One reason for increased product variety on the Internet is the ability of online retailers to
catalog, recommend, and provide a large number of products for sale. For example, the
number of book titles available at Amazon.com is more than 23 times larger than the
number of books on the shelves of a typical Barnes & Noble superstore, and 57 times
greater than the number of books stocked in a typical large independent bookstore.Looking at the issue from another perspective, they estimate that 40% of sales are
from relatively obscure books with a sales rank of more than 100,000 (if you visit
Amazon, you will see that every book has a sales rank from 1 for the most popular to
over 1 million for the least popular). This indicates the importance of the long tail for
online retailers like Amazon, since 40% of sales are from these less popular books which
cannot be stocked in a conventional bookstore (a large real-world book store would typi-
cally hold 100,000 books). In a Pricing context, another benefit for online retailers is
that less popular products cannot be readily obtained in the real world, so Amazon can
justify higher prices for these books. Brynjolfsson et al. (2003) estimated that average
Amazon prices for an item in the top 100,000 is $29.26 and in less popular titles $41.60.The Internet and branding
What constitutes a successful online brand? Is it an e-commerce site with high levels of
traffic? Is it a brand with good name recognition? Is it a profitable brand? Or is it a site
with more modest sales levels, but one that customers perceive as providing good serv-
ice? Although sites meeting only some of these criteria are often described as successful
brands, we will see that a successful brand is dependent on a wide range of factors.
The importance of building an effective online brand is often referred to when start-
ups launch e-commerce sites, but what does branding mean in the online context and
how important is online branding for existing companies?
Brandingseems to be a concept that is difficult to grasp since it is often used in a
narrow sense. Many think of branding only in terms of aspects of the brand identity such
as the name or logo associated with a company or products, but branding gurus seem
agreed that it is much more than that. A brandis described by Leslie de Chernatony and
Malcolm McDonald in their classic 1992 book Creating Powerful Brandsasan identifiable product or service augmented in such a way that the buyer or user perceives
relevant unique added values which match their needs most closely. Furthermore, its suc-
cess results from being able to sustain these added values in the face of competition.
This definition highlights three essential characteristics of a successful brand:
brand is dependent on customer perception;
perception is influenced by the added-value characteristics of the product;
the added-value characteristics need to be sustainable.To summarise, a brand is dependent on a customer’s psychological affinity for a product,
and is much more than physical name or symbol elements of brand identity.
De Chernatony (2001) has evaluated the relevance of the brand concept on the
Internet. He also believes that the main elements of brand values and brand strategy are
the same in the Internet environment. However, he suggests that the classical branding
model of the Internet where consumers are passive recipients of value is challenged
online. Instead he suggests that consumers on the Internet become active co-producers
of value where consumers can contribute feedback through discussion groups to add
value to a brand. De Chernatony argues for a looser form of brand control where the
company facilitates rather than controls customer discussion.CHAPTER 5· THE INTERNET AND THE MARKETING MIX
Branding
The process of
creating and evolving
successful brands.
Brand
The sum of the
characteristics of a
product or service
perceived by a user.