1 DEFINITIONS & A ; CONCEPTS
1.1 WHAT IS A BRAND?
Harmonizing to Rita Clifton, CEO of Interbrand Newell and Sorrell – a prima specializer trade name consultancy house – a trade name is: “A mixture of touchable and intangible properties, symbolized in a hallmark, which, if decently managed, creates influence and generates value”1
This definition genuinely captures the kernel of a trade name, and highlights the importance of trade name direction. Branding is about making “value” , both for clients, and for the company. This value stems from the merchandises and services that companies create and bring to the market, but extends farther to embrace added values derived from factors such as the brand-customer relationship, the trade name ‘s emotional benefits and its self-expressive benefits. Other common descriptions of a trade name include – a “relationship” , a “reputation” , a “set of expectations” , and a “promise” . It is a company ‘s promise to systematically present a specific set of characteristics, benefits, and services to clients. Trade names are richly endowed entities. They start life as thoughts, doing their manner into planning and scheme paperss, yet finally reside as consumer perceptual experiences. For some companies, trade names are their most valuable plus. The infinite a trade name occupies inside a client ‘s caput can make a “mental” patent, which grows out of the cumulative memory and the experiences clients have of merchandises or services. As such, brand-building is about making value through the proviso of a compelling and consistent client experience that satisfies clients and keeps them coming back.
1.2 THE LAYERS OF A BRAND
Trade names are made up of four beds – the nucleus merchandise or service, the basic trade name, the augmented trade name and the possible trade name.
The nucleus Product / Service
At the most basic degree, clients buy merchandises to run into certain functional demands. However, most merchandises and services can non last on functionality entirely as this is normally matched in clip. The most common barrier to competition is constructing a trade name.
The Basic Brand
The basic trade name consists of the “name, term, mark, symbol, or design, or a combination of them, intended to place the goods and services of one marketer or group of Sellerss and to distinguish them from those of competitors”2. Basically, this should back up the offering ‘s public presentation and distinguish the trade name from those of rivals.
The Augmented Brand
Successful companies seek a competitory border through the expansion of the nucleus merchandise or service, with auxiliary merchandises and services ( e.g. information, speedy bringing ) that enhance the client ‘s entire buying and usage experience. These merchandises and services add value and do the offering much more hard for rivals to emulate.
The Potential Brand
A trade name achieves its possible when added values are so great that clients will non volitionally accept replacements, even when the options are well cheaper or more readily available ( e.g. Coca-Cola, Kodak, Levi ‘s ) .
1.3 BRANDING & A ; THE BUYING PROCESS
In order to understand the context and the function of trade names, it is of import to clear up clients ‘ underlying purchasing behaviour and the purchasing procedure. The purchasing procedure consists of five phases.
Beginning: Phillip Kotler, “Marketing Management – the Millennium Edition”
The procedure starts when the purchaser recognizes a demand. This can be triggered by internal or external stimulations ( advertizements ) . Once aroused, a consumer will be inclined to seek for more information, either through heightened attending or through an active information hunt. Through garnering information, the consumer learns about viing trade names, and evaluates them in footings of the grade to which their benefits and package of properties satisfy their demands. Consumers differ as to which merchandise / service attributes they see as of import, and pay the most attending to the trade names that will present the sought benefits. Therefore, it is critical to understand what attributes consumer ‘s value.
Consumers develop a set of trade name beliefs about the properties of viing trade names. These trade name beliefs make up the trade name image ( this construct is re-visited in following portion of this chapter ) . These beliefs depend on their old experiences with the trade name, and the consequence of selective perceptual experience, selective deformation, and selective keeping. In the rating phase, the consumer signifiers penchants among trade names and may organize a purchase purpose to purchase the trade name they prefer. However, two factors can step in between the purchase purpose and the purchase determination – attitudes of others and unexpected situational factors.
If other people have had a negative experience with the trade name, their negative attitude may act upon the consumer ‘s purchase purpose or frailty versa. A consumer ‘s determination to modify, postpone, or avoid a purchase determination is to a great extent influenced by perceived hazard. Expensive purchases involve some hazard taking. A consumer attempts to cover with this by garnering information from friends, and a penchant for recognized trade names they can swear.
After a consumer has really purchased the merchandise or service, they will measure their degree of satisfaction – the client will be extremely satisfied, slightly satisfied, or dissatisfied with the purchase determination. Satisfaction depends on how closely the trade name ‘s sensed public presentation matches the client ‘s outlooks. If perceived public presentation and quality exceed their outlooks so they are satisfied, even delighted. If public presentation falls below their outlooks, they will be dissatisfied and look for alternate trade names in the hereafter.
