Brand Building

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BRAND BUILDING

The key to a successful brand lies in delivering value to the customer. Brands offer customers a promise, a set of values that will motivate them. Brands are positioned to echo the brand promise. This requires understanding customer needs. It is also important for companies to deliver a brand that reflects what customers thought they were promised. Brands are built around successful products, not the other way around. Sometimes this insight has been lost on e-businesses, in particular, which have spent millions of dollars on e-brand building programs, motivated by speed, by the need to be first in order to capture "eyeballs." Along the way, some e-business companies neglected to develop products that lived up to the brand images they wished to project.

There are many benefits to having a recognized brand. A strong brand is regarded as an important strategic asset that can enable a company to build stronger relationships with its customers and give it a measure of strategic control. A strong brand cuts through clutter in a fragmented marketplace and keeps a firm's products from becoming commodities. A strong brand name can affect investment decisions and a firm's market capitalization. A strong brand, then, has come to be regarded as an asset to be managed like any other corporate asset.

Brand building is multi-dimensional. A strong brand is the result of a long-term, cumulative effort. It involves more than advertising, although most marketing executives believe that traditional advertising is the best way to reach a broad audience, according to a Mercer Management Consulting survey as reported in Advertising Age. Brand building also includes investments in areas such as customer service, product development, and enhancing the customer experience.

Companies need to determine what is important to their customers and recognize that different customers have different preferences. Companies learn what is important by listening to their customers. Gathering information from their customers enables them to learn what their customers' needs are. They can then build and position their brand to offer the promise of satisfying those needs. Factors such as low price, high quality, broad selection, and personal service figure into customer preferences and brand building. One group of online customers may prefer high quality, a reputable brand, and the lowest possible price. Another group may prefer speed, convenience, and a high level of functionality and interactivity when shopping online.

USING THE WEB FOR BRAND BUILDING

Brands originally came into existence to identify the creator of a product or service and create some type of competitive advantage. The Internet has the potential of helping companies use their brands to create new sources of competitive advantage through content richness, interactivity, and targeting. Internet-related investments in brand building include using the Web as a way to manage customer relationships and cross-sell. Customer service has always been a key element in building a brand. In e-commerce, the Internet has raised the importance of customer service and accelerated the time frame in which companies have to provide superior service to their customers. Having a Web site up and running accelerates how a company's brand is interpreted. The nature of the Web site experience thus becomes an important part of building the firm's brand. It gives the company an opportunity to build on its strengths.

For companies with an existing brand, Web sites are an extension of their brand franchise. Web sites can tap into demand by offering product information that differentiates a firm's products from its competition. Customers may gather information on the products at the Web site and then take the information to the firm's brick-and-mortar store. Building a brand requires an integrated set of messages across all media, including the Internet. Companies need to achieve a high degree of integration among all point of contact with customers, including call centers, Web sites, and stores. By giving value to the customer when they are online, the firm enhances its brand image and the brand becomes part of the value proposition.

BUILDING A BRAND THROUGH ADVERTISING

Banner ads can be successful brand-building tools. To measure the effectiveness of banner ads as brand-building tools, though, requires more than a glance at click-through rates. To study the effect of banner ads on brand awareness, market researchers use a control-exposed methodology, which compares responses from a group that has been exposed to a banner ad with those of a control group that has not seen the ad. According to InformationWeek, ongoing research has shown that banner ads can be an effective brand-building tool. Companies such as Johnson & Johnson advertise on the Web, but they do not expect the ads to result in online sales. Rather, they are creating a brand awareness that they expect will translate into sales at the store. That is, the banner ad creates a relationship with the consumer that may result in sales at the counter.

Banner ads have been compared to billboard advertising. The advertiser has the consumer's attention for only a few seconds. During that time, the ad must capture the consumer's attention and leave a lasting impression through the use of compelling visuals that are memorable but not confusing.

Brand building must also exploit the synergies between Web advertising and traditional print and broadcast advertising. This is an area marketers continue to explore. A large media company such as Walt Disney Co., which owns ABC-TV and ESPN among other media properties, can exploit the synergy between ABC-TV and ABC.com, for example. Ads or messages placed on a television show direct viewers to a Web site where additional information can be obtained. In the case of ABC's hit TV quiz show, Who Want to Be a Millionaire?, viewers can go to the Internet to play the game. While there, they pick up brand awareness and have the opportunity to enter a sweepstakes.

BUILDING A NEW BRAND

New e-commerce companies that want to build their brands typically begin with an ad campaign to build brand awareness and market share. Oftentimes, that proves expensive, and funds may run out before the brand is established and the enterprise can sustain itself. In the crowded field of online brokerage firms, E*Trade and Ameritrade spent heavily to establish their brands. In 1997-98 Ameritrade Inc. spent $20 million on a national advertising campaign that focused on the company's $8 online trading fee. While heavy advertising expenditures built awareness and helped increase the number of new accounts, Ameritrade sustained higher quarterly losses as a result of its marketing expenditures. Apparently the company was satisfied with this approach, however, as in 1999 it spent another $50 million on advertising to launch OnMoney.com, its financial portal.

E*Trade's large expenditures on advertising to build its brand resulted in it being the fourth most recognized e-commerce brand in 1999, behind Amazon.com, eBay, and Priceline.com ., according to the Internet Brand Study by Opinion Research Corp. In 2001 the company used its Super Bowl ad to position itself as a brand that could still be trusted amidst the failure of so many dot-com companies in 2000. The ad served to remind people that E*Trade was not going to go away like many other dot-coms.

