A known and respected brand name can present to potential customers a powerful statement of quality, value, and other desirable qualities in one recognizable element. Branded products are easier to advertise and promote, because each product carries the reputation of the brand name. Companies have developed and nurtured their branding programs in the physical marketplace for many years. Consumer brands such as Ivory soap, Walt Disney entertainment, Maytag appliances, and Ford automobiles have been developed over many years with the expenditure of tremendous amounts of money. However, the value of these and other trusted major brands far exceeds the cost of creating them.
Elements of Branding:
- Product differentiation: The first condition that must be met to create a product or service brand.
- Relevance: The degree to which the product offers utility to a potential customer.
- Perceived value: A key element in creating a brand that has value.
Emotional Branding vs. Rational Branding
Companies have traditionally used emotional appeals in their advertising and promotion efforts to establish and maintain brands. One branding expert, Ted Leonhardt, has described “brand” as “an emotional shortcut between a company and its customer.” These emotional appeals work well on television, radio, billboards, and in print media, because the ad targets are in a passive mode of information acceptance. However, emotional appeals are difficult to convey on the Web because it is an active medium controlled to a great extent by the customer. Many Web users are actively engaged in such activities as finding information, buying airline tickets, making hotel reservations, and obtaining weather forecasts. These users are busy people who will rapidly click away from emotional appeals.
Brand Leveraging Strategies
Rational branding is not the only way to build brands on the Web. One method that is working for well-established Web sites is to extend their dominant positions to other products and services, a strategy called brand leveraging. Yahoo! is an excellent example of a company that has used brand-leveraging strategies. Yahoo! was one of the first directories on the Web. It added a search engine function early in its development and has continued to parlay its leading position by acquiring other Web businesses and expanding its existing offerings. Yahoo! acquired GeoCities and Broadcast.com, and entered into an extensive cross-promotion partnership with a number of Fox entertainment and media companies. Yahoo! continues to lead its two nearest competitors, Excite and Go.com, in ad revenue by adding features that Web users find useful and that increase the site’s value to advertisers.
Brand Consolidation Strategies
Another way to leverage the established brands of existing Web sites was pioneered by Della & James, an online bridal registry that is now doing business as part of WeddingChannel.com. Although a number of national department store chains, such as Macy’s, have established online registries for their own stores, Della & James created a single registry that connects to several local and national department and gift stores, including Crate&Barrel, Gump’s, Neiman Marcus, Tiffany & Co., and Williams-Sonoma. The logo and branding of each participating store are featured prominently on the WeddingChannel.com site. The founders identified an opening for a market intermediary because the average engaged couple registers at three stores. Thus, WeddingChannel.com provides a valuable consolidating activity for registering couples and their wedding guests that no store operating alone could provide.
Costs of Branding
Transferring existing brands to the Web or using the Web to maintain an existing brand is much easier and less expensive than creating an entirely new brand on the Web. In 1998, a large number of companies began spending significant amounts of money to build new brands on the Web. According to studies by the Intermarket Group, the top 100 electronic commerce sites each spent an average of $8 million that year to create and build their online brands. Two of the top spenders included the battling Web sites Amazon.com, which spent $133 million, and BarnesandNoble.com, which spent $70 million. Most of this spending was for television, radio, and print media – not for online advertising. Online brokerages E*TRADE and Ameritrade Holding were also among the top five in that first year of major brand building on the Web, spending $71 million and $44 million, respectively.
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