CMB Online Branding

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Business Excellence 03

On-Line Branding Nobre, Becker, Lencastre and Brito

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ON-LINE BRANDING: ANALYSIS OF MARKET EFFECTS ON BRAND

MANAGEMENT

1

Helena NobreLecturer

IPAMAv. da Repblica, 594

4450-238 Matosinhos - PortugalE-mail: [email protected]

Kip BeckerAssociate Professor

Administrative Science Department - Boston University808, Commonwealth Avenue

Boston, MA 02215 - United States of AmericaE-mail: [email protected]

Paulo de LencastreAssistant Professor

Faculty of Management and Economics - Catholic UniversityRua Diogo Botelho, 13274169-005 Porto - Portugal

E-mail:[email protected]

Carlos Melo Brito *Associate Professor

Faculty of Economics - University of PortoRua Dr. Roberto Frias

4200-464 Porto - PortugalE-mail: [email protected]

Abstract: Brands play an increasingly important role in marketing inasmuch as they represent one ofthe major assets firms hold. Furthermore, the growing importance of the electronic commerce made thestudy of brands in the Internet particularly relevant both for researchers and marketers. This paper is theoutcome of a research project on the consumer response to e-brands i.e. brands commercialized in theInternet. Two key questions have oriented the research: (i) Does a virtual brand need a different approachthan a physical brand? (ii) What is the real impact of the Internet on branding?

Keywords: E-commerce, branding, consumer behavior.

1Comunicao apresentada na First International Conference on Performance Measures, Benchmarking, and Best

Practices in New Economy, organizao conjunta da Universidade do Minho e da University of Massachusetts

Dartmouth, Universidade do Minho, Guimares, 10-13 de Junho de 2003.


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INTRODUCTION

With the growing importance of e-businessand, in particular, the on-line marketing, the buyer-

seller relationship tends to assume an importantdimension in branding [1]. This shift is the result ofthe need to find new forms of responding to thedemand of the market through the relationshipmarketing. Moreover, it is also the result of theinformation technologies that have given tocompanies the electronic means to interact directlywith customers [2].

Although the e-marketplace tends to bequicker and less predictable than the off-linemarket, there is a trend towards a marketconverge. In other words, as Rayport and

Jaworski [3] state, physical and virtual marketsare merging in one single space. This leads to theuse of the most effective channels in theestablishment and defense of a brand. Does thismean that in the near future, differences betweenphysical and virtual brands are likely to disappear?

In this context, e-branding represents a newmajor research field in e-commerce. It is arelatively unexplored area where a number ofimportant issues remain without answer. Indeed,with the Internet, it was never so easy to build arecognized brand in the short term. But, on theother hand, it was never so ephemeral andvolatile.

This paper is the outcome of a researchproject that aimed to study the consumer responseto electronic brands i.e. brands commercializedin the Internet. The paper attempts to understandwhether virtual branding demands a differentapproach than physical branding. On the otherhand, given that the Internet introduced deepchanges in terms of consumer behavior and theway consumers relate to brands, this resulted innew challenges for marketers. This raised tworesearch questions that have oriented the study:

Does a virtual brand need a different approachthan a physical brand? What is the real impact ofthe Internet on branding?

THE FRAMEWORK FOR ANALYSIS

Brands have become the corner stone of mostmarketing strategies, and the management of ane-brand must be in line with the core of themarketing strategy. In this context, to address theresearch questions referred before, a frameworkwas developed to study the differences andsimilarities between management of on-linebrands and traditional branding.

The framework for analysis (Figure 1) wasbuilt on the basis of four conceptual constructs.

Firstly, the classical theory of branding (e.g. Aaker[4] and Keller [5]). To analyze a brand it isfundamental to understand not only its identity mixbut also the marketing mix strategy as well as thepublic mix [6]. In fact, the way a brand is perceived

by the public influences its own identity. In thisway, it is crucial to characterize its image mix,which, in turn, requires the identification of thelevel of awareness and respective associations.

