Fashion Brand

Management

Abhilasha Chandra
ASFT
FASHION BRANDING –AN OVERVIEW
 What is a Brand?

 Customer Perception
 Company Perception
 Legal Perception
 Traditional View
 Modern View

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 Brand as Perceived by Customers
 Relationship with product or services
 These relationship are of two types mental
association and emotional association
 A strong mental and emotional association leads to
physical possession of the product
 The condition for the strong association is exclusivity
,Saliency(the extent to which a brand visually stands
out from its competitors) ,and desirability .
 These strength of the associations helps customers
move from acquisition to retention to advocacy
stage.
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 Brand as Perceived by Company
 A brand is a name, term, sign, symbol, or design, or a group
or combination of them, intended to identify the goods and
services of one seller or group of sellers and to differentiate
them from those of competition.

 A way of creating
• Unique identity to its offerings
• Image which is different from competiting brands
• Favorable image about its offerings

 A way of earning sustainable business in terms of monetary

and non monetary value

 Brand is created in the 2nd stage of product creation

 Brands are perceived as conditional assets 5

 LEGAL PERSPECTIVE

•Protection to the identity

•The protection comes under
IPR

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 Traditional View

An identification for the purpose of

differentiation

Monetary Wealth creators

Brands segment the market

Way of capturing human mind

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 Modern View
•Win the heart and the mind will follow

•Functional Feature , Emotional Feature

•Brand equity

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 Brand Glossary
•Brand Audit : The evaluation of brand performance in terms
of its assets , strength and value it generates .
•Brand Awareness: Measured by brand recognition (the
ability of a customer to confirm prior knowledge of a brand
and brand recall (ability of customer to retrieve a brand
from memory), Brand dominance (the only brand recalled)
,Top of mind(the first named brand in recall list)
•Brand Champion: Internal and external story tellers
•Brand Expansion: The exposure of a brand to a broader
geographical market , distribution channel , new customer
segments.
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 Brand Glossary
•Brand Extension: The application of a brand beyond its initial range of products
or outside its category.
•Brand Revitalization: The process of bringing back glory of a fading brand back
by means of new strategy , brand equity and new brand strength.
•Brand Slogan /Tagline: Phrases which are catchy , easy to recognize and
memorable used in marketing communications which always remains with the
brand. Nike “Just do it” ,HSBC “The world’s local banK” , HP “Invent”,
Singapore Airlines “A great way to fly”
Co-branding--also called brand bundling or brand alliances--occurs when
two or more existing brands from different organizations (or distinctly
different businesses within the same organization) are combined into a
product and/or marketed together in some fashion .
E.g. Pillsbury Brownies with Nestle chocolate ,Citibank--American
Airlines Visa credit card
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 What The Brand Is--
Functional Benefits
 VW: “German engineering”
 BMW: “The ultimate driving machine”
 Abbey National Bank: “A special kind of
security”
 Xerox: “The digital document company”
 3M: “Innovation”
 Banana Republic: “Casual Luxury”
 Compaq: “Better Answers”
 Lexus: “Without compromise”
What The Brand Does-- Emotional and
Self-Expressive Benefits
 American Express: “Do more”
 Pepsi: “The Pepsis generation”
 HP: “Expanding possibilities”
 Apple: “The power to be your best” (or “Think different’)
 Sony: “Digital dream kids”
 Schlumberger: “The passion of excellence”
 Nike: “Excelling”
 Microsoft: “Help people realize their potential” (or “Where doe you
want to go today?”)
 Brand Hierarchy Levels

 Many brand names are designed to reflect the

hierarchy
 The brand Dell Dimension XPS R400 identifies
it at four hierarchical levels
 Corporate (Dell)
 Family (Dimension - desktop models)
 Individual (XPS)
 Modifiers (R400)

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Brand Hierarchy Levels

Corporate Brand (Tata)

Family Brand (Tata Motors)

Individual Brand (Indica , Indigo )

Modifier: Item or Model (LX, VX, SX)

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 Brand Hierarchy Tree: Toyota
Toyota
Corporation

Toyota Toyota Toyota Toyota Lexus

(Trucks) (SUV/vans) (Cars) Financial
Services

Corolla MR2
Camry Avalon Celica ECHO Matrix Prius
Spyder
Platinum
CE SE Edition
S LE XL SE
LE XLE XLS SLE

