Research and explanation into e-branding and it’s impact on the consumer behaviour

| December 6, 2012

CHAPTER 1

INTRODUCTION

Modern day marketing has greatly developed. Companies now use consumer driven approaches to promote their abilities to satisfy needs and wants of the modern consumer.

E-branding is one of the processes that let a company to promote their products and services over a broad and open platform, accessible to half the world. More than 4 billion people access the web all over the world.

Therefore branding CAN be described as a process of building a positive image for product or service what company provides to its consumers.

Moreover effective branding has the emotional element that creates product loyalty, for example Burger King- “Do it your way” or Nike “Just do it”.

According to Sterne (1999) “A brand is not a name. A brand is not a positioning statement. It is not a marketing message. It is a promise made by a company to its customers and supported by company”. 

 

CHAPTER 2

LITERATURE REVIEW 

INTRODUCTION

In this chapter, the main purpose is to understand various concepts of e-branding- for example- different branding strategies, brand equity and elements of success, importance of e-branding etc.

INTRODUCTION TO E-BRANDING

            Commercial internet has been around for over a decade. Many organizations used E-branding to promote their brands on internet. According to Kotler et al (2010, pg 255) e-branding is “the creation and development of communications strategies specifically for brands to have meaning and context on the web” and the brand stands for “a name, term, sign, symbol, design or a combination of these, that identifies the product or service of one seller or group of sellers and differentiates them from those competitors”.

The Internet is a tactic part of business strategy just like newspapers or direct mail advertisements or business cards. Therefore branding is an important part of Internet commerce, as branding allows companies to build up their reputations as well as expand beyond the original product and service, and add to the revenue generated by the original brand (Carpenter, 2000).

According to Kotler et al (2010) strong, successful brand can shift the competitive framework in the company favour, given it intangible, difficult to replicate, values with which to supplement its more basic products, price and distribution benefits.

However nowadays people don’t pay attention to the existence of a site as a company, but consumer pays much attention to a good deal for product or service, what could save a lot of money for consumer pocket.    According to Levine (2003) in 1995 July 16th -Amazon.com- was the first company who went live on the Internet, even that time period many people had never ever purchased any goods or services from online shopping.            According to Interbrand (2011) a survey of Retail Brands Performance 2010 UK, the BEST TOP 10 are-

Rank

Brand

Brand Value ($m)

1

TESCO

10.102

2

MARK & SPENCER

6.074

3

BOOTS

2.480

4

ASDA

1.395

5

NEXT

1.314

6

ARGOS

912

7

SAINSBURYS

849

8

MORRISONS

429

9

WAITROSE

338

10

DEBENHAMS

284

 

Source: http://www.interbrand.com/en/BestRetailBrands/2011.aspx

For that reason Levine (2003) argues that “E-branding is not just the activity of creating a brand on the internet, it’s not just about making e-commerce site famous and creating brands that end in “.com”, e-branding can create brand awareness, state brand identity, and reinforce brand integrity as well as or better than most other forms of branding communications”.

            Internet is as a direct communication with the public, where companies can talk to their consumers what they want to reach or they can talk with consumers who have interest about product or service what organization provides, therefore organizations can reach millions of people for the price of one local newspaper advertisement fees (Sheehan, 2010).

Nowadays organizations need to use WEB, because cited from Levine (2003, pg 169) “Product or service without a web site in today’s market is like a politician without vocal cords: he or she might have great ideas, but who’s going to know about them?”

Internet has transformed the image of marketing and branding. Traditional brand branding types such as TV, radio, newspapers etc is always the choice of marketers to brand the business; however the pattern is changing with consumer buying behaviour shifting towards online purchasing, and for that reason e-branding now is more and more important as ever with the globalized access for billions of consumers. Successful e-branding leads to increase brand awareness and potential access to new customers as well as the development of new lines of business, previously unavailable to traditional companies.

As customers creates their trust in brands through of use and experience, companies has the opportunity to start building relationship with consumers, strengthening the brand further and making it more difficult for competitors to imitate. Therefore it is very important for business to build up memorable brand in consumers mind.

