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

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Presentation on theme: "COMP 6125 An Introduction to Electronic Commerce Session 2: Branding on the Web."— Presentation transcript:

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 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 s 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 onBlue Mountain Arts

18 Links Reference –Electronic Commerce, Seventh Annual Edition by Gary Schneider Of Interest –LinkShare:


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