Secondly, since the consumer behavior is adeterminant of the implementation of any brandstrategy there was the need for a conceptualframework in this field. The model developed byTurban et al. [7] was considered a goodcontribution for the understanding of the electroniccommerce consumer behavior.

Finally, the scorecard for evaluating brand on-

line affinity developed by Diorio [8] and the bestpractices on e-branding suggested by Carpenter[9] were the third and fourth elements of ourframework for analysis.

METHODOLOGY

The methodology adopted relied on anexploratory research conducted through the studyof three north-American cases: two typicalphysical brands that were later extended to theInternet (Timberland and Boston Coffee Cake),and one pure virtual brand (Napster). Given thedifferences in terms of products/services, historicalbackground, levels of awareness and theassociations involved, the multi-case studyallowed for a certain degree of generalization interms of branding.

This methodology was adopted because e-branding is an area of knowledge that has some ofthe characteristics that Yin [10] considers that canbe studied by exploratory cases. In fact, it is a newfield of research without a well established andaccepted conceptual framework. Therefore, anexploratory approach was chosen based on

qualitative methods through a multi-case analysis.

THE EMPIRICAL STUDY

The three cases studied represent differentbusiness models: Timberland is a good exampleof mass-marketing, Boston Coffee Cake illustratesa niche marketing approach, and Napster is atypical one-to-one case.

Timberland and Napster are widely recognizedbrands. However, while the former is a largemultinational corporation, Napster is a small

company that appeared during the so-called NewEconomy boom. It is the result of an innovativeidea of P2P music file sharing, which, through theviral Internet abilities, got a huge on-line audience


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in just one year. By contrast, Timberland onlyentered the Internet when it was an internationallyrecognized brand through its store network all overthe world.

Boston Coffee Cake illustrates an intermediarycase. It refers to a small familiar company with abrand with a low degree of differentiation orientedto a niche market. Although it is mainly a B2Bcase, Boston Coffee Cake also sells its productsto consumers using catalogs and direct mailing.Later on, the company has extended its longexperience in direct marketing to the Internet.

Figure 2 summarizes the three cases on thebasis of the scorecard developed by Diorio [8].The first remark that comes up from thecomparison of the three brands is the different wayof building awareness: two traditional brands that

were built on the basis of long and huge efforts interms of communication, and a pure virtual playerthat built a recognized brand in about one year.Timberland and Boston Coffee Cake did not havean easy on-line entering, whilst Napster created anotorious brand in a very short period of timethrough a viral marketing strategy.

SCORECARD

Traditional commercial

channels

On-line presence:

- Web site

- Media convergence

YES

Physical

Brand

Pure

Digital Brand

Go or not

go to the

Internet?

Digital

Brand

NOCreation of

a new

brand

Not go to

Internet

Does this brand

strategy have on-line

affinity?

Best

Practices

Defense of

Brand

Fig. 1. The Framework for Analysis


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Timberland BCC Napster

First mover

advantage

No Yes First coffee

cake on Internet

Yes First P2P Web

site for music file

sharing

Customer

segment

affinity

No Yes Direct

marketing affinity

Yes Web users

Innovation and

creativity

No No Yes Innovator and

creative software for

sharing music

Information

richness

No No Yes Music can

generate huge and

interesting content

Brand

experience

portability

No Yes Physical

catalog affinity

Yes The model just

makes sense on

Internet

Domain name

readiness

Yes Recognized

brand, easily

spelled

No Yes Hight

differentiation level of

brand identity

Fig. 2. The Application of the Scorecard to the Three Cases

Nonetheless, Napster failed as a businessmodel and lost a huge amount of money for

sustaining its on-line portfolio of customers. Bycontrast, Timberland and Boston Coffee Cakeadopted strategies that were very rigorous interms of cost control.

The application of the framework for analysisput in evidence that a brand that is sold only inthe Internet must have a different communicationstrategy from the traditional physical brand. So,the brand must become visible whether by viralmarketing, off-line communication or physicalassets. Therefore, it is essential to manage thecommunication efforts according to thecharacteristics and habits of the target public.But, the basic issues related to consumersatisfaction remain important in determining thebrand success, both in the traditional market andin the on-line market.

