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Copying or distributing in print or electronic forms without written permission of Idea Group Inc. is prohibited. Chapter XII The E-Mode of Brand Positioning: The Need for an Online Positioning Interface S. Ramesh Kumar, Indian Institute of Management, Bangalore, India Abstract Brand positioning is a crucial strategy to any brand’s strategy. Given the rapid development of technology and its impact on online strategies, changing lifestyles of consumers, and the consumer interaction required as a part of contemporary brand strategy, there may be need for brands to synergize their positioning strategies with online positioning strategies. This would enable brands to adapt to an environment that is increasingly becoming digital. This chapter, after taking into consideration the published literature on brand positioning, attempts to formulate online positioning strategies using different aspects of brand positioning, price, customer interactivity, and consumer community orientation. Implications for marketing managers are provided. The E-Mode of Brand Positioning 305 Copyright © 2006, Idea Group Inc. Copying or distributing in print or electronic forms without written permission of Idea Group Inc. is prohibited. Introduction Brand positioning has been the cornerstone of marketing strategy in recent times in fast-moving consumer product categories, durable categories, and services. It would be difficult to think of a strategy for any brand without a well-thought-out strategy for entering the consumer’s psyche (Ries & Trout, 1987). Thus, Nike’s success could be attributed to the positioning that it is worn by the world’s best athletes as reflected by the Michael Jordan campaign (Trout & Rivkin, 1999). While the challenges concerned with positioning strategies still remain with marketers, the environment has been changing with the influence of Web-based marketing. In the year which closed in September 1999, there was an increase of 221.5% of goods that were traded over the Internet. Consumer goods registered an increase of 665% over the same period (Wind & Mahajan, 2001). The consumer is becoming more evolved in terms of information control. The consumer is no longer likely to receive information without the interactive component being present when he/she becomes involved in consumer decision making. Hence, the traditional positioning strategies may not succeed as segments are becoming smaller and less homogenous (Solomon, 2003). A number of established brands have also started using the Internet and the Web to adapt to the changing environment. Some of the global brands making this transition include Levi’s, Dockers, and Barbie (Ries & Ries, 2000). Even in a developing country such as India where less than 5% of the total retail sales come from organized supermarkets/malls and the penetration of the Internet is miniscule, supermarkets such as Subiksha and FabMall (www.fabmall.com) have started online marketing of groceries and consumer goods. FabMall started as an online store in Bangalore with books and music and over time has added several categories such as groceries, jewelry, and gifts. It has since added physical retail stores around the city of Bangalore. Today, its model attempts to synergize the advantages of retail outlets and online dimen- sions. The physical retailing model of the company has grown from revenues of 4 million rupees to 15 million rupees per month from April 2003 to November 2003 (Kumar & Mahadevan, 2003). The trend of having multiple channels to reach the consumers could result in building a good brand besides the profitability aspects. Subiksha is a discount grocery store at Chennai (previously known as Madras) which deals with low- priced groceries. The store has a network of stores around the city and has started online operations by which customers could order groceries. The unique aspect of this store is that the residential neighborhoods are located close to the network of stores and hence the delivery charges, which are normally significant, are saved. 306 Kumar Copyright © 2006, Idea Group Inc. Copying or distributing in print or electronic forms without written permission of Idea Group Inc. is prohibited. This integration of physical and online presence is commonly observed in global brands. Charles Schwab transacts 80% of its business over the Internet but increased its off-line presence as both channels would be required to service its customers (Lindstorm, Peppers, & Rogers, 2001). Tesco, the U.K based retail chain with 600 stores, 60,000 product lines, and 10 million customers who are members of a loyalty program has illustrated how the combination of online and off-line retailing could develop a successful retail brand. Amazon.com with a customer base of 8.4 million and 66% of sales being contributed by repeat purchasers is a brand that has an association of customizing products (books, music, etc.) to the needs of consumers by suggesting a number of options which they may not have otherwise considered (Rust, Zeithamal, & Lemon, 2000). Given the rapid challenges in the marketing environment and consumer lifestyles and the growing influence of technology with regard to consumer retailing and marketing communications (e.g., advergaming and SMS messages), there is a distinct need to explore new conceptual frameworks for the