Birmingham Business School Working Paper Series. http://business.bham.ac.

uk

Succeeding with brands on the internet

Leslie de Chernatony Professor of Brand Marketing The Business School The University of Birmingham Edgbaston Birmingham B15 2TT Tel: Int code + 44 121 414 2299 Fax: Int code + 44 121 414 7791 Email: L.Dechernatony@bham.ac.uk

September 2000 Paper submitted to Journal of Brand Management

Professor L de Chernatony, 2000

Biography Leslie de Chernatony is Professor of Brand Marketing and Director of the Centre for Research in Brand Marketing at The Business School, The University of Birmingham. He held a Visiting Professorship at the Madrid Business School and is currently Visiting Professor at Thammasat University, Bangkok. With numerous publications in American and European journals and frequent international conference presentations, he has several books on brand marketing, the most recent of which is From Brand Vision to Brand Evaluation (Butterworth-Heinmann). A Fellow of the Chartered Institute of Marketing he acts as an international consultant to organisations seeking more effective brand strategies.

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Abstract This paper focuses on some of the issues involved in brand building on the internet. A new mindset is needed to execute an on-line branding strategy which thinks more about enhancing the benefits to consumers. By questioning some of the assumptions organisations have made migrating their brands to the internet, insights are provided about brand building on the internet. It is argued that for brands, because of the greater involvement of a brands community, a looser form of control is needed which places more emphasis on brand management as values management. Finally it is argued that a new theory of the concept of brand is not needed between the off-line and on-line environment, but rather a different approach to executing the brands essence.

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Introduction Electronic commerce is giving rise to a new business model and many brand marketers are wondering whether their strategies to migrate their brands, in order to have both off-line (bricks and mortar environment) and on-line (clicks environment) presence could be improved. However this starting point when developing an integrated brand strategy may be detrimental as it is grounded in an incremental mode of thinking1 and may erroneously encourage some managers to think in terms of a partitioned brand strategy. A more appropriate starting point is that: In 5 years there will be no distinct e-businesses or dotcom businesses; only those that have learned how to change their business model and survived and those that have fallen by the wayside Matthew Barrett, Barclays Group Chief Executive, 2000 In other words brand strategists need a new mental model2 to develop their brands in a digital age which goes beyond the classical models3 and which recognises the new roles consumes are taking4.

This paper considers some of the issues that need addressing to enhance the likelihood of brands succeeding on the internet. It opens by exploring the implications of moving from incremental to radical thinking. The paper then considers some of the assumptions that led some corporations to migrate their brands onto the internet, and through challenging these assumptions, draws out implications for internet branding. It is argued that off-line brands are tightly controlled and because of the involvement and greater interactions of brands on-line communities, a looser degree of control is more appropriate, placing more emphasis on brand management as values 1

management. Finally the paper argues that a new theory about the concept of a brand in an online versus off-line environment is not needed, rather the differences lay in the way the brands essence is executed.

Incremental versus radical thinking The managerial mindset needs changing to successfully compete with brands in the digital age. For example, the assumptions about designing web site brand content needs challenging since electronic content is not read the same way as print publications. A study5 found that 79% of visitors to a web page scan it instead of reading it, looking for easily digested, quickly absorbed chunks of information. With another study6 reporting that only 22% of on-line transactions are completed, due to customer frustration at not being able to communicate with vendors, the classical model of talking to customers needs replacing by interactively communicating with customers supported by systems which enable organisations to rapidly respond to customers enquiries.

One way of appreciating the need for changed thinking about brands is to consider the matrix in figure 1.

Search engines New Managerial mindset Loyalty Loyalty schemes schemes Old

eCharge eCharge

Waterstones Waterstones

Few Consumer benefits

Notable

Figure 1 : Justifying the need for changed thinking

Some marketers favour developing on-line incentive programmes to foster loyalty among their customers. Their logic is one of using established bricks and mortar incentive programmes to engender a stronger bond with their brand. However, in cyberspace consumers interact with both the brand and the community. Thus the brand acts as a focus, but the bond and loyalty is with both the community and the brand. People are accustomed to incentive schemes and, taking these for granted, perceive few benefits. In part this explains the findings of a study7 showing that while over half of American on-line users belong to an on-line loyalty programme, only 22% regarded it as an impetus for increasing on-line purchases. Building on Aaker and

Joachimsthalers8 point that interaction with other people in the context of a web site can create the potential for a meaningful social experience, there is scope for marketers pursuing ideas that engender a greater sense of community amongst visitors, so they want to keep returning.

