Business Excellence 03 On-Line Branding Nobre, Becker, Lencastre and Brito

ON-LINE BRANDING: ANALYSIS OF MARKET EFFECTS ON BRAND MANAGEMENT1

Helena Nobre Lecturer IPAM Av. da Repblica, 594 4450-238 Matosinhos - Portugal E-mail: hnobre@ipam.pt Kip Becker Associate Professor Administrative Science Department - Boston University 808, Commonwealth Avenue Boston, MA 02215 - United States of America E-mail: kbecker@bu.edu Paulo de Lencastre Assistant Professor Faculty of Management and Economics - Catholic University Rua Diogo Botelho, 1327 4169-005 Porto - Portugal E-mail: plencastre@porto.ucp.pt Carlos Melo Brito * Associate Professor Faculty of Economics - University of Porto Rua Dr. Roberto Frias 4200-464 Porto - Portugal E-mail: cbrito@fep.up.pt Abstract: Brands play an increasingly important role in marketing inasmuch as they represent one of the major assets firms hold. Furthermore, the growing importance of the electronic commerce made the study of brands in the Internet particularly relevant both for researchers and marketers. This paper is the outcome of a research project on the consumer response to e-brands i.e. brands commercialized in the Internet. Two key questions have oriented the research: (i) Does a virtual brand need a different approach than a physical brand? (ii) What is the real impact of the Internet on branding? Keywords: E-commerce, branding, consumer behavior.

Comunicao 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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Business Excellence 03 On-Line Branding Nobre, Becker, Lencastre and Brito

INTRODUCTION
With the growing importance of e-business and, in particular, the on-line marketing, the buyerseller relationship tends to assume an important dimension in branding [1]. This shift is the result of the need to find new forms of responding to the demand of the market through the relationship marketing. Moreover, it is also the result of the information technologies that have given to companies the electronic means to interact directly with customers [2]. Although the e-marketplace tends to be quicker and less predictable than the off-line market, there is a trend towards a market converge. In other words, as Rayport and Jaworski [3] state, physical and virtual markets are merging in one single space. This leads to the use of the most effective channels in the establishment and defense of a brand. Does this mean that in the near future, differences between physical and virtual brands are likely to disappear? In this context, e-branding represents a new major research field in e-commerce. It is a relatively unexplored area where a number of important issues remain without answer. Indeed, with the Internet, it was never so easy to build a recognized brand in the short term. But, on the other hand, it was never so ephemeral and volatile. This paper is the outcome of a research project that aimed to study the consumer response to electronic brands i.e. brands commercialized in the Internet. The paper attempts to understand whether virtual branding demands a different approach than physical branding. On the other hand, given that the Internet introduced deep changes in terms of consumer behavior and the way consumers relate to brands, this resulted in new challenges for marketers. This raised two research questions that have oriented the study: Does a virtual brand need a different approach than a physical brand? What is the real impact of the Internet on branding?

Firstly, the classical theory of branding (e.g. Aaker [4] and Keller [5]). To analyze a brand it is fundamental to understand not only its identity mix but also the marketing mix strategy as well as the public mix [6]. In fact, the way a brand is perceived by the public influences its own identity. In this way, it is crucial to characterize its image mix, which, in turn, requires the identification of the level of awareness and respective associations. Secondly, since the consumer behavior is a determinant of the implementation of any brand strategy there was the need for a conceptual framework in this field. The model developed by Turban et al. [7] was considered a good contribution for the understanding of the electronic commerce consumer behavior. Finally, the scorecard for evaluating brand online affinity developed by Diorio [8] and the best practices on e-branding suggested by Carpenter [9] were the third and fourth elements of our framework for analysis.

METHODOLOGY
The methodology adopted relied on an exploratory research conducted through the study of three north-American cases: two typical physical brands that were later extended to the Internet (Timberland and Boston Coffee Cake), and one pure virtual brand (Napster). Given the differences in terms of products/services, historical background, levels of awareness and the associations involved, the multi-case study allowed for a certain degree of generalization in terms of branding. This methodology was adopted because ebranding is an area of knowledge that has some of the characteristics that Yin [10] considers that can be studied by exploratory cases. In fact, it is a new field of research without a well established and accepted conceptual framework. Therefore, an exploratory approach was chosen based on qualitative methods through a multi-case analysis.

THE EMPIRICAL STUDY

The three cases studied represent different business models: Timberland is a good example of mass-marketing, Boston Coffee Cake illustrates a niche marketing approach, and Napster is a typical one-to-one case. Timberland and Napster are widely recognized brands. However, while the former is a large multinational corporation, Napster is a small company that appeared during the so-called New Economy boom. It is the result of an innovative idea of P2P music file sharing, which, through the viral Internet abilities, got a huge on-line audience
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THE FRAMEWORK FOR ANALYSIS

Brands have become the corner stone of most marketing strategies, and the management of an e-brand must be in line with the core of the marketing strategy. In this context, to address the research questions referred before, a framework was developed to study the differences and similarities between management of on-line brands and traditional branding. The framework for analysis (Figure 1) was built on the basis of four conceptual constructs.

Business Excellence 03 On-Line Branding Nobre, Becker, Lencastre and Brito

in just one year. By contrast, Timberland only entered the Internet when it was an internationally recognized brand through its store network all over the world. Boston Coffee Cake illustrates an intermediary case. It refers to a small familiar company with a brand with a low degree of differentiation oriented to a niche market. Although it is mainly a B2B case, Boston Coffee Cake also sells its products to consumers using catalogs and direct mailing. Later on, the company has extended its long experience in direct marketing to the Internet.