concept of position- ing. There are two stages that would lead to the development of such frame- works which could assist practitioners in a marketing environment. The first stage is concerned with analyzing existing dimensions of brand positioning with a view to examine how they could be used for a brand that will have both online and off-line retail channels. The next stage is to develop a framework for categories of consumer products from the insights gained from the first stage. Different Dimensions of Brand Positioning The challenge for marketers in India is not just to create an online experience: there is a need to “move” the consumer from the traditional ways of buying to the digital ways of buying after understanding certain shopping aspects which are unique to the Indian context. While some of these aspects may involve providing a kiosk in a traditional store for customers to browse through several dimensions of brand comparison, the most critical factor is the manner in which such prospective buying experiences are communicated. Given the Indian diversity with regard to demographics and psychographics, positioning chal- lenges need to be market specific and product specific. The second challenge is to ensure that positioning propositions of brands are fulfilled and this involves infrastructure demanded by positioning strategies in a manner that would bring in price differentiation. There are various dimensions that could be used for positioning a brand. Brand equity is a set of assets and liabilities linked to a brand, its name, or symbol. Brand loyalty, brand name awareness, perceived quality, brand associations, and other brand assets such as patents and trademarks are some of the components of The E-Mode of Brand Positioning 307 Copyright © 2006, Idea Group Inc. Copying or distributing in print or electronic forms without written permission of Idea Group Inc. is prohibited. brand equity (Aaker, 1991). Brand positioning involves developing, nurturing, and sustaining brand associations and brand imagery in such a way that it offers a long-term competitive edge through the consistency of such associations, which could be called sustainable competitive proposition (SCP) (Kumar, 2003). Hence, most components of brand equity could be used to develop positioning strategies. Loyalty as a Positioning Dimension Amazon.com uses loyalty as a strong positioning strategy. It provides a customer not just value in terms of the price of the merchandise. Rather, its unique value comes from specific strategies such as recommendation of book and music titles after capturing the customer’s preferences on its database. It found that customers who bought books also bought CDs and expanded its product-line base to satisfy the base of loyal customers. It could be noted that the interactive nature of online marketing was effectively made use of by Amazon.com and this enabled the company to sustain a dialogue with its customers. Peapod, an online grocery shopping store in the United States has sustained the loyalty of its customers based on its “virtual supermarket” strategy. Customers could access a list of categories, brands in the categories, (continue) brands by package size, by unit price, or in some cases even by nutritional value. Customers can have standardized and special shopping lists which could be used by them any time. The customer retention rate for Peopod is 80%. The retail outlet also uses the Internet to develop “learning relationships” by which it could adapt itself to the needs of consumers (Gilmore & Pine, 2000). In both the Amazon.com and Peapod cases, the organization uses customization and interaction with customers to gain loyalty and the outlets are positioned on “value-based customization.” In contrast, in a typical brick-and-mortar outlet the loyalty is built up in a different manner. Tesco has collected massive data on its customers and divided them into 5,000 needs segments. It sends coupon assortments to various customers depending on their needs and the redemption rate of these coupons is 90% (Kotler, 2003). From 1980 to 1993, the number of sales promotion coupons distributed tripled from 100 billion to 300 billion in the United States and the number of coupons redeemed has only grown over only by about a third since 1981 (Hallberg, 1995). Shoppers Stop in India, which has a considerable degree of loyalty, also attempts to research the needs of consumers to formulate its loyalty programs. Large off- line retail outlets could develop loyalty-related positioning by analyzing the purchase data of consumers belonging to different segments. As the number of consumers in these off-line retail formats are likely to be large in numbers, 308 Kumar Copyright © 2006, Idea Group Inc. Copying or distributing in print or electronic forms without written permission of Idea Group Inc. is prohibited. “value-based loyalty” arises from the purchase patterns. FabMall uses recency of purchase, frequency of purchase, and monetary value (RFM) to formulate its loyalty programs. RFM could be useful both in off-line and online retailing environment. It is possible for a multiple channel retailer (with both online and off-line channels) to follow strategies that would enhance loyalty. In a country such as India where shopping for both fast-moving consumer goods and durable categories such as television, music systems, and