Customers ‘ outlooks are peculiarly of import when covering with services, and particularly of import when covering with purchases made through the Internet, as these services are intangible and hence, clients make determinations strictly on the footing of their outlooks. These outlooks are formed through a combination of past experiences, word-of-mouth, advertisement and communicating.
The degree of client satisfaction will act upon whether they buy the trade name once more and speak favourably or unfavourably about it to others. Highly satisfied and loyal clients tend to travel straight from the demand acknowledgment phase to the purchase determination, locking out possible rivals. Customer satisfaction and trueness are indispensable to making successful trade names.
1.4 PRODUCT AND SERVICE BRANDS
Product trade names are the original trade name bearers. They are the historical nucleus of branding because they are the most prevailing, and because they most readily come to mind when consumers are asked to remember trade names. For case: Ford, Motorola, Coke, Honda, etc.
Service Brands ( intangible ) are much less legion than their merchandise counter parts. Intangible services are besides more ambitious to “package” and sell to consumers who frequently have trouble conceptualizing, preferring things they can see and touch. Certain service trade names, such as in retailing, really sell merchandises, but the trade name itself is the shop, non the merchandises it sells – The Gap shops, Southwest Airlines and Amazon.com are illustrations. In fact, this is the instance with all Internet companies, as they basically perform the map of a “virtual” mediator or “infomediary” and are intangible.
2 AMAZON E-BRAND
2.1 COMPANY OVERVIEW
Amazon.com has become synonymous with e-commerce, and is one of the few Internet trade names that is recognized all over the universe. It is the 57th most valuable trade name in the universe, and the most widely recognized e-commerce trade name name in the US ( with 60 % consciousness ) . Amazon serves over 23 million clients from 160 states, and has gross revenues of over $ 2 billion. In add-on, it is the most visited e-commerce web site in America, and one of the top two or three in Britain, France, Germany and Japan.
In July 1995, Amazon.com launched with a mission to utilize the Internet to transform book purchasing into a fast, easy, and gratifying experience. Amazon.com has since evolved from being an online bookseller into a one-stop store with “Earth ‘s Biggest Selection” of more than 18 million merchandises, runing from books and music to auctions and zShops ( a portal / market place that online Sellerss can utilize to sell their merchandises ) , and has equity investings in several e-tailers.
2.2 VALUE PROPOSITION
Amazon.com ‘s success stems from its obliging value proposition. Amazon provides increased added value on several dimensions, including: increased choice, discounted monetary values, more information, greater convenience, and higher degrees of customization and service than the traditional shopping experience allows. In add-on, Amazon has cultivated a repute for excellence, invention and presenting on its promises. Through its proviso of a one-stop shopping experience, combined with its degrees of customization and client service, Amazon has been able to distinguish itself from other on-line rivals.
2.3 SOURCES OF VALUE – THE 7Cs FRAMEWORK
Amazon provides value-added characteristics to increase the easiness of shopping encourage repetition visits and thrust higher transition rates. The site is easy-to-use, offering multiple waies to a given book or merchandise. The site is designed to minimise download clip ( limited artworks ) for users on modems and despite the heavy traffic, downloads rapidly and services visitants adequately.
Over clip, Amazon has added other characteristics for shopping convenience, such as the Amazon.com All Product hunt ( searches the full web ) , the 1-Clickexpress check-out procedure, gift chink, wish lists, gift reminders, and Amazon.com Anywhere to back up entree from wireless devices ( i.e. nomadic phones, Palm VII PDA device ) .
Amazon provides content on several degrees, including book jacket images, book sum-ups, adept reappraisals, client testimonies, recommendations, interviews with writers, treatment boards, and client Purchase Circles. Customer purchase circles allow shoppers to cross-index similarities such as where people work, live or survey. This is an illustration of Amazon ‘s ability to data its huge client base of information to larn and associate by doing recommendations and showing points on the web page that have a high chance of being of involvement to peculiar clients – thereby increasing transition rates. By leveraging its huge client base, Amazon ‘s content is non consistent by competition, and hence, creates a competitory advantage.
Amazon provides customized characteristics and services, from the client acknowledgment at the point of interface to the content and recommendations based on consumers ‘ purchase history and Purchase Circles. In making so, Amazon creates one-to-one relationships with its clients, which helps to construct trueness and create shift costs, while driving up repetition purchases and cross-selling chances.
Amazon has besides added a community component to the buying procedure, and ingeniously turned bibliophiles ‘ preferences into a beginning of distinction by beging and posting readers ‘ remarks with book shows. This builds the trueness of both the clients who write reappraisals and the clients who find community among like-minded people. More late, Amazon introduced Amazon.com Discussion Boards to further heightening the community feel by leting clients to portion information on subjects of involvement.
