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A DISSERTATION REPORT ON

STRATEGIES USED TO BUILD

SUCCESSFUL BRANDS ON INTERNET

SUBMITTED BY

POOJA JAIN

(Reg. No - 04VWCM6060)

This dissertation report is submitted in partial fulfillment of the

requirements of the

MBA program of Bangalore ni!ersit"

nder the guidan#e of

Prof. K.K.HAVALDAR Facult

All!a"c# Bu$!"#$$ Aca%#&

Alliance Business Acade !

19 th cross, 7 th main,N.S.Palya, BTM 2 nd Sta !,

Ban alor! " #$%%7$

("004 # "006)

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$%C&ARA'ION

I, POOJA JAIN o& MB' I( SEMESTE) st*dyin in 'llianc!

B*sin!ss 'cad!my, Ban alor! do h!r!+y d!clar! that this

diss!rtation titl!d *'RA'%+I%* ,*%$ 'O B,I&$

*,CC%** ,& BRAN$* ON IN'%RN%' has +!!n r! ar!d

+y m!, *nd!r th! *idanc! o& P/o esso/ 1.1.2AVA&$AR , in

th! artial &*l&illm!nt o& th! a-ard o& M'STE) / BUSINESS 'DMINIST)'TI N *nd!r Ban alor! Uni0!rsity d*rin s!ssion

2%% 2%%$.

I &*rth!r d!clar! that this diss!rtation r! ort has not +!!n

s*+mitt!d !arli!r to any oth!r Uni0!rsity or Instit*t! &or th!

a-ard o& any D! r!! or Di loma.

Dat!3

Plac!3 Bangalo/e

POOJA JAIN

404VWCM6060 5

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C%R'I ICA'%

I, P/o esso/ 1.1.2AVA&$AR h!r!+y c!rti&y that this

diss!rtation r! ort titl!d *'RA'%+I%* ,*%$ 'O B,I&$

*,CC%** ,& BRAN$* ON IN'%RN%' has +!!n

s*cc!ss&*lly carri!d o*t +y POOJA JAIN -ith )! istration

n*m+!r " 04VMCM6060 *nd!r my s* !r0ision and

*idanc!.

D'TE3PRO %**OR

1.1.2AVA&$AR /ac*lty

'llianc! B*sin!ss 'cad!my Ban alor!

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AC1NOW&%$+%M%N'

The satiation and euphoric that accompany the successful completion of

task would be incomplete without the mention of the people who made it possible. So with immense gratitude I acknowledge all those whose

guidance and encouragement crowned my efforts with success.

I would like to thank Prof. Sudhir G Angur, President, Alliance

Business Academy, and r. B.!."rishnamurthy, #$ecuti%e !ice

President, Alliance Business Academy for pro%iding the support

to do this study.

&ith deep sense of gratitude and indebtedness I sincerely thank

Proffessor ".". 'A!A( A), my dissertation guide for gi%ing me

%aluable suggestions and ad%ice throughout the e$ecution of the

dissertation. I would like to thank the entire faculty members of

Alliance Business Academy. I would like to thank *r. )a%ikiran,

(ab +o coordinator, and Alliance Business Academy for his co

operation and support.

(ast but not the least I would like to thank my parents, friends

without whose co opera tion this d issertat ion wouldn- t ha%e

possible.

Thanking #%eryone.

P /A /AI0

%

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TABLE OF CONTENTS

SNo. CHAPTER NA'E PAGE No.

E(#cut!)# Su&&ar

I. I"tro%uct!o" *

II. L!t#ratur# r#)!#+ ,*

III. I"%u$tr Prof!l# -

IV. R#$#arc/ D#$!0"

A. Pro1l#& Stat#"t 2

B. R#$#arc/ Pla" 23

C. Ca$# A"al $!$ 45

D. Data I"t#r6r#tat!o" 75

E. F!"%!"0$ of t/# $tu% 8- F. R#co&"%at!o"$ **

. G. L!&!tat!o"$

V. Co"clu$!o" ,53

VI. A66#"%!(

A. 9u#$t!o""a!r#

B. B!1l!o0ra6/

&

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LIST OF CHARTS AND TABLES

Ta1l# No. Co"t#"t Pa0# No.

Ta1l# , :/at ar# 6#o6l# %o!"0 o"l!"# 8-

Ta1l# - :/o r#all carr!#% 1u$!"#$$ 83 tra"$act!o" o" !"t#r"#t

Ta1l# Na of c 1#r co&6a"!#$ ou 82 Actuall %#al +!t/.

Ta1l# 3 :/o +a"t$ to co 1ac; for 84 futur# tra"$act!o"$

Ta1l# 2 Sta"%ar%$ for 0oo% o"l!"# 87 Co&6a"

Ta1l# 4 K# $ to +#1 1ra"% lo alt 88

Ta1l# 7 K!ll#r$ of +#1 1ra"% lo alt 8*

Ta1l# 8 T/!"0$ ou +a"t to 1u o"l!"#. *5

Ta1l# * Ra";!"0 t/# 6o6ular!t of c 1#r *, co&6a"!#$.

Ta1l# ,5 Do ou r#all r#a% c/a!" or 1ul; *- 'a!l$.

Ta1l# ,, D!ff. a66roac/#$ !" Bra"% Bu!l%!"0. **

Ta1l# ,- Eff#ct!)#"#$$ of Bra"% Bu!l%!"0 ,55 '#t/o%$.

'

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E

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NTRODUCT ON

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INTRODUCTION

G#"#ral O)#r)!#+

O!er the past fe) "ears* there has been an e(plosion in the online )orld 4 an e(plosion

that is also a harbinger of ho) business )ill operate in the future- Suppl" #hains are being

rethought* produ#ts and ser!i#es re#onfigured* and business models re!amped- As su#h*

the Internet is ha!ing a profound impa#t on the )a" business is being #ondu#ted in )a"s

that are often disrupti!e to traditional methods- This is #reating ne) #hallenges and

opportunities- The Internet pro!ides the opportunit" for #ompanies to rea#h a )ider

audien#e and #reate #ompelling !alue propositions ne!er before )hile pro!iding ne)

tools for promotion* intera#tion and relationship building- It is empo)ering #ustomers

)ith more options and more information to ma,e informed de#isions- As su#h* the

Internet is #hanging fundamentals about #ustomers* relationships* ser!i#e and brands* and

is triggering the need for ne) brand+building strategies and tools- In the midst of this*

aggressi!e Internet start+ups ha!e emerged* #reating strong brands that are putting

established brands at ris,- Internet #ompanies su#h as =a/oo> * A&a?o".co& * Ar!ca

O"l!"# 5AOL 6*Goo0l# and #Ba ha!e been able to build po)erful brands in a fe) "ears*

)hereas it has ta,en de#ades for traditional #ompanies to a#hie!e the #lient base*#ustomer affiliation and le!el of sales that these Internet start+ups ha!e a#hie!ed-

As a result* harnessing the rea#h and intera#ti!it" of the Internet to build and maintain

brands has be#ome e(tremel" important- 2or pure online pla"ers* )ho are essentiall"

intangible* brands are e!en more #riti#al as #ustomers ha!e little to go on other than a

re#ognised brand- 7i!en the tremendous #lutter in toda"/s e +#ommer#e mar,etpla#e* and

the high #ost of a#quiring online #ustomers* the most su##essful sites )ill be those that

#an attra#t #ustomers and build brand lo"alt" and enthusiasm that e(tends the brand+

#ustomer relationship be"ond a single transa#tion-

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A Business .ee, sur!e" found out that &09 of Internet users go to the same sites o!er

and o!er again* rather than drifting from site to site- Therefore* building a)areness*

attra#ting traffi# or : eyeballs1 * turning bro)sers into bu"ers* and turning first+time

bu"ers into lo"al repeat #ustomers has be#ome the ;ol" 7rail of online mar,eting

strategies-

;o)e!er* as the need to build brand lo"alt" online is rea#hing a pea,* there is a gro)ing

re#ognition that traditional methods are no longer suited to this ne) intera#ti!e

en!ironment- The disruption of the global Dot#om industr" in the beginning of

millennium* the loss of in!estors< #onfiden#e* the assailan#e from ha#,ers and #ode+

brea,ers* and the ban,rupt#" of man" start+up giants made man" pessimisti# souls

belie!e at the doomsda" of the industr" in a not+too+distant future- Dot#om industr" isstill a fledging and promising one-

Bac;0rou"% of t/# $tu%

This pro=e#t has been underta,en to stud" about the strategies of brand building )ithin

start+up industr"- The stud" tries to anal"se brand Mar,eting Strategies for Brand

building on internet building strategies of & #"ber #ompanies* )hi#h atta#h to the su##ess

and failure of ea#h and e!er" of them* there of bring out a lesson regarding ho) to build

a su##essful brand on Internet- In this stud"* resear#her tries to e(tra#t to #ustomers88&* )ith the appearan#e of Ama@on and AO * to the @enith of Dot#om industr" in

>888* and the nadir of ???* )hen Boo-#om and 7oodsonline-#om #ame into ban,rupt#"*

and the ne)est resurre#tion of Dot#om industr" sin#e ?? * )ith Cahoo* 7oogle and

eBa"

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T/#or#t!cal Bac;0rou"%

THE NATURE OF BRANDS

INTRODUCTION

Brands are made up of man" la"ers and dimensions- In this #hapter* these la"ers are

unra!eled to re!eal the nature of brands and their reason for e(isten#e- The #hapter

pro#eeds to des#ribe the influen#e of brands on the bu"ing pro#ess* and the importan#e of

#ustomer satisfa#tion and brand lo"alt"- The #on#ept of brand equit" is outlined*

e(plaining the !alue of brands* both to #ustomers* and to #ompanies- These #on#epts are

#entral to brands and brand+building* )hether online or offline and the" form the

ba#,bone of this dissertation-

:HAT IS A BRAND@

A##ording to Rita 1lifton* E( 1EO of Interbrand Ne)ell and Sorrell + a leading spe#ialist

brand #onsultan#" firm + a brand is A &!(tur# of ta"0!1l# a"% !"ta"0!1l# attr!1ut#$

$ &1ol!?#% !" a tra%#&ar; +/!c/ !f 6ro6#rl &a"a0#% cr#at#$ !"flu#"c# a"%

0#"#rat#$ )alu#.