kitchen appliances could be a ritual of entertainment, it is possible for a retailer to provide information on the Web and attract retail traffic base on the information being given on the Web for a specific segment (Kumar, 2002). By this approach, while the information provided enables a consumer to be appraised of the offerings of the company, the “touch and feel” factor—a major prerequisite in the Indian shopping context—is also retained. This would be possible only for a specific segment of a market (niche) as the penetration of computers is low in India. The positioning of the brand is based on information support as well as the retail service when the customer visits the retail outlet. There has been a proliferation of brands in most categories and the traditional positioning methods may not result in customer retention. In a low-involvement category such as soap, consumers will have a tendency to try many brands even if they express a dominant loyalty to one brand. In other low-involvement categories such as antiseptic lotion or floor cleaning solution, penetration levels have to be enhanced especially in developing markets. In both these kinds of categories, there is a need to combine off-line and online positioning strategies and hence mass-based advertising approach, which has been followed for decades, may not produce sustainable outcome in terms of brand loyalty. In the case of soaps, Indian brands continue to position themselves on fragrance, skin care, and prevention of bad odor while expanding on herbal offerings. One Indian herbal soap brand, Ayush, claims in its advertisements that it would kill 99% of seven types of bacteria. Pears, a well-known glycerin soap, has launched the germ-shield variant. Another brand, Lifebuoy, with variants is positioned as a family soap on the health platform and the brand has been in the Indian context for more than four decades. Lyril, which was positioned on product freshness with its lime ingredient and “waterfall” freshness, has not been doing well in recent times because of highly competitive positioning strategies. All four brands mentioned are from the same company, and except for the herbal brand, the other brands have a distinctive identity of their own and they have been nurtured for several decades by the company. Given such a competitive situation, positioning has to go beyond the traditional imagery created by advertisements and the blitz of mass media. It may be worthwhile to follow the principle of combining the product benefit with the life benefit (Buchhold & Wondemann, 2000) while the positioning strategy is being formulated by brands in the competitive context. Incidentally, Lifebuoy was also The E-Mode of Brand Positioning 309 Copyright © 2006, Idea Group Inc. Copying or distributing in print or electronic forms without written permission of Idea Group Inc. is prohibited. positioned for several decades as a soap with a germ-killing action to the rural target segment characterized by a lower income and a different type of lifestyle. In fact, using a Lifebuoy a few decades back in the rural areas meant that the consumer has graduated to a branded offering from several low-end regional substitutes. Pears is a high-priced soap that has a small niche market and it has been positioned on long-term skin care. At the outset there is a need to provide differentiation in terms of how the product benefit of brands is relevant to the respective segment and even to segment the market combining life benefit with the product benefit would be useful. The product benefit of a herbal brand such as Ayush (killing of bacteria) may be relevant for a target segment that is exposed to dust and pollution in the environment in a developing country such as India. Children and several thousands of middle-class consumers of soaps traveling by crowded buses can be the target segment. The life benefit for this target segment is to stay fresh in the context to which they are exposed. Lifebuoy, which is currently positioned to the urban target segment as a “family soap” on the health platform (rather than on its original germ-killing proposition) could have the same demographic segment but address the same life benefit of staying fresh with regard to consumers who are exposed less of the dusty environment—probably self-employed business people who do not travel to work—as the target segment for Ayush. The Internet enters into the mix as an information channel. It could provide information on the various brands, the various life benefits, the context (user situation) in which the core benefit of the brand could offer the maximum benefit and the ingredients used by each brand which is appropriate to the context (user situation). From this approach, it is apparent that there is a very clear differen- tiation not only in terms of benefits offered by the brands but also in terms of usage situation, which is a very strong criterion to segment consumers. Consum- ers would be able to appreciate how they are made to select the offering closest to their needs (not just in terms of fragrance or odor prevention which is very generic). This would make them buy the brand more frequently as there is a strong rationale to buy the specific brand (than just trying a few brands as more a variety seeking behavior). The problem of low penetration of the Internet in India (and hence the