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Building Brand Value through the Internet

Two years ago, the Internet was the most hyped-up thing occurring in Europe and elsewhere. Nowadays, after the crash of the NASDAQ, many people disparage the Internet. Prof. Jan-Benedict Steenkamp and Dr. Inge Geyskens, Tilburg University, the Netherlands

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Both reactions are extreme. The Internet is and remains a very important instrument in the company’s marketing strategy to build brands. Currently, over 100 million Europeans use the Internet. The Internet allows companies to reach into the remotest parts of Europe and other parts of the world.

Together with AIM (The European Brands Association), Europanel (the joint venture of Taylor Nelson Sofres and GfK) and the Internet information provider MetrixLab, we conducted a massive study into how the Internet can be used by European brand manufacturers to build consumer and brand value.

The main data source, on which we drew, is a massive data set specifically collected under our guidance in two electronic questionnaires. The first questionnaire focused on general Internet issues, public policy affairs and the generation of website traffic (who, how often, why). 49,808 consumers from 146 countries (but mostly EU countries) responded to this questionnaire. This wide geographic spread attests to the global reach and role of brand manufacturer websites in the consumer environment.

A second, longer, questionnaire was sent to a subset of these visitors (12,463 of them). It dealt with building consumer and brand value for 38 different websites of 22 branded goods manufacturers. Some key results are presented here.

Brand manufacturer website traffic

Emerging loyalty to brand manufacturer websites.

Seventy-five percent of the brand manufacturer website visits are first time visits. On the other hand, there are some indications that websites can generate enduring interest, if not some degree of emerging loyalty.

Fourteen percent of consumers have visited one and the same website more than three times. Emerging loyalty is more prevalent among females than among males. Moreover, the proportion of consumers for whom website-related loyalty is emerging increases with age. Seniors are 50% more likely than young consumers to visit the same website more than three times.

Why do consumers visit a brand manufacturer website? The answer is for a variety of reasons. The reason most frequently given is to find some useful information: 55% of the respondents give this as a reason.

Furthermore, 18% of respondents visit the website because they have some specific questions, and expect that the website will provide information to answer those questions. These results clearly underline the information-provision function of manufacturer websites.

But there are also other reasons, less functional but rather more experiential in scope. Twenty-nine percent of visitors want to enjoy themselves a bit, and about one-fifth of visitors are looking for some excitement. Thus, manufacturer websites can also provide recreational value.

Finally, one-quarter of respondents indicate that they visit the website to feel in control of their information needs.

Although this deals with information, the crucial distinguishing aspect is that the information flow is not passive, such as in the mass media, but under the influence of the consumer. This is a crucial advantage of the Internet as a source of consumer information about brands and products.

Control is clearly appreciated by consumers, and is consistent with the growing desire of European consumers to direct their lives rather than be directed by outside influences.

First-time visitors to a website differ somewhat from repeat visitors in their reasons for visiting. First-time visitors are more often looking for some useful information while repeat visitors more often come to have a good time or to feel in control of their information needs.

Building web-driven brand value through the creation of consumer value

Brand and consumer value.

A key goal of brand manufacturer website activities is to create brand value. We refer to brand value as perceived by consumers, not in the sense of discounted cash flow. At the end of the day, the value of a brand resides in the mind of the consumer. Brand value encompasses consumers’ affective feelings, trust, and purchase likelihood toward the brand.

How can a visit to a brand website increase one’s affective feelings, trust, and purchase intention vis-à-vis the brand?

This occurs when the consumer feels that visiting the website was useful and a good experience, when it met or even exceeded expectations, when the consumer intends to visit the website again, and when there is a desire to add it to a list of favorites. In short, when consumer value is created. If the consumer feels satisfied with what they got out of their brand manufacturer website visit, this should lead to increased brand value.

Does consumer value lead to brand value?

We find indeed that consumer satisfaction with the website visit is crucial in building brand value. A high 91% of the consumers who are satisfied with the value provided by the website to them, also report an increase in brand value (see Figure 1).