11.15
Benefits of Branding
-Business
 A way to send meaning and message to customers (acts
as a messenger)
 Differentiates a company from its competitors
 Provides Monetary and non monetary benefits to
customers
 Directs customers buying behaviour
 Provides brand equity to company
 Enables a company to develop and sell brand extension
Benefits of Branding
-Customers
 Reduces the complexity in purchase decision
 Delivers consistency and reliability
 Provides status and image benefits
 Brand Name Decision
 An arbitrary or invented word not to be found in any standard
English dictionary, such as Toyota’s Lexus , Google , Nike
(INVENTED BRAND NAMES)
 A recognizable English (or foreign-language) word, but one
totally unrelated to the product in question, such as the
detergent Wheel(UNRELATED BRAND NAME)
 An English (or other language) word that merely suggests some
characteristic or purpose of the product, such as FixIt , Aqua
guard(SUGGESTIVE BRAND NAME)
 A word that is eventually descriptive of the product, although the
word may have no meaning to persons unacquainted with
English (or the other language), such as the diaper brand
Pampers(DESCRIPTIVE BRAND NAME)
 Within one or more of these categories, a geographical place or a
common surname, such as Kentucky Fried
Chicken(GEOGRAPHICAL BRAND NAME)
Name Research Procedures
 Learning Tests - (How easily is the name pronounced?)
 Memory Tests - (How well is the name remembered?)
 Registration Test -Check for prior registration,
trademarks & patents.
Characteristics of an Ideal Brand
Name
1. Memorable  Easily recognized
 Easily recalled.
Descriptive * Nature of product/category
2. Meaningful 
* Benefits of the brand
 Persuasive * Brand Personality/ imagery/ users etc

3. Likeability  Aesthetically appealing.

 Rich visual & verbal imagery
4. Transferable  Within & across product categories.
 Across geographic boundaries & cultures.
5. Adaptable  Flexible
 Updatable
6. Protectable  Legally
 Competitively
 BRAND ELEMENTS
 Brand elements are those trademarkable devices which gives an identification to a
brand and differentiates it from the other brands.
 The purpose of brand elements is to enhance brand awareness , forms unique ,
strong and favorable brand association with positive brand judgment and feelings in
the minds of customers .
 Brand elements include
 Brand Name
 Logo /Symbols
 Slogan
 URL
 Character
 Jingles
 Packaging

 The test of the brand-building ability of these elements is what consumers would think
or feel about the brand/product if they only knew about the brand element.
 LOGO
 A unique symbolic shape reserved for any specific entity, not
commonly used for others used by commercial enterprises,
organizations and even individuals to aid and promote instant public
recognition.
 Logos can take the form of a wordmark, a lettermark, a symbol
mark, or a combination mark.
 Also called a brand mark, mark, identifier, logotype, or trademark.
 A logo must be designed appropriately in terms of style, type,
shapes, and symbols to express the spirit or personality of the
product, service, or organization.
 Lettermark

 A lettermark is a type of logo consisting wholly of an abbreviation —

usually a company’s initials. When building a brand, companies
often do so using lettermarks. This is especially true when a
company’s name may be hard to pronounce, or when there is
difficulty translating a company’s name when doing business on an
international level.

 E.g. GE(General Electric) ;HBO(Home Box Office)

 Wordmark
 The standardized graphic representation of the name of a company,
institution or product.
 Also called logotype is the name spelled out in unique typography or
lettering.
 It uses typography to represent companies, organizations and
products
 Symbol Mark
 An object, picture , written word , sound or a particular mark that
represent something else by association , resemblance or convention.
 A symbol is not the name of the company which it represents.
 The apple with a piece out of it is a symbol
 An abstract or non-representational visual or a pictorial visual.
 An abstract symbol mark is a representational visual with an
emphasis on the intrinsic form, an extraction relating to a real object
modified with an abstract emphasis.
 Examples of abstract safety symbol mark (hot surface, laser,
radiation).
 No word , No Letter only pictorial representation
Combination Logos
Combination Logos are most common types of
logos because:
- Combination Logos offer best of both worlds.
- Ideal for small/new brands with limited advertising &
marketing budgets.
- Are very unique because of presence of brand name.
- Easier to copyright.
Combination of letters with Symbol
Combination of Symbol and word

Dr. B. B. Jena IPR/FMS/NIFT, Gandhinagar

Applications for a Logo
 A logo should work for all necessary applications.
 Packaging
 Stationery (letterhead, business card, envelope)
 Signage
 Advertisements
 Clothing
 Posters
 Shopping bags
 Menus
 Forms
 Covers
 CHOOSING A SLOGAN OR
PUNCHLINE/TAGLINE
 These are important, but often overlooked
brand elements.
 Slogans act as “hooks” or “handles” to help
consumers grasp what the brand is and what
makes it special.
 They complete the picture – adding an
additional meaning to a brand name,
character or symbol.
Slogans/ Taglines/Punchlines can help
achieve following benefits:

 Express brand’s uniqueness & overall vision.

