COMP 6125 An Introduction to Electronic Commerce

1. COMP 6125 An Introduction to Electronic Commerce Session 2: Branding on the Web

2. 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

3. 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

4. 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

5. 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

6. 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

7. 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

8. 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

9. 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

10. 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

11. 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

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

13. 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

14. Cause Marketing • Click-through rates are significantly higher than for typical banner ads! • Why do you think that is?

15. 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

16. 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

17. 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

18. Links • Reference • Electronic Commerce, Seventh Annual Edition by Gary Schneider • Of Interest • LinkShare: http://www.linkshare.com