Brand is the product what organization produce, and its represents organizations core values, competencies, attitudes, vision, mission, personality and appearance (Kushwaha, 2009).

More over there exist high competition in market, therefore organization need to find a market niche and accurately adjust the offer to the consumers need.  According to study by Cheskin Research (1999) – brand is at the top the list of six marketplace fundamentals for building and maintaining trust on the internet: others are navigability, fulfilment, presentation, technology and seals of approval.

THE IMPORTANCE OF E-BRANDING

According to Aaker (2000) “branding has been characterised as the process of creating value through the provision of a compelling and consistent offer and customer experience that will satisfy customers and keep them coming back”. However Chernatony et al (1992) says that the companies who have strong history of strong brands -will likely maintain greater control over the balance of power between them and customers, not forgetting that command a higher market share and premium price against generic, unbranded, equivalents. Were Rowley (2004) argues that “if organization has the strong and successful brand, then it helps to shift the competitive framework in the company favour, giving it intangible, difficult to replicate, values with which to augment its more basic product, price and distribution benefits”. However Steven (1999) explains that e-branding also provide an economy of scale to the company and provide it with a springboard from which to launch additional associated products and services.

Brand management should aim to build into customers minds a set of perceptions and attitudes relating to an offering, leading to positive buying behaviour (Phillips, 2006).

A brand helps in differentiating one company from another. As it was mention before brand marketing is the process of developing the right image or corporate identity of organization to the market place. According to Show (2009) the main element of good brand development include target market research which involves collecting information on potential clients need and preferences, features and benefits of their products in which the target market will be interested. As Show (2009) explains – brand building or brand marketing comprises of brand name development, brand design, logo design, brand communications, corporate branding and product branding. The creation and development of a well-differentiated brand helps in reaching customers in a way that it is compatible with their beliefs, language, need and expectations (Show, 2009). Branding seeks a certain impression with respect to the qualities or characteristics of a product that makes it special or unique, furthermore with branding, organization can brand product/service brand into the consciousness of consumers.

In generally the importance of branding a product/ service lies in the fact that branding means recognition and an identity (Scholasticus, 2010). However cited from Scholasticus (2010) “actual words “branding” in its origins can be connected to the activity of branding of milk giving animals, where farmers-animal owners- often branded their cows and buffaloes with their signature brands. The milk of animal that were taken better care of, was always in demand and of course-costly”.  But from the point of view of business, the process of branding involves making of a trademark and a good name (Scholasticus, 2010). However in the field of marketing, the brand name plays an important role as it helps the people to promote the brand name and its merits quite easily, it also becomes possible for the marketing people to generate intelligence information about brands popularity and also what people exactly want from the brand owning company, and more over as a result of a brand loyal group of consumers, it also becomes easier for marketing department to asses regular and promised demand (Scholasticus, 2010).

E-branding refers to any type of branding by electronic means. Dubberly (2000) describes a brand as a sign, formed by words or graphics that represent or signify the brand and the perception of the brand, which has been shaped by the experience. All traditional branding and e-branding must be customer centric.  However the type of customer that organization hope to attract may be different, for example traditional brands may center or a domestic market, where brick- and- mortar locations exist, but the e-brand may look to have an international reach. Traditional branding may look to move customers to impulse buying whereas e-brands may look more for brand recognition. More over e-branding supplement brand recognition on website through community building for their loyal customers.

According to Mega public branding (2011) multinationals corporations operating online face different problems, for example information technologies, but connection with the commercial performance on their online ventures. Often, the budget has been spent on content management system, IT staff, and in local web companies delivering individual user interfaces based on either outdate branding system or on none at all.

Such problems derive from the fact that these companies have failed to invest pro-actively in a global strategic branding program- because organization have failed underestimated the need for a strong global brand vision and for a direct marketing program adapted to the internet (Mega public branding, 2011).

However Hoeck (2007) argues that there exist three main problems with branding, and the first problem is that the companies try to be what they think their customers want them to be. The second problem is that the companies have done nothing about their brands. The third common problem is that the companies who get mired in analysis paralysis- over thinking market segmentation, competitive positioning, value propositions, long- term objectives, short- term objectives, quality research, quantitative research etc.  As Hoeck (2007) explains companies need to be “themselves”.