This definition trul" #aptures the essen#e of a brand* and highlights the importan#e of brand management- Branding is about #reating :!alueG* both for #ustomers* and for the

#ompan"- This !alue stems from the produ#ts and ser!i#es that #ompanies #reate and

bring to the mar,et* but e(tends further to en#ompass added !alues deri!ed from fa#tors

su#h as the brand+#ustomer relationship* the brand/s emotional benefits and its self

e(pressi!e benefits-

Other #ommon des#riptions of a brand in#lude + a : relationship1 * a :reputation1 * a : set

of e$pectations1 * and a : promise1 - It is a #ompan"/s promise to #onsistentl" deli!er a

spe#ifi# set of features* benefits* and ser!i#es to #ustomers- Brands are ri#hl" endo)ed

entities- The" start life as ideas* ma,ing their )a" into planning and strateg" do#uments*

"et ultimatel" reside as #onsumer per#eptions- 2or some #ompanies* brands are their most

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!aluable asset- The spa#e a brand o##upies inside a #ustomer

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The Potential Brand

A brand a#hie!es its potential )hen added !alues are so great that #ustomers )ill not

)illingl" a##ept substitutes* e!en )hen the alternati!es are substantiall" #heaper or more

readil" a!ailable 5e-g- Coca Cola *N!;# *L#)! $ 6-

PRODUCT AND SERVICE BRANDS

Pro%uct 1ra"%$ are the original brand #arriers- The" are the histori#al #ore of branding

be#ause the" are the most pre!alent* and be#ause the" most readil" #ome to mind )hen

#onsumers are as,ed to re#all brands- 2or instan#e 7M* No,ia* Pepsi* ;onda* et#-

S#r)!c# Bra"%$ 5intangible6 are mu#h less numerous than their produ#t #ounter parts-

Intangible ser!i#es are also more #hallenging to :pa#,ageG and sell to #onsumers )ho

often ha!e diffi#ult" #on#eptuali@ing* preferring things the" #an see and tou#h-

1ertain ser!i#e brands* su#h as in retailing* a#tuall" sell produ#ts* but the brand itself is

the store* not the produ#ts it sells + T/# Ga6 stores* Sout/+#$t A!rl!"#$ and

A&a?o".co& are e(amples- In fa#t* this is the #ase )ith all Internet #ompanies* as the"

essentiall" perform the fun#tion of a :!irtualG intermediar" or : infomediary G and areintangible-

E'OTIONAL LO=ALT=

Emotional lo"alt" #an be brought about in t)o main )a"s- 2irstl"* emotional lo"alt" is

born out of a #onsumer/s personal relationship )ith a brand- This relationship #an

a#tuall" start through the satisfa#tion of a fun#tional need or e(pressi!eness 5self+image6

need- 1onsumers #ross the threshold from a mere brand relationship into emotional

lo"alt" )hen the" HanimateH the brand* gi!ing quasi+human qualities and relate to it as

the" )ould to humans + #onsider ho) Co;# #onsumers felt betra"ed )hen Coca Cola

de#ided to #hange their formula in >83&-

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Emotional lo"alt" #an be also #reated through the formation of a strong user #ommunit"

around the brand- The #onsumer rea#hes emotional lo"alt" )hen membership in the

brand88>6* brand equit" : is a set of

assets 4and liabilities5 linked to a brand-s name and symbol that adds to 4or subtracts

from5 the %alue pro%ided by a product or ser%ice6 G- The ma=or brand assets are brand

lo"alt"* name a)areness* per#ei!ed qualit"* strong brand asso#iations* and other assets

su#h as patents* trademar,s* and relationships )ith distributors and strategi# partners-

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T/# )alu#$ of 1ra"% to cu$tor$

A##ording to Fean+Noel apferer 5>88 6%* brands perform se!eral fun#tions that add

!alue and #ustomer benefits

I%#"t!f!cat!o" + To be #learl" seen* to ma,e sense of the offer* to qui#,l" identif" sought

after produ#ts

+Pract!cal!t To sa!e time and energ" through identi#al repur#hasing and lo"alt"

+Guara"t## To be sure of finding the same qualit" no matter )here or )hen "ou bu"

the produ#t or ser!i#e

+O6t!&!?at!o" + To be sure of bu"ing the best produ#t in the #ategor"* the best performer

for a parti#ular purpose

+C/aract#r!?at!o" + To ha!e #onfirmation of "our self+image or the image that "ou

present to others

+Co"t!"u!t + Satisfa#tion brought about through familiarit" and intima#" )ith the brand

that "ou ha!e been #onsuming for "ears

+H#%o"!$t!c + Satisfa#tion lin,ed to the attra#ti!eness of the brand* to its logo* to its

#ommuni#ation

+Et/!cal + Satisfa#tion lin,ed to the responsible beha!iour of the brand in its relationship

)ith so#iet"

Valu#$ +/!c/ BRAND 0!)#$ to a co&6a" .

Brands #reate !alue for #ompanies* in the follo)ing )a"s

+Bra"%$ &ar;#t $/ar# a"% 6rof!t$ + T"pi#all" a brand leader obtains t)i#e the mar,et

share of the number t)o brand* and the number t)o t)i#e the share of the number three-

The brand leader is the most profitable and all be"ond number t)o are unprofitable-

+Bra"% L#)#ra0# + The brand leader benefits from t)o main le!erage effe#ts ;igher

!olume leads to e#onomies of s#ale in de!elopment* produ#tion and mar,etingJ Premium

pri#ing in#reases re!enue-

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+T/# Valu# of N!c/# Bra"%$ + Dominating a ni#he mar,et is usuall" more profitable

than being fifth in a large mar,et-

+Bra"% Lo alt a"% B#l!#f$ + Strong brands are more attra#ti!e to in!estors- Brand

lo"alt" also redu#es mar,eting #osts and enables firms to o!erride o##asional problems

5e-g- o/"$o" o/"$o" )ith T l#"ol 6-

+T/# Bra"% Barr!#r + Brand leaders usuall" ha!e the finan#ial strength to fend off

#ompetitors- Potential #ompetitors are usuall" relu#tant to enter the mar,et if e(isting

brands satisf" #ustomers- In addition* brand leaders #an e(ploit their superiorit" in the

mar,et 5e-g- Coca Cola the real thingG6- +A)#"u#$ for Gro+t/ + The produ#t life #"#le

appl" to produ#ts* not brands- 1ompanies #an maintain a brand )hile modif"ing the

underl"ing produ#t to a##ount for ne) te#hnolog"* fashion or pre!ailing mar,et

#onditions- The brand #an also be used to penetrate ne) mar,ets-

All these aspe#ts ma,e branding an essential in #reating !alue through the pro!ision of a

#ompelling and #onsistent offering and #ustomer e(perien#e that )ill satisf" #ustomers

and ,eep them #oming ba#,- .hen a #ompan" #reates this t"pe of #ustomer preferen#e

and lo"alt"* it #an build a strong mar,et share* maintain good pri#e le!els and generate

strong #ash flo)s- This* in turn* dri!es up share pri#e and pro!ides the basis for future

gro)th-

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L TERATURE

REV EW

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LITERATURE REVIE:

The dissertation has got insights from noted a#ademi#ians* arti#les and maga@ines-Branding is pra#ti#ed from longtimeJ ho)e!er the e(tension in to internet brand building

is ne) realm- Due to the #hanging d"nami#s of internet* there are no #on#rete theories

that ha!e been established b" resear#hers in this field- Some of the ,e" literature has been

mentioned in this #hapter-

Strat#0!c Bra"% 'a"a0#"t 1 No#l Ko6f#r#r has pro!ided !alues of rand to

#ustomers- ;e has )ritten the material in an eas" format to understand the basi# #on#ept

and pra#ti#e brand management in totalit"- Author is a re#ogni@ed authorit" on Brands

and brand management- Being professor of mar,eting Strateg" and a#ting as an

#onsultant to man" 7lobal #orporations ma,es him an good author in branding- ;e is also

passionate about ad!ertising and #ommuni#ation- The boo, has influen#ed this

dissertation b" pro!iding good basi#s in branding and e(tending pra#ti#al appli#ations in

dissertation-

Bu$!"#$$ Tra"$for&at!o" a"% I"for&at!o" 'a"a0#"t

A paper written for the ctober 2777 *arketing 1ommuni#ations #$ecuti%e

International Asia Pacific +onference. By Simon Rawson

I"tro%uct!o"

This mar,eting paper e(amines no)ledge Management* 1ontent Management*

1ustomer Relationship Management and Information 1ontent Suppl" 1hain on internet-

The arti#le gi!es #hara#teristi# of su##essful use of te#hnolog" and their #ommon

#hara#teristi#s- The" are holisti# management* emplo"ing a range of #omplementar"

te#hnolog" s"stems understand and implement #ommuni#ation about ne) pro#esses

resulting in organi@ational #hange-

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All these literature re!ie) helped in understanding the branding and its strategies in

different aspe#ts- The dissertation differs in ha!ing unique #ase stud" anal"sis in

identif"ing the strategies- Some of the sampling has been done abroad to get more

rele!ant data-

Pra#ti#al theories ha!e been used to anal"se ea#h #ase stud" and get uniform anal"sis-

The dissertation is #ombinational result of both theor" and Pra#ti#al approa#hes gi!ing

different !ie)s to the #on#erned persons-

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INDUSTR= PROFILE

BUILDING A BRAND

INTRODUCTION

Building a strong brand is a #omple( tas,- This part spells out the traditional brand

building pro#ess* highlighting important fa#tors that #ontribute to the su##ess of ea#h step

along the )a"- The ma=or #hara#teristi#s of su##essful brands are also re!ie)ed-

OVERVIE: OF THE BRAND BUILDING PROCESS

The brand building pro#ess starts )ith the de!elopment of a strong !alue proposition-

On#e this has been established* the ne(t step is to get #ustomers to tr" the brand- If the

offering is de!eloped properl"* it should pro!ide a satisfa#tor" e(perien#e and lead to a

)illingness to bu" again- To enti#e trial and repeat pur#hase requires triggering

me#hanisms* )hi#h are #reated through ad!ertising* promotion* selling* publi# relations*

and dire#t mar,eting- Through the #ombination of the stimulus of #onsistent

#ommuni#ations and satisfa#tor" usage and e(perien#e* brand a)areness* #onfiden#e and

brand equit" are built-

THE VALUE PROPOSITION

Brand+building starts )ith a #learl" defined !alue proposition 4 a strong offer that a potential #ustomer )ould find #ompelling and interesting- In order to do this* a #ompan"

must de!elop a strong understanding of )ho their potential #ustomers are* )hat the"

!alue and ho) the produ#ts or ser!i#es should be optimi@ed or #onfigured to deli!er this

!alue-

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Brand themes are the most fle(ible element and )ill tend to #hange )ith fashion* st"le or

#ultural differen#es from one #ountr" to anotherJ ho)e!er the brand st"le and #ore tend to

be less fle(ible- The brand prism enables management to understand the brand* its

strengths and opportunities- Se#ondl"* it helps in de!eloping the brand strateg" and the

formulation of a distin#ti!e positioning in the mar,et- It also fa#ilitates #onsisten#" in the

message being transmitted through presentation 5e-g- )ebsite design* stru#ture6*

ad!ertising* belo)+the+line a#ti!ities* and through line and brand e(tensions- 2inall"*

understanding the brand

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+ Experience o !se + if a brand pro!ides good ser!i#e o!er timeJ it a#quires added !alues

of familiarit" and pro!en reliabilit"-

+!ser Associations + brands frequentl" a#quire an image from the t"pe of people )ho are

seen as using them- Ad!ertising and sponsorship are often used to #on!e" images of

prestige or su##ess b" asso#iating the brand )ith glamorous personalities or #elebrities-

