you can spend your points
at retail outlets, hotels, etc. We have done some research on it and the
first thing I can tell you about loyalty programmes is that the client
doesnt give a toss about loyalty actually. Thats the first thing weve
decided. The loyalty is an important thing to us. What the client
wants is rewards.
Quality
Product/
service
quality
(30%; 10%)
Service standards are paramount to success; we will lose our existing
clients otherwise.
We can provide better support, better staff training, and good
safeguards for customers in that they have surety of service support
in the future.
Our philosophy is to provide better services than anyone else. From a
variety of perspectives - service quality, management systems - were
perceived as one of the industry leaders. And that is a result of
setting exceedingly high standards right from day one and
developing on them.
All those quality aspects we encapsulate in terms of the brand.
Benchmarking
(7%; 0%)
We benchmark ourselves extensively, both within New Zealand

where we have competition and internationally where we dont. And
what were attempting to do is to use independent sources of
information which we update every year from 27 countries.
751
Appendix 2. Branding and Service Quality Advantages [prompted responses]

Investment,
positioning,
integration
Investing in
brand equity
(mentioned by
48% of top
performers and
30% of lower
performers;
however, 30% of
lower performers
also made little or
no investment)
Our brands are very important, and are on the balance sheet [of
parent holding company] at $600 million; brand value has
increased, which is an indication that were doing something right.
The board has backed us and we have invested heavily [in
branding]; the last two years have been our best ever as a business.
We spend a lot on brand awareness with advertising, sponsoring
sports programs on TV, billboards, a web site, celebrity golf
matches with clients, charity donations and sponsorships, writing a
book on financial planning.
If you looked at the industry, we probably rank fourth or fifth in
terms of advertising spending. We rely on more innovative ways,
of getting our image across, like TV programme sponsorship and
associated advertising.
We changed the organisations philosophy to one of having
professionally trained sales people, and putting a lot of emphasis
on brand advertising, and then developing a professional approach
to the different functions throughout the organisation.
Competitive
brand
positioning
(19%; 0%)
We try to reposition our competitors, as well as ourselves, by

implication, by what weve done and by what they are not doing.
Branding sets your presence and lets people know what sort of
organisation you are, and gets people to inquire about you and then
purchase.
Essentially we had to position the work we did and any new
branding campaign to have some sense of New Zealand-ness. It
[also] had to position both [the company] and its people as trusted
experts.
Our campaigns vary in different countries. Depending on where
the markets are, from a maturity point of view, we would alter
brand positioning. In France, for example, which is quite a
sophisticated market, we would be tugging more at the heart.
Whereas in Japan people really want to know what it [the service
product] delivers [compared to other competitors or substitutes].
752
Corporate/
umbrella
branding
(11%; 0%)
Brendan J. Gray
Our corporate umbrella brand gives a lot of credibility to new
products and services.
Some of the product brands would be getting as strong as the
corporate one. But in terms of [umbrella/corporate brand] weve
been trying to develop brand associations of organisations which
are well managed and carefully run that are in touch with the needs
and requirements of customers, and that are not there to make a
profit for the sake of making a profit. And that we had a solid value
proposition, a fair price for what we charge, and do so in a
transparent and competitive way. That is in direct response to
market research.
Integrated
marketing
communications [IMC]
(15%; 0%)
IMC is important. We use all the skills in the marketing team to get
the best out of them. For example, the communications team
reports to me as marketing manager (in other organisations they
tend to report to corporate affairs) so we produce consistent,
holistic brand messages; we integrate corporate affairs with the
branding team.
People focus
Branding
people in the
organisation,
rather than
services offered
(22%; 10%)
We is more important than I in this organisation; teams are

more important than individuals; there are no superstars; we talk
about people we work with, not work for; having fun is an
important part of business.
Our campaign last year involved staff fronting ads and interacting
with real customers. The advertising process involved trust and
commitment from senior management, as well as staff, because we
didnt know what staff or customers would say in the ads - there
was no script to be fine-tuned.
The use of the persons [owner-operators] name is important in the
rural sector - there is trust in a name. In rural business you are
dealing personally with the cocky - its an important connection
with people. People know the name and can relate to it.
Internal
marketing
(15%; 0%)
Our whole organisation structure is extremely flat, with about 65%