Furthermore Hoeck (2007) explains if companies don’t stand out in the marketplace, they are not connecting with potential customers. And the main reason why companies don’t stand out- is because they don’t know “who” they are (Hoeck, 2007). Nowadays some companies think that they need to be like their potential customers in order to connect with them, so they bend over backwards trying to be what they think the market wants them to be (Hoeck, 2007). Some companies try many different looks and change with the trends, however having many different images and personalities at the same time, makes consumer confused and it dilutes any competitive advantage (Hoeck, 2007).

Good example would be Microsoft, when Windows Live online service was introduced in 2005, and company was criticized for the confusing and inconsistent branding and naming of the Live services (Arvidson, 2010).

In general Windows Liver service includes Windows Live Hotmail, a free email system, Windows Live Essentials, which includes a package of software including Photo gallery, movie maker, and Windows Live Mesh, which allows user to sync photos and documents between computers (Arvidson, 2010).

The brand problems appearance after Microsoft created the “Live” service brand, because it created confusion when the email service was alternately named Windows Live Mail and Windows Live Hotmail, more over the “Live” branding term was not consistently used in several Microsoft products, but it made big confusions in consumers’ eyes (Arvidson, 2010). And only in 2007 Microsoft launched The Windows Live Search service, separating it from its “Live” brand to be a part of its Microsoft ad Centre, which provides pay- per- click advertisement service (Arvidson, 2010).

DIFFERENT BRANDING STRATEGIES

According to Worsham (2009) there exist four branding strategies- Corporate branding, distinct brand, hybrid brand and umbrella brands.

As Worsham (2009) explains- CORPORATE BRAND STRATEGY stands for companies that only offer one benefit for their customers, more over they usually used corporate brand.

Advantage- Everything the company does is attributed to its brand

Disadvantage- Everything the company does is attributed to its brand

The next brand category according to Worsham (2009) is DISTINCT BRAND STRATEGY, what stands for when companies choose to release each product or service as its own brand ( for example Proctor & Gamble)

Advantage- each product stands alone so failures do not affect the entire company or other products. Distinct benefit for each product can be directly attributed to a specific brand.

Disadvantages- according to Worsham (2009) would be that each product will require its own marketing strategy and budget, with no synergy possible between products. Successes will not be directly attributes to the company brands.

The next category of brand is HYBRID BRAND STRATEGY according to Worsham (2009). This brand stands for when a product extends the benefit of an overall brand or company.

Advantages: marketing and branding can take advantage of the overall brand for budget and reputation.

Disadvantage: any problems or negative press for either the product or the overall brand will affect both brands.

The last brand category stands for UMBRELLA BRAND STRATEGY according to Worsham (2009). If company provides different products with different benefits, but they all extend the same value to the customer, sometimes they all offered under an overall brand, for example Nike.

Advantages: each product contributes to the shared value offered to the customer. More over marketing and branding strategies can be at the shared value level, touting all the specific benefits.

Disadvantages: any product can negatively affect the overall brand and specific benefits may be muddled in the overall shared value.

Cited from Irvine (2011) – it doesn’t matter in what industry organization operates, but it is important to choose and used the right branding strategy.

With branding strategies organization define what advertisement campaigns organization will use to promote their products.

Furthermore branding strategy what organization choose will end up forming the identity or image that people will have of the products, causing them to be attracted or repelled by what organization present (Irvine, 2011)

DRIVING ONLINE BRANDS TO SUCCESS

According to Sharpe (2000) the development of a powerful brand requires money, analysis, planning, execution and time, and for that reason there exist principles for building up strong online brand:

KEY BRANDING PRINCIPLES:

  1. Defining the brand
  2. Selecting the brand strategy framework
  3. Developing specific and achievable goals
  4. Operational zing the brand
  5. Leveraging the features of the internet
  6. Monitoring the brand performance
  7. Caring about customers

Source: Key principles for successful online branding, Sharpe, 2000.