 Emphasize a compelling customer benefit.
 Taglines necessarily reveal the crux of a brand’s power/
promise and message in one sentence.

 E.g. Nike -- “Just Do It”

Apple -- “Think Differently”
Raymond’s -- “ The Complete Man”
Nokia -- “ Connecting People”
Amex -- “ Never leave home without it”
Slogan /Tagline/Punchline Selection
Guidelines
 Simple & Memorable
 Positive
 Unique, Interesting & Original
 Consistent with the brand identity
 Believable
 Benefit-oriented
 Longevity
 Slogans gone wrong…

 Many a times, slogans go wrong during translation.

Look at a few examples:
- The KFC slogan “Finger-Lickin Good” when translated
to Chinese came out as “Eat your fingers off”.
- Pepsi slogan “Come Alive With the Pepsi Generation,”
came out as “Pepsi Will Bring Your Ancestors Back
From The Grave” in Chinese.

- In Italy, a campaign for Schweppes Tonic Water

translated the name into Schweppes Toilet Water.
 PACKAGING AS BRAND
ELEMENT
 Packaging includes “activities of designing and
producing containers or wrappers for a product.”
 Primary Objectives of a Package Include:
 Helps in transporting and protecting the product
 Benefits storage at the store and home
 Provide descriptive and/or persuasive information
 Identify the brand
 Enhance consumption of the product
 Brand Personality

 Human being has certain physical (age , gender ,

height , weight, lean , strength, rugged, beauty,
athletics) and emotional (warmth , concern ,
sentimental ,pride ,relationship) ,socio –economic
characteristics.
 The personality of an individual is influenced by these
characteristics.
 A brand is an individual possessing some or one of these
characteristics. A brand personality is defined as the set
of human characteristics associated with a given brand
 Brand Personality

 Product characteristics (product category ,price) and non

product characteristics (CEO, User imagery, sponsorship
are the drivers of brand personality.
Examples:
Apple is considered young
IBM tends to be seen as older
Nike is considered athletic
Lux is considered as Glamorous
 Brand Personality Scale-BPS: The
Big Five
1. Sincerity: Tata, LIC of India , State Bank of India ,Kodak ,
Hallmark , Peter England , Oxemberg
Down to earth : family oriented , small town, blue collar ,
conventional .
Honest : Sincere , real , ethical , thoughtful , caring .
Wholesome: Original, genuine , ageless, classic , old
fashioned .
Cheerful: Sentimental , friendly , warm , happy.
 Brand Personality Scale-BPS: The
Big Five
2: Excitement : Provogue , Benetton , Levis , Absolut
Daring : trendy , exciting , off beat , flashy , provocative
Spirited: cool ,young , lively , outgoing , adventurous
Imaginative: Unique , humorous ,surprising , artistic , fun
Up-To –Date: Independent , contemporary , innovative ,
aggressive
 Brand Personality Scale-BPS: The
Big Five
3. Competence : Arrow , Raymond ( Park Avenue), IBM ,
CNN
Reliable : hardworking , secure , efficient , trustworthy ,
careful
Intelligent: technical , corporate , serious
Successful: Leader , confident , influential
 Brand Personality Scale-BPS: The
Big Five
4. Sophistication: Luxury Brands like Mont Blanc , Armani ,
Louis Vuitton , Lexus , Mercedes
Upper Class : glamorous , good looking , pretentious ,
sophisticated
Charming : Sexy , gentle

5. Ruggedness(Nike , Land Rover , Land Cruiser, Nokia)

Outdoorsy: Masculine , , athletic
Tough: rugged , strong
 What is Brand Identity?
• Older Theories emphasizes that Brand identity and Personality are
same concepts .

• Modern theories says Identity is an extension of Personality . Apart

from Physical , emotional/ mental and socio economic characteristics
identity covers aspects of value systems of a brand .

• Modern theories says that a brand identity provides not only the
personality of the brand but also the direction, purpose and meaning
for the brand. It answers the following questions :
 What are my core values?
 What do I stand for?
 How do I want to be perceived?
 What personality traits do I want to project?
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 What are the important relationships in my life?
 Identity Structure- David Aaker

Core Identity : Soul , Timeless essence , Vision of Brand.

