4 Branding in the E-commerce Environment
4.2 Online Brand Trust
4.2 Online Brand Trust
Consumer trust is a crucial component in brand building online, just as it is offline (Morgan & Hunt, 1994). In the e-commerce context, trust is also seen as one of the most important prerequisites for success (Chen, Yen, Pornpriphet & Widjaja 2014).
Given the relative unfamiliarity of the e-environment, the absence of personal interaction and uncertainty concerning the authenticity of the site and adequacy of payment security, trust plays a very critical role online (Reynolds 2000;; Ibeh et al.
2005;; Das 2016;; Merrilees & Fry 2002).
A strong online brand plays a vital role in building trust towards the e-commerce company, since a well branded e-commerce website can reassure customers that the business is reliable, safe and worth their trust in making a purchase (Ibeh et al.
2005;; Hashim & Murphy 2007). Previous studies have argued that brand awareness reduces risk perceptions and is thus positively related to website trust (Yoon 2002;;
Mourad, Ennew & Kortam 2010;; Das 2016). A strong brand has a very big impact in building and maintaining trust online, surpassing most other marketplace fundamentals (Ibeh et al. 2005). As seen in the empirical study of Chang and Chen (2008), both website quality and the website’s brand affect consumers trust and perceived risk, but the brand is even more important cue in influencing purchase decisions.
Trust is seen as an important factor both in attracting customers and also building and maintaining long-term relationships with them (Twing-Kwong et al., 2013;; Bart et al., 2005). Consumers generally form stronger relationships with brands that they trust and feel satisfied with (Veloutsou 2007). Several researchers have proved that trust has an important impact on consumers’ motive to buy online and on actual
buying decisions, and that trust towards an e-commerce website directly acts as a key to transactions (Köksal & Penez 2015;; Li et al. 2014;; Lin & Lee 2012;; Oliveira, Alhinho, Rita & Dhillon 2017). Even more importantly, trust plays a determinant construct in influencing repurchase intent. Customers may like the brand but if they do not trust it, there is less chance for repurchase. Therefore, it is very clear that online retailers should focus their marketing strategies on establishing a great online brand and engage in continuous brand trust-building. (Chen-Yu, Cho & Kincade 2016;; Chang & Chen 2008).
In electronic commerce, consumers can exchange with each other on social networks, go through product reviews and compare sites, which means they become information-rich even before taking a purchase decision, and are able to develop their own perspective on companies and brands (Das 2016;;
Christodoulides 2009). Companies have either very little or no control over this process. This is why trust towards e-retailers plays a very important role in consumers’ purchase decision and in maintaining a positive relationship between customers and e-retailers. (Das 2016) This also explains the importance of positive word of mouth in generating customer trust towards the online brand (Ibeh et al.
2005).
Emotional connection plays an important role in brand trust formation, meaning that consumer’s trust in a brand is built more on a personal level than based on pure facts (Chen-Yu et al. 2016). Trust is built on reassurance that the company will always fulfill their promises, look after their best interests and protect them in all respects (Merrilees & Fry 2002;; Oliveira et al. 2017). This emotional connection and eventual trust can be built with the help of a good reputation and customer-oriented mindset. In order to gain trust, it is important that the consumer enjoys visiting the particular e-commerce website. (Oliveira et al. 2017)
4.3 Online Brand Experience
Brand experience means all those sensations, feelings, comprehensions and behavioral responses provoked by brand-related stimulations that are part of a
brand’s design and identity, communications and environments (Brakus, Schmitt &
Zarantonello 2009). Brand experiences are important constructs in creating emotional connections with brands, as well as in advocating a positive feeling between consumers and brands (Chen-Yu et al. 2016). They are also likely influencing customers’ future purchase behavior (Pappas et al 2014). Good brand experiences are followed up with repeated interactions, and in time, those positive interactions lead to satisfying relationships between consumers and brands they interact with (Morgan-Thomas & Veloutsou 2010). For marketers, understanding how consumers experience brands is crucial in developing the right marketing strategies (Brakus et al. 2009).
