It is easier for consumers to consummate transactions when they are aware of sellers and, moreover, when they have confidence that sellers will deliver as promised. The reputation of sellers - or the brand - is one means by which businesses have traditionally promoted buyer awareness and bonded their promises to deliver (Klein & Leffler, 1981). Brands as "a collection of perceptions in the mind of the consumer" (Bates, 2006) are relevant for many choice and purchase decisions (Meffert, 2000). Consumers link a range of associations to a brand, from associations that include characteristics which can be perceived by the senses (e.g., an engine’s horsepower, a product’s design, or a brand’s visual presence in visual or promotional campaigns) to characteristics associated with a brand’s identity (origin, reputation, and personality); and from perceived rational benefits (the product and its functions, the transaction process, or the relationship between the consumer and the brand/supplier) to emotional benefits which consumers perceive to be related to a brand (self-expression, image transfer, or self-realization) (Perrey et al., 2003; see also Aaker, 1996). By delivering all this information to consumers, brands can facilitate consumers’ purchase decisions. At the same time, information provided by sellers and by third parties can be an alternative mechanism for making consumers willing to undertake transactions. Through the Internet 1 , an ever-increasing amount of information from branded sellers, unbranded competitors, and third party information providers (“information intermediaries”) is provided to consumers. Consumers are now able to obtain objective, trustworthy information on retailers’ existence and reliability as well as products and services in real-time, at any time from virtually any place in the world - markets become increasingly transparent and information asymmetries between sellers and buyers decrease. The so empowered consumers may, as a consequence, become willing to patronize lesser-known, rather than branded, retailers (Deregatu, Rangaswamy & Wu, 2001). [...]
Table of Contents
1. Introduction
2. The research area – The changing role of brands in the age of empowered consumers
2.1 Brands
2.1.1 The role of brands
2.1.2 Functions of brands
2.2 Functions of the Internet on markets
2.3 Brands in the online environment
2.3.1 The relative importance of the Internet as a touchpoint with the brand
2.3.2 Particularities of branding in the Internet
2.4 The changing role of brands and the empowerment of consumers
3. Purchase decision process
3.1 Problem recognition
3.2 Information search
3.2.1 Manufacturers’ and dealers’ homepages and online shops
3.2.2 Experts’ homepages
3.2.3 Cybermediaries
3.2.4 Consumer-to-consumer communities
3.3 Evaluation of alternatives
3.4 Purchase
3.5 After-purchase evaluation
4. Effects of consumer empowerment
4.1 Information as a substitute for functions of the brand
4.1.1 The frame of reference
4.1.2 The empirical study
4.1.3 Synopsis of primary and secondary research results
4.2 The changing role of intermediaries and online retailers
4.3 Impacts on price and quality
4.4 Implications for brand management
5. Conclusions
5.1 Summary and key findings
5.2 Limitations and future research issues
Research Objectives and Themes
The research examines how Internet-enabled consumer empowerment alters the traditional functions and importance of brands within the purchase decision process. It investigates whether increased digital information availability substitutes brand functions, impacting pricing, retailer roles, and brand management strategies.
- Evolution of brand functions in the digital age.
- Impact of the Internet on consumer information transparency and bargaining power.
- Substitution effects: Information vs. brand value.
- Role of multi-channel strategies and online brand communities.
- Empirical assessment of consumer behavior across different product categories.
Excerpt from the Book
The changing role of brands and the empowerment of consumers
Basically, markets (electronic or otherwise) have three main functions: (1) matching buyers and sellers; (2) facilitating the exchange of information, goods, services, and payments associated with market transactions; and (3) providing an institutional infrastructure, such as a legal and regulatory framework, that enables the efficient functioning of the market (Bakos, 1998). This mechanism works best in the case of a perfect market, which is influenced by high (perfect) market transparency and low (no) product differentiation (Porter, 2001). However, consumers used to be disadvantaged in markets due to two facts: there are only few homogenous products, and prices for comparable goods can only be compared spending considerable amounts of time, efforts, and money (Bakos, 1998). Based on this information-asymmetry, companies were able to achieve higher margins with inferior goods (Kumar, 2000).
Moreover, manufacturers and retailers have always been better organized than consumers. They work on a global scale, while consumers were restricted to local offers. Manufacturers and retailers were able to arrange mutual price agreements. And traders could purchase larger quantities and in this way realize economic prices compared to consumers. On many markets, rivalry among existing firms was low due to lacking information compared to the present situation. Consumers were not able to keep track of markets and they did not have sufficient market potential to be able to achieve market equilibrium (Kumar, 2000).
The opportunity for almost everybody to gather information online increasingly changes this situation. Lower search costs and greater availability of information can improve the extent of searching done and the amount of information gathered, allowing the online consumer to consider a lot more alternatives. Hence, markets become more transparent and bargaining power of buyers grows (Porter, 2001). Consumers can now compare products and prices and interact with other consumers easily and independently of time and place (Bakos, 1998).
Summary of Chapters
1. Introduction: Outlines the research scope, highlighting the intersection of traditional brand theory and the transformative impact of Internet technology on consumer purchase behavior.
2. The research area – The changing role of brands in the age of empowered consumers: Explores the fundamental definitions of brands and how Internet-driven information transparency disrupts established market power dynamics.
3. Purchase decision process: Details the five-stage model of consumer decision-making and analyzes how different online channels and community types influence these stages.
4. Effects of consumer empowerment: Combines empirical research and secondary academic analysis to assess how information transparency impacts brand relevance, intermediary roles, and pricing.
5. Conclusions: Synthesizes the study's key findings regarding brand viability and provides strategic recommendations for adapting brand management to the digital environment.
Keywords
Brand management, Consumer empowerment, Information asymmetry, Online shopping, Digital marketing, Purchase decision process, Brand functions, E-commerce, Market transparency, Information search, Virtual communities, Brand community, Consumer behavior, B2C-markets, Digital strategy.
Frequently Asked Questions
What is the core focus of this research?
The thesis explores how the increased availability of information via the Internet empowers consumers and potentially shifts the role, value, and influence of traditional brands in the decision-making process.
Which thematic fields does the study cover?
It covers brand management, the digital transformation of markets, consumer decision-making models, the economic role of information, and the rise of virtual communities.
What is the primary objective of this work?
The main goal is to determine if Internet-based information transparency acts as a substitute for the traditional functions of brands (information efficiency, risk reduction, and image benefit creation).
Which scientific methodology is employed?
The author combines secondary academic research with a primary empirical study, utilizing an online questionnaire among students to test hypotheses regarding the importance of brand functions across three distinct markets.
What topics are discussed in the main body?
The main body treats the five stages of the purchase decision process, the classification of goods by differentiation and involvement, and the strategic implications for brand owners facing increased information transparency.
Which keywords characterize this thesis?
Key terms include brand management, consumer empowerment, information asymmetry, market transparency, e-commerce, and brand community.
How does the Internet specifically affect consumers’ purchase decisions?
The Internet reduces search costs and increases information transparency, allowing consumers to compare products more effectively and interact with other users, which can weaken the reliance on traditional brand signals for purely functional goods.
What is the main conclusion regarding brand survival?
Brands providing emotional or self-expressive benefits are harder to substitute through information alone, whereas brands relying solely on rational or functional benefits face higher risks of being commoditized by digital information tools.
- Quote paper
- Gunnar Klaming (Author), 2006, The changing role of brands in the age of empowered consumers, Munich, GRIN Verlag, https://www.grin.com/document/63919
