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Online opportunities are not going away. In fact, the
Web still offers one of the best opportunities for future growth for
both dot-com start-ups and bricks-and-mortar firms in the retail and
B2B sectors. Not only are more consumers buying online, but they're
buying more. In the B2B sector, ecommerce continues to thrive with
estimates of online commerce in this sector doubling within the next
few years alone.
Part of the failure of many dot-coms was founded on the level playing
field argument (i.e., the belief that small start-ups could design
professional Web sites and compete with any large player). While new
dot-corn start-ups can often design Web sites similar in quality to an
established firm, Web site design does not necessarily translate into
comparable brand equity, which is built on consumer loyalty, brand
awareness, perceived quality, brand associations, and other
proprietary brand assets.
For example, if you're thinking of buying books online you may
consider purchasing from Amazon.com or traditional retailers turned
brick and clicks, like Barnes and Noble. However, other booksellers,
such as smartbooks.com and booksforbusiness.com, are available. Would
you buy from one of these relatively unknown retailers? Wouldn't
buying the latest brand management book from Amazon.com be the same as
buying from booksforbusiness.com? Of course not. Online shoppers are
more attracted toAmazon.com because it inspires confidence through its
brand equity. Alternatively, retailers with lower brand equity have
higher perceived risks for consumers.
But how did Amazon.com create its brand equity in a highly competitive
bookseller industry? Amazon.com was an innovator in online bookselling
when traditional retailers with established brand equity were still
standing on the sidelines. As such, these companies allowed Amazon.com
to build its brand equity in the online marketplace unfettered. Amazon
promoted itself widely and developed a Web site design, inclusive of
its one-click ordering technology, that set the industry standard.
However, times have changed. New online firms, or regional firms
expanding nationally or globally online, must establish their brands
in a highly competitive marketplace that includes established national
and/or global brands. They must go beyond simply making consumers
aware of the brand to giving them brand-specific information,
developing perceived quality and credibility, thus enhancing their
brand equity.
Branding by Design
A firm's brand equity comes from its brand-building actions. David
Aaker, a leading thinker on branding, notes that a firm's brand is
more than a simple identifier for consumers. Brands provide critical
evaluative information relating to the product and the organization,
conveying product attributes (e.g., quality) as well as organizational
attributes (e.g., credibility and believability).
For established firms, a well-designed Web site helps reinforce the
firm's brand equity, while a poorly designed Web site can devalue its
established brand equity. For new firms, whether dot-coms or
local/regional traditional firms going nationally or globally online,
a well-designed Web site can help start the process of building brand
equity. A poorly designed Web site may not engage the consumer,
causing them to move to another Web site without evaluating the site's
content.
A common mistake in Web site design is to not consider the content and
navigation as part of the design. Web site design refers to the
representational richness of a Web site, which includes content,
navigation, graphic design, and functionality. It can range from
extremely simple sites that employ basic text, links, and menus to
highly complex sites that offer graphical links with rollovers,
streaming audio and video, Flash, DHTML, and the like. Simply stated,
Web site design refers to the look, feel, and functionality of the
site. When browsing the Web, it's typically the design of a firm's
site that influences the consumer's perception of the company. Web
sites that only use textlinks with low quality images and awkward
navigation leave the impression of a less "professional" Web site.
What's a Manager to Do?
How should a firm invest its resources to build brand equity and its
Web site? A well-designed Web site can enhance brand equity, but,
without previously established brand equity, a consumer may perceive
too much risk involved in a purchase decision. Managers can evaluate
their firm's ability to successfully compete in an online environment
by employing a series of assessment steps. (See Exhibit 1.) We'll use
two retail categories, general apparel and specialty apparel, to help
illustrate how to implement the assessment model.
Step 1: Assess importance of branding in the industry. Brand equity is
not equally important across product categories and industries. As
such, firms should first assess brand importance in the markets where
they compete. Using multiple proxy measures (e.g., brand loyalty), a
firm can gain a general sense of the importance of branding in the
product category or industry. For example, general industry surveys
can provide a rough measure of the proportion of consumers who are
brand-loyal. In product categories and industries with a low
proportion of brand-loyal customers, brand may play a less important
role than other product attributes. For a general apparel retailer
carrying a broad selection of product lines, overall brand loyalty (to
the retailer) may be relatively low. Consumers wishing to purchase a
pair of Levi's jeans may be indifferent to purchasing them at JCPenney
as opposed to Macy's. As such, the overall importance of the brand
(i.e., retail name) may be relatively low, even when the product brand
loyalty is high. Alternatively, for a specialty apparel retailer such
as The Limited, consumers may tend to be more brand-loyal because of
the private-label branding strategy.