            Defining the brand is the first crucial step for success. According to Anonymous (2002) investing time and energy in e-marketing, can help understand brand better, involving its meanings to potential consumers, its relationships to competitor brand, and the brand role in the market.

According to Anonymous (2002) there exist three basic brand strategy frameworks, when organizations define their brands-

  • Conglomerate brand strategy- means that the companies’ brands stand on their own, for example Procter & Gamble with independent brand like Tide and Crest.
  • Corporate brand strategy- what means that there exist relationship between the company and its brands, for example car brand Renault and its models like Renault Megana and Renault Twingo
  • Master brand strategy- means that there are very close relationship with brand and company, in different words every brand name includes the corporate brand name, for example hotel chain Holiday Inn and its brand Holidays Inn Express.

Developing specific and achievable goals is next important principle for building up strong online brand. Quoted from Graham (2002) – different objectives demand different strategic approaches. Therefore Goldsmith (2001) recommends distinguish between specific branding goals:

  • Awareness, therefore organizations need to use online and offline advertisements if they want to stand out from the crowd
  • Message association- organization need to design perfect brand message to make customers to associate a message with products what organization provide.

Next important principle according to Anonymous (2002) is operationalzing the brand, because the identification and formulation of the brand actions plan can help to increase effective communication and delivery of the brand attributes.

Leveraging the features of the internet, offers advertisers unique opportunities allowing them to make stronger brand affinity (Anonymous, 2002). Therefore Bruner (2000) explains that there exist five features, what are the most important for online branding success, and they are –

  • Search engines- majority of internet users use primarily search engines such Google or Bing for information research, therefore Web search engines are a key to success by positively influencing a brand awareness among customers
  • Permission email – nowadays web users have become more and more fed up of “spam” – marketing message bombarding their e-mail boxes, therefore email as online marketing tool can be used for targeting new customers, and retaining existing users if they allowed it.  For example- customer relationship e-mail –by Amazon. Com for order confirmation.
  • Personalization- organization need interact with customer, for example FedEx offering their customers to track the shipment of an online order, and it can also increase customer satisfaction and it can improve brand loyalty.
  • Word of mouth-  can be very cost- efficient tool in acquiring new customers, because usually satisfied users recommends a website to their friends or they give good feedback to another web users who need the same service or product what organization provide
  • Affiliate networks. Nowadays WEB users more and more randomly surf in the WEB sites, therefore the business existence in many web sites are become more important in reaching potential customers.  Therefore Graham (2002) explains that affiliate network allows cooperative advertisements and promotions to be more rewarding than conventional banner and campaigns.

E-BRAND BUILDING

According to Murphy (1993) “branding is concerned with assembling and maintaining a mixture of values, both tangible and intangible, which are relevant to consumers and which significantly and appropriately distinguishes one suppliers brand from that of another”.

According to Treiblmaier (2006) the origins of brand management can be found in the beginning of the 20th century. Its primary goals include the creation and the development of distinguishable symbols, which could serve as a reference and influence a consumer’s buying decision. To make a brand competitive, it is important to have preferences for brand, trust and customer loyalty. E-brands are brands what exist in online and it represents an offer or an organization, depending on whether the company conduct business online, offline or both, there can be seen three different types of differentiation, for example pure players, offline brands and mixed players (Treiblmaier, 2006).

Source: Brand building on the web (Aaker and Joachimsthaler, 2000, p 237)

Aaker et al (2000) explains that there exist six tools for building brand on the web, and they are the most powerful brand-building tool, since it can be tailored to the actual needs of the customers.

  • Advertising efforts and sponsored content on a third-party site help to get known in the online world.
  • An intranet can be used to communicate the brand and its identity internally, while a customer extranet makes users feel like being part of a big community.
  • Web based public relations strategies intend to influence communication measures, which cannot be directly controlled by the company itself, such as private websites, public discussion rooms and chats.
  • It is of vital importance for enterprises to know about their “online image”, since information is spread easily on the Internet, and can have both positive and negative effects.
  • E-mail enables the organization to send and receive information, thereby simplifying contact with their stakeholders

Furthermore Clark (1997) explains that to create a powerful e-brand it is important to compare the impact of various factors, for example- web-design, promotions, positioning, security, name, information and service delivery in different market environment.

