COMP 6125 An Introduction to Electronic

Commerce

Session 2: Branding on the Web

Introduction

• Successful branding (I.e: known and respected) creates a powerful statement of quality, value and other desirable qualities in one recognizable element to potential customers

• Products become easier to advertise and promote as each item carries the reputation of the brand name

• Examples: Gap clothing, Mercedes vehicles, Walt Disney entertainment

Key Elements Of A Brand

• Differentiation– First condition that must be met– Product must be clearly distinguished from all

others in the market

• The Issue:– Difficult for commodity products, but not

impossible– Example is the success of Ivory Soap by

Proctor & Gamble

Key Elements Of Branding

• Relevance– Degree to which the product offers utility to a potential

customer; i.e: visualizing how it can be included in their life/lifestyle

• The Issue– Brand only has meaning to a customer if he can

visualize it in his life– Example is Tiffany & Co that offers a unique line of

jewellery and gift products but does not capture a large market as few people see themselves purchasing and using the products

Key Elements Of Branding

• Perceived value– Key element in creating a brand that has value– Customers may distinguish it from other products

• The Issues: – Customers may distinguish it from other

products/services and may even see themselves using, but will avoid it because they cannot see it as having value to them

– Examples are fast food restaurants that have well-established brand names but due to negative association (low quality, high fat-content, etc), persons avoid eating at them

Points Of Note• Figure 4-11, pg 196

• Buyers will only purchase product and become familiar with how it provides value once a brand has established that it is different from other competing brands and inspires a perception of value

• Brands become established only when the level of buyer understanding and acceptance is high

• Sometimes a brand can lose its value if the environment in which it was successful has changed

Emotional Vs Rational Branding• Traditional use of emotional appeal in advertising and

promotional efforts

• Difficult to convey on Internet – active medium; site users are “busy” with set goals in mind and most often shy away from emotional appeals

• Rational branding is when companies attempt to offer assistance to site visitors in exchange for viewing an ad; relies on cognitive appeal of specific help offered

• Example: Hotmail offers a valuable service of email and storage space, and users see an ad on each page the provides these services

Brand Leveraging• This strategy involves well-established sites

extending their dominant positions to other products and services

• It adds features that are useful to already existing customers

• Example: Amazon.com expanding from just books to include CDs, videos, etc

• Only works for those companies that already have sites that dominate a particular market

Brand Consolidation

• This strategy involves bringing together related interests and needs of customers from well-established branded companies

• Could include acting as a market intermediary

• Example: pg 197

Branding Costs• Costs of transferring an existing brand to the Web or

maintaining one on the Web is significantly cheaper than creating a new one

• Estimates of about US $8 million spent in 1998 to create and build an online brand by each of the top 100 e-commerce sites– Amazon.com spent US $133 million– BarnesandNoble.com spent $70 million

• Interestingly enough, this was not spent on online advertising but on television, radio and print media

Affiliate Marketing

• In this strategy, company A’s site (affiliate) includes descriptions, reviews, ratings etc about a product that is linked to company B’s site that offers the product for sale

• For every visitor that follows the link for company A’s site to company B’s site, company A receives a commission

• Company A also gets the added benefit of company B’s brand in exchange for the referral

Affiliate Marketing

• The affiliate makes saving from not having to handle inventory, advertise or promote any products, or process transactions

Cause Marketing

• Affiliate marketing program that benefits a charitable organisation

• Affiliate site is created simply to benefit the charity

• When a visitor clicks on a link on the affiliate site, donation is made by a sponsoring company to support the charity

• The page that loads after the visitor clicks on the donation link carries advertising for the sponsoring companies

Cause Marketing

• Click-through rates are significantly higher than for typical banner ads!

• Why do you think that is?

Commission Types From Affiliation

• Pay-per-click model– Commission is earned every time visitor clicks

the link and loads the page– Similar to click-through model for banner ads

with similar rates

• Pay-per-conversion model– Commission is earned each time a visitor

becomes a qualified prospect or actual customer

Affiliate Program Broker

• Serves as a clearinghouse or marketplace for both sites that run affiliate programs and those that want to become affiliates

• Also provide software, management consulting and brokerage services to affiliate program operators

• Example: track affiliates’ sales, calculate and pay commissions, etc

Viral Marketing• Relies on “word of mouth” to inform of company, products

and services

• On the Web, also includes use of emails and other communication means to spread word

• Name is derived from the fact that the number of customers increases in the same manner that a virus spreads

• Success story is Blue Mountain Arts which produces e-cards and relies on persons receiving cards and following link to send cards to their friends and so on

Links

• Reference– Electronic Commerce, Seventh Annual Edition

by Gary Schneider

• Of Interest– LinkShare: http://www.linkshare.com