Those managers who have adopted new ways of thinking about branding on the internet recognise that consumers use keywords on search engines to locate suitable brands. To capitalise on this opportunity they then work with the different search engines to get their brand names listed at the top of any search9. Unfortunately insufficient though has been given to the benefits consumers believe they gain from using search engines. In their infancy search engines were regarded as very helpful mechanisms to narrow information search problems. However, now that

the concept of search engines is accepted, users want more consumer-centric engines. As one internet searching specialist commented10: The word needs to convey the context of your search and your need state. But most search engines are lumbering behemoths that cannot

interpret the finer points of communication. When was the last time you used just one word during a phone conversation? To help brands succeed on the internet, marketers need to ensure their brands positioning is razor sharp and to encourage search engine owners develop more consumer focused engines.

The more forward thinking marketers, with their new ideas about branding on the internet, are striving to generate enhanced consumer benefits. For example, e-tailer Carphone Warehouse not only offers the convenience of shopping from home, but also provides a self-completion audit to enable the potential consumer appreciate which network is best value for them. However,

consumers are concerned about the risk of fraudsters when using their credit card. The credit card was designed for a bricks not a clicks environment. To offer the extra benefit of security, eCharge11 has been working with e-tailers to enable consumers to click on an eCharge icon on the e-tailers site, and the charge is debited against the consumers telephone bill.

Organisations with brands in the final quadrant which offer consumers notable benefits, yet managers mindset are based on old assumptions, have a short term respite. Waterstones, the book retailer, in 1999 opened its flagship store in Piccadilly offering consumers a vast selection, with the convenience of being able to take a book to the juice bar in order to decide whether or 4

not to purchase it. This brand format currently satisfies those consumers seeking elaboration. However, while brands such as Amazon.com may currently be seen to satisfy the desire for fast availability, their added values are growing to also meet consumers elaboration needs and will rapidly become a threat.

First mover versus followers in e-branding Serious e-branders, for example Amazon, Autobytel, Charles Schwab, Dell and Letsbuyit have thrived as they view the internet as a force that levels imbalanced playing fields in favour of consumers. Each of these brands is based on a new business model, significantly improving the value equation through interactivity, enhanced consumer experiences, tailoring and rapid response. These brands show commitment to web based branding and a long term view

underpins these brands12.

Bystanders watched the growth in on-line branding and it is postulated that, amongst other reasons, they moved into cyberspace branding because: they felt they had to; they were allured by cost savings; they held questionable assumptions about the characteristics of the target market.

The rationale for these three propositions can be appreciated from the following.

A perusal of web pages shows how some represent little more than company brochures, i.e. brochureware. These brands are based on the incorrect classical promise of telling consumers. The presumption is they could refine their e-branding strategy once they had de-coded winners strategies. However this ignore the fact that internet customers need a compelling reason to revisit a site13. Another erroneous assumption is that the brand is safely protected because the brand owner controls brand information8. The internet has spawned a new way for consumers to share information, by-passing brand owners, and having considerable credibility because of their frankness. Sites such as www.ihateikea.co.uk, www.mcspotlight.org and

www.chasebanksucks.com represent networked brand information which deflates the identity claims of some brands. An extension of this argument is provided in the Cluetrain Manifesto14. In essence, if brands are to survive on the internet, brand owners need to develop conversations with markets, rather than monotone monologues. Firms need to break down the corporate firewalls that impede employees talking with stakeholders and, through listening more to the market conversations, develop more customer relevant added values.

The second proposition, that marketers are attracted primarily because of the cost savings, arises from several factors. For example, cost savings from consumers on the internet taking over some of the work traditionally done for them by corporations, reduced salaries bill from fewer staff and savings from by-passing distribution intermediaries. Evidence of this is the fact that selling airline tickets on the internet, rather than through travel agents, saves at least 13% of the fare cost 15. The problem is that price comparison sites, e.g. Pricescan.com, and shopping agents, e.g. Mysimon.com, enable consumers to rapidly obtain and compare prices. Furthermore with agents 6

such as Priceline.com allowing buyers to specify their prices, if these are accepted it puts more pressure on reducing prices as the lower price levels become more transparent16.

