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Online
Myths
By Michael Alan Hamlin
April 14, 2003
Accenture recently conducted a study
examining the online buying habits of 2,000 consumers in the U.S.
The purpose of the study was to "uncover the facts behind brand
value online," according to Accenture partner Teo Lay Lim writing
in the March issue of CIO-Asia. On the surface, the survey
appears to have burst a number of common myths associated with online
purchasing.
Among them is the notion that the
Internet is all about price. Teo says the findings of Accenture
suggest that price actually contributes less than 10 percent of
what he calls e-Brand value. "The payoff from investing in
brand selection, site speed, and other performance dimensions is
greater," he noted. By brand selection, Teo appears to be referring
to the availability on a retail site of a selection of established
brands. In that respect, Teo's findings aren't surprising in a traditional
branding sense. A principal purpose of any branding strategy is
margin insulation from low-priced competitors.
However, it is true that much has
been made of the notion that the Internet empowers consumers because
they can quickly check multiple sites for the best prices. But even
when a top brand is available at a lower price on a competing site,
the online retailer's reputation for quick order processing and
delivery is likely a factor that helps determine in a fairly significant
way whether the cheaper price is truly attractive. If true, and
it probably is, that would be further evidence of the power of a
strong corporate brand for online retailers.
The fact that site speed and performance
are important dimensions of the online customer's experience isn't
much of a surprise. Rather than shattering a myth, this seems to
confirm the general impression that bandwidth and blazing fast servers
and software are a key component of the online retailer's value
proposition. Buying should be a painless, simple exercise. So nothing
new there.
The second myth Teo addresses is
that the benefits of a strong brand provide an excellent return
on investment. Teo says brand familiarity is a lowly number 10 among
the top 10 buying needs among respondents. "Most online buyers
learn about new sites from links and search engines - not from offline
media, so the impact of offline media is less than once thought,"
he argues somewhat disingenuously, considering his first myth suggested
that brand selection is in fact important, as well as a reputation
for speed and performance. But just how disingenuous this is becomes
apparent in Teo's discussion of his third myth.
And that is that marketing is the
key to brand building. Instead, Teo says, "the consumer experience
is the product." Of course any marketer just out of school
knows that some of the world's most powerful brands are in fact
experiential. Some of them are Sony, Nike, and Hershey's. Each of
these brands communicates its value proposition in part through
providing experiential marketing opportunities. The most obvious
are the Sony, Nike and Hershey's stores where customers are invited
to come in and see, touch, eat, etc (Not every experience, of course,
applies to each product!).
So making websites where their products
are sold experiential is, I'm afraid, hardly revolutionary. Instead,
it is a matter of transferring what is a basic principle of building
strong brands online. That's an important point, which Teo and his
hapless readers should bear in mind. Online or otherwise, the principles
of marketing are pretty much the same. While implementation may
and frequently should vary, the principle behind the act stays in
place.
But Teo isn't finished yet with his
myths. He also believes that contrary to common perception, a bricks
and mortar presence really doesn't matter much to online buyers.
After the dot-bomb, many analysts suggested that there was strength
in diversity and weakness is exclusive reliance on either an online
presence or a traditional retail experience inside a physical rather
than a virtual store. This is actually an "old" notion
in Internet time. Amazon.com, Yahoo!.com, and e-Bay and others have
clearly demonstrated that an online business model, if it is a solid
business model, is more than just workable and in fact a bricks
and mortar presence if often entirely inappropriate.
What is revealing about Teo's online
brand building perspective, however, is what he says next: "The
payoff from building online brand reputation is much greater."
Didn't he just say that brand ranked number 10 among the top 10
buying needs? And that links and search engines were the principal
methods for identifying new online retailers? So which is it, I
wonder?
In fact, it's both. Links and search
engines are important components of any brand building communication
strategy. Teo may not realize it, but what his survey actually found
is that online branding is every bit the imperative traditional
branding is.
(Michael Alan Hamlin is the managing
director of consultancy TeamAsia and the author of three books on
Asian economies and companies. His latest book is Marketing Asian
Places, of which he is a co-author (Wiley, 2001), and he is
currently at work on High Visibility: The Making and Marketing
of Asian Professionals into Celebrities. Write him at mahamlin@teamasia.com.).
Copyright © 2003 Michael Alan
Hamlin. All Rights Reserved.
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