For e-commerce companies, brand experience is especially important, since it is difficult to maintain differentiation at product level as many competitors are offering similar products and services (Hatch and Schultz, 2003). In fact, in the e-commerce environment, traditional attributes such as product offering and price are less important drivers of brand equity and loyalty compared to a positive online experience (Ibeh et al. 2005). Brand experience is therefore helping customers to understand the value proposition that the brand offers. When consumers perceive the greater value brought by the experience, they are more likely to remain loyal customers. (Khan, Rahman & Fatma 2016)
Functionality and corporate visual identity are important parts of the online brand experience. Corporate visual identity means building up visually appealing and relevant brand elements online in order to increase brand satisfaction and loyalty.
Functionality then again means all the functional aspects of online transactions in the site. (Khan et al. 2016) In the e-commerce environment, a well-designed and user-friendly website is in a way the equivalent of a competent salesperson in the offline world (Zhang, Fang, Wei, Ramsey, McCole & Chen 2011).
When companies develop customer experience, they are typically focusing on the goal of improving customer satisfaction at each step of the customer journey.
However, customer satisfaction alone is rarely a competitive differentiator. Instead, companies should tap in to reaching emotional connection with consumers.
Customers that are emotionally connected to an online brand are more likely to buy
more, visit more, exhibit decreased price sensitivity, care more about the company’s communications, follow its advice and spread a good word about the brand. (Zorfas
& Leemon 2016) A brand experience that promotes a positive feeling between consumers and brands is a significant driver in creating this emotional connection (Zorfas & Leemon 2016;; Chen-Yu et al. 2016).
4.4 Online Brand Loyalty
Online trust and satisfying online experience are critical components for building online brand loyalty (Jevons & Gabbott 2000). Online brand loyalty, often defined as e-loyalty, means consumer’s perceived loyalty towards an e-commerce website, which shows in consumer’s intention to continue shopping from a specific website, with no intention of switching to another (Flavian, Guinaliu & Gurrea 2006;; Chen et al. 2014). Brand loyalty is very important for the success of online businesses, since generating traffic and attracting new customers is costly and inefficient compared to building a loyal base of customers who spend more money and buy more often (Ibeh et al. 2005;; Pappas et al. 2014). Customers’ emotional loyalty towards a brand can help the e-commerce company to stand out in the highly crowded competitive environment (Ibeh et al. 2005).
Customer loyalty can be reinforced by a consistent fulfilment and delivery of promises (Ibeh et al. 2005). This includes providing a satisfying purchasing experience, and especially in the case of e-retailers, providing an after-sales experience that is so great that it will inspire loyalty and therefore repeat purchases (Court et al. 2009). Customer satisfaction is therefore not only a key factor influencing customers’ online purchase behavior but also reinforcing customer loyalty (Pappas et al. 2014).
Customers’ favorable opinion of product assortment is also strongly linked to online store loyalty, meaning that a wide and relevant variety of products is needed for an online store to attract and maintain long-term customers (Koo 2006). Moreover, the quality of different brands offered by the online store positively influence the image
of the e-retailer in the minds of consumers (Ailawadi & Keller 2004). For many e-
retailers the number of brands they have to offer is a part of their competitive positioning along with other factors such as the quality of service and easiness of use.
Website usability and functionality positively influence repurchase intention and thus brand loyalty. Usability can be improved for example by focusing on providing rich product information, clear navigation functions and easy purchase. (Zhang et al.
2011) Website design and visual appeal on the other hand have not been found to have direct effects on brand loyalty, but this might be due to the fact that the studied online stores have failed to differentiate themselves against competitors in terms of these attributes (Koo 2006).
There are two types of loyal customers: passive and active loyalists. Passive loyalists are staying with a certain brand out of laziness or confusion and never actually actively commit to it. Active loyalists, on the other hand, not only stick with the brand but also recommend it to others. Branding professionals should therefore make expanding the base of active loyal customers a priority. (Court et al. 2009)
4.5 Online Brand Communication
E-brand building and communication strategies are not distinct but instead are generally overlapping (Ibeh et al. 2005). In the digital world, brand communication presents new levels. Successful marketing communications in the internet requires understanding how information, entertainment and commerce can be linked together within an online marketing communications mix (Simmons 2007).
Marketing mix activities should also function in a way that they support the brand message, and they should be integrated to deliver the message in a consistent manner across all channels (Wood 2000;; Keller 2009).
