Term Paper, 2005
11 Pages, Grade: A
“According to De Chernatony (2000) a brand is a brand regardless of its environment. Therefore, there is no need for a new theory of branding for the online environment, but merely a different approach to executing the brand’s essence”.
The aim of this paper is to conclude whether brands in a mortal and bricks environment are different from brands in a ‘click’ environment, and therefore, if a new theory of branding is required. De Chernatony (2000) believes that a “brand is a brand regardless of its environment”, which he substantiates by analysing the assumptions about migrating brands to the Internet, and the impact of online communities. In order to test De Chernatony’s idea, it is necessary to define and understand a ‘brand’, its components and functions.
According Duncan (2002) a brand is defined as a “perception of an integrated bundle of information and experiences that distinguishes a company and/or its product offerings from the competition”. A similar definition is given by Kotler (in Esch, 2000); a brand is a “name, term, sign, symbol, or design or combination of them which is intended to identify the goods and services of one seller or a group of sellers and to differentiate them from those of competitors.” This means that the function of the brand is mainly differentiation and identification. To reflect the importance of the brand influence on the buying decision, and to put the customer into the centre of branding, Bruhn (1999) defines a brand as a “promise to the customer”. This promise stands for a continuous supply of standardised quality to the customer. A further element of a brand is its added emotional value, the emotional notion leads to a psychological product differentiation. For example Coca-Cola has a strong emotional association. Another essential aspect of a brand is its image which for the customer can be in the form of pictures, feelings, attributes, values, content of the brand etc. (Knoblich, 1992). The buying decision depends on the difference between the communicated brand image and the consumer’s personality. In summary, the various definitions include the three components: promise, emotional values, and rational values (see also De Chernatony, 2003).
A brand has various functions for a consumer as well as for the seller. A brand allows the producer to differentiate the product - through generic product advantages, emotional attributes and brand personality - from its competitors (Esch, 2000). According to Porter, differentiation does not only protect the company from its competitors, it also increases customer loyalty and reduces price sensitivity (in Esch, 2000). This means a brand leaves the marketer more price flexibility. On the other hand, customer loyalty leads to long-term profits, and positively supports brand transfers (Bruhn, 1992).
For the consumer, a brand provides orientation in the ‘product jungle’, and facilitates the identification of a specific product among competitive ones. Furthermore, it lowers the purchasing risk, as the customer can trust the functional and emotional quality of the brand (Biel, 2000). Lasty, a brand allows the customer to transfer the brand image to himself. Bugdahl (1998) describes this as a personalisation function or ‘snob syndrome’, for example, a BMW owner has the physical and emotional experience of “being sporty and having friends” (Herrmann, 2000). Understanding the meaning of a brand, its components and functions, the following section discusses if the essence of a brand changes in an online environment.
This section considers the environmental change, applied branding approaches, and the brands components in the cybermarket.
Without doubt, the environment of branding has changed since the coming of the Internet. It is an environment which is marked by interactivity, virtual communities, information asymmetry and overload (De Chernatony, 2000; Ind and Riondino, 2001; Mierau, 2002; Fazarinc, 2003; Graham, 2002). However, it is just the environment which has changed but not the meaning and function of a brand. The internet as an information medium provides the consumers with more market information. According to Siegmund (2003), the relevance of information in an online environment such as the internet is more efficient in reaching people compared to other channels. In this kind of ‘product jungle’, a brand is becoming more and more important as it helps the customer’s orientation during the product selection. On the other hand, a brand gives the seller the possibility to create customer loyalty (Mierau, 2002). Mierau (2002) explains that the consumer has gained more power through the internet. In the past, the consumer had an information deficit. He or she was not able to have an overview the various offers, prices, product descriptions, customer recommendations etc. This situation has changed in the online environment. Here, the customer has the chance to base the buying decision on deeper market information. According to Chernatony (2000), the classical branding model is based on a “tightly controlled approach”, which assumes consumers to be “passive recipients of value”. In an online environment, consumers exchange more information, for example, through chat forums. This reduces the level of owners’ control over brands. On the other hand, the consumer is often confronted with an information overload. Therefore, consumers rely on the brand’s strength - a meaningful, clear and trusted set of values and attributes (Reynolds 2000; Ward and Lee 2000) - which facilitates the buying decision. De Chernatony (2000) found that people read the content of a web site in another way compared with the way that they read print publications. This means that customer behaviour slightly changed. A study by Chernatony (2003) found that the majority of website visitors scan the content instead of reading it. “Only 22 percent of online applications are completed” because the customer was not able to communicate with a vendor. To ensure a rapid response to customers, an interactive communication approach will replace the classical model of talking to customers.
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