2or instan#e Britne" Spear and Da!id Be#,ham )ith Pepsi 1ola* or Sharu,h ,han )ith

;"undai Santro-

+ Belie in E icacy + in man" #ases* if #ustomers ha!e faith that a brand )ill )or,* it is

more li,el" to )or, effe#ti!el" for them- 2or pharma#euti#als* #osmeti#s and high+te#h

produ#ts* faith in brand generates satisfa#tion in use- Beliefs in effi#a#" #an be #reated b"

#omparati!e e!aluations and ran,ings from #onsumer asso#iations* industr"

endorsements and ne)spaper editorials-

+ Brand Appearance + the design* la"out and appearan#e of the brand #an #learl" affe#t

preferen#e b" offering #ues to qualit"-

+ "anu acturers# $ame and Reputation + In man" situations a strong #ompan" name

5e-g- Coca Cola * To ota * So" * H#+l#tt Pac;ar% * a"% N!;o" 6 atta#hed to a ne)

produ#t )ill transfer positi!e asso#iations* pro!iding #onfiden#e and in#enti!e to trial-

DEVELOPING THE FRA'E:ORK CO''UNICATING

THE VALUE PROPOSITION

On#e the !alue proposition is #learl" defined* the #ompan" must ensure that it de!elops

the appropriate stru#ture* s"stems* strateg" 5partnerships and allian#es6* s,ills*

management st"le* #ulture and staff needed to support* deli!er and reinfor#e this !alue

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proposition 5see Appendi( B + The M# inse" 0+S 2rame)or,6- The !alue proposition

must then be arti#ulated in terms of the :mar,eting mi(G + often referred to as the :%PsG 4

P rodu#t features* P ri#e*P romotion and P la#e 5distribution strateg"6- In term of ser!i#e* $

more :PsG must be atta#hed P eople* P ro#ess* and P h"si#al e!iden#e-The !alue

proposition must be #ommuni#ated to enti#e #ustomers to tr" the produ#t L ser!i#e- If the

offering is de!eloped properl"* it should lead to satisfa#tion and re+pur#hase- Before

potential #ustomers #an bu" a produ#t L ser!i#e* the" must learn about it-

This learning is #alled the adoption process8. Adoption pro#ess The Inno!ation+Adoption

Model #onsists of

+ Awareness + The 1ompan" has to #reate a)areness of the brand* and its produ#ts Lser!i#es- Ad!ertising and PR are #ommon tools for a#hie!ing a)areness-

+ %nterest + 1ustomers need to be stimulated to see, information about the brand

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Traditionall"* #ompanies ha!e used the tools of the promotions mi( + ad!ertising* dire#t

mar,eting* sales promotion* personal selling and publi# relations L publi#it" + to mo!e

#ustomers through the adoption pro#ess- Ad!ertising and publi# relations #an be effe#ti!e

in generating a)areness and interest-

Sales promotions and sampling are often used for en#ouraging e!aluation and trial- It is

benefi#ial for #ompanies to a##elerate the adoption pro#ess before #ompetitors emulate

the benefits the" offer- Enti#ing #ustomers to repur#hase and adopt the brand not onl"

requires a su##essful trial e(perien#e* but enhan#ed #ustomer intera#tion through

relationship building-

BUILDING CUSTO'ER RELATIONSHIPS

Building relationships )ith #ustomers e(tends be"ond a single transa#tion- This is often

referred to as +ustomer )elationship *anagement 4+)*5 - This fo#uses on establishing a

long+term* multi+transa#tion relationship* )hen ea#h trusts the other to deal fairl" and

reliabl"- O!er time* this pro#ess enables an e(#hange of information* pro!iding insight

into #ustomers< needs and )ants- This information is a ,e" #ompetiti!e ad!antage*

allo)ing #ompanies to #ommuni#ate regularl" )ith their #ustomers and #ustomi@e their

intera#tion- In this )a"* #ompanies #an in#rease bu"ers/ satisfa#tion* ma,ing them less

li,el" to s)it#h to a #ompetitor- 1ustomer ser!i#e is an important element of this

relationship- Berr" and Parasuraman 5>88>6 identified three #ustomer relationship

building

+&inancial Bene its + su#h as airline frequent fl"er programmes* lo"alt" L dis#ount

#ards-

+ Social Bene its + b" learning #ustomers/ indi!idual needs and )ants and indi!iduali@ing

and #ustomi@ing ser!i#e and #onta#t )ith the #ustomer-

+ Structural Ties + for e(ample* the #ompan" ma" suppl" #ustomers )ith spe#ial

equipment or tools 5e-g- Internet lin,ages* soft)are6 to help #ustomers intera#t )ith the

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#ompan"- Through building relationships )ith #ustomers* #ompanies #an in#rease the

!alue of ea#h #ustomer* )hile strengthening the position and !alue of the brand-

CHARACTERISTICS OF SUCCESSFUL BRANDS

Se!eral fa#tors #ontributing to the su##ess of brands ha!e been

Identified* in#luding

+ 'uality Product / Service Experience + Satisfa#tor" e(perien#e is the ma=or

determinant of brand !alues- If the qualit" of the e(perien#e deteriorates* or if the brandis surpassed b" superior offers from #ompetitors* then its position )ill be undermined-

+&irst-"over Advantage + Being first into the mar,et does not ne#essaril" bring su##ess*

but it ma,es the tas, easier- It is easier to #apture a share of the #onsumer/s mind and

build a #ustomer base* )hen the brand has no #ompetitors to ri!al its position-

+!ni(ue Positioning Concept + If the brand is not the inno!ator* it must ha!e a unique

positioning #on#ept + a segmentation s#heme* !alue proposition or augmented brand*

)hi#h )ill add !alue and distinguish it from #ompetition-

+ Strong Communications Programme + A su##essful brand requires an effe#ti!e selling*

ad!ertising or promotional #ampaign* )hi#h )ill #ommuni#ate the brand/s e(isten#e* its

fun#tion and ps"#hologi#al !alues* trigger trial and reinfor#e #ommitment to it- .ithout

building a)areness* #omprehension and intention to bu"* the brand is meaningless-

+Time and Consistency + Rome )as not built in a da"- So is a brand name- It often ta,es

"ears for a brand to build up the added !alues* and establish a trusting relationship-

Building strong brands stems from the #reation of a #ompelling !alue proposition- On#e

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the frame)or, has been established and the organi@ation #onfigured to pro!ide this

proposition* #ompanies must a#ti!el" #ommuni#ate it to the target audien#e to enti#e trial-

THE INTERNET

INTRODUCTION

The Internet is transforming the business en!ironment* #reating ne) #hallenges and

opportunities- This #hapter pro!ides an o!er!ie) of the Internet and its defining#hara#teristi#s* highlighting the ,e" de!elopments that ha!e #ontributed to its e(plosi!e

gro)th and its impa#t on the business en!ironment-

OVERVIE: OF THE INTERNET

The Internet is a )orld+)ide net)or, of net)or,s- In essen#e* it is a #ommon te#hnolog"

platform that allo)s #omputing de!i#es to #ommuni#ate )ith ea#h other- In doing so* it

offers a number of alternati!e #hannels that enable businesses and people to

#ommuni#ate- The three #ore #hannels in#lude e+mail 5the most #ommon6* ne)s groups

and mailing lists* and the :)orld )ide )ebG 5)))6-The .orld .ide .eb 5)))6 is a

large net)or, of do#uments* )hi#h #ontain h"perte(t and pi#tures* and pro!ides the

opportunit" for d"nami# intera#tion- ;"perte(t allo)s information to be organised in a

user friendl" )a" that is easil" a##essible- Information is be#oming a ma=or part of the

produ#ts and ser!i#es that people bu"* and a #riti#al sour#e of added !alue-

T/# D#f!"!"0 C/aract#r!$t!c$ of t/# I"t#r"#t

The distin#ti!e #hara#teristi#s of the Internet #an be summari@ed in three ,e" points

%t dramatically Reduces %n ormation Costs + the #ost of sear#hing for information and

the #ost of the information itself is signifi#antl" redu#ed 5and in man" #ases is free6-

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%t Allows or Two-way Communication and %nteractivity + this radi#all" alters the

pro#ess of intera#tion bet)een #ommuni#ating parties* allo)ing both parties to identif"

ea#h other and build one+to+one relationships 4 not pre!iousl" a!ailable )ith mass

medium forms of #ommuni#ation-

%t )vercomes the Barriers o Time and Space + The Internet is a global net)or, and #an

be rea#hed from e!er")here* regardless of )here the #omputer or Internet a##ess de!i#e

is ph"si#all" lo#ated-

The Internet #an also be a##essed at an" time + % hours a da"* 0 da"s a )ee,- These

qualities eliminate the barriers of time and spa#e that e(ist in the ph"si#al )orld-

These #hara#teristi#s #ombine to #reate a !er" po)erful medium- B" allo)ing for dire#t*

ubiquitous lin,s to an"one* an")here* the Internet lets indi!iduals and #ompanies buildintera#ti!e relationships )ith #ustomers and suppliers* and deli!er ne) produ#ts and

ser!i#es at lo) #ost- These defining #hara#teristi#s ha!e fuelled its e(plosi!e gro)th-

THE GRO:TH OF THE INTERNET

The origins of the Internet date ba#, to >8'8* )hen the nited States Defense

Department de!eloped the :ArpanetG* )hi#h )as intended to lin, militar" net)or,s

together- The gro)th of personal #omputing te#hnolog" in the >83?s* largel" #ontributedto the a##elerated adoption of the Internet and the )orld+)ide )eb 5)))6 )hi#h far

outstrips that of pre!ious te#hnologies-

The number of Internet users is #onstantl" in#reasing- B" ???* there are $0& million

Internet users )orld+)ide* and b" ?? the figure is &?? million- This boom has been the

result of se!eral underl"ing for#es that ha!e #ome together

The )ider a!ailabilit" of the Internet* offering ine(pensi!e band)idth-

Easier a##ess to these net)or,s pro!ided b" point+and+#li#, )eb bro)sers-

Multimedia de!elopment tools that #an be used to #reate ri#h #ontent-

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The emergen#e of open standards in de!elopment tools and at the net)or,

proto#ol le!el 5e-g- T1PLIP6* ma,ing it more #ost effe#ti!e for soft)are

de!elopers and other te#hnolog" pro!iders to #reate interoperable produ#ts-

The gro)th in support ser!i#es 5e-g- )eb design* hosting* and gate)a" ser!i#es6-

The de!elopment of #riti#al pro#esses 5ordering* billing* pa"ment* et#-6- The most

important fa#tor has been that users are be#oming a##ustomed to the Internet and

are rapidl" o!er#oming an" inhibitions #on#erning e+#ommer#e- The momentum

#reated b" all these for#es has #reated a !irtuous #"#le of gro)th-

A stud" b" the Stanford Institute for the uantitati!e Stud" of So#iet" 5 ???6* re!eals the