In order to effectively communicate about the brand’s values and to deepen the company-customer relationship, an interactive and focused communication
customer group with clearly specified objectives and a rich array of marketing communications tools. (Ibeh et al. 2005)
There are many online tools available for brand communication, and the simplest and most obvious tool is the company’s website. More than being an online marketplace, the website presents a way to communicate the company’s value proposition and brand promise, and to strengthen the brand’s image. (Simmons 2007;; Alwi 2009) Websites communicate about the brand both through their design and functionality. A few of the web elements that a company can communicate through are logo, pictures, text and copy, currency, news, layout, colors and shapes.
Website’s text elements show the brand’s tone of voice and personality. While pictures act as visual representation of the brand values, text helps to reinforce those values consistently. It is then up to the consumer to determine whether the message delivered through those elements is relevant and compelling. (Rowley 2004) E-commerce websites generally have a simple and clear design, since that reduces the customers’ perceived risks of wasted time, frustration and difficulties (Wang & Emurian 2005). However, the perception of good design is greatly influenced by customers’ national culture (Reinecke & Bernstein 2013).
Another tool for online brand communication is e-mail marketing. E-mail marketing communications do not have the best image due to the issue of spamming, which has caused anger among recipients and lead to the development of filtering tools to prevent unwanted e-mails. However, when done right, e-mails are useful for various marketing communications purposes: sharing information about products or services and promoting them, building brand relationships, leading customers to websites and informing about order status. What is important is to understand that e-mail marketing should not be used only for the purpose of converting additional sales, but for facilitating brand encounters and deepening consumer-brand relationships with loyal customers. (Simmons 2007) This requires understanding what factors customers value in regular e-mail communications and the capability to personalize e-mail communications to suit individual preferences (Merisavo &
Raulas 2004).
4.6 International Online Branding
Due to the fact that e-commerce websites are globally accessible, some view online brands as synonymous to global brands. Growth-seeking e-commerce companies have basically no choice but to actively explore overseas market opportunities and engage in rapid internationalization. However, as with any companies, e-commerce businesses should understand the importance of a suitable level of brand localization within international markets. (Ibeh et al. 2005) What makes it challenging is that the audience for online brands is less predictable and more diverse than the brand audience of many traditional businesses (Rowley 2004).
The importance of localization and adaptation is as valid online as it is in the physical international environment, since language, symbols, colors and preferences often do not translate as such across different cultures and countries (Rowley 2004;;
Cronin 1996). This means that international online brand builders should stay sensitive to the special characteristics of national markets and adapt to local preferences and cultures. However, in order to build brand recognition on a truly international scale, it is still important to stay fairly consistent across the markets. All in all, the principle of ‘think global, act local’ is considered to be fairly relevant in the context of international e-commerce brands. (Ibeh et al. 2005) A common way for e-commerce brands to build worldwide brand recognition is by using an internationalized domain name or a series of standardized domain names (Cronin 1996). Realizing the connection between culture and preferences, many e-
commerce companies offer localized versions of their website with local languages, and adapt the site’s content to meet local needs and to add local significance (Reinecke & Bernstein 2013;; Ibeh et al. 2005). Local adaptation of content, language, currency and other factors are generally needed in order to strengthen brand identification among international customers (Rowley 2004).
Culture is the most important reason why domestic brands are adapted to suit foreign markets (Erdem, Swait & Valenzuala 2006). This applies to online businesses as well, and often the most visible culturally localized component is the company’s website. Cultural adaptation in website design not only enhances the
user experience of the website, but it can also lead to more favourable attitudes towards the company, which in turn can incline consumers to purchase (Singh et al.
2006).
More than localizing the mere language of the website, there can can be situations where an e-commerce company should consider localizing the whole design of the website. Adaptation of company’s user interfaces to meet a user’s cultural background can increase customer satisfaction and company’s revenue and market share. A comprehensive personalization of interfaces to cater to different cultural backgrounds can be needed to appeal to national users if the company operates in markets that greatly differ from each other. (Reinecke & Bernstein 2013)
Moreover, an e-commerce company should make sure that it has the same high-
quality service in all its markets, and that it is able to deliver a consistent fulfilment of customer promise across all markets. This will allow the brand’s reputation to be globally consistent. (Ries & Ries 2000;; Cronin 1996)
5 Research Methodology
This chapter introduces the empirical part of the study. The aim here is to present how the empirical research was conducted, what was its approach and how the data was collected and analyzed. The research was conducted as a qualitative research by using two case studies as the approach and semi-structured interviews, observations and content analysis as data collection methods. Qualitative research method was used in order to gain a deeper understanding of the current practices of international branding within e-commerce.