Amazon has built relationships with high traffic web portals and sites, change overing them into a shopfront for Amazon, and has developed an Associates Program, associating it to a big figure of other sites. These are discussed in more item subsequently.
Amazon places great accent on fulfilling clients and supplying high degrees of client service. This customer-centricity is apparent in all Amazon ‘s activities, from its shopping basket applications which lists the estimated clip to bringing faithfully, to the proactive presentment of new points of involvement, real-time transportation and backorder notices, and client interaction. All these activities exploit the communications capableness of the web and electronic mail to offer greater client ‘touch ‘ and better client service.
Amazon maintains close communicating with clients. Once orders are placed, they are later confirmed by electronic mail, and clients are besides e-mailed when the points are shipped from the warehouse. In add-on, two personalized services, Eyes and Editors, aid keep contact and physique traffic by e-mailing clients when desired merchandises or books become available.
As a consequence of all these factors ( 7Cs ) , Amazon has been able to make a strong value proposition and compelling on-line experience that engages and retains clients, luring them to return to the site and purchase repeatedly.
2.4 BRAND-BUILDING Scheme
Amazon has attracted traffic in a figure of ways. Through the first half of 1996, Amazon had chiefly relied on word-of-mouth among tightly knit on-line communities ( newsgroups and chew the fat suites ) to make a “cyberbuzz” and better its visibleness. In the 2nd half of 1996, it began to publicize in print media and online – a move that along with the freshness of its concern theoretical account and the newness of the Internet, helped bring forth promotion and narratives about the company in publications such as The Wall Street Journal, The Financial Times, Business Week, Newsweek, New Yorker and The Economist.
In July 1996, Amazon inaugurated the Associates Program under which other web sites could expose the Amazon.com hot-link and offer specific books of involvement to their visitants. This enabled Amazon to make more client sections and niches. Alternatively of paying straight for this exposure, Amazon offered Associates referral fees of up to 15 % , which merely applied to gross revenues that resulted from the initial click-through, and non subsequent purchases. The Associates Program has been phenomenally successful, pulling member sites of all sizes, and by 1999 it had over 200,000 members, increasing to over 500,000 by August 2000.
Amazon has developed confederations and partnerships with high traffic web portals and sites. From July 1997 to December 1998, Amazon closed trades with five of the six most visited Internet references, including: America Online ( AOL ) , Netscape ‘s Netcenter and NetSearch, Yahoo! , and Geocities. These multimillion-dollar, multiyear trades involve sole book-selling rights, common links, and primary button arrangement on web portal hunt engines. The Yokel! understanding was besides linked to Amazon ‘s entry into Europe – Amazon.de became the local supplier for Yokel! Germany and Amazon.co.uk the local supplier for Yokel! UK & A ; Ireland. Amazon besides established understandings with AltaVista, Excite, Prodigy and @ place. In add-on, Amazon has used viral selling techniques through client reappraisals, free e-Cards and gift certifications ( which clients send to friends, thereby advancing Amazon.com ) . Interesting viral enterprises include:
Amazon.com Refer-A-Friend – clients are encouraged to supply e-mail references of friends. In return, each friend is sent a $ 5 Amazon.com gift certification ( in your name ) , and you are given a $ 5 gift certification for each client you provide. Therefore, the client acquisition cost is merely ?10.
Amazon.com About Me – allows clients to make a personal profile ( with images ) on the site. Peoples tend to state their friends about it, distributing the word for Amazon.com.
FIGURE The bulk of clients continue to be attracted through word-of-mouth, nevertheless, with the detonation of web sites, Amazon has besides incorporated traditional offline media ( Television, Magazines, hoardings, newspapers ) to bring forth consciousness. Harmonizing to Jeff Bezos, “we had a first site the twenty-four hours we launched – but it was merely a ten percent every bit good as the site we have now. And we relied on word-of-mouth to construct consciousness, so we did n’t hold to make much advertisement. That ‘s non possible anymore3” .
Amazon ‘s enlargement into new e-tailing classs and non-e-tailing concerns ( auctions and zShops ) has significantly increased merchandise handiness while leveraging the site ‘s tremendous client traffic to make extra gross watercourses. This has besides helped to bring forth incremental traffic at no cost to Amazon ‘s bing concerns, ensuing in increased gross revenues for bing e-tailing sectors and hence “monetizing” their client base. This scheme has created an efficient traffic-generating machine by making practical cringles of traffic so that Amazon is top of head when clients go on-line.