of our total staff dealing with customers. And our internal support
staff fully understand that our internal customers are just as
important, and their primary role is meeting the needs of the front
line staff who are meeting the needs of customers.
There is a huge sense of company pride and loyalty, which
translates into knowing what the image of the company is about.
753
One of the things that we can pride ourselves on is that in all the
years Ive worked in the company I can name on one hand the
number of people who have left us and gone and worked for
another member of the industry. Having worked for the best, the
attitude is how can you possibly go and work for someone else?
Community
relations
Community
events
(7%; 0%)
We are putting our brand in front of the market at every

opportunity, especially through our involvement in community
events.
Sponsorship,
PR
(7%; 0%)
There are a number of promotional events that we started which

relate [to our major sponsorship] a mix of things like prizes in
scholarship and an annual lecture where we bring an international
speaker and have a public speaking event which generate a
certain amount of news [publicity]. One of the branding outputs is
to look at our sponsorship and see what were doing and how we
can leverage it more.
Customer
relations
Personal
selling,
account &
relationship
management
(11%; 50%)
Our customer loyalty program is our personal relationship

program. We have to respect feedback from customers about
product failure or poor performance and give information to
suppliers to help resolve problems.
Loyalty
programs
(11%; 10%)
Its just day-to-day communication with [customers], and making

sure that theyre happy and were doing what they want.
Account management is paramount to our success and is already

giving us a key strategic advantage; our competitors are not a one
stop shop; we are the only people who can provide a total solution,
providing a broad mix of products and services and business
solutions under one umbrella.
We get customers to send people in to be trained [on our

equipment]; we answer the phone bright and chirpy, so the
customer thinks they are going to get good service.
{low brand investment, but highly market-oriented company}
Our research shows clients dont give a toss about loyalty thats
important to us they want rewards; we have introduced a loyalty
754
Brendan J. Gray
card [credit, air and phone points card] to 40 thousand clients [to
reward them for using particular financial products].
Customer
newsletters
(11%; 20%)
Newsletter] goes to 100 customers; we would like it to be on

customers cafeteria tables; the front page has information for
managers [stories on safety, etc], inside has information and jokes
for staff; it is part of the companys branding exercise to stimulate
people to think about [company]; its designed to improve
recognition, enhanced reputation.
Encouraging
positive word
of mouth
(7%; 50%)
The best advertising that we can probably get is word of mouth. To

achieve that, we need to provide good support, good service, as
well as the reliability inherent in the product.
The way you relate to people is important if you are honest they
will have confidence in you. Most people hear about us by word of
mouth.
{lower performer}
Quality
Product/
service quality
as implicit
promotion
(19%; 20%)
At the end of the day you can market till youre blue in the face, but
consumers wont accept it if the message is perceived to be wrong
or you are not offering a good product.
Feedback
If we dont perform, that customer gets a rebate; so if we are not as

good as that performance level weve set in that contract, which is
measured independently every year, they get a cheque.
Brand auditing, We did the branding audit last year we interviewed 35 clients, 60
staff and 20 directors; we had workshops and then produced a
research
brand narrative; were looking at our visual identity and how we
(19%; 0%)
brand. Its a strong brand because the stakeholders agree on what it
is. We identified the core values as held by all the stakeholders, for
example the ability to deliver, no matter what, is a value that our
clients associate with our branding. They rely on us implicitly to
deliver service, and if things become difficult, things go wrong,
they know that well deliver for them. Now there were some other
things that werent positive about the brand as well which we need
to work on, like, we are perceived as being somewhat large,
relentless, like a big crushing steamroller; maybe were not
responsive enough.
We research our brand continuously, and quite heavily, on a
month-by-month basis, in terms of advertising brand points. Brand
755
performance is one of the key KPIs that the bank measures itself
on. We measure the ability of customers to recognise our brand and
various attributes which measure ad performance versus
competitors focused round three areas community, service and
technology. And we measure the stickiness of our brand and
other brands attraction and retention.
We are doing specific customer brand monitoring across several
criteria - substantiating trust in our expertise and substantiating
that we are not a bank, that we are a financial services provider. So
the ads cover a whole range of things from life insurance to
mortgages to rural lending. And [as well as improvements in
customer perceptions] theres a much greater recognition across the
whole organisation that brand is a relevant component to driving
customer perception and also the way our own people feel about
the organisation.
We have an extensive brand monitoring process, collated into
market mind software. We have 5,500 half-hour telephone
interviews [in our database] about what people think of our brand.
We measure the effectiveness of brand campaigns, linking the
brand with the core message, and measure competitors brands and
media on the same basis. We use focus groups to test creative
elements pre-, during and post-campaign at each stage the
creative gets better as we take on board feedback; creative directors
get frustrated by us always wanting to test and retest; research
influences our strategic decisions about our brand.
Appendix 3. Corporate Image/Reputation Advantages [prompted responses]