A smaller start-up brokerage, Web Street Inc., spent $10 million in six months on cable TV and newspaper ads to make its name better known. MarchFirst, a newly named electronic commerce and information technology (IT) consulting firm formed by the merger of Whittman Hart Inc. and USWeb/CKS, launched an $18 million ad campaign to gain recognition for its new name. According to Crain's Chicago Business, the ads more than tripled the number of visitors to the MarchFirst Web site. That firm later became one of the higher-profile casualties in the dotcom shakeout.

Priceline.com appeared more successful at using advertising to reach a mass audience and build its brand. Its aggressive radio and newspaper advertising strategy (begun in 1998 and later expanded to include television) featured the actor William Shatner as a spokesperson. The company's ads resulted in name recognition for Priceline.com among at least a quarter of the U.S. adult population, or some 50 million people, according to a study by Opinion Research Corp., which listed the top five Internet "megabrands" as America Online, Netscape, Yahoo!, Amazon.com, and Priceline.com.

Once a company's brand and its market share have been established, it will typically cut back on brand-building advertising expenditures. After studies showed that Egghead.com 's brand was fairly well established, for example, the company slashed advertising and marketing expenditures by 65 percent year-to-year in the fourth quarter of 2000. Replacing online advertising at Egghead.com were telemarketing, direct marketing, and more marketing to the firm's customer base. As with so many of the dot-coms, it was difficult to say whether this strategy succeeded; by the second half of 2001 Egghead had filed for bankruptcy.

MORE THAN BRAND AWARENESS

Critics of large advertising expenditures for brand building point out that awareness is only one aspect of creating a strong brand. More significant to a brand's strength is the underlying business and how it relates to its customers. Brands simply cannot be invented overnight. A strong brand is the result of creating a promise to consumers—one that is clear and memorable—and then creating a history of fulfilling that promise. Once awareness is achieved, companies must focus their brand-building efforts on conveying what the company does rather than what it represents.

Before the dot-com shakeout of 2000, many dotcom brand managers mistakenly believed that brand awareness would of itself create enough momentum to lead to brand loyalty. As an example, the domain name Business.com was sold for $7.5 million, with the buyers reportedly believing that the name itself would constitute the bulk of the company's brand building. Other dot-coms, such as Computer.com, believed that an expensive one-shot Super Bowl ad would build its brand overnight. For the 2000 Super Bowl, some 17 dot-coms placed ads, compared to only three in 2001.

That thinking has been replaced by the realization that brand-building is a long-term process that needs to be established on a solid customer relationship based on service and community. The most successful online brands have created online communities; they include Yahoo!, America Online, and eBay.

AFFILIATE PROGRAMS AND CO-BRANDING

Start-up and relatively unknown online companies can use affiliate relationships to build awareness of their brand as well as to attract new customers. When barnesandnoble.com became the featured bookseller on America Online, its brand awareness rose significantly in the online community. In mid-1998 Ameritrade expanded its relationship with America Online by committing to pay $25 million over two years for a prominent spot on America Online's finance page, thereby strengthening its brand name among AOL's subscriber base. 1-800-Flowers.com, which has been in business for 24 years, told the New York Times that its partnership with AOL was its most productive; the company also had productive marketing agreements with MSN.com and Yahoo!.

Co-branding with an established brick-and-mortar company is another way that online retailers can gain the benefits of a strong brand. Virtual retailers without their own brand identity can co-brand with traditional merchants to gain credibility and trust and drive traffic to their Web sites. Flooz.com, for example, used its merchant partners—including Martha Stewart and Tower Records—in its advertising to help strengthen its brand name, build trust and confidence, and explain the benefits of its Web site.

MARKETING BRAND-NAME PRODUCTS ON THE INTERNET

The Internet has opened new possibilities for traditional advertisers of established brand-name products. The Web has given marketers new ways to communicate with their customers and to establish deeper relationships with them. General Mills, for example, brought Betty Crocker to the Web in 1997, well after competitors like Kraft, Nabisco, and Pillsbury had their Web sites up and running. General Mills entered into a multiyear alliance with America Online to produce online and offline marketing programs, including contests. The alliance with AOL enabled General Mills to reach a key audience segment: women at home with children. Another Web-based initiative for General Mills involved creating a Web site where consumers could create their own cereals. The company also planned to improve the Betty Crocker Web site by adding more interactivity and thus build stronger relationships with its customers.

Companies with strong brands are using the Web to acquire new customers. Consumer goods manufacturer Procter & Gamble created a new beauty products company, Reflect.com, to market on the Web. The concept behind Reflect.com, which launched in September 1999, was to provide customized beauty products for women, based on answers they provided to a list of questions. To be a successful brand, Reflect.com had to provide a good Web site experience for women and a high level of service. Emphasizing personalization and customization, Reflect.com soon distinguished itself from typical e-commerce sites that sold off-the-shelf beauty products.

STILL SEEKING THE FAST LANE

In spite of the lessons inherent in the dot-com shakeout, startup online companies still continued to seek instant brand recognition. One company, X10.com, went from being a relatively unknown seller of home networking and security devices, to a leader in Internet traffic. Following a massive pop-up advertising campaign, X10.com went from 8.4 million visitors in March 2001 to 28 million in May 2001. That put it in Jupiter Media Metrix's top five, ahead of such e-commerce giants as Amazon.com and eBay. Critics pointed out that most of X10.com 's traffic was not voluntary; traffic counts were based on the number of people who viewed the pop-up browser window that featured the X10 ad, even if they closed it immediately. It remained to be seen if X10 could convert those visitors to customers and whether it could establish its brand by offering a sufficient level of service and community to its visitors.