)ide range of areas )here people are embra#ing the Internet + from #ommuni#ating 58?9

use e+mail6 and sour#ing information* to intera#ting 5e-g- #hat rooms* entertainment6 and

pur#hasing 5$096- These a#ti!ities highlight the adoption of the Internet as an intera#ti!e*

#ommuni#ation and information tool-

THE INTERNET AND E CO''ERCE

E+#ommer#e des#ribes the use of the Internet as a medium and as a mar,et for #ommer#e-

The main differen#e bet)een the Internet and other ele#troni# media 5i-e- fa(* telephone6

is that the Internet goes be"ond =ust enabling transa#tions- The Internet be#omes an

information+ri#h :!irtualG mar,et spa#e through )hi#h bu"ers and sellers intera#t- These

/!irtual/ mar,etpla#es are not fi(ed in ph"si#al territor" but are #reated b" the

#ombination of standards+based net)or,s* )eb bro)sers* soft)are* #ontent* and people-

1ondu#ting business o!er the Internet 5 e business 6 represents a fundamental shift in ho)

bu"ers and sellers intera#t- The bu"er and seller :fa#eG ea#h other through an ele#troni#

#onne#tion- There is no nee d to tra!el to a ph"si#al lo#ation* no order boo,* and no #ashregister- Instead there is a )ebsite- The !alue of e+#ommer#e transa#tions and mar,et

fore#asts !ar" )idel" among resear#h firms and go!ernment agen#ies- ;o)e!er* the" all

pro=e#t the !alue e+#ommer#e transa#tions to gro) at unpre#edented rates-

I"t#r"#t U$a0# Stat!$t!c$

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threatening to undermine man" old established brands- At the same time* the e(plosion of

information is pla#ing a premium on s,illed information management- Ne) brands and

business models are emerging to sei@e this opportunit"* some of )hi#h loo, set to

be#ome the super*rands of the future 5e-g- =a/oo Goo0l# 6-

I&6ro)#% Cor# Bu$!"#$$ Proc#$$#$

The use of Internet+based te#hnologies as the platform* o!er )hi#h the organi@ation

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This* #ombined )ith the emergen#e of ele#troni# intermediaries* the diminishing barriers+

to+entr" and the lo)er s)it#hing #osts* has resulted in a fier#e #ompetiti!e en!ironment-

K"o+l#%0# !$ 1#co&!"0 a K# Strat#0!c A$$#t

Man" #ompanies ha!e re#ognised that if the" )ant to su##eed* their organi@ations must

harness ,no)ledge + internall" and e(ternall" 4 in de!eloping produ#ts* impro!ing

pro#esses* getting #loser to #ustomers and ultimatel" sta"ing ahead of #ompetitors-

Internet te#hnolog" #an be used to e(ploit #olle#ti!e learning and ,no)ledge* allo)ing

emplo"ees to share ,no)ledge* #ollaborate more effe#ti!el" and ultimatel" embed

organi@ational intelligen#e )ithin pro#esses* produ#ts and ser!i#es-

T/# Pac# of Bu$!"#$$ !$ Acc#l#rat!"0

.ith the fast pa#e of te#hnologi#al #hange* the globali@ation of business* fier#e

#ompetition* empo)ered #ustomers* the de!elopment of a ,no)ledge e#onom"* and the

% ( 0 en!ironment* the t"pi#al #lo#,+speed at )hi#h #ompanies need to operate has

a##elerated- No) #ompanies need to mo!e at warp speed * to #apture ne) opportunities*

#ommit and deplo" resour#es* #onstantl" inno!ate* respond to #ompetiti!e and mar,et

d"nami#s* and reorgani@e as appropriate-

R#)olut!o"!?!"0 Sal#$ a"% Bra"% 'a"a0#"t

The Internet pro!ides #ompanies )ith a ne) #hannel to rea#h a ne) breed of #ustomer-

Enhan#ed #ommuni#ation #apabilities allo) #ompanies to build one+to+one relationships

)ith their #ustomers and suppliers that )ere pre!iousl" impossible- It allo)s #ompanies

to impro!e #ustomer ser!i#e* a#hie!e global rea#h and reali@e a ne) sour#e of #ost

ad!antage- As su#h* it pro!ides the opportunit" to rea#h #ustomers )here the" )ant*

)hen the" )ant ho) the" )ant and )ith the le!els of #ustomer ser!i#e the" demand-

N#+ :a $ of Or0a"!?!"0 a"% Structur!"0 Bu$!"#$$

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Transformed #ommuni#ations #osts and #apabilities are helping to dri!e a fundamental

rethin, of ho) firms should organise themsel!es- E(amples of emerging information age

business stru#tures in#lude flat !ersus hierar#hi#al* e(tensi!e outsour#ing* suppl" #hain

#ooperation* and multiple strategi# allian#es and partnerships-

The opportunit" of lin,ing the #omplete suppl" #hain /!irtuall"/* #ombeidn )ith intense

#ompetiti!e pressures* and the need for speed and fle(ibilit" ha!e a##elerated the

unbundling of business s"stems-

In#reasingl"* #ompanies are fo#using on the part of the !alue #hain that is most !alued b"

#ustomers or )here their #ompan" has a #ore #ompeten#e* and partnering up )ith the best for the remaining a#ti!ities- In this )a"* #ompanies #an pro!ide #ustomers )ith a

strong !alue proposition b" offering them the best in qualit"* !ariet"* information* ad!i#e

and #on!enien#e-

T/# Strat#0!c I&6orta"c# of All!a"c#$ a"% Part"#r$/!6$

Although this point has alread" been tou#hed upon* allian#es and partnerships ha!e ta,en

on a ne) le!el of strategi# importan#e- Traditionall"* #ompanies ha!e loo,ed upon

allian#es onl" as a means of filling gaps* and most traditional partnerships )ere !erti#al*

lin,ing #ompanies )ith suppliers and #ustomers up and do)n a pre+defined !alue #hain-

;o)e!er* most Internet and e+#ommer#e partnerships e(tend be"ond this* lin,ing

#ompanies )ith #ompetitors and pla"ers from entirel" different industries and business

se#tors* thus #reating a : %alue net1 - The e(tent of this partnering highlights the t"pi#al

stru#ture and d"nami#s of an online #ompan"- In an attempt to pro!ide a ri#h #ustomer

e(perien#e* man" online #ompanies are blending together the produ#ts and ser!i#es of a

)ide range of #ompanies- This pro!ides #ustomers )ith added !alue* )hile ma,ing the

offering hard to dupli#ate off+line- Partnering )ith portals and affiliate )eb sites is

important in dri!ing traffi# to a )eb site- Rapid and e(tensi!e partnering is also an

effe#ti!e )a" to a#hie!e the first+mo!er ad!antage that #an pro!e essential to)ards

establishing a #ompetiti!e ad!antage-

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F!"%!"0$

The Internet and its strategi# impa#t are not te#hnologi#al issues + the" are business

issues- The Internet is transforming e!er" business to some degree- Ne) opportunities for

effi#ien#" and #o+ordination are emerging* #ompetition is intensif"ing* the pa#e of

business is a##elerating and po)er is shifting to the #ustomer-

As su#h* it is transforming the #ompetiti!e lands#ape and brand+building en!ironment*

)hile triggering the emergen#e of ne) brand building strategies* tools and opportunities-

BUILDING BRANDS ON THE INTERNET

INTRODUCTION

The Internet is #hanging the brand en!ironment or : brand scape1 - This #hapter e(plores

the ne) d"nami#s of brands and the #riti#al importan#e of #ustomer lo"alt" online- Ne)

strategies and tools for building brands on the Internet are identified* in#luding the

intera#ti!e approa#h to attra#ting #ustomers and building lo"alt"- The limitations of

brand+building on the Internet are also dis#ussed-

R#a$o"$ for Pr#$#"c# o" !"t#r"#tA. To E$ta1l!$/ a" O"l!"# Pr#$#"c#

B" ??'* )orld)ide e#ommer#e re!enues are e(pe#ted to total % trillion dollars- No

matter )hat business #ompan" is in* the" #an/t ignore % trillion dollars business

opportunit"- To be a part of that #ommunit" and sho) that the" are interested in ser!ing

them* #ompanies need to be on the ... or else #ompetitors )ill-

B. To N#t+or;

A lot of )hat passes for business is simpl" nothing more than ma,ing #onne#tions )ith

other people- E!er" su##essful business person ,no)s* it/s not )hat "ou ,no)* it/s )ho

"ou ,no)- Passing out business #ard is part of e!er" meeting and e!er" person #an tell

more than one stor" of ho) a #han#e meeting turned into the big deal- Internet gi!es "ou

an opportunit" to pass on #ompanies< business #ard to thousands* ma"be millions of

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potential #lients and partners- These ser!i#es are pro!ided % hours a da"* ine(pensi!el"

and simpl"* on the ...- The #ompan" is no) a !irtual lo#ation )here people #an find

an"time-

C. To 'a;# I"for&at!o" A)a!la1l#

.hat are "our hoursQ .hat do "ou doQ ;o) #an someone #onta#t "ouQ .hat methods of

pa"ment do "ou ta,eQ .here are "ou lo#atedQ .hat is toda"/s spe#ialQ Ne(t )ee,/s

promotion information- The #ustomer is informed of e!er" reason )h" the" should do

business )ith #ompan"* leading to more business-

D. To S#r)# Cu$tor$

Ma,ing business information a!ailable is one of the most important )a"s to ser!e#ustomers- But if )e loo, at ser!ing the #ustomer* )e/ll find e!en more )a"s to use

... te#hnolog"- Allo) #ustomer to sear#h for e(a#tl" )hat the" )ant )ithout hunting

through the store* the" #an find #olors* si@es and more )ithout the help of a sales agent*

its all right there at their fingertips- All this #an be done* simpl"* qui#,l" and

ine(pensi!el"* on the ...-

E. To I"cr#a$# Pu1l!c I"t#r#$t

.ith .eb page information* an"bod" an")here )ho #an a##ess the .eb and hears about

is a potential !isitor to .eb site and a potential #ustomer for our information there-

F. To S#ll T/!"0$

Man" people thin, that this is the number > thing to do )ith the .orld .ide .eb* but

here it is not- To ma,e it #lear )e should #onsider selling things on the Internet and the

.orld .ide .eb after )e ha!e done all the things abo!e and ma"be e!en after doing

quite a fe) more things from this list- .h"Q .ell* the ans)er is #omple( but the best

)a" to put it is* do )e #onsider the telephone the best pla#e to sell thingsQ Probabl" not-

.e probabl" #onsider the telephone a tool that allo)s "ou to #ommuni#ate )ith our

#ustomer* )hi#h in turn helps us sell things- The te#hnolog" is different* of #ourse* but

before people de#ide to be#ome #ustomers* the" )ant to ,no) about #ompan"* )hat the"

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. To A"$+#r Fr# u#"tl A$;#% 9u#$t!o"$

The organi@ations time is usuall" spent ans)ering the same questions o!er and o!er

again- These are the questions #ustomers and potential #ustomers )ant to ,no) the

ans)er to before the" deal )ith #ompan"- B" posting them on a ... page )ill remo!e

another barrier to doing business )ith #ompan" and frees up some time for that harried

phone operator-

K. To O6#" I"t#r"at!o"al 'ar;#t$

.ith a .eb page* #ompan" #an open up a dialogue )ith international mar,ets as easil"as )ith the #ompan" a#ross the street- As a matter+of+fa#t* before it goes onto the .eb* it

should de#ide ho) the" )ant to handle the international business that )ill #ome their

)a"* be#ause the postings are #ertain to bring international opportunities * )hether it )as

part of plan or not- Another added benefitJ if #ompan" has offi#es o!erseas* the" #an

a##ess the home offi#es information for the pri#e of a lo#al phone #all-

L. To Cr#at# a -3 Hour S#r)!c#

.e/re not all on the same s#hedule- Business is )orld)ide but offi#e hours aren/t- Tr"ing

to rea#h Asia or Europe is e!en more frustrating- But .eb pages ser!e the #lient*

#ustomer and partner % hours a da"* se!en da"s a )ee,- No o!ertime either- It #an

#ustomi@e information to mat#h needs and #olle#t important information that )ill put "ou

ahead of the #ompetition* e!en before the" get into the offi#e-

'. To K##6 U6%at#% I"for&at!o" A)a!la1l# 9u!c;l .

