Dual branding in OEM spare parts business
Koivisto, Aukusti (2022)
Koivisto, Aukusti
2022
Tuotantotalouden DI-ohjelma - Master's Programme in Industrial Engineering and Management
Johtamisen ja talouden tiedekunta - Faculty of Management and Business
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Hyväksymispäivämäärä
2022-09-28
Julkaisun pysyvä osoite on
https://urn.fi/URN:NBN:fi:tuni-202209207188
https://urn.fi/URN:NBN:fi:tuni-202209207188
Tiivistelmä
Original Equipment Manufacturers are facing a shift in their highly profitable spare parts business. 3rd party parts providers are creating intensified competition with wide offerings and competitive pricing. Thus, OEMs are trying to find new business opportunities in the spare parts business in order to keep their revenues and profitability stable. Manufacturers lose their customers to other spare parts suppliers when customer’s equipment ages which causes the weakening of OEM’s offering in later parts of the equipment lifecycle. As a result, manufacturers want to capture new customer segments from the equipment lifecycle perspective. Moreover, OEMs would like to also serve 3rd party equipment in addition to their own installed base to grow the business further.
The objective of this thesis is to explore the possibilities in using dual branding concepts to grow OEM spare parts business through new customer segments and 3rd party offerings. To reach the objective of the study, service, spare parts, branding and customer value literature is reviewed, and conceptual framework is created. The framework is then applied in the case of a company which operates as an OEM in cargo-handling equipment business. Moreover, the case company has a big spare parts business. In order to grow case company’s spare parts business, dual branding concept is investigated and assessed in the case company with the formation of a model. The model is based on interviews with the case company executives, analysis of spare parts sales data and active participation of the researcher in the research process. Conceptual framework is then reflected with the case.
The study shows that dual branding concept can offer a valuable opportunity for OEM to grow its spare parts business without major changes in its current business model. In addition, prevention of cannibalization, operational considerations and branding perspectives are important building blocks of successful dual branding implementation in B2B context. Moreover, right power-ratio between the respectful brands is vital to enable success of the dual branding business model. Consequently, differences between OEM and 3rd party spare parts business were recognized alongside with changing desire of spare parts attributes of a customer during equipment lifecycle. Both were identified as major enablers of successful implementation of dual branding in OEM spare parts business.
The objective of this thesis is to explore the possibilities in using dual branding concepts to grow OEM spare parts business through new customer segments and 3rd party offerings. To reach the objective of the study, service, spare parts, branding and customer value literature is reviewed, and conceptual framework is created. The framework is then applied in the case of a company which operates as an OEM in cargo-handling equipment business. Moreover, the case company has a big spare parts business. In order to grow case company’s spare parts business, dual branding concept is investigated and assessed in the case company with the formation of a model. The model is based on interviews with the case company executives, analysis of spare parts sales data and active participation of the researcher in the research process. Conceptual framework is then reflected with the case.
The study shows that dual branding concept can offer a valuable opportunity for OEM to grow its spare parts business without major changes in its current business model. In addition, prevention of cannibalization, operational considerations and branding perspectives are important building blocks of successful dual branding implementation in B2B context. Moreover, right power-ratio between the respectful brands is vital to enable success of the dual branding business model. Consequently, differences between OEM and 3rd party spare parts business were recognized alongside with changing desire of spare parts attributes of a customer during equipment lifecycle. Both were identified as major enablers of successful implementation of dual branding in OEM spare parts business.