Academic journal article Business Management and Strategy

Extension-Based versus Creation-Based Strategies in Tangiblizing E-Brands: A Preliminary Study

Academic journal article Business Management and Strategy

Extension-Based versus Creation-Based Strategies in Tangiblizing E-Brands: A Preliminary Study

Article excerpt

Abstract

Purpose of this research was to explore how a brand-equity could be leveraged in establishing the customer equity in the online environment. Existing research has not yet explored how the tangibilization affects various branding and e-branding approaches. We seek to identify the possible effects of tangibilization in firms' attempts in gaining customer equity through efforts of branding online. Findings of this study include highlighting both types of e-branding approaches, extension-based (e-EBA) and creation-based (e-CBA); have distinctive power in gaining respective equities in the virtual world in which the brand extension may have superior position by leveraging brand equity offline whereas new brand is free to fully utilized Internet technology. Both e-EBA and e-CBA shall seek to tangibilize their services to well categorized customers, since service tangibilization would significantly mediate the relationship between brands and customer equity. This paper would bring managers several implications. The key to the success in online expansion is the brand used online and the associated tangibilize activities in building customer relationship and gaining customer equity.

Keywords: Brand extension, e-Branding, Tangibilization, Customer equity

1. Introduction

Based on the Internet as a reliable tool in information exchange (e.g. Morris et al., 2003), the on-line business or its equivalent is increasing importance not only because of the attractive volumes of on-line spending, but also the huge cost-effective benefits. In addition, the Internet brought customers multi-sensory experiences that were impossible with traditional approaches. This helped improving the quality and quantity of exchanges with current and prospective customers, and efficiently aligning marketing functions (Cespedes, 1996). However, the Internet also brought customers a newer and faster approach to access product knowledge among competitors, and accordingly to build brand attitude and purchase intention (Li et al., 2002) in a different approach. Exchange on an Internet-based environment is, nevertheless, a challenge to both the suppliers and the customers.

1.1 Business Operation Online

Traditionally, marketers adopt various marketing activities in a mode of one-to-many communications to reach possible customers and prospects (Dussart, 2001; de Chernatony, 2001). Growing businesses take advantages of innovative Internet technology to integrate diverse communications with the customers in a timely and interactive manner (Dussart, 2001; Hoffman & Novak, 1996). This not only expanded the marketing access capability but also making mass-customized service possible. Operating with an ideal integrated marketing communication (IMC) would be economically feasible.

Well-designed online operation, the marketers may collect and analyze customer's data in a form of continuous and speedy ways with lower costs, with which to erect a customer relationship (Walsh & Godfrey, 2000). In this erection process, the brand acted as an identification of a service supplier to convince customers (Aaker, 1996), to serve customers, and to build a brand equity in customers' mind. Contrast to other predictions (Indrajit, 2001) that predicted the brand effects will disappear in a virtual context. The role of a brand played proved to be a signal for reliability and trustworthiness in this highly intangible business world (Bergstrom, 2000; Smith & Brynjolfsson, 2001; Page & Lepkowska-White, 2002). Moreover, an e-brand may convince customers that the technology-based online services promised a more customer-oriented service. This will in turn result in more customers' perceived value; eventually advance corporate brand equity by reciprocal effects (Balachander & Ghose, 2003). This means a successful e-branding not only help fostering the relationship with customers with customized communication on an individual basis (Walsh & Godfrey, 2000), but also creating a new marketplace that was not found and served through traditional channel. …

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