information) could be addressed at the important retail outlet and consumers could be educated by the company at these outlets with digital kiosks. Shiseido, a Japanese cosmetic brand, has outlets where consumers could simulate several color combinations to suit their skin/desired aesthetic appeal and if they wish, they could leave their details in the database (Johansson & Nonka,1996). For the category of soaps, for instance, consumers could take a look at the kinds of ingredients and their benefits based on life benefit for an appropriate segment. With the database the company could obtain feedback on the effectiveness of the claims of the brand used by the consumers. This method 310 Kumar Copyright © 2006, Idea Group Inc. Copying or distributing in print or electronic forms without written permission of Idea Group Inc. is prohibited. of contemporary positioning even for a low-involvement product category could enable a brand to build up a relationship with the consumer base than just satisfying the positioning function of differentiating the offering from the competitors. Customer lifetime value has to consider the duration of loyalty and the profitability of customers during the duration of loyalty (Reinartz, Thomas, & Kumar, 2003). In a specific category the duration of loyalty is critical and the contemporary positioning suggested is likely to result in a longer duration of loyalty. Besides the company that has several brands across a price spectrum, the duration of loyalty could also enable the consumer to graduate to updated offerings. One of the reasons for customer migration is because the consumer does not find the company offering a broad spectrum of offerings which the consumer could adapt to based on his/her changing lifestyle (Coyles & Gokey, 2002). Positioning Framework–I My framework (Figure 1) uses two dimensions—price and interactivity with consumers—to provide guidelines for marketers to position their products on the dimension on loyalty: The framework has four dimensions from which a brand can choose to employ its online and off-line positioning strategies depending on the selection of target segment for the brand. This framework would also be useful to develop specific “loyalty associations” through appropriate reward systems as applicable for the respective segment. Needs to be integrated with the framework more system- atically. For example, low price–low interactivity (LEAD consumers as a target segment) would clearly understand that they would not be in a position to get rewards on loyalty as they are a part of the bargaining segment which is only Customer Interactivity Low High P rice High Low G OLD L EAD SILVER P LATINUM GOLD LEAD PLATINUM SILVER Figure 1. Price-customer interactivity linkages The E-Mode of Brand Positioning 311 Copyright © 2006, Idea Group Inc. Copying or distributing in print or electronic forms without written permission of Idea Group Inc. is prohibited. price conscious. The understanding comes from the positioning signal provided by the company’s reward system for retaining customers.(continue) break down into smaller paragraphs. Such type of positioning is not possible through traditional ways. For a brand that wants to consider high price–high customer interactivity (PLATINUM consumers as a target segment), the company should customize its product (even a tea brand could do this) to the consumer based on the finer needs of the consumer and the Internet-based interactivity could be used for changes in customization whenever it is required by the customer when it is bought frequently. For example, a brand of glycerin soap may customize such an offering based on the constant feedback received on usage, changing climatic conditions, and the customer’s skin-specific reaction to the brand. The high-end customer getting involved in this interaction with the brand also perceives a value for the price he/she is paying and is aware that the price-conscious consumer is clearly differentiated by the brand. The Internet could throw up several customization options and give the customer specific guidelines on product usage after ascertaining feedback on brand performance with the inclusion of a dermatologist. A new variant of the soap could be initially introduced exclusively through a loyal base of consumers belonging to this segment, and this adds exclusivity to the value positioning. High price–low customer interactivity (GOLD segment of consumers) could find application in hedonic products such as coffee, tea, and perfumes. While the interactivity may not be much on product performance, it may be associated with trends or recipes and the interaction may be low but customer information on new offerings may be required. This type of interaction would be helpful to build a relationship with customers by emphasizing the superiority of the offering, taking into consideration the category and competition together. An interesting example could be provided from the ready-made apparel industry which has a number of brands generally positioned on lifestyle aspects. The brand Van Heusen has brought in a fabric which reduces the temperature of the wearer. Another brand, Louis Phillippe, has introduced a shirt which is called “Permpress” (it offers a fabric that remains permanently pressed because of a specific technology). Even diapers, which have a very low penetration in the Indian market, could be a category that involves high price–low customer interactivity. These categories could reach out to the consumer on the net with information on the state of the artwork in the category and how such critical applications are treated with technology to deliver the relevant benefits to consumers. This approach would also add credibility to the brand. Product development efforts could also be highlighted and if the brand is able to get a testimonial from the scientific community on the credibility of claims, they could be discussed on the Web. Providing consumption-related services could be another dimension that may be appropriate to this segment. For example, a new user of baby foods may be [...]