Brands can respond tactically to the price pressure challenge in several ways.

For example,

varying prices geographically to reflect issues such as the cost to serve different segments, local market conditions and perceived value, as Staples does by first asking visitors to enter their post codes. Alternatively, by electronically interrogating which sites the person has visited,

algorithms can set prices based on price sensitivities. The weaknesses with such brand pricing tactics are that they overlook the fact that consumers share information about prices and a perception of unfairness may result.

The strategic brand winners recognise that while prices initially attracted consumers, added value brings them repeatedly back. Thus Amazons one-click competitive advantage of consumers not having to restate personal details, its new titles alerting system and suggested comparison books help it not having to compete on an ever decreasing, viscous pricing spiral.

It would appear that a third reason why bystanders moved their brands into e-space is because they assumed internet customers were primarily given by financial savings and had time to surf the internet. This assumption can be appreciated for figure 2.

Lot Spare time

Assumed Assumed internet internet purchaser purchaser

Little

Low Primary motivation is saving money

High

Figure 2 : Consumers free time versus their motivation to save money

An irony of modern society is that consumers are faced with more brand choices17, yet have less time to choose because of very full lives 4. Thus, the assumption that people seeking brands via the internet have notable spare time is questionable. If a brand is to enter the consumers consideration set, consumers navigation into and around the brands site should be easy to undertake and the key information being sought needs to be rapidly recognised. The branding emphasis needs to be on quality, rather than quantity of information. The home page of Microsofts internet explorer is a classic example of excess quantity of information. The section of the page offering the user search words is approximately a twentieth of the total surface area, with the user being bombarded with a notable amount of peripheral advertising.

One can also challenge the assumption that the primary attraction for the visitor is low price. A qualitative research programme18 found that users went through a learning curve and that internet usage was either habitual, visiting favoured sites, or task oriented. When probing to unearth the 8

motivators amongst task oriented visitors, price was a consideration, but this was but one motivator amongst others. The implications for successful internet branding were that visitors need to feel in control, want confidence in a brands site and should rapidly be able to access brand information to make a choice.

Loosely versus tightly controlled brands The classical branding model is based on a tightly controlled approach19 and, particularly for product based brands, assumes consumers to be passive recipients of value20. In an electronic environment, chat forms enable consumers gain access to credible information about brands and thus brand owners loose some control over their brands identities. Consumers are active coproducers of value, further reducing owners control over brands. With their greater involvement, consumers are likely to be initially more forgiving of a brands mistakes, believing they are partly responsible for any shortcomings21. However, the reservoir of goodwill is finite and frustration will result in visitors defecting.

To thrive with brands on the internet a looser form of brand control is needed, welcoming the active participation of consumers. Western Digital is a good example of this new approach22. If one of their customers has a problematic disk drive, they are led to a virtual discussion forum where conversations are not filtered by management. Within a few hours of posting the problem, a Western Digital person responds with a solution often after other customers have provided their ideas. This is a community brand that has built goodwill. It treats its customers with respect and its policy of openness has led to mutual trust. Some might think it takes a brave 9

organisation to allow customers such latitude in venting their problems. All Western Digital has done is respond to turned tables. To thrive, a brand on the internet needs to be responsive and responsible, facilitating discussion and even dissent.

In the digital environment, successful brands are those which recognise that their web pages are not the only source for brand facts23 and encourage chat forums about their brands. For example, WeddingGuideUK.com has 15 chat forums spanning groups such as grooms, newly-weds and new families. The brand makes its revenue from selling wedding related products and services. It designs its offerings by taking a back seat, listening to the conversations. The Motley Fool (www.fool.co.uk), providing financial advice, is another example of a loosely controlled brand. It uses its brand community to generate content, guide new editorial features, provide feedback on new products and bring the site to life. Managers focus on providing the right environment for discussion, then give up control, responding to participants24.