On the other hand, if consumer value is not satisfactory, this does not have an appreciable negative effect on brand value. A plausible explanation is that the brands included in this study are all widely respected brands and therefore a single dissatisfying web-based experience does not lead to a significant change in brand value. We should caution though that repeated dissatisfying experiences might negatively affect brand value. This is not an unthinkable scenario as a high 25% of consumers are dissatisfied with their visit to the brand manufacturer website, and 40% of the websites have dissatisfaction rates of 30% or higher.

How is consumer and brand value created?

Drivers of consumer and brand value. Consumers are more satisfied with their website visit, the more useful and customized the information is that they acquire, ie. the more positive their functional experience. Moreover, websites are powerful in generating positive (or – unintentionally - negative) emotions.

Emotions are rapidly becoming more important in shaping consumer behavior in Western markets. Three basic emotions are pleasure (feeling good), excitement (feeling activated) and feelings of being in control.

We find that the provision of clear, reliable and timely information is a sine qua non for brand manufacturer websites. If consumers trust the information provided and consider it to be useful, satisfaction with the website will result and brand value will be built. Worrisome though, about one-quarter of consumers are dissatisfied with the information provided by brand websites.

Customisation of information to individual needs and the emotion of excitement (that the consumer feels activated by the site) play a secondary but not negligible role. Feelings of being in control and pleasure also have a significant effect but their effect is relatively small. Satisfaction with these drivers of consumer and brand value is only about 50%. Hence, there is clearly room for improvement.

However, the usefulness and trustworthiness of the information is so important that it is the obvious first leverage point to improve consumer satisfaction with the website. Only when the information provided is satisfactory does it makes sense to consider the other aspects (especially customisation and the emotional experience of excitement) to further increase consumer value.

What creates functional and emotional experience?

We further find that key foundations of satisfactory functional and emotional experiences are a tight and transparent privacy and security policy as well as an easily navigable and flexible website.

Although in general consumers are satisfied with the navigation of brand manufacturer websites, there is much more concern about security and privacy. Automatic recording of data, security of online shopping with a credit card, and getting good redress when online purchases go wrong are among the concerns voiced by consumers around Europe.

This does not necessarily mean that security and privacy are not guaranteed, but about half of our website visitors are not certain about this. Market-driven companies should take this to heart as it is a serious barrier to the creation of consumer and brand value.

Finally, satisfaction with flexibility of the website can also be improved considerably.

A virtuous brand value chain reaction

The key findings are summarised and integrated in Figure 2. It shows how brand value can be increased through the Internet, following a virtuous chain reaction. High security, privacy protection, ease of navigation, and flexibility lead to increased functional as well as emotional experiences. These in turn mean that consumers derive more value from the website. In its turn, increased consumer value leads to higher brand value. This virtuous chain reaction emerges as a common thrust in our data, covering a large number of websites and a large sample of consumers with a varied socio-demographic background.

A negative chain reaction can also occur. Lax security arrangements, (unintentionally) ignoring privacy rules or even simply not being fully transparent about security and privacy decrease functional and emotional experiences, and thus overall consumer value. However, the negative chain reaction does not extend to an appreciable decrease in brand value, at least not in the short term. Adverse longer-term effects (after repeated negative experiences) are likely, but have not been researched. Alternatively, consumers will not visit the website again, resulting in the investment in the website not yielding the expected return. Both consequences are clearly undesirable.

In sum, our results show that consumer value works mainly in the positive direction. Given that we still need to learn a lot about how to develop better websites, this indicates that, at this stage in the development of the Internet, the negative risks are still modest. Thus, companies can for the present seize this window of opportunity to further improve and fine-tune their websites to reap the benefits of satisfactory consumer value in terms of increased appreciation for their brands.

Copies of Prof. Steenkamp and Dr. Inge Greyskens’ research, Building Consumer Value through the Internet, is available free from the British Brands Group (info@britishbrandsgroup,com).

This article was first published in British Brands, the newsletter of the British Brands Group, 8 Henrietta Place, London W1G 0NB Tel: 07020 934250 Fax: 07020 934252 www.britishbrandsgroup.com

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