Employer Branding: Recruitment cost or Strategic Profit Driver

Published by MBA Skool Team, Published on September 03, 2013

Employer branding has become a very popular concept with branding consultants, HR professionals, and market researchers. A critical aspect for business success is attracting the right talent and retaining them, and right brand for an employer can really help in this regard. This article attempts to broadly identify and categorize the analogy between product marketing and employer branding. Just like a popular brand of customer product expresses certain images and qualities, similarly an employer brand represents corporate identity to its prospective and current employees, head-hunters and stakeholders especially those who get associated with the people side of the corporate.

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In the recent years, it has become important for organizations to brand themselves as not just related to products and services offered by them but also as employers, by focussing on Employer Branding if organizations can communicate to the world why their workplace is unique and appealing it will become easier for them to attract talent.

With the emergence of India, Brazil and China as economic powers and aging work forces in European Union, Japan and the U.S., and also with the current economic slowdown -- and  demand to increase productivity and pressure to cut down costs – has increased the importance of getting the best people in the right jobs even more crucial. This has made many companies use employer branding as a crucial management tool in the “WAR FOR TALENT”.

For a company that wants to brand itself as an employer- It is important to align the brand with the company's business plan, it means that the brand should be designed to attract and retain the nature of talent the company needs most – these acquired talents will help company increase profits, sales and market share. The effective way of doing so is by borrowing a tool from the toolbox of product-marketing.

Consumers are divided into groups by the marketers on the basis of things like consumers buying behaviour, lifestyle and demographics, and then offer customized product offerings and advertising messages specifically for a specific group with the belief that in order to gain more profits it is better to treat certain groups of people differently than to treat all of them same. Each product is tailored to have its own specific set of marketing strategies and advertising message. This is termed as segmentation, which lies at the core of brand marketing.

We can use the analogy of the above stated principle in employer branding -- that in order to gain more profits it is better to treat certain groups of people differently than to treat all of them same. Employers can use segmentation to their advantage by pinpointing nature of talent they need to attract and what they should do to attract them

Segmentations can be done by the Employer in similar way as by Marketers:

On the basis of Entry Level:

In case of employer branding, the "product" that the company is selling is the employment experience that the company will offers, and the "customers" are current and prospective employee or staff. The back -up that the employer's brand in the marketplace is in form of benefits, which includes tangibles such as salary/pay and intangibles such as a sense of collegiality and status.

Segmentation is already being used in employer branding to some extent, in a way that companies are focussing a large chunk of their branding strategies and efforts on attracting entry-level employees/staff. The most prime target for these companies are recent college graduates, whom they primarily segment on the basis of things like, grade-point average, location, age and university, and then expose them with multimedia campaigns promising exciting careers growth opportunities, promotion scope, free travel expenses and exceptional pay.

On the basis of Potential/Actual Profitability:

When considering consumer marketing, the thing that is taken into account for profitability segmentation is that consumers differ from one another in terms of the potential or actual profitability that they bring to an organization. For Example, Consumers that are loyal and purchases in big quantities are more profitable than those who buy occasionally and in small amounts. This knowledge about the company’s high–profit clients, allows marketers to channel more resources and efforts toward winning their business.

The similar analogy can be drawn for employees. Employees who have the knowledge, skills or experience in the area that are critical to a business, and these areas are driving growth  for the organization than these employees are strategically important. Identification of these groups of employees through segmentation allows organization to devote more resources and efforts towards hiring and retaining these groups.

On the basis of Product-Feature Preferences:

Grouping consumer on the basis of the product features that they desire is a much-used technique of segmentation in consumer marketing. Segmentation of market on the basis of these consumer preferences allows marketers to customize product offerings and advertising messages that attracts and appeals specifically to these set of consumers.

In the similar manner, employees can be segmented and grouped in accordance to the career benefits that are important to them or that they value. Some employees want flexible working hours, while others value opportunities for travel; some are looking for educational assistance and training, while others seek on-site child care.

Once an organization has identified the groups it should be attracting, it can then use product-feature segmentation to gain a better understanding of the benefit bundles those groups of employees’ prize.

On the basis of Reference Groups:

The consumers don't make purchasing decisions in air, which is the reason why some marketers use segmentation to identify the groups to whom consumers turn for advice and approval when making a buying decision.

The similar goes for employers branding too. It is important for the employer brand to be viewed favourably by the group that the potential employee mostly turns to for approval and advice. People often turn to friends, colleagues and family members when they are choosing between different employment offers for advice and approval, as everyone wants to work for a reputed organization.

There are various ways in which employers can reach out to these reference groups. Like, employers can tout themselves as award winning employers, good corporate citizens and responsible entities through public-relations and advertising campaigns, thus can provide detailed and specific information about the unique experience that the company offers at their workplace.

On the basis of Bargaining Power:

Marketers often determine the type of prices and rates that they should offer, in order to win business by grouping consumers in accordance to the ability of buyer to negotiate attractive terms and conditions or prices. For Example: Consumers with excellent credit ratings have more options of taking loan in comparison to those with spotty credit histories.

Bargaining power in employer branding refers to negotiating power that certain employee groups have in terms of their employment because of their level of seniority, the rarity of their skills, qualifications or relevant experience. The greater the demand for these skills and attributes within the organization, or indeed within the employment market as a whole, the greater will be the bargaining power that these employees can exert.

On the basis of Choice Barriers:

Marketers lock in their highly valued customers through the use of choice barriers. For Example: Airlines and hotels offer rewards to their loyal customers, so as to discourage them from switching to or using rival services.

Similarly in case of Employer Branding, companies prevent people from leaving or entering a firm by setting up the hire and pay policies. Companies’ segment employees on the basis of experience, education and residency status or visa, in order to rule out candidates for certain job roles. On the other side, things like lucrative retirement, retrenchment packages or delayed bonuses serves as "golden handcuffs," thus tying employees to a company who else otherwise might be tempted towards new opportunities elsewhere.


Taking together into account these segmentation approaches can help companies in getting the right employees to get attracted for the critical jobs and help the company in achieving its business goals that too without breaking the bank. Thus, employer branding has evolved in its role from being a recruitment cost to a strategic profit driver for an organization.

The article has been authored by Vikas Bhojwani, MDI Gurgaon.

Views expressed in the article are personal. The articles are for educational & academic purpose only, and have been uploaded by the MBA Skool Team.

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