If brand equity is an important competitive aspect in the firm's
marketplace, as in the case of the specialty apparel retailer, it
should proceed to the next assessment step to determine the
competitive brand intensity. However, if branding is less important in
the product category or industry, as in the case of the general
apparel retailer, the firm should invest less heavily in
brand-building strategies and allocate more resources to Web site
design. This would require assessing elements of competitive Web site
design to direct managerial action.
Step 2: Assess virtual/traditional brand intensity. To assess brand
intensity, a firm should examine the number of brands dominating the
product category or industry. In some product categories or
industries, two brands can account for as much as 90%, while in others
two brands account for only 40% of the market (with the remaining
market share widely dispersed). A general rule of thumb is that any
single brand accounting for more than 33% of the market is considered
strong, and markets where fewer than five brands account for more than
66% of the market are highly competitive.
To calculate current brand intensity, a firm should assess current
online and traditional market shares. For example, let's assume the
following market shares exist:
Brand intensity online is moderate with 35% of the market dominated by
a single brand, and the remaining 65% widely dispersed among
competitors. Brand intensity in the traditional marketplace is much
higher, with 60% of the market being controlled by two
well-established and strong competitors (Brands A and B). This
analysis suggests less current brand intensity online than in the
traditional marketplace, which is characteristic of many product
categories and industries today. However, the concern for a firm
entering this marketplace isn't the state of current online brand
intensity, but rather the potential online brand intensity. The
potential competition online is much greater than in the current
online marketplace, as Brand B maintains a strong market share in the
traditional marketplace that may be extended online in the future.
If the current competitive brand intensity of the product category or
industry is high, the firm should next assess its current brand
position within the marketplace. Firms facing strong brand intensity
may wish to reconsider their target market. For example, a new online
specialty apparel retailer will note that the brand intensity is high
for the age 18 to 35-year-old segment. This segment purchases from
specialty retailers currently online (e.g., J.Crew, LL. Bean), as well
as from retailers such as The Limited, who have strong traditional
market share, but have yet to enter the online retail environment.
Thus, a firm should carefully assess its brand positioning, developing
an appropriate strategy to enter the market. In industries where brand
has previously been less important (but is becoming more important) or
where a clear brand leader hasn't yet been established in the product
category or industry (i.e., low brand intensity), the firm may wish to
move quickly to establish its brand online.
Step 3: Assess branding position. In a product category or industry
composed of known and unknown brand names, those with greater brand
equity may have an inherent advantage over unknown brand competitors.
As discussed previously, Amazon entered early into a market where
branding was only moderately important but online brand intensity was
low, which enabled it to establish a competitive brand position. This
branding position has continued even as traditional brands such as
Barnes and Noble and Chapters have entered the marketplace. If a firm
has low brand equity, it may wish to develop its brand equity before
spending a lot of money on high-end design technology. This doesn't
mean these firms shouldn't establish an online presence, but they need
to carefully consider how they allocate resources in branding and
high-end Web design technologies.
Boo.com serves as a point of illustration. At the height of the e-tail
revolution, Boo.com was one of the industry's online darlings. It
promised to revolutionize selling fashion apparel online. Large
investments were made in cyber-modeling technology, attempting to
bring the essence of product trial in a dressing room to the online
retail environment. Unfortunately, the investments in a high-end Web
site depleted Boo.com's financial reserves even before it opened.
For firms with established brand equity, online success lies in
supporting and leveraging brand equity online. As such, the issue is
supporting the online brand extension with the firm's Web site design.
For firms without established brand equity, success lies in developing
brand equity while simultaneously developing Web site design.
Step 4: Assess level of competitive Web site design. After brand
positioning analysis (or in product categories where brand is less
important or in situations where brand intensity is low) a firm should
critically evaluate the competitiveness of its Web site design.
Consumer expectations are set by experiences with other Web sites in
the overall marketplace, so a firm should assess its Web site design
in comparison with marketplace best practices. Web site design is
subjective (i.e., some consumers like bright colors and motion, while
others prefer primary color combinations presented statically), but
differences tend to exist primarily at the margins. That is, most will
agree on the basic elements that separate a well-designed Web site
design from a poorly designed one.