5.1 Research Approach
Research methods in business research are generally divided into qualitative and quantitative. This research is qualitative in nature. Qualitative describes any data collection technique or data analysis process that generates or uses non-numerical data (Saunders, Lewis & Thornhill 2009, 151). Qualitative method was chosen since the objective of this study is to gain a deeper understanding of the state of international branding in the B2C e-commerce context.
A case study is one form of doing qualitative research. Case study strategy is generally used to generate answers to ‘why?’, ‘what?’ and ‘how?’ questions. The data collection techniques used in case studies may be various and are likely to be combined. Possible techniques can be for example interviews, observation, documentary analysis and questionnaires. When applying a case study strategy, it is also advisable to use multiple cases in order to establish whether the findings are generalizable. (Saunders et al. 2009, 146) Since the purpose of this study is to examine how e-commerce companies are engaging in international branding, what are the motives behind it and what would be the most successful way of doing international branding, case study with real-life examples presents a right choice for exploring these topics. In this research, two case studies are used and various data collection techniques are applied. These case studies address the international branding actions and decisions of two European e-commerce companies.
5.2 Case Companies
The main criteria for choosing the case companies was that the companies are pure players in the e-commerce field, and that they are international in the sense that they not only sell products to multiple countries but that they also have an international marketing strategy and thus some international marketing and branding activities. Both of the chosen case companies are European B2C e-
commerce companies that operate in multiple countries. Both companies also sell products from the fashion retail sector, which makes it easy to compare the companies to each other. Both companies are international but only operate in Europe.
The case company A is a European e-commerce company, selling fashion for consumers in 26 countries in Europe. The company has offices only in one location and a warehouse in the same country. The business has been up for 12 years and the company has been gradually internationalizing. Currently the company has 10 country-domains, for which the company has specific marketing strategies. The company was chosen to the study since it fulfills all the main criteria, and furthermore because the company has very high brand awareness in its country-of-origin, which raises up interesting questions of how the brand’s success can be transferred to international markets.
The case company B is a German e-commerce company named Zalando. The company was founded in 2008 in Berlin, and it now sells on 15 different country sites across Europe with about two billion yearly visits (Zalando 2017). Zalando was chosen as a second case company because it acts as the European leader in fashion e-commerce, making it a very interesting case to study against the case company A.
5.3 Data Collection and Analysis
The study’s data collection is divided into two different processes, a different one for each case company. For case company A, data was collected from interviews and observations. For case company B - Zalando, on the other hand, data was collected from an extensive web content analysis. The objective for having different data collection methods for different cases is to get insights from many perspectives and to achieve diverse data that is still easily comparable. The fact that Zalando is a public company also helped to make the decision to collect data through a content analysis, since it means there is a good amount of public data available.
For case company A, the data collection process started by contacting potential respondents and asking if they were interested in participating to the study in the form of an interview. Four employees of the case company A were approached, and interviews were conducted with three of them. The reason for choosing these three interviewees was that they all worked in different departments within the company, and yet all those departments contributed greatly to the company’s branding activities. Those departments were: Branding, PR & Communication, and Online Marketing. This offered the chance to get a diverse view of the company’s branding goals and activities from multiple perspectives. All of the interviewees were in manager positions and had worked in the company for at least one year. Interview questions were sent to the interviewees by email at least a week before the interview, offering them the possibility to think about the subject and answers beforehand. Interview questions were formed based on the research goals and theoretical part of the study. The questions talked about the practices and objectives
For case company A, the data collection process started by contacting potential respondents and asking if they were interested in participating to the study in the form of an interview. Four employees of the case company A were approached, and interviews were conducted with three of them. The reason for choosing these three interviewees was that they all worked in different departments within the company, and yet all those departments contributed greatly to the company’s branding activities. Those departments were: Branding, PR & Communication, and Online Marketing. This offered the chance to get a diverse view of the company’s branding goals and activities from multiple perspectives. All of the interviewees were in manager positions and had worked in the company for at least one year. Interview questions were sent to the interviewees by email at least a week before the interview, offering them the possibility to think about the subject and answers beforehand. Interview questions were formed based on the research goals and theoretical part of the study. The questions talked about the practices and objectives