Sometimes* information #hanges before it gets off the press- No) "ou ha!e a pile of

e(pensi!e* )orthless paper- Ele#troni# publishing #hanges )ith "our needs- No paper* no

in,* no printer/s bill- Cou #an e!en atta#h "our .eb page to a database )hi#h #ustomi@es

the page/s output to a database "ou #an #hange as man" times in a da" as "ou need- No

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printed pie#e #an mat#h that fle(ibilit"- Its an instant online full #olor #atalog that is

updated in real+time-

N. To T#$t 'ar;#t N#+ S#r)!c#$ a"% Pro%uct$

Tied into the reason abo!e* )e all ,no) the #ost of rolling out a ne) produ#t-

Ad!ertising* ad!ertising* ad!ertising* PR and ad!ertising- E(pensi!e* e(pensi!e*

e(pensi!e- On#e "ou ha!e been on the .eb and ,no) )hat to e(pe#t from those )ho are

seeing "our page* the" are the least e(pensi!e mar,et for "ou to rea#h- The" )ill also let

"ou ,no) )hat the" thin, of "our produ#t faster* easier and mu#h less e(pensi!el" than

an" other mar,et "ou ma" rea#h- 2or the #ost of a page or t)o of .eb programming* "ou

#an ha!e a #r"stal ball into )here to position "our produ#t or ser!i#e in the mar,etpla#e-

Ama@ing-

O. To R#ac/ a S6#c!al!?#% 'ar;#t

Sell fish tan,s* art reprodu#tions* and fl"ing lessonsQ Cou ma" thin, that the Internet is

not a good pla#e to be- .ell* thin, again- The Internet isn/t =ust #omputer gee,s an"more-

.ith the millions of the ... users* e!en the most spe#ifi#all" defined interest group

)ill be represented in large numbers- Sin#e the .eb has se!eral !er" good sear#h

programs* "our interest group )ill be able to find "ou* or "our #ompetitors-

P. To S#r)# =our Local 'ar;#t

.here!er "ou are lo#ated there is probabl" enough lo#al #ustomers )ith .eb a##ess to

ma,e it )orth "our )hile to #onsider .eb mar,eting- Some lo#al restaurants e!en ta,e

reser!ations on the )eb or internet order Cou #an ma,e the .eb a #ost+effe#ti!e retail

lo#ation no matter )here "our mar,et is-

THE NE: D=NA'ICS OF BRANDS

Traditionall"* in addition to pro!iding added !alue* brands )ere a substitute for

information + a )a" for #onsumers to simplif" the time #onsuming pro#ess of sear#h and

#omparison before de#iding )hat to bu"- ;o)e!er* the Internet ma,es sear#h and

#omparison mu#h easier- This threatens to undermine the !alue of brands- On the other

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hand* the logi# of the Internet #uts another )a"- Transa#tions on the Internet require

#ustomers to pro!ide detailed personal information + names* addresses* #redit #ard

numbers* et#- 7enerall"* people ha!e #on#erns about sharing personal information- In

addition* the intangible nature of the Internet* and the fa#t that #ustomers are bu"ing

goods that* in most #ases* the" ha!e ne!er handled or seen 5e(#ept ons#reen6* has pla#ed

greater importan#e on trust and security - People onl" tend to transa#t )ith sites the"

,no) and trust + sites that pro!ide a )ealth of information and ma,e #omparison

shopping eas"* )here the user feels a part of* and sites that understand the user/s needs

and preferen#es-

This highlights the surfa#ing of in ormation and relationships as ,e" sour#es of added!alue in the Internet e#onom"- 1ustomers deri!e added !alue through the pro!ision of

information on the produ#ts or ser!i#es the" bu"* as )ell as on topi#s of interest related to

the brand and produ#t #hara#teristi#s- Traditionall"* brands ha!e been de!eloped in an

en!ironment )hereb" a #ompan" #reates a brand* and pro=e#ts it onto a third part"

intermediar" 5the media6- In response* man" unnamed #ustomers de!elop a :relationshipG

)ith the brand-

THE I'PORTANCE OF ONLINE CUSTO'ER LO=ALT=

A##ording to a re#ent stud"3* 0&9 of senior e(e#uti!es belie!e the su##ess of an e+

business initiati!e depends entirel" on its abilit" to build #ustomer lo"alt"- In fa#t* it

#ould be argued that #ustomer lo"alt" is e!en more #riti#al online- This !ie) is reinfor#ed

b" in+depth studies #arried out b" Bain 1o- 5 ???6 )hi#h identified the follo)ing

fa#tors

+ 1ompanies )ill not brea,+e!en on one+time shoppers + often* #ustomer a#quisition #osts

are high* and to re#o!er their in!estment* #ompanies need to retain #ustomers so that the"

return to the site repeatedl"- Man" e+retailers 5 ;e tailers; 6 are a!eraging more than >?? to

a#quire a ne) #ustomer* and some are spending o!er &??- Therefore* it is !er" unli,el"

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that an online retailer #an brea, e!en on a one+time shopper* unless the" are selling high+

pri#e* high+margin items-

+ Repeat pur#hasers spend more and generate larger transa#tions + due to more frequent

shopping and larger pur#hases-

+ Repeat #ustomers refer more people and bring in more business + )ord+of+mouth is the

single most effe#ti!e and e#onomi#al )a" online businesses gro) their sites-

+ o"al #ustomers are more )illing to bu" other produ#ts from the #ompan"- 2or

e(ample* almost 0?9 of T/# Ga6 online shoppers said that the" )ould #onsider bu"ing

furniture from T/# Ga6 - Repeat pur#hasing not onl" binds trust* but also pro!ides more

opportunities for #ross+selling-

These points stress the importan#e of online #ustomer lo"alt"* and )ith #ustomers

holding all the po)er* #ompanies must ensure that the" pro!ide a #ompletel" satisf"ing

end+to+end #ustomer e(perien#e- This is further reinfor#ed b" the fa#t that* on a!erage* a

disgruntled online #ustomer tells >? people about a poor e(perien#e-

INCREASING RETURNS ECONO'ICS FIRST 'OVER ADVANTAGE

E#onomists ha!e traditionall" taught that businesses gro) to the point )here returns to

s#ale diminish* as the benefits of s#ale are o!er)helmed b" the disad!antages of si@e-

;o)e!er* this is not the #ase on the Internet- On#e the up+front in!estments are made 5for

resear#h and de!elopment and te#hnolog" infrastru#ture6* additional produ#ts*

#ustomisation for indi!idual #ustomers* and other features #an be added or #hanged at

lo) marginal #ost-

Similarl"* additional #ustomers and transa#tions #an be managed )ith limited fi(ed #ost

in!estment- As a result* ea#h additional unit sold does not #ost more than the last to

deli!er* and in the #ase of information+based produ#ts* the #osts approa#h @ero8- E!en

more important* businesses and online #ommunities that rel" on #onne#ti!it" #an en=o" :

network effects1 * 5also referred to as : %iral economics1 6* )here the !alue of the

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net)or,* and the !alue that ea#h member realises* in#reases disproportionatel" as more

people =oin the net)or,-

Nu&1#r of u$#r

These #hara#teristi#s suggest there ma" be :first +mo!erG ad!antages for businesses that

establish leadership positions- .ith no #ompetitors around* being first into a mar,et

ma,es it easier to #apture the #onsumer/s share of mind- As the #ompan" builds a

#ustomer base and de!elops a relationship )ith #ustomers* its abilit" to tra#, #ustomer

preferen#es and #ustomise offerings impro!es* enhan#ing the intera#tion- This ma,es it

more effi#ient in impro!ing produ#t sele#tion* #ross+selling and up+selling- It also allo)s

online #ompanies to tap supplementar" re!enue streams* in#luding dire#t mar,eting*

ad!ertising and referrals* deli!ering in#reased margin per #ustomer-

In addition* the larger #ustomer base pro!ides online #ompanies )ith more le!erage in

attra#ting and negotiating )ith ,e" #ontent* #ommer#e and distribution partners- This* in

turn* pro!ides added !alue and strengthens the #ompan"/s abilit" to build #ustomer

lo"alt" and instill s)it#hing #osts- An e(panding #ustomer base enables retailers to

amorti@e the #ost of brand building o!er a larger base- 7i!en the #onne#ti!it" of the

Internet among #ustomers* larger sites #an le!erage more #ustomer ad!o#ates to redu#e

#ustomer a#quisition #osts- arger sites #an also negotiate better supplier dis#ounts or

produ#t pla#ement fees-

This sno)ball effe#t fa!ors first+mo!ers* as on#e a strong lead is established* the leader

)ill pi#, up momentum and )ill stand to gain an insurmountable ad!antage + unless the

leader ma,es a serious mista,e* or until a #ompetitor finds a )a" to #hange the rule of the

game again- .hen a #ompan" rea#hes /#riti#al mass/* the brand begins to ta,e hold* and

the #ost of s)it#hing to an alternati!e brand be#omes quite high* leading to the

e(ponential e(pansion of the #ustomer base- B" the time a #ompan" has rea#hed #riti#al

mass* its gro)th #ur!e relati!e to a ne) entrant is some)hat daunting- As a result* the

!alue of the #ompan" rises e(ponentiall" )ith mar,et share- This is the logi# behind

some of the e(traordinar" !aluations of Internet #ompanies- These fa#tors help to

understand )h" man" online #ompanies are spending aggressi!el" 5up to '&9 of their

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re!enue6 on mar,eting and site de!elopment to a#quire #ustomers and build #riti#al mass-