 Product thrust
 User profile
 Performance
 Enhancing lives

Extended Identity : Mission

 Personality
 Basis for relationship
 Sub brands
 Logo
 Slogan
 Organizational associations
 Endorsers

Value Proposition : Functional , Emotional and Self Expressive benefits

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 THE IDENTITY STRUCTURE

A Nike Brand Identity

The CORE Identity
Product thrust: sports and fitness
User profile: top athletes, plus all those interested in fitness & health
Performance: performance shoes base on technological superiority
Enhancing lives: enhancing peoples lives through athletics

The EXTENDED Identity

Brand personality: exciting, provocative, spirited, cool, innovative, and
aggressive; into health and fitness and the pursuit of excellence
Basis for relationship: hanging out with a rugged, macho person who goes for
the best in clothing, shoes, and everything else
Subbrands: Air Jordan and many others
Logo: “swoosh” symbol
Slogan: “Just do it”
Organizational associations: connected to and supportive of athletes and
their sports; innovative
Endorsers: top athletes, including Michael Jordan, Andre Agassi, Deion
Sander, Charles Barkley, and John McEnroe 43
 Sample BRAND IDENTITY PRISM

Physique Personality
Discrete without fancy
Crocodile
Vibrant / experimental Colors
Sports fit

Lacoste Culture
Relationship Shirt 12x12
Aristocratic ideals
Social Conformity Sophistication & simplicity
and distinction (Chic) Sport and classicism
Individualism

Reflection Self – image

Neither hyper feminine I am discreetly elegant
Nor hyper masculine I am always correct although casual

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 PICTURE OF SENDER
Physique Personality
Sophisticated, brand Glamorous, beautiful,
name, packaging, film competent, accessible,
stars female

INTERNALISATION
EXTERNALISATION

Relationship Culture
Reverence, person I
LUX Aesthetics,
admire
outer beauty

Self-Image
Reflection
Makes me more
Beauty conscious, beautiful, confident and
glamorous glamorous

PICTURE OF RECEIVER
 PICTURE OF SENDER
Physique Personality
Quality, range, Warm, friendly, helpful,
convenience, ambience reliable

INTERNALISATION
EXTERNALISATION

Relationship SHOPPER’S STOP Culture

Helpful, respectful Shopper
empowerment

Reflection Self-Image
Trendy, fashionable, Person who’s ready to
quality conscious, person pay. Money for value
who gives experience
importance
PICTURE OF RECEIVER
Brand Knowledge
 A brand speaks about itself in the form of Brand
Personality or identity.
 The same is then communicated to the target customer
groups
 The communication is such that the information about
Brand has differentiating points and provides a unique
positioning in the minds of the customers.
 Brand Knowledge is defined as the customers
understanding of a Brand in terms of its image and
positioning.
 Brand knowledge has two components:
 Brand awareness and
 Brand image.
Sources of Brand Equity
 Brand awareness
 Brand recognition
 Brand recall
 Brand Dominance
 Top of the Mind
 Brand image
 How I associate myself with the Brand
 What brand stands for
Brand Awareness Advantages
Learn , consider and choose
 Learning advantages
 Register the brand in the minds of consumers
 Consideration advantages
 Likelihood that the brand will be a member of the
consideration set
 Choice advantages
 Affect choices among brands in the consideration
set
Customer Based Brand Equity
Pyramid

Brand
Consumer
Resonance Relationship- What
about You and me

Consumer Consumer Response- What

Judgement Feeling about You

Meaning-
What are You
Brand Brand
POP, POD
Performance Imagery

Brand Identity -Who

Salience are You
Salience Dimensions
 Depth of brand awareness
 Ease of recognition and recall
 Strength and clarity of category membership