All Web site design must stand up to basic design standards-quality
photographs, well-written copy, clearly defined navigation, and
professionally designed graphic art. High-level programming and
functional development play a role in the perceived quality of a site,
although not always for the better. A Web site employing several
high-end Web design technologies doesn't provide value to its users if
they aren't able to navigate the site easily. Intuitive arrangement of
links to product and service offerings will often make up for a lack
of high-end Web design technologies.
Before deciding to implement a graphically intense Web design, firms
should pay attention to the intended end user. For example, compare
sites that make their money online, such as Amazon.com or yahoo.com,
to sites that make their money offline, such as GM.com or Sony.com.
Many of the sites conducting business online tend to not use large or
animated images, flash, or other elements that will limit their
audience or slow their page-load times. A site targeted at individual
consumers, many of whom connect via modems through Internet service
providers, shouldn't require users to download a new browser version
or plug-in to simply access their site. Even if users are willing to
download the required software, the slower page-load times will result
in longer waits for customers to access information, stimulating them
to move to a competitor's site.
One way to cater to both high- and low-bandwidth customers is by
offering a "high graphic" and "low graphic" version of their site.
Gulfstream (www.gulfstream.com), the wellknown jet manufacturer,
offers its users a choice between a Flash site and an HTML site. While
the basic design of the two sites is similar, the Flash site is more
graphically intense. The HTML site provides lower bandwidth users
access to the same information with faster page-load times, without
compromising Web design quality or the quality of the brand
perception.
To assess Web site design, managers should not simply surf their
competitors' Web sites. Rather, they should design and employ a
structured instrument categorizing Web site design elements. The
structured instrument should include design elements (e.g., color,
graphic size, product design techniques, static or dynamic graphics)
as well as more technical Web site design aspects (e.g., use of frames
and order processing technology). Once the structured instrument is
completed, a firm should develop a process to examine Web site design
at two levels: competitors and best practice.
First, the firm should examine its Web site design relative to its
competitors, which consumers will have viewed and be using as a
reference point. Next, the firm should assess the Web site design of
top online firms. This aspect is more difficult because sometimes it's
hard to know which sites are well-regarded by the general population.
However, a consumer's expectations of Web site design are not only set
by direct and indirect competitors, but also by Web standards, which
makes it a critical element of design assessment. As a starting point,
managers may wish to draw their sample from one of the many award
sites available online, such as WorldBestWebsites.com.
Step 5: Take branding/Web design action. For managers in firms with
high brand equity, the advice is simple: Extend the brand online. If
you're not currently online, get online-- whether in full online
retail mode or simply as a communication vehicle. Further, be careful
of how you get online. Some firms invest heavily in Web site design,
while others don't. When Web site design is poor, consumers perceive
the quality of the products to be lower. A consumer's online
evaluation of a firm's products is influenced by his/her Web site
design expectations. As such, a firm with high brand equity should
continually assess the quality of its Web site design to make sure
consumers perceive it to be of high quality. The negative carryover
effect of a poor Web site design can hurt an established brand as much
as the positive carryover effect of the brand into the online world
can help.
For managers in firms with little or no brand equity (i.e., newly
established dot-coms or regional firms expanding nationally or
globally online) in a brand-important product category or industry, a
key to success is maintaining competitive Web site design while
investing in brand-building tactics. In these industries, firms must
leverage their competitive advantages and build their brand online and
offline. Web site design alone isn't enough to support an ongoing
concern. While site design is very important to present a professional
image, with established brands entering the online world, managers of
online firms should begin full-fledged brand-building strategies that
move beyond the Web.
Further, for managers competing in product categories or industries
where branding is less important, site design can significantly
influence the firm's ability to stimulate consumer response. In this
situation, consumers evaluate products on alternative attributes. If,
for example, a consumer can purchase the latest Michael Crichton
bestseller at a traditional retailer such as Barnes and Noble or
online from Amazon.com, the final decision may depend on price and
convenience. Given the importance of design over brand in this case,
it's critical to invest in professional Web site design.
Where Do You Stand?
As the e-commerce market continues to move toward massmarket
consumers, online brand management will become more important.
Established firms will leverage their brands online, making the
competitive intensity even higher. This doesn't mean new firms can't
enter the marketplace when brand equity of competitors is high or
that, by simply moving online, firms with high brand equity will be
successful. As suggested previously, when branding isn't important,
when there's no dominant brand in the marketplace, or when brand
equity is equivalent across competitors, Web site design can have a
significant impact on stimulating consumer response. However, in
product categories or industries where branding is important, simply
having a great Web site design will not overcome a competitor with
strong brand equity. Rather, managers must critically evaluate their
position in terms of both brand equity and Web site design for online
success.
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