Ne) mar,eting strategies* su#h as /!iral/ mar,eting* ha!e emerged in attempts to e(ploit

the net)or, effe#t and potential e(ponential gro)th of the #ustomer base-

VIRAL 'ARKETING

iral Mar,eting is a mar,eting te#hnique that indu#es )eb sites or users to pass on a

mar,eting message to other sites or users* #reating a potentiall" e(ponential gro)th 5li,e

a !irus6 in the message/s !isibilit" and effe#t- It is often referred to as :)ord+of+mouthG*

:#reating a bu@@G* :le!eraging the mediaG* and :net)or, mar,etingG- .ord +of+mouth is

a parti#ularl" po)erful medium* as it #arries the implied endorsement from a friend-

The Internet* )ith its e+mail lists* )eb sites* #hat rooms and bulletin boards* ma,es

#ommuni#ation tighter* and )ord+of+mouth e!en more effe#ti!e- As a result* !iral

mar,eting is an effe#ti!e tool in getting a message out fast* )ith a minimal budget and

ma(imum effe#t- Other #ompanies ha!e adopted !iral mar,eting te#hniques su#h as

'!ra1!l!$ 5a#quired b" AOL 6* # Grou6$ and G#oc!t!#$ 5both a#quired b" =a/oo> 6-

G#oc!t!#$ enables people to #reate personal )ebsites for free- .hen a user builds a

)ebsite* the" tell all their friends to !isit it* and in doing so spread the )ord for

G#oc!t!#$ - If a #ompan" #an pro!ide a strong enough in#enti!e for #ustomers to Share

their lists of personal #onta#tsJ )hether for #ommuni#ations or #ommunit"* the" )ill

ha!e a po)erful !iral opportunit" at their disposal- A good !irus )ill loo, for prolifi#

hosts 5su#h as students6 and tie into their high frequen#" so#ial intera#tions 5su#h as e+

mail and messaging6- The #lassi# e(ample of !iral mar,eting is Hot&a!l.co& * a #ompan"

no) o)ned b" '!cro$oft - Hot&a!l.co& )as one of the first free )eb+based e+mail

ser!i#es* and the" #reated a subs#riber base more rapidl" than an" #ompan" in histor"-

Toda" the" are the largest e+mail pro!ider in the )orld )ith o!er %? million users-

Their strateg" )as

+7i!e a)a" free e+mail addresses and ser!i#es +Atta#h a simple tag at the bottom of e!er"

free message sent out* sa"ing

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Co"t#"t

1ontent is rele!ant and useful information dire#ted at the needs and interests of the

targeted users- .ith almost infinite displa" spa#e and in!entor" #apabilit"* online

#ompanies ha!e the opportunit" to pro!ide ri#h* up+to+date information* e(pert insights*

and a )ide range of produ#ts* )hi#h #an enhan#e the #ompan"/s !alue proposition-

1ontent is #onsidered to be a ;sticky/ appli#ation as it enti#es !isitors to spend longer

periods of time on the site-

A #ertain amount of :#ommer#e content1 is important to support the pur#hase de#ision-

A##ording to 2orrester Resear#h>?* $>9 of online #onsumers use the Internet for

obtaining produ#t information* e!en if the" pur#hase offline* and nearl" ?9 use it for

post+sales support- 7ood #ontent #an help to edu#ate bu"ers and sellers and #reate a

greater sense of #ontrol o!er the transa#tion- On the other hand* !isitors should not be

engulfed )ith too mu#h information- Other #ontent in#ludes #ommunit"+generated

#ontent and ad!ertising 5if it is rele!ant and useful6-

Cu$to&!$at!o"

1ustomisation in!ol!es tailoring the presentation of a )eb+site to indi!iduals* based on

profile information* demographi#s* or prior transa#tions- Online sites #an tra#, a

#ustomer/s pur#hase histor" and modif" its ser!i#e a##ordingl"- Often* sites allo)

;surfers #ustomise their e(perien#e b" #hoosing )hat t"pe of information the" !ie)

through personali@ed sites 5su#h as ' =a/oo> 6* as )ell as through lo"alt" programmes

that pro!ide targeted benefits- Some #ompanies ha!e ta,en this a step further and

#ustomise the produ#t or ser!i#e on offer 5 D#ll offers :made +to+orderG #omputers

through D#ll O"l!"# 6- 1ustomisation #reates the feeling of a one+to+one relationship*

)hi#h enhan#es the user/s online e(perien#e-

Co&&u"!t

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Online #ommunities are emerging as ne) gathering pla#es for #onsumers )ith similar

interests 5e-g- I V!lla0# and G#oc!t!#$ - These sites allo) members to intera#t )ith one

another* share information and a##ess a )ide range of ser!i#es- An important #ontribution

of these #ommunities is that the" pro!ide members )ith a medium to #ommuni#ate )ith

ea#h other- Members #an intera#t in #hat rooms* use bulletin boards* and organise li!e

e!ents- A unique #hara#teristi# of an online #ommunit" is that the site in#ludes both

editorial #ontent 5determined b" the site o)ner6 and member dri!en #ontent- An online

#ommunit" offers a #ompelling )a" to enti#e #ustomers ba#, to a site- It fosters a sense

of belongingness among the members* )hi#h is fa#ilitated b" a #ombination of fa#tors-

2or a #ommunit" to )or,* it needs a #riti#al mass of members- 1ommunities enhan#e the

speed and !alue of information sharing* allo)ing #ustomers to deepen their e(perien#e

)ith a brand and build more personal #onne#tion* and #an #reate emotional lo"alt"* )hen

membership in the brand/s #ommunit" be#omes an end in itself-

Co""#ct!)!t

1onne#ti!it" is #on#erned )ith site+to+site #onne#ti!it" and user+to site #onne#ti!it"-

Site+to+site #onne#ti!it" fo#uses on #onne#ting users to other rele!ant sites- 1ompanies

#an pro!ide a sele#tion of related lin,s that #omplement the site/s purpose and !alue

proposition* as )ell as attra#ting traffi# from other sites- 1onne#ti!it" is enhan#ed b"

lin,ing to sear#h engines L portals and popular sites )here target #ustomers are li,el" to

be bro)sing- This is similar to pla#ing offline stores in high traffi# areas- On#e #ustomers

,no) of a site* the" opt to input the R 5Internet address + )))-brand+name-#om6

dire#tl" into the bro)ser and a##ess the site immediatel"- ser+to+site #onne#ti!it"

fo#uses on pro!iding in#enti!es for users to #onne#t ba#, to the site- The de!elopment of

lo"alt" programmes* )hi#h pro!ide targeted and unique 51ustomised6 benefits to the

#ustomer* ser!es this purpose and helps to build #ustomer lo"alt"- Other tools su#h as

book marking the page #an also fa#ilitate #onne#ti!it"-

Cu$tor Car#

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Online #ustomers often require assistan#e and reassuran#e- 1ustomers share se#urit" and

pri!a#" #on#erns* and a re#ent sur!e" b" Mar,et .at#h re!ealed that ' 9 of surfers feel

that gi!ing out personal information on the Internet is unsafe- Therefore* #ustomer

support at all stages of the intera#tion is important* and #an be pro!ided through e+mail*

online #hat* toll+free telephone numbers* and 2A pages 52requentl" As,ed uestions6

to sol!e problems- In addition* #ustomer #are a#ti!ities #an in!ol!e pro!iding a !ariet" of

pa"ment* deli!er" and return options* as )ell as features su#h as gift+)rapping-

Co&&u"!cat!o"

The Internet pro!ides the opportunit" to establish dialogue )ith #ustomers through e+

mail* li!e #hat* and online sur!e"s- 1ommuni#ation #an be tailored to spe#ifi# user

interests and should allo) for t)o+)a" intera#tion- It is important in buildingrelationships* as )ell as informing and reminding #ustomers of spe#ial offers* ne)s up+

dates* a#ti!ities* e!ents and sub=e#ts of interest to the #ustomer-

The stages in building a lo"al #ustomer base is basi#all" a reformulation of the

Inno%ation Adoption *odel 52igure & + A)areness* Interest* E!aluation* Trial* Adoption6*

modified to ta,e into a##ount of the intera#ti!e d"nami#s of the Internet- This model

#onsists of fi!e stages 4

Attract , Engage , Retain , +earn and Relate , Attract

The #riti#al first step of the digital #ustomer e(perien#e is to attra#t ;eyeballs * ; and bring

people to the site for the first time- The #ompan" must build a)areness and #ommuni#ate

its !alue proposition to its target #ustomers- This is more diffi#ult online than offline*

be#ause there is no ph"si#al presen#e- Therefore* !isibilit" relies solel" on

+ommunication - The me#hanisms to #ommuni#ate range from traditional media 5T *

billboards* Maga@ines* Ne)spapers* et#-6 to online tools* in#luding affiliate programmes

)ith other )ebsites* lin,s from dire#tor" sear#hes 5 +onnecti%ity6* e+mail notifi#ations and

banner ad!ertisements-

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interested in + pro!ides #ompanies )ith !aluable information )hi#h* if used properl"* #an

#reate !alue for the #ustomer and help build the brand #ustomer relationship-

Relate

B" le!eraging the multidimensional data gathered from ongoing intera#tions )ith

indi!idual #ustomers* a #ompan" #an #reate !alue b" pro!iding a personali@ed online

e(perien#e- This helps to #reate a #ustomer base that spends more time and mone" at a

site- +ustomisation and good +ustomer +are help to ere#t s)it#hing barriers and

en#ourages #ustomers to return and repeat the #"#le-

LI'ITATIONS OF BRAND BUILDING ON THE INTERNET

It )ould be unrealisti# not to a#,no)ledge some of the limitations to )hat the Internet

#an offer the brand+building pro#ess +The Internet does not ha!e the penetration of other

promotional mediums 5e-g- T * Radio6-

+The Internet supports brand+building a#ti!ities )here there is a need to build a

relationship- 1ertain produ#t #ategories* su#h as gro#eries and #on!enien#e goods* do not

lend themsel!es to a need for #ustomers to build a relationship )ith the brand-

+Not all produ#t #ategories ha!e a strong fit )ith intera#ti!e media as the" still need real

life intera#tion* and the need to stimulate the other senses 5taste* tou#h* smell6-

+Brand+building fa!ors produ#ts that #an be sold online- ;o)e!er* it is not e#onomi#all"

feasible to sell #ertain produ#ts* espe#iall" in small quantities* due to high deli!er" and

transa#tion #osts 5relati!e to the !alue of the produ#t6-

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F!"%!"0$

On the Internet* the e(perien#e is the brand- In order to #reate :apostles 1, #ompanies

must pro!ide a satisf"ing end+to+end #ustomer e(perien#e + from the promises made in

the !alue proposition* to its deli!er" to the #ustomer- 7i!en the high a#quisition #osts of

online #ustomers* it is #riti#al for #ompanies to build relationships and foster brand

lo"alt"- The 01s 2rame)or, outlines the ,e" #omponents of the brand e(perien#e and the

sour#es of added !alue-

> otler* P- :Mar,eting Management 4 the Millennium EditionG

Aa,er* D-* :Managing Brand Equit" 1apitalising on the alue of a Brand NameG

$ apferer* F-* : Strategic Brand *anagement1

% Phillip otler* :Mar,eting ManagementG& Berr"* - Parasuraman* A-* : *arketing Ser%ices9 +ompeting Through 88>* pp->$'+>%