 Breadth of brand awareness

 Purchase consideration
 Consumption consideration
Performance Dimensions
 Primary characteristics and supplementary
features
 Product reliability, durability, and serviceability
 Service effectiveness, efficiency, and empathy
 Style and design
 Price
POP AND POD
 Points of Difference (PODs) – Attributes or benefits consumers strongly
associate with a brand, positively evaluate and believe they could not find to
the same extent with a competing brand i.e. points where you are claiming
superiority or exclusiveness over other products in the category.
 Points-of-parity (POPs) – Associations that are not necessarily unique to the
brand but may be shared by other brands i.e. where you can at least match
the competitors claimed benefits. While POPs may usually not be the
reason to choose a brand, their absence can certainly be a reason to drop a
brand.
 While it is important to establish a POD, it is equally important to nullify the
competition by matching them on the POP. As a late entrant into the
market, many brands look at making the competitor's POD into a POP for
the category and thereby create a leadership position by introducing a new
POD.
 Imagery Dimensions
 User profiles
 Demographic and psychographic characteristics
 Actual or aspirational
 Group perceptions—popularity
 Purchase and usage situations
 Type of channel, specific stores, ease of purchase
 Time (day, week, month, year, etc.), location, and context of usage
 Personality and values
 Sincerity, excitement, competence, sophistication, and ruggedness
 History, heritage, and experiences
 Nostalgia
 Memories
Judgment Dimensions
 Brand quality  Brand consideration
 Value  Relevance
 Satisfaction
 Brand credibility
 Brand superiority
 Expertise
 Differentiation
 Trustworthiness
 Likeability
Feelings Dimensions
 Warmth
 Fun
 Excitement
 Security
 Social Approval
 Self-respect
Resonance Dimensions
 Behavioral loyalty
 Frequency and amount of repeat purchases
 Attitudinal attachment
 Love brand (favorite possessions; “a little pleasure”)
 Proud of brand
 Sense of community
 Kinship
 Affiliation
 Active engagement
 Seek information
 Join club
 Visit website, chat rooms
 Brand Positioning
The placement of a brand in the mind of target
customers which is different from competitors
product .The positioning task comprise of
following five steps.

 Identify possible competitive advantage

 Choose right competitive advantage
 Develop a positioning statement
 Communicate and Deliver chosen positioning
statement
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Identify possible competitive advantage
Competitive advantage: An advantage over competitors by offering
consumers something different .This differentiations could be in
terms of :
 Price
 Product (style , design , features , quality ,performance ).
 Service (delivery , demonstrations , installations , training ,
repairs , warranty , guaranty )
 Channel
 People
 Image
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Choose right competitive advantage
While choosing a competitive advantage(POD)
,one needs to keep in mind the following
 Profitable business

 Affordable

 Preemptive

 Communicable

 Distinctive

 Higher value

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Developing a positioning
statement
 Target segment
 Need
 Brand
 Value offering
 Point of difference

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Communicate and delivering
the chosen positioning
statement

 Designing and developing 4P’s Strategy as

per the positioning statement

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 Brand Positioning Statement/
Brand Mantra
 An articulation of the “heart and soul” of the
brand
 Similar to “brand essence” or “core brand
promise”
 Short three- to five-word phrases that capture
the irrefutable essence or spirit of the brand
positioning and brand values
 Considerations
 Communicate
 Simplify
 Inspire
Designing the Brand Mantra
 The term brand functions describes the
nature of the product or service or the type of
experiences or benefits the brand provides.
 The descriptive modifier further clarifies its
nature.
 The emotional modifier provides another
qualifier—how exactly does the brand
provide benefits, and in what way?
Mantra terms: Nike & Disney
 Brand function - nature of product or
service; performance, entertainment
 Descriptive modifier - specific functions;
athletic performance, family entertainment
 Emotional modifier - how brand delivers
benefits; authentic, fun
Designing the Brand Mantra
Emotional Descriptive Brand
Modifier Modifier Functions

Authentic Athletic Performance

Nike

Fun Family Entertainment

Disney

Fun Folks Food

 Brand
Positioning
Statement

For homemakers, Dow Bathroom Products are the easy way to get a great
clean shine for your tub, tile and toilet. That’s because only Dow
Bathroom Products contain scrubbing bubbles that cut through dirt and
grime clean to the shine!
 Brand
Positioning
Statement

For those suffering from a cold, Comtrex offers four different relief
formulas that treat and work against your specific cold ailments.
 Brand Positioning
Statement

For cold sufferers, Contac offers 12 hours of continuous relief

from congestion and sinus pressure thanks to it’s time-release
technology.
 Brand Positioning
Statement

For consumers ages 16-35, Crest Whitestrips whiten teeth five times
better than the leading paint-on whitening gel. That’s because Crest’s
gel-coated strips hold the peroxide on teeth longer, to whiten stains
below the tooth surface.
 Brand
Positioning
Statement

For women ages 25-55, Loreal Revitalift Anti-wrinkle and firming

cream reduces facial wrinkles and firms your skin.