Furthermore, in what concerns the best e-branding practices, the real importance theyassume relies fundamentally on the type ofbrand, product/service and marketing strategy.Indeed, those practices revealed themselves aseffective tools to build brand visibility althoughsuch does not mean necessarily brandprofitability.

Finally, the media convergence and theInternet represent new capabilities for thetraditional marketing. In this sense, classical

branding must evolve and use new approaches.Namely, it seems evident that all the brands tendto have an on-line presence.

In short, the main contributions of this study

refer to the virtual brand approach, the on-linepresence, and the best e-branding practices.

Virtual brands approach

The virtual branding approach depends onthe kind of brand as well as its marketing tools.In fact, customer satisfaction remains the criticalissue in determining the brand success, both inthe off-line market and in the Internet.

On-line presence

The study also showed that although the on-line commerce may be not applicable to allbrands, in general they must have an on-linepresence. That is, the opportunity costs of beingabsent from the Internet are likely to negativelyaffect the brand image.

The best e-branding practices

The importance of the best e-brandingpractices relied fundamentally on the type of

brand, product/service and marketing strategy.These practices revealed to be effective tools tobuild brand visibility. However, this does notmean necessarily brand profitability.


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Furthermore, in the future, differences betweenphysical and virtual bands might be limited to thelevel of marketing mix actions and tools.

CONCLUSIONThe study concluded that although the

specific e-branding practices might allow thebuilding of awareness in a short period of time,the sustained profitability of on-line brandsseems to rely on the same factors as thetraditional brands: time, financial resources and,last but not least, the marketing mix strategyadopted by the firm.

The study also concluded that in the nearfuture, with the generalization of the broadbandand the consequent media convergence,

marketers couldnt regard to an on-line brand asthe opposite of a physical brand. Rather, brandshave to be managed in a comprehensive way,taking into account all alternatives based notonly on the kind of product/service offered butalso on the desired positioning.

On the other hand, this study, representingan exploratory research on e-branding, is likelyto provide suggestions for further investigation.Thus, the new ways that the traditional marketingmust consider when looking to a brand (eitheron-line or off-line) emerges as an importantresearch field. As well as the challenge ofmaking a brand profitable through the Internetrevealed itself as an interesting study theme.

Moreover, the validation of the framework foranalysis deserves more attention. Such impliesto test, in a more extended way, both the brandclassical theory relevance for electroniccommerce, and the practical e-branding theory i.e. the scorecard of Diorio [8] and the best e-branding practices suggested by Carpenter [9].In this way, it would be also interesting to test thehypotheses in a larger basis of generalization,that is, with more and contrasting cases.

References

[1] Moon, M. and Millison, D., Firebrands BuildingBrand Loyalty in the Internet Age. 2000, NewYork: Pergamon.

[2] Brito, C., A Insustentvel Leveza do Marketing,working paper 81. 1998, Porto: Faculty ofEconomics.

[3] Rayport, J. and Jaworski, B., Cases in e-Commerce. 2002, New York: McGraw-Hill/Irwin.

[4] Aaker, D., Managing Brand Equity Capitalizingon the Value of a Brand Name. 1991, New York:The Free Press.

[5] Keller, K., Strategic Brand Management: Building,Measuring and Managing Brand Equity. 1998,Upper Saddle River, NJ: Prentice-Hall.

[6] Lencastre, P., A Marca: O Sinal, a Misso e aImagem, Revista Portuguesa de Marketing. 1999,8, p. 105-119.

[7] Turban, E., Lee, J., King, D. and Chung, H.,Electronic Commerce. 2000, Upper Saddle River,NJ: Prentice-Hall.

[8] Diorio, S., Beyond e: 12 Ways Technology isTransforming Sales and Marketing Strategy.2002, New York: McGraw-Hill.

[9] Carpenter, P., eBrands: Building an InternetBusiness at Breakneck Speed. 2000, Boston, MA:Harvard Business School Press.

[10] Yin, R., Case Study Research: Design andMethods, 2

ndedition. 1994, Thousand Oaks, CA:

Sage Publications.


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