RESEARCH

METHODOLOGY

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RESEARCH 'ETHODOLOG=

Pro1l#& Stat#"t

A free mar,et #ompetition is se!ere and #onsumers prefer man" times re#ogni@able brands- Building brand is done b" all leading #ompanies- Interbrand latest ran,ing

#onfirms amount of resour#es spend on brand building #orrelating )ith the #ompan"

gro)th- Earlier it )as onl" big #ompanies )ho had the resour#es to build brands- The

ad!ent of internet has bro,en all the barriers in rea#hing #ustomers and opening up the

mar,ets- This has led to equal opportunit" for all pla"ers to build brands on internet

)hose potential is humongous- Small #ompanies ha!e utili@ed the opening to gro) at

faster pa#e than traditional #ompanies- E!en traditional #ompanies ha!e sho)n gro)th b"

de!eloping their internet brand building efforts- The le!el pla"ing field #reated b"

internet poses #omple( problems in sele#ting mar,eting strategies for internet brand

building )hi#h #an help in differentiation in the #luttered mar,et-

O1 #ct!)#$ of t/# Stu%

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The ob=e#ti!es of this dissertation are as follo)s

- To gain an understanding o the role o *rands and how they have traditionally *een

*uilt

A re!ie) and anal"sis of leading a#ademi# thin,ing )ill be used to e(plorethese issues-

To explore how the %nternet is changing the *rand-*uilding environment. and to

identi y new sources o value. tools and strategies to *uild *rands on the %nternet

A#ademi# literature and an anal"sis of the impa#ts of the Internet )ill be used to

in!estigate these fa#tors* supported b" se#ondar" data related to aspe#ts of online

business from a##redited and published sour#es-

To identi y the ey actors and characteristics that contri*utes to the development o

success ul %nternet *rands

This is based on the out#ome of the primar" resear#h 5in+depth #ase studies6* )ith

referen#e to the theoreti#al themes that emerge from the literature re!ie) and in terms of

the pra#ti#al impli#ations for #ompanies-

Research 0esign

Academic Research 7i!en that the Internet is su#h a ne) area* there is more )or, in

popular rather than a#ademi# literature- 1onsequentl"* the literature re!ie) dra)s on

leading a#ademi# thin,ing in more established areas su#h as brand management*

relationship management* mar,eting* strateg" and e#onomi#s- The absen#e of a#ademi#

literature on Internet branding posed a ma=or obsta#leJ ho)e!er* this also highlights the

true !alue of the dissertation- .hile there is no attempt* nor desire* to pro!ide an in depth

anal"sis of the ps"#hologi#al and so#ial dimensions of brands* #ertain ,e" fa#tors are

highlighted in their rele!an#e to the dissertation-

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Secondary 0ata This #onsists primaril" of ,e" fa#ts and sur!e" results quoted b"

leading #onsultan#" and resear#h firms* and is used to pro!ide insight into some of the

fa#tors that #ontribute to the de!elopment of su##essful brands-

1ypothesis 2&ramewor 3 This is based on the literature re!ie) and se#ondar" data- The

resulting =+s >ramework and Interacti%e Brand Building *odel outline ,e" sour#es of

added !alue and the tools a!ailable for #ompanies to #reate a high+impa#t #ustomer

e(perien#e that is #riti#al in building an online brand- These are further refined using the

insight obtained through the #ase studies-

Case Studies The dissertation is essentiall" built on the in+depth anal"sis of the brand

building efforts of si( online #ompanies- The #ase studies in#lude born+on+the+)eb#ompanies that are among the most re#ognised Internet Brands 5 A&a?o".co& *#Ba and

=a/oo> 6* traditional :bri#,s +and+mortarG #ompanies that rose to the #hallenge of ta,ing

their brands to the Internet 5 Ga6.co& 6* as )ell as an Internet failure 5 Boo.co& 6- The

#ombination of #ases pro!ides a useful and pra#ti#al insight into brand+building issues

and problems* and fa#tors that #ontribute to a brand/s su##ess-

T 6# of R#$#arc/

The resear#h is mainl" done in a des#ripti!e )a" and lots of sur!e" has been done in

order to #ondu#t resear#h- Due to the nature of resear#h both primar" and se#ondar" data

has been used and the details are gi!en in the ne(t subheading-

R#$#arc/ Proc#%ur#

This se#tion outlines the pro#edure follo)ed in #olle#ting data and anal"@ing it-

a3 Type o data used

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Both primar" data and se#ondar" data )here used- Primar" data )as obtained from dire#t

inter!ie)s )ith e+#ustomers* )eb+users* and potential pur#hasers- Se#ondar" data )as

obtained from sour#es li,e bro#hures of #"ber #ompanies* .eb sites* Maga@ines* and

Boo,s et#-

*3 "ethod o collection4

The sur!e" )as #ondu#ted to #olle#t primar" data both quantitati!e and qualitati!e- Data

)as sought from #"ber #ompanies and e+#ustomers- It in#ludes questionnaires* telephone

sur!e"s and e+mail sur!e"s-

c3 Tools or data collection4

The primar" data )as #olle#ted )ith the help of questionnaire- The questionnaire )as

designed to obtain ne#essar" information that #an help resear#her to fulfill his stud"- The

questionnaire )as administered b" the resear#her through dire#t !isit to institutes*#ompanies* administration offi#es* and residen#es* and b" #olle#ting them from the

respondents at a later date in some #ases-

Part of the questionnaire )as #ondu#ted abroad b" an o!erseas #onfidential partner of the

resear#her- The abo!e mentioned partner released the questionnaire* #olle#ted the data*

and #on!e"ed the feedba#, to resear#her through Internet- That ,ind of un#on!entional e+

#on!e" has brought a ne) dimension to the stud"* and brought out a broader idea about

ho) the things done-

d3 Sample si5e4

eeping in mind the budgetar"* time and manpo)er #onstraints* the total sample sele#ted

)as >?? sample units- &? of them )ere #ondu#ted in Bangalore* and the remaining )as

administrated abroad* mostl" in 7eorgia* SA-

e3 Sampling Techni(ue

The sample used is small ,eeping in !ie) of the nature of the respondents- So )e ha!e

used #on!enient random sampling in the dissertation-

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3 Assumption4

The information from the respondents has been treated as the #orre#t information-

Though the sample si@e is limited to >??* the resear#her feel it is good enough to #ome to

#on#lusion about ho) to build a re#ogni@ed brand name on Internet-

To anal"@e and interpret the primar" data* the resear#her has used simple per#entage

anal"sis* )hi#h suits the best-

Sco6# of t/# Stu%

To understand )hat !ital role a brand name might pla" in #ontributing to the su##ess of a

#"ber #ompan"* it )ill be ne#essar" to understand the #onte(t of #urrent issues )ithin the

Dot#om industr" and to identif" the main pla"ers )ithin the Dot#om industr"* their brand

building strategies* their su##esses and failures* and lessons from them- The pro=e#t )or,

#o!ers brand building strategies )ith spe#ial referen#e to si( t"pi#al #"ber #ompanies*

in#luding

A&a?o".co&

=a/oo>

EBa

Ga6.co&

Boo.co&

And the sur!e" has been #ondu#ted based on t)o sour#es the first are randoml" sele#ted

respondents )ithin the #it" of Bangalore* and the se#ond are randoml" sele#ted e+

respondents from o!erseas* mostl" in 7eorgia* SA- uestionnaire )as sent and

#olle#ted through e+mails-

L!&!tat!o"$ of t/# Stu%

>- Part of the stud" )as #arried out in Bangalore #it"- ;en#e the results must not be

e(tended to the national le!el as the ps"#hographi#s and demographi#s !ar" signifi#antl"

a#ross the #ountr"- Thus the results are appli#able onl" in Bangalore #it"-

&0

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- Out of > la,h odd dot#oms in the )orldJ onl" & #ompanies are sele#ted* so )e #an not

generali@e the findings-

$- 7i!en suggestions and interpretations are limited to parti#ular #ompanies onl"-

%- Part of the stud" )as based on e+sur!e"* in )hi#h resear#her has entrusted an o!erseas

#onfidential partner to do the =ob of releasing the questionnaire* #olle#ting the data* and

#on!e"ing the feedba#,- The result* therefore* is less dependable-

&- Biased and #on#ealed responses b" the respondents #an

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CASE ANALYS S

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CASE ANAL=SIS

INTRODUCTION

This #hapter pro!ides an anal"sis of si( #ompanies- Ea#h #ase is presented in the same

format in#luding* a #ompan" o!er!ie)* its !alue proposition* the sour#es of added !alue

5using the 01s 2rame)or,6* its brand+building strateg" 5ho) it generates traffi#6* and

other ,e" fa#tors that ha!e #ontributed to its su##ess 5or failure6- The #ases are presented

in the follo)ing sequen#e

=a/oo>

A&a?o".co&

Boo.co&

EBa

Ga6.co&

CASE STUD= =AHOO>

CO'PAN= OVERVIE:

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In April >88%* Cahoo )as founded b" Da!id 2ilo and Ferr" Cang* t)o PhD students at

Stanford ni!ersit"* )ho started an online guide as a )a" to ,eep tra#, of their personal

interests on the Internet- The #on#ept e(ploded 5through )ord+of+mouth6 and in less than

si( months* the site )as re#ei!ing > million hits per da"- Cahoo has sin#e promoted from

an ordinar" sear#h ser!i#e into a global Internet #ommuni#ations* #ommer#e and media

#ompan" that offers a #omprehensi!e branded net)or, of ser!i#es and information to

more than >%& million indi!iduals ea#h month )orld+)ide* and is one of the fe) Internet

#ompanies to turn a profit earl" in the de!elopment of the Internet- As the first online

na!igational guide to the )eb* Cahoo is a leading guide in terms of traffi#* ad!ertising*

household and business user rea#h- Cahoo is one of the most re#ognised brands on the

Internet and is the '& th most !aluable brand in the )orld- The #ompan"/s global )eb

net)or, in#ludes $ )orld properties outside the S-

VALUE PROPOSITION

At the #ore of Cahoo /s !alue proposition* lies the dire#tor" + a hand tailored and eas"+to+

use guide to the Internet that be#omes more useful ea#h da" as Internet penetration* the

amount of information* and the number of )ebsites #ontinues to e(plode- A##ording to