With this combination of promotional methods, Amazon has been able to accomplish mean client acquisition costs of less than $ 20 – significantly lower than other on-line companies. Once clients are attracted to the site, Amazon ‘s proved on-line ware merchandising techniques including easy-to-use hunt options, clear presentation, interesting content, community feel ( as discussed antecedently ) , have been instrumental in prosecuting and retaining clients ‘ on the site and driving higher transition rates. As the relationship develops, Amazon maintains a database of client penchants, purchasing forms and sing wonts, which is analyzed ( larning ) and used to supply value-added services such as the debut of new merchandise classs, and improved customization and recommendations ( e.g. Purchase Circles ) . By associating to client demands, Amazon is constructing client trueness and encouraging repetition concern, which accounts for 66 % of Amazon ‘s gross revenues.
2.5 OTHER FACTORS THAT CONTRIBUTE TO THEIR BRAND LEADERSHIP
Innovation & A ; First-Mover Advantage
As an early-mover on the Internet and a first-mover in online bookselling, Amazon has been able to construct a strong trade name at comparatively low cost, due to the ballyhoo and coverage it was given. This has helped them pull clients and travel up the acquisition curve rapidly, set uping Amazon as the taking on-line bookseller with a big client base. In add-on, Amazon was able to procure partnerships and confederations with cardinal participants, farther heightening their value proposition. Nevertheless, Amazon is invariably seeking new ways of bettering its offering, and harmonizing to Jeff Bezos, “we ‘re non a stationary mark. We were blessed with a biennial caput start, and our end is to increase that gap4” .
Customer Focus & A ; Reputation for Excellence
Amazon ‘s client focal point is apparent throughout all its activities. Harmonizing to Jeff Bezos, “Online, the balance of power displacements off from the company and goes towards the client. Our secret is that we have non been rival obsessed. We have been client obsessed, while our rivals have been Amazon.com obsessed5” . As such, Amazon continually invests in re-working and bettering its engineering substructure and package ( 80 % in back office operations ) , developing client service centres and spread outing its distribution web to back up high degrees of service, set uping a repute for excellence and fulfilment.
Distinct Brand Identity
Jeff Bezos chose the name ‘Amazon ‘ , because he wanted it to be short, memorable, to capture the spirit of the site, and to convey its huge size and offering. In add-on, he wanted the name to get down with an ‘A ‘ so that it would look at the top of hunt engine lists. Amazon ‘s apprehension of its trade name individuality has been a critical factor. Amazon received unfavorable judgment for spread outing its merchandise line, thereby thining the value of its association with books. However, direction realized that Amazon had become more associated with other nucleus trade name values – a broad scope of pick, good value, and its safe and unafraid bringing. As such, Amazon has been successful in stretching its trade name to include new classs and non-e-tailing concerns. For illustration, in June 1998, Amazon unveiled a music shop, which within six months propelled Amazon to one of the taking on-line music retail merchants. Harmonizing to Jeff Bezos, “Brands to a certain grade are like quick-drying cement. When they ‘re immature, they ‘re stretchy and plastic, but over clip they become more and more associated with a peculiar thing and harder to stretch6” . Think about how impossible it is for Coca Cola to do anything beside soft drink, like car, for case.
Amazon has achieved a client base of over 23 million people and an one-year gross run rate of over $ 2 billion in less than five old ages. The cardinal factors driving its growing and high keeping rates, root from its obliging value proposition and high quality end-to-end client experience. Amazon has besides benefited from a first-mover advantage giving it an border over rivals, nevertheless, Amazon ‘s intense focal point on client demands and continual invention, have kept it in front. This customer-centricity is a cardinal trademark of a successful Internet trade name.
Amazon besides recognized that service quality is a perceptual experience, non needfully a world. Amazon delivers on its promises of a broad stock list of merchandises, unafraid payment processs, rapid bringing and good value. Quality is merely mensurable in the heads of visitants to the site, and to prolong a positive image and satisfactory end-to-end experience, Amazon has continuously invested in client service, distribution centres and upgrading the site, with new merchandises and value added content. In making so, they have cultivated a repute for excellence and fulfilment, which is critical on the Internet.
Although Amazon has successfully built a strong trade name and loyal client base, it has non recorded any net incomes to day of the month, particularly since the rupture of planetary Dotcom bubble in 2000. Nevertheless, Amazon is claiming to be doing net incomes on its books and music classs, possibly seeking to support its position that losingss taken to construct market portion can harvest net incomes subsequently. In July 2003, 1.5 million orders worldwide to Amazon for the newest Kipling ‘s saga, “Harry Potter and the Order of Phoenix” may be a good start. However, Amazon still incurs losingss, and if it continues to make so, investors will lose assurance ; the drain on their hard currency resources will force them towards bankruptcy. This raises a critical issue, as the true value of a trade name lies in its sustainability.