The impact of brand equity and product augmentation on purchasing industrial commodities.

Abstract

The purpose of this research was to establish the impact of brand equity and product augmentation on purchase decisions involving industrial commodities. The field of investigation was that of industrial tyres in the South African open cast mining industry and the sample was extracted from buying centre members who purchased tyres for earthmoving equipment for use on coal mines in the Mpumalanga Province of South Africa. Literature pertaining to commodity products, brand concepts and consumer brands forms the basis of the literature review; whereafter specific study on industrial branding and the buying centre were explored. The research method used was a conjoint analysis experiment which was constructed following a series of pilot studies to determine the key factors in industrial tyre procurement. The findings were that brand was indeed considered of primary importance in tyre procurement, demonstrated by each buying centres' willingness to pay a premium price for their preferred brand of tyre. Product durability and price were second and third in importance respectively. The augmented product attributes of delivery lead time and technical support were considered least important of the five attributes. These results have important implications for mining company procurement departments as well as tyre suppliers. Mining companies may be paying premium prices for tyres which are a considerable cost element in running expenses for heavy machinery. On the other hand, well known tyre supply companies may be able to expand their market share and improve profitability through the use of this information.