Proactive
strategies
Managing
corporate
identity &
image
(mentioned
by 26% of
top
performers;
20% of lower
performers)
Corporate identity and brand image go hand in hand; you need to be

a fair employer, reliable, and address health, hygiene and safety
areas. At the consumer level, the brand of the store is more important
[than the parent company]. The latter is better known to suppliers.
A strong corporate brand identity is more long lasting than one-off
public relations opportunities. All those PR opportunities obviously
lead into a brand, but you run into trouble if you try and create
public relations opportunities that dont inherently mention the
brand; so, your brand attributes have got to flow into the things you
do. Organisations get into trouble when they try to be something
theyre not.
756
Brendan J. Gray
At the foot of our letterhead, we have four organisations that we
support, and we actually use their logos. But you can argue that we
are covering sport, the arts, sick children and sick animals a very
broad field. And its interesting that a lot of people will comment on
oh, I see that you support these charities. Whether anybody
actually buys a product [is uncertain]. Its very difficult to get definite
feedback, [so] one of the areas that we are looking at is causal
marketing.
Sponsorship [of major events, organisations, appeals] is always one
of these things where, unless youre prepared to commit the same
amount of money again in supporting the sponsorship [with
advertising & PR] then you might as well not do it. And weve never
had the financial resources to do that, so weve tended to steer away,
unless there were some very clear advantages to us.
Supporting
branding
activities
(22%; 0%)
We spend more on PR than advertising; we hold regular lunches and

briefings with journalists, and bring in overseas experts for them to
interview.
The two [branding and corporate reputation] are quite inter-mingled,
and they are everything because all youve got in this organisation is
1100 people, and a brand. We dont own the buildings we work in,
weve got a few cars, and weve got some computers. So weve got a
brand which encapsulates or should encapsulate a set of values
which are derived from the experience of people over [a number of]
years, and a culture which sustains that.
Both of them [corporate reputation and branding] are essential.
Reputation is very much about how we interact with our customers.
And sponsorship is not so much about trying to demonstrate youre a
good corporate citizen and hope to improve awareness its about
augmenting the concept of trusted expert to our target groups. We
track how people perceive our sponsorships in light of: Does it
make me feel that [company] is the trusted expert for me in financial
services? That manifests differently for different customer segments.
Professional
involvement
(7%; 0%)
We are [active] members of our professional organisations.
Awards
(7%; 0%)
We get our name to the public by winning awards, or being on juries.

Promoting
public image
of CEO,
principal
(7%; 10%)
757
[We have] a pretty dynamic leader who understands the

environment we work on and can balance the social and political
ambitions of our shareholder against the business imperatives; and
maybe weve seen that in recent times in recent news broadcasts.
[The owner] could be described as humanitarian - makes you feel
good towards him and want to do well for him. {lower performing
firm}
Image of
managers,
staff
(4%; 10%)
Our reputation comes from the people on our staff; we have 20

specialist practices; individuals must build their own reputation
before [firm] can build its reputation. {lower performing firm }
Community
relations
Community
involvement
(26%; 0%)
We want to get our name in front of the public in areas where we can
be seen to be helping.
We want to see our staff more involved in the community. We need
to find a vehicle to do that [since pulling out of major sport
sponsorship because of conflict with brand positioning] its a new
challenge.
Sponsorship
(41%; 20%)
We try to leverage the brand through sponsorship; its nice to be able