... the other an entry-level model Both of these versions are targeted toward different segments The higher-end consumer would expect specific features, the state-of-the-art features, which would also add some symbolic appeal to the television (which is normally kept in the visitors’ hall in the typical Indian household) and effective after-sale service when there is a need for it The expectations of the... his/her needs The preferences of several individuals could vary and several dimensions associated with the brand could be shown in accordance with the preferences of each individual prospective consumer Perceived quality of an offering could also be enhanced by the services offered OnStar is a service offered by General Motors and several million consumers have availed this service The service ranges... service quality through Web site usability has been very carefully studied in an online environment (Nielsen, 2002), there are few empirical studies examining the theory that service quality increases customer loyalty through increased trust in the online environment At the same time, in the literature, there is little empirical research on cognitive lock-in based on superior service quality provided... Giudice & Del Giudice, 2003; Lohse & Spiller, 1998) Therefore, one would expect that the customer experience with the Web site would also have a strong effect on customer trust in the company Following this approach, as in the marketing literature trust is positively related to the experience of the customer with the salesperson, in online commerce, instead, the salesperson is almost replaced by the company’s... the lower-end customer would be very different and hence perceived quality would be different for these two segments Perceived quality is used by the consumer in his/her decision making A customer who is convinced of the perceived quality of a car would select the brand from among several alternatives This aspect is especially applicable for a premiumpriced brand There are several car brands competing... industries Network externalities, also known as network effects or positive consumption externalities, exist when a user values a good or service more as the total number of users for that good or service increases A common example is the fax machine—as more people own faxes, faxes become more valuable to each individual user Positive feedback is a force that “makes the strong get stronger and the weak get... more about the brand The Internet could also be used in carrying the experience of consumers who have used the features of a brand (as testimonials) prospective consumers are thus encouraged to have a dialog with consumers who have experienced the brand Such word-of-mouth references on reliability (which could be spread quickly from a variety of consumers on the web /e- mail) could enhance the perceived... positively related to the experience of the customer with the salesperson, in online commerce, instead, the shopping experience is “lived,” in the major part, with the company’s Web site: as a result, the customers’ experience and perceptions of the quality service provided by the Web site’s tools can influence their assumptions about the nature of the company and its trustworthiness (Friedman et al.,... enable them to consider several alternatives revolving around their preferences E- positioning of brands extend the conventional positioning to offer whole customer experience which spans the entire decision-making stages of consumer’s selection process from prepurchase to postpurchase (Bloch, 1995) The lifestyle positioning associated with a number of consumer categories, too, could effectively use... as design and performance and comfort It is surprising even such a celebrity-oriented advertising, very rarely brands use online positioning to “connect” with these target segment especially in durable categories An online consumer chat session with the celebrities starring in the brand’s advertisement (e. g., in Santro’s) on the functional features of the car and the celebrities’ experience with the . after-sale service when there is a need for it. The expectations of the lower-end customer would be very different and hence perceived quality would be different for these two segments. Perceived quality. prohibited. one an upscale plasma version and the other an entry-level model. Both of these versions are targeted toward different segments. The higher-end consumer would expect specific features,. terms of how the product benefit of brands is relevant to the respective segment and even to segment the market combining life benefit with the product benefit would be useful. The product benefit