Figure 2 summarizes the three cases on the basis of the scorecard developed by Diorio [8]. The first remark that comes up from the comparison of the three brands is the different way of building awareness: two traditional brands that were built on the basis of long and huge efforts in terms of communication, and a pure virtual player that built a recognized brand in about one year. Timberland and Boston Coffee Cake did not have an easy on-line entering, whilst Napster created a notorious brand in a very short period of time through a viral marketing strategy.

Pure Digital Brand

Does this brand strategy have on-line affinity?

SCORECARD
Go or not go to the Internet?

YES

Best Practices

Defense of Brand

Physical Brand

NO

Creation of a new brand

Traditional commercial channels On-line presence: - Web site - Media convergence

Digital Brand
Not go to Internet

Fig. 1. The Framework for Analysis

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Business Excellence 03 On-Line Branding Nobre, Becker, Lencastre and Brito

Timberland First mover advantage Customer segment affinity No No

BCC Yes First coffee cake on Internet Yes Direct marketing affinity No No Yes Physical catalog affinity

Napster Yes First P2P Web site for music file sharing Yes Web users

Innovation and No creativity Information richness Brand experience portability Domain name readiness No No

Yes Innovator and creative software for sharing music Yes Music can generate huge and interesting content Yes The model just makes sense on Internet Yes Hight differentiation level of brand identity

Yes Recognized No brand, easily spelled

Fig. 2. The Application of the Scorecard to the Three Cases branding must evolve and use new approaches. Namely, it seems evident that all the brands tend to have an on-line presence. In short, the main contributions of this study refer to the virtual brand approach, the on-line presence, and the best e-branding practices. Virtual brands approach The virtual branding approach depends on the kind of brand as well as its marketing tools. In fact, customer satisfaction remains the critical issue in determining the brand success, both in the off-line market and in the Internet. On-line presence The study also showed that although the online commerce may be not applicable to all brands, in general they must have an on-line presence. That is, the opportunity costs of being absent from the Internet are likely to negatively affect the brand image. The best e-branding practices The importance of the best e-branding practices relied fundamentally on the type of brand, product/service and marketing strategy. These practices revealed to be effective tools to build brand visibility. However, this does not mean necessarily brand profitability.
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Nonetheless, Napster failed as a business model and lost a huge amount of money for sustaining its on-line portfolio of customers. By contrast, Timberland and Boston Coffee Cake adopted strategies that were very rigorous in terms of cost control. The application of the framework for analysis put in evidence that a brand that is sold only in the Internet must have a different communication strategy from the traditional physical brand. So, the brand must become visible whether by viral marketing, off-line communication or physical assets. Therefore, it is essential to manage the communication efforts according to the characteristics and habits of the target public. But, the basic issues related to consumer satisfaction remain important in determining the brand success, both in the traditional market and in the on-line market. Furthermore, in what concerns the best ebranding practices, the real importance they assume relies fundamentally on the type of brand, product/service and marketing strategy. Indeed, those practices revealed themselves as effective tools to build brand visibility although such does not mean necessarily brand profitability. Finally, the media convergence and the Internet represent new capabilities for the traditional marketing. In this sense, classical

Business Excellence 03 On-Line Branding Nobre, Becker, Lencastre and Brito

Furthermore, in the future, differences between physical and virtual bands might be limited to the level of marketing mix actions and tools.

CONCLUSION
The study concluded that although the specific e-branding practices might allow the building of awareness in a short period of time, the sustained profitability of on-line brands seems to rely on the same factors as the traditional brands: time, financial resources and, last but not least, the marketing mix strategy adopted by the firm. The study also concluded that in the near future, with the generalization of the broadband and the consequent media convergence, marketers couldnt regard to an on-line brand as the opposite of a physical brand. Rather, brands have to be managed in a comprehensive way, taking into account all alternatives based not only on the kind of product/service offered but also on the desired positioning. On the other hand, this study, representing an exploratory research on e-branding, is likely to provide suggestions for further investigation. Thus, the new ways that the traditional marketing must consider when looking to a brand (either on-line or off-line) emerges as an important research field. As well as the challenge of making a brand profitable through the Internet revealed itself as an interesting study theme. Moreover, the validation of the framework for analysis deserves more attention. Such implies to test, in a more extended way, both the brand classical theory relevance for electronic commerce, and the practical e-branding theory i.e. the scorecard of Diorio [8] and the best ebranding practices suggested by Carpenter [9]. In this way, it would be also interesting to test the hypotheses in a larger basis of generalization, that is, with more and contrasting cases.

[6] Lencastre, P., A Marca: O Sinal, a Misso e a Imagem, 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 is Transforming Sales and Marketing Strategy. 2002, New York: McGraw-Hill. [9] Carpenter, P., eBrands: Building an Internet Business at Breakneck Speed. 2000, Boston, MA: Harvard Business School Press. [10] Yin, R., Case Study Research: Design and nd Methods, 2 edition. 1994, Thousand Oaks, CA: Sage Publications.

References
[1] Moon, M. and Millison, D., Firebrands Building Brand Loyalty in the Internet Age. 2000, New York: Pergamon. [2] Brito, C., A Insustentvel Leveza do Marketing, working paper 81. 1998, Porto: Faculty of Economics. [3] Rayport, J. and Jaworski, B., Cases in eCommerce. 2002, New York: McGraw-Hill/Irwin. [4] Aaker, D., Managing Brand Equity Capitalizing on 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.

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