to support one charity nation-wide which does a lot for needy
children; we offer scholarships for underprivileged children in
Auckland; supporting children and families fits in well with our
customers.
We have one significant sponsorship relationship with [university]
they supply us with our product, new engineers; they are a centre of
learning, technical excellence; its quite a symbiotic relationship.
We very seldom do dual sponsorship of an event [because] it dilutes
the effect of it you dont get the same volume. If youre going to do
it, you do it well.
We do not enjoy the luxuries of being able to build these classical
above line campaigns like Unilever and P & G that have had a
multiplicity of brands to support them over the years. We just dont
have the money to do it. Mass media in markets like Japan are just
too expensive. So we are very, very cost conscious in terms of return
for every advertising and promotional dollar; more the latter, now.
And if we can make PR work harder for us like a relatively low
budget sponsorship of a lifestyle festival then we prefer that to big
758
Brendan J. Gray
advertising campaigns that we have been historically unable to
demonstrate the value of. We are using PR and other below the line
activities where you can still communicate with consumers, but you
dont do it in the traditional media.
About the Author

Brendan Gray is Professor of Marketing, Director of Postgraduate Studies,
and Director of the Marketing Performance Centre (MPC) at the School of
Business, University of Otago, Dunedin, New Zealand. The MPC is a
research group which has a panel of 3,000 managers who take part in regular,
in-depth studies into various aspects of marketing practice and firm
performance. A sample of managers from this panel was involved in the
current study, a five-year project aimed at improving the competitiveness of
New Zealand service firms. Dr Grays research interests include marketing
communications, marketing strategy and market orientation.

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Journal of Marketing Management, 2006, 22, 717-758

Benchmarking Services Branding

Correspondence: Brendan J. Gray, Professor of Marketing, School of Business, University

Westburn Publishers Ltd.

Benchmarking Services Branding Practices

More highly market-oriented service firms are likely to invest more

Brand-oriented service firms are likely to invest more resources in

These propositions only address the likely outcomes and characteristics of

Benchmarking Services Branding Practices

Guffey and Kijewski 1993). However, the relationship between corporate

Figure 1. Services Competitiveness Research Model

The first stage of the current study involved developing a survey

Benchmarking Services Branding Practices

on performance, and also moderate the relationships between sources of

questionnaires being posted.

Benchmarking Services Branding Practices

had significant management experience and could be expected to have fairly

Which of the following best describes your service sector?

Table 2. Manager Demographics

Exploratory factor analysis and Cronbachs alpha tests of the multi-item

Benchmarking Services Branding Practices

levels of service personnel, offering some support for Propositions 3 and 4

0.473* 0.572* 1.000

New service 0.361* 0.518* 0.417*

0.439* 0.212* 0.206*

0.397* 0.209* 0.175*

0.546* 0.257* 0.236*

DIFFER COST SKILL TRAIN

0.197* -0.087 0.260*

0.531* 0.263* 0.404* 0.319* 0.142 0.270* 0.206* 0.325* 1.000

The brand orientation of firms was assessed by investigating whether they

Benchmarking Services Branding Practices

Table 4. Characteristics of Top Branders

Mean scores for

Mean scores for

Market Orientation (alpha =0.88) yes

Brand Management (alpha =0.83)

Mean scores for

Mean scores for

Benchmarking Services Branding Practices

views of frontline staff, core service providers and management) than

responses into aggregated tables of indicative responses (with a record of the

Benchmarking Services Branding Practices

Table 5. Summary of Interview Participants

Main market: Banking, finance, insurance

Large (over 200 staff)

Owner, Managing Director, Principal Partner

Table 6. Managers Perceptions of Sources of Competitive Advantage

Corporate image, reputation, social responsibility, public

Staff motivation, skills, competencies

Vision, mission, values, energy, passion

Market orientation - responding to customers needs &

Managing customer relationships, key client account

Distribution channel relationships

Willingness to experiment, take risks & make mistakes

Utilising information technology

Partnerships and alliances

Little hierarchy, flat structure

Market (segment) coverage

Geographic spread, location

Benchmarking Services Branding Practices

related to market scope: covering a broad number of market segments (30%;

Investing in marketing communications to improve customer

Improving service quality (e.g. Our philosophy is to provide better