Thriving with brands on the internet can be achieved by adopting a more relaxed approach to controlling brands. Nextweekend.com would be a good example of a loosely controlled brand and Lastminute.com a tightly controlled brand. Nextweekend.com offers weekend leisure packages by giving people ideas about what to do at weekends, inviting users to make their suggestions and responding with appropriate solutions. It started by building a community, encouraging them to share ideas about what they would like to do over the coming weekend, then finds timely offerings to satisfy suggestions25. It is a loosely controlled brand since it listens to the

conversations, welcomes ideas from its community and devises products its community wants. 10

By contrast Lastminute.com is a tightly controlled brand, making available what it has managed to source and using price as an attraction.

Successful branding on the internet will increasingly come from organisations who do not manage market conversations, but rather join in14. They will be managed by people comfortable with the notion of brand management as values management26. Such brand managers see themselves as conductors, providing brand leadership, leaving the orchestra of their customer community to interpret and co-define the brand melody (cf Chopras SynchoDestiny27).

Successful brands on the internet will make their brand values very clear. As a discussion forum unearths new ideas, so the community will be encouraged to consider whether the ideas reinforce or run contrary to the brands values. To enable members of the community to play their roles effectively, narratives may be posted to help them understand how they can use knowledge of their brands values to evaluate the suitability of new ideas. For example, one of Disneys values is family togetherness. A proposal from a potential Disney partner about using Mickey Mouse as a merchandising device, with his hands almost in a begging position holding the brochures, was rejected. Begging runs contrary to one of Disneys values and thus is not something Mickey Mouse would ever do.

Loosely controlled brands gain their strength from connecting with their communities28.

By

encouraging unmoderated chat forums, not only do new brand ideas emerge, but the distinction between the brand owner and its consumers disappears further stimulating new ideas. Kraft24 is 11

critical of Amazon exerting control through vetting readers book reviews and impeding direct interaction between readers. He postulates that if management at Amazon relaxed brand control, enabling community conversation to flow, this may result in debates taking place about manuscripts, enable community influenced decisions to be taken about which manuscripts to publish and some of the community members might even work together to write new texts. A debate can only take place if there are positive and negative views about a brand and loosely controlled brands need dissent to keep communities talking.

Reconceiving the concept of brand? Is the experience gained from successful e-brands indicative of the need to have a new theory about the concept of a brand in an on-line versus off-line environment? This paper would argue that this is not the case. A brand is a brand regardless of its environment29. What is different is the way the brands essence is executed.

An interpretation of the meaning of a brand is a cluster of functional and emotional values. A brand that exists in a bricks and mortar environment can be migrated to a clicks environment using the same brand essence, provided it remains true to the same values and recognises the input of its community in shaping these values. If not a schizophrenic brand results, giving rise to

confused and worried consumers who will leave.

One way the brands values can be inferred are from the design of the web site and the feelings it evolves. The Co-operative movement has always had sharing and giving people more control over 12

their destiny as part of its values. It has remained true to those values with its financial services e-brand. The first manifestation of feeling food about sharing in the cost savings of banking on the internet is the brands novel name, Smile.co.uk. The quirky web design with its use of atypical pink colouring, the animated smile and the easily navigated site, that enables the user to feel in control, all reinforce the brands values.

Conclusions Developing an integrated brand strategy with a brand coherently presented in a bricks and mortar environment and/or a clicks environment necessitates a reconsideration of the execution of the brand strategy. Just as services brand building requires a reconsideration of the way the brands essence can be delivered29, so the classical models need revisiting when building brands on the internet.

The first executional difference is the need to adopt a new approach to presenting brand information, since on the internet people scan rather than read. Accepting this tactical

observation should then encourage managers to question whether they are still using an out dated mode of thinking and whether their brand strategy provided more benefits for the consumer, or greater ease of administering for the organisation.

Developing brands on the internet should not be based on a follow my leader prescription, but rather should consider how customers increased involvement can be harnessed to co-produce more value. Customers learn about brands through electronic conversations with other customers 13

and brand owners need to listen and respond to these conversations.

By then developing

customer welcomed enhancements, brands are protected from the vicious downward price spiral associated with great transparency.

Successful internet branding demands relaxing the degree of control exerted over the brand. Encouraging communities to converse through unmoderated chat forums, within the brands web site, integrates the corporation with its community. By enabling community members to

recognise the brands values, they can sense when some of their innovative suggestions have unacceptably stretched the brand. Adopting a more relaxed view about controlling a brand may take some organisations time to accept but with the speed of change through the internet it is important to prepare for new ways of executing the brands essence.

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