Website, at the end of the day, is the ultimate one-to-one communication channel, second only to human interface (Sheehan, 2010). A well designed website can be a superb brand extension and sales executive for any company: always on duty, always accurate, always up-to-date (as long as it is maintained) and utterly consistent (Sheehan, 2010). Of course, the web is no replacement for the human intelligence but it is a powerful weapon to extend a brand into the wide world, 24-hours a day (Jacobsohn, 2002).

BRAND EQUITY

According to Kotler et al (1999) “Brand equity is the value of brand, based on the extent to which it has high brand loyalty, name awareness, perceived quality, strong name associations, and other assets such as patents, trademarks, and channel relationships”.

Therefore advertisements are main force what help increase brand equity.  Brand equity is measured based on how much a customer is aware of brand, in another words it shows how much customers are willing to switch to another brand, especially when that brand makes a change, either in price or in product features (Kapferer, 1997).

More over high brand equity provides a company with many competitive advantages, for example powerful brands enjoy a high level of consumer brand awareness and loyalty, for example Coca Cola, IBM, Marlboro and so on (Kotler et al, 1999). Furthermore if brand carries high credibility, then organization can more easily launch line and brand extension for example Procter & Gamble (Kotler et al, 1999).

According to Stamoulis (2011) ” building up brand equity in online can take time, dedication and patience, however the intangible asset that is brand equity can go a long way in building and maintaining an online reputation, building trust factor with the search engines and consumer; and it helps increase online brand presence and more”.

Brand equity is not something that just happens; it takes a conscious effort to make sure that the brand equity becomes a valuable asset (Kotler et al, 1999). And for that reason Stamoulis (2011) explains that there exist three ways how to build up brand equity:

  1. Invest in content marketing. According to Junta42 Content Marketing (2011): ”Content marketing is a marketing technique of creating and distributing relevant and valuable content to attract, acquire, and engage a clearly defined and understood target audience-with the objective of driving profitable customer action”. Content marketing is art of communications with customers and prospects without selling, in different words it is non-interruption marketing (Stamoulis, 2011). In different words consumer doesn’t care what company is or what they          do; all what consumers want is to know what organization can do for them, or how the product what company sell can solve consumer problems (Stamoulis, 2011). This type of marketing used organizations around the world, and good examples would be Procter& Gamble, Microsoft or Cisco Systems.
  2. The second way according to Stamoulis (2011) would be cultivate relationship with industry bloggers, because influential blogger (person who writes a weblogs) can provide a huge boom for organizations content marketing campaign. A popular business blog may get thousands of visitors per day and a powerful blogger can help Support business not only for building up brand equity; but it can also help drive incredible amounts of traffic to the site.
  3. The third way according to Stamoulis (2011) would be- building an online community.

ONLINE BRANDING METRICS

Consumers often anthropomorphize brands by endowing them with personality traits, and marketers often create or reinforce these perceptions by their brand positioning (Rajagopal, 2008). Brand personality traits provide symbolic meaning or emotional value that can contribute to consumer brand preferences and can be more enduring than functional attribute. Successful positioning of a brands personality within a product category requires measurement model that are able to disentangle a brand unique personality traits from those traits that are common to all brands in the product category (Rajagopal, 2008).

Therefore businesses need to use brand measurement system to understand how successful they are in the market. However Stewart (2004, pg 382) explains that “The key benefit of a brand measurement system is that it links brand management and business performance, and the system is most powerful when it is viewed as a strategic management tool for continuous improvement rather than a static snapshot in time of the brands performance”.

All measurements need to be considered as a continuous activity (Stewart, 2004). For that reason Stewart (2004) explains that metrics should be grouped in three categories- perception metrics, performance metrics and financial metrics, what allows marketer to gauge the effectiveness of brand- building activity from brand investment (inputs) through to business impact (outputs), (Stewart, 2004).