Timoth" oogle* 1EO of Cahoo * : &e;%e set out to make ?ahoo@ the only place anyone

needs to go to get connected to anything. There;s nothing in the real world to compare to

that G- As su#h* Cahoo offers a range of supporting ser!i#es that add !alue* from e+mail

ser!i#es to sto#, quotes and mu#h more* all in a single lo#ation-

SOURCES OF VALUE J THE 7C$ FRA'E:ORK

Co")#"!#"c#

1entral to Cahoo /s su##ess* is the )a" it has stru#tured and displa"ed information- Their

goal is not to list e!er"thing under the sun* but instead to be sele#ti!e and to displa" the

best the )eb has to offer in a hierar#hi#al frame)or, that ma,es sense to #ustomers- The"

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ha!e ,ept the design of the site simple and #lean to appeal to #ustomers and a!oid slo)+

to+load graphi#s- More re#entl"* Cahoo e(tended its #on!enien#e through its ?ahoo@

#%erywhere ser!i#e* to allo) a##ess* regardless of platform 5i-e- mobiles* T s* Palm

#omputers6-

Co"t#"t

Cahoo has pursued a broad range of deals )ith #ontent and #ommer#e #ompanies- These

ha!e helped Cahoo be#ome the pla#e to tra#, do)n a broad range of !aluable

information and resour#es* ranging from dail" ne)s and )eather reports to road maps and

boo,s* and has been at the heart of Cahoo /s gro)th and de!elopment - The" ha!e formed

multiple allian#es and partnerships )ith leading online #ompanies su#h as A&a?o".co& -

Their thrust has been to pro!ide !aluable #ontent to #ustomers* )hile pro!iding partners

a##ess to a large #ustomer base- This #reates a )in+)in situation as its satisfies Cahoo *the partner* and more importantl"* the end+user-

Cu$to&!$at!o"

*y ?ahoo@ allo)s surfers to #ustomise their !ie) of Cahoo and pi#, fa!orite topi#s*

from sto#,s and sports results to )eather and air fares* and is similar to a #ustom tailored

ne)spaper- B" tailoring the information to users/ preferen#es* Cahoo has in#reased

#ustomer lo"alt" and retention rates-

Co&&u"!t

Cahoo has de!eloped #ustomi@able )eb #ommunities #alled Cahoo 1lubs* )here

groups of people )ith shared interests #an #ommuni#ate through #hat* message boards*

and e+mail- In >888* Cahoo A#quired 7eo 1ities* 5one of the largest online

#ommunities6 )hi#h pro!ides eas"+touse and inno!ati!e tools to allo) users to publish

#ontent on the site- Cahoo /s a#quisition of e 7roups 5an e +mail group #ommuni#ation

ser!i#e6 )ill pro!ide #onsumers )ith po)erful ne) )a"s of #ommuni#ating one+toone*

one+to+man"* and man"+to+man"- One of the most re#ogni@ed Cahoo #ommunities is the

famous Cahoo Messenger- Built from >88&* )ith more than >??*??? #hat rooms and

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)idel" !ar"ing topi#s* from publi# health to mo!ies* from sports to politi#s* Cahoo

Messenger attra#ts more than > million #hatters dail"* and spreads its #ommuni#ation

through )ord+of mouth faster than an"thing else- In some #ountries li,e ietnam and

1hina* Cahoo Messenger has be#ome a #ultural phenomenon* )here an ordinar" #hatter

spends no less than $ hours dail" on Cahoo Messenger to meet his or her e+pals-

Co""#ct!)!t

1onne#ti!it" is Cahoo /s #ore produ#t* and the nature of the na!igation business* and is

dri!ing Cahoo /s multiple partnerships and allian#es* to pro!ide its #ustomer base )ith

a##ess to useful lin,s and #ontent- In addition* Cahoo has also implemented #ampaigns

to persuade users to boo,mar, the site* or to ma,e it their home page-

Cu$tor Car#

Cahoo responds to #ustomer inquiries !ia e+mail* fa(* telephone and e!en traditional

mail* and plans to in#orporate other features su#h as online #hat to fa#ilitate

#ommuni#ations- Cahoo spends more on #ustomer support than most #ompanies*

reinfor#ing the brand #ustomer relationship* and #ontributing to their reputation as a

qualit" ser!i#e pro!ider-

Co&&u"!cat!o"

B" positioning itself as a site that users frequentl" !isit* and through #ommuni#ations !ia

email* Cahoo maintains #lose #onta#t )ith #ustomers- Cahoo also en#ourages

#ustomers to e+mail ideas and feedba#,-

BRAND BUILDING STRATEG=

Cahoo is a mar,eting ma#hine- It is often highl" praised for its brand+building abilit"

and promotion strategies through the use of traditional 5offline6 media and guerrilla

'$

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it is in fa#t a #arefull" or#hestrated #ampaign that requires ea#h branding opportunit" to

meet one stri#t test + it must reinfor#e the image of the #ompan" as :a ser!i#e that is fun*

a little )a#," and in!itingG- On#e #ustomers a##ess the site* #ustomers qui#,l" dis#o!er

its !alue and through a high qualit" e(perien#e 501s6* Cahoo has managed to #ulti!ate

high brand lo"alt"- A##ording to a re#ent stud"* 8 9 of Cahoo users rate the ser!i#e as

:e(#ellentG or :!er" goodG )hi#h is signifi#antl" higher than those of other sites* and

0'9 turned to Cahoo before !isiting another sear#h engine or na!igational site- In

addition* the resear#h sho)s that 0$9 of Cahoo users boo,mar, the ser!i#e + higher

than all other Ser!i#es- A##ording to aren Ed)ards* P+Brand Mar,eting* Cahoo/s

abilit" to qui#,l" pi#, up on user

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sear#hing for* Cahoo points them to its #ompetitors b" in#luding lin,s to AltaV!$ta *

HotBot *GoTo.co& * and other sear#h engines at the bottom of its sear#h results page6-

CONCLUSION

Cahoo is one of the most su##essful brands on the Internet- As the first online

na!igational guide to the )eb* Cahoo has benefited from a first mo!er ad!antage- The"

ha!e maintained that lead through the #reation of a high qualit" end+to+end #ustomer

e(perien#e- This has been a#hie!ed through their relentless in!estment into ne) ser!i#es

and e(tensi!e partnerships and allian#es )ith leading brands- These relationships ha!e

pro!ided end+users )ith added+!alue* )hile also asso#iating Cahoo .ith )ell ,no)n

brands- Cahoo /s intense fo#us on #ustomer/s needs and high qualit" online e(perien#e

has been instrumental in #ulti!ating a reputation for e(#ellen#e- In addition* theirinno!ati!e promotional and guerrilla mar,eting te#hniques* ha!e #reated a distin#t brand

identit" that Differentiate the brand and appeals to its target mar,et- As a result of all

these fa#tors* Cahoo has built a strong brand* )ith a large #ustomer base and high le!els

of #ustomer lo"alt"- The essen#e of Cahoo /s brand+building strateg" is highlighted in a

simple statement made b" aren Ed)ards* PBrand Mar,eting of Cahoo * :)e

focused our marketing efforts on attracting new users and pro%iding an e$perience that

makes them stay2 G-

CASE STUD= A'A ON.co&

CO'PAN= OVERVIE:

Ama@on-#om has be#ome s"non"mous )ith e+#ommer#e* and is one of the fe) Internet

brands that are re#ognised all o!er the )orld- It is the 0% th most !aluable brand in the

)orld* and the most )idel" re#ognised e#ommer#e brand name in the S 5)ith '?9

a)areness6- Ama@on ser!es o!er $ million #ustomers from >'? #ountries* and has sales

of o!er billion- In addition* it is the most !isited e+#ommer#e )ebsite in Ameri#a* and

one of the top t)o or three in Britain* 2ran#e* 7erman" and Fapan- In Ful" >88&*

Ama@on-#om laun#hed )ith a mission to use the Internet to transform boo, bu"ing into a

fast* eas"* and en=o"able e(perien#e- Ama@on-#om has sin#e e!ol!ed from being an

online boo,seller into a one+stop shop )ith : #arth;s Biggest Selection1 of more than >3

''

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Cu$tor Car#

Ama@on pla#es great emphasis on satisf"ing #ustomers and pro!iding high le!els of

#ustomer ser!i#e- This #ustomer+#entri#it" is e!ident in all Ama@on/s a#ti!ities* from its

shopping bas,et appli#ations )hi#h lists the estimated time to deli!er" reliabl"* to the

proa#ti!e notifi#ation of ne) items of interest* real+time shipping and ba#,order noti#es*

and #ustomer intera#tion- All these a#ti!ities e(ploit the #ommuni#ations #apabilit" of the

)eb and e+mail to offer greater #ustomer /tou#h/ and titer #ustomer ser!i#e-

Co&&u"!cat!o"

Ama@on maintains #lose #ommuni#ation )ith #ustomers- On#e orders are pla#ed* the"

are subsequentl" #onfirmed b" e+mail* and #ustomers are also e+mailed )hen the itemsare shipped from the )arehouse- In addition* t)o personali@ed ser!i#es* #yes and #ditors *

help maintain #onta#t and build traffi# b" e+mailing #ustomers )hen desired produ#ts or

boo,s be#ome a!ailable- As a result of all these fa#tors 501s6* Ama@on has been able to

#reate a strong !alue proposition and #ompelling online e(perien#e that engages and

retains #ustomers* enti#ing them to return to the site and pur#hase repeatedl"-

BRAND BUILDING STRATEG=

Ama@on has attra#ted traffi# in a number of )a"s- Through the first half of >88'*

Ama@on had primaril" relied on )ord+of+mouth among tightl" ,nit online #ommunities

5ne)sgroups and #hat rooms6 to #reate a : #"ber bu@@G and impro!e its !isibilit"- In the

se#ond half of >88'* it began to ad!ertise in print media and online + a mo!e that along

)ith the no!elt" of its business model and the ne)ness of the Internet* helped generate

publi#it" and stories about the #ompan" in publi#ations su#h as The &all Street /ournal *

The >inancial Times * Business &eek * 0ewsweek * 0ew ?orker and The #conomist -

In Ful" >88'* Ama@on inaugurated the Associates Programme under )hi#h other

)ebsites #ould displa" the Ama@on-#om hot+lin, and offer spe#ifi# boo,s of interest to

their !isitors- This enabled Ama@on to rea#h more #ustomer segments and ni#hes- Instead

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see,ing ne) )a"s of impro!ing its offering* and a##ording to Feff Be@os* :)e

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in#luding intera#ti!e games to attra#t pur#hasers- All orders )ere to be deli!ered )ithin &

)or,ing da"s in Northern Europe and the S from distribution #entres in Muni#h*

7erman" and ouis!ille* entu#,"- ;o)e!er* Boo made some fundamental mista,es-

2irst* a large portion of its potential mar,et )as unable to use Boo-#om/s site be#ause the

)ebsite design 5e(tensi!e graphi#s* pop+up )indo)s* $+D images6 )as too ad!an#ed for

most #omputers and a##ess )as frustratingl" slo)- It required a high band)idth Internet

#onne#tion that )as onl" a!ailable to >9 of European surfers and 9 in the S- In

addition* the site )as