Metrics of brand measurement

Source: Steward, Brand Management (2004, pg 383)

As Steward (2004) explains that the Perception metrics focus on the range of functional, emotional and latent connections that combine to form an opinion of a brand. This metric also include awareness, familiarity, relevance, consideration and preference, more over all these aspects help to gauge the effectiveness of various brand-building activities across all the points of interaction with a customer. Performance metrics helps to assess how thevarious brand-building activities have combined to drive over- all business results, and range from price premium to loyalty to lifetime value of a customer.Financial metrics represent the economic impact on the business, whether revenue growth or return on investment.

However the biggest challenges what marketer can face is an understanding the causal relationship between brand perception, brand performance and financial impact, but once the causal connections are made across perception, performance and impact, the marketer can tie activities directly to value creation (Stewart, 2004)

STAGES OF BRANDING

Brand changes are related to the expertise of management, the firms’ strategic goals and market targeting activities, the branding activities of other firms, the sophistication of consumers, the level of involvement in the product category, the stage of the product life cycle and the development of branding in the relevant product category (The Star, 2006).

The brand evolution process consists of six stages, where each stage and every stage is related to the consumer engaging, learning, and valuing a particular brand (Shahzad, 2010).

Therefore The Star (2006) explains that there exist six stages of branding:

  1. Unbranded goods. In this first stage, goods are treated as commodities and most are unbranded. This stage can be described as an excess of demand over supply. Producers make little effort to distinguish or brand their goods with the result that the consumers perception of good is utilitarian (Shahzad, 2010)
  2. Brand as reference- competitive pressure stimulate producers to differentiate their goods from other manufacturers, and it is achieved through change in physical product attributes. Consumer memory network expand beyond recognition of the basic product category to include other product information in order to evaluate goods on the bases of consistency and quality (Shahzad, 2010). Organizations used brand names based on their image of the brand as a heuristic device in decision making.
  3. Brand as a personality- by this stage of brand as personality, differentiation among brands on rational and functional attributes becomes exceedingly difficult as many producers make the same claim, and for those reason organisations gives their brand personality.
  4. Brand as icons- in this stage the brand is “owned by consumers”. There exist extensive knowledge about the brand- frequently worldwide- and use it to create their self-identity.
  5. Brand as a company- brand has a complex identity and there are many points of contract between the consumer and the brand.
  6. Brand as policy- this stage is distinguished by an alignment of the company with ethical, social and even political causes.

ELEMENTS OF SUCCESSFUL ONLINE BRANDING 

Successful online branding must have excellent management of product positioning, good copy content, good SEO values and an effective online brand presence, all of which require a lot off work (Cleanthous, 2010).  The online market may be the biggest in the world, but it is also is the toughest market in the world, because businesses need get consumer attention to the extent of actually buying a product.

Therefore Cleanthous (2010) explains that “Four Ps” of traditional marketing plays huge role in success, and “Four Ps” stands for:

  • Products- must have a clear target audience online. Core users are the essential demographic for online marketing.
  • Positions- internet audience will ignore irrelevant information, and that includes any product related to irrelevant information, marketing information must be positioned correctly in terms of the target demographic.
  • Price- online pricing must be considered to be market sensitive, because in a market where everyone can instantly go and check and make comparisons with other products, pricing must be competitive and realistic.
  • Promotion- online promotions can be brilliant, incredibly successful or stunningly ineffectual and totally wasteful in terms of time and effort.

However small business Trend (2011) argues that there exist 4Cs, what helps create a great brand online, and 4Cs stands forcontent, consistency, clarity, cultivate.

Therefore Small Business Trend (2011) explains that the most important factor of branding online is CONTENT, not a logo or the colours what company use on their WEB site. Content is a brand message what company are using to unite with their customers (Barone, 2011).

The next “C” stands for – CONSISTENCY. Companies try to create a brand with a cohesive message that users will be able to trust over time. Companies’ logo, web accounts, site colour, and text on message or home page everything must deliver the same message and brand must do – what it promise to its consumers (Small business Trend, 2011).

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