NO REASON WHY!
 Brand
Positioning
Statement

For “Green” consumers seeking healthy foods free from pesticides,

chemical or preservatives, Seeds of Change frozen entrée’s taste
great. 100% of our ingredients are grown organically and are not
only healthy for you, but also our planet.
 Brand
Positioning
Statement

For females who cook meat, Saran Disposable Cutting Sheets are
the solution to your worries about meat juice germs.

That’s because you can cut your meat right on Saran Cutting
Sheets, and they’ll soak up the juicy mess. Just toss the sheet
away and your worries are gone with it!
1st Mover
 Those who invent or initiate a concept , idea and makes business
out of it are called 1st movers . Those who follow these initial movers
are called followers .
 The generation of first mover advantage is an endogenous process
arising from environmental change. This change situation sets up an
initial asymmetry that presents a pioneering firm with the opportunity
to become a first mover to the market, and in doing so, it enables
that firm to reap abnormal profits derived from the firm's competitive
head start over rivals.
First Mover Advantages
 Opportunity to exploit network effects and positive feedback loops, locking

consumers into its technology

 Establish significant brand loyalty which is expensive for later entrants to break

down

 Ability to ramp up sales volume ahead of rivals and thus reap cost advantages

associated with the realization of economies of scale and learning curve

 Ability to create switching costs for its customers

 Ability to accumulate valuable knowledge advantage

First Mover Advantages
 Get a head start over the competition (force competition to be reactionary
and have to play “catch up”)

 Develop your brand first

 Establish key partnerships (customers, suppliers, distribution channels,
advertising partners)

 Lock in market share by creating switching costs (financial, psychological)

 Stay ahead on the learning curve (must be a fast learner) – challenge is to

keep learnings proprietary (difficult in the e-commerce environment)

 Experience and knowledge can generate entry barriers, though knowledge

diffusion does occur

First Mover Disadvantages

 Significant pioneering costs ( Developing the technology, the distribution

channels, and educate consumers about the product benefits)

 First movers are prone to making mistakes due to uncertainties in new markets

 Building the wrong resources and capabilities due to errors in identifying

characteristics of the mass market

 First mover may invest in inferior or obsolete technology

First Mover
 Euphoric DotCom boom: Build brand in new category (Amazon), invent a
new business model (eBay), achieve critical mass (webvan hoped to do) 
lead to long term success
 In fact: for most dot.coms being first meant losing more faster
 Businesses built on ideas rather than products and services
 Stock prices went up based on the strength of these ideas (venture capital
available – companies overspent)
 IT professionals – not necessarily business professionals
 62% DotComs had no financial experience, 50% had little marketing experience
 Learning: WEB sites are not businesses
 E-commerce shift after DotCom bust: Pure play  Brick & mortar to
click and mortar. Legacy firms represent the future of e-business
 Effective integration of existing business processes with technology
Late Mover Advantages
(Imitation Strategy)
 Volatile dynamic market characteristics – imitation surpasses innovation as
business strategy
 Innovation can be risky, costly (develop technology, channels)
 If the market develops contrary to first mover’s forecast – it stands to lose
significantly
 Late mover can wait until the uncertainty resolves and capitalize on the opportunity.
More knowledge about how the market will evolve leads to more confidence in
achieving desired outcomes (ROI)
 Followers can learn from pioneers’ mistakes and position their products as superior
 Pioneers are discouraged from adopting followers positions
First Mover Success –
Amazon.com
 First to move booking retailing online (1994 – Jeff Bezos)
 Brand recognized worldwide, most visited site in USA (2000)
 Simple model: Expensive inventory and brick and mortar warehousing not
required – Require WEB to interface with customers and take their orders
 Continuous Rapid innovation
 “one-click”, search facilities, collaborative filtering, affiliate programs (250,000 partners
in 2000), order tracking mechanisms
 Established strong brand presence – created psychological switching costs in
consumers (collaborate filtering, privacy policies, builds trust)
 Pillars (quality of service, value for money, trust worthiness)
 WEB site easy to use, easy to find, and fast
First Mover Failure Webvan
 Founded under the name of “Intelligent Systems” to be a full service online
retailer, offering customers a convenient and affordable way to shop for groceries
 In April 1999 the company changed its name to Webvan and launched its
operations in June 1999 in the San Francisco Bay Area
 It was the first online full service grocery store that delivered to “time starved”,
and “price insensitive” customers who raved about the service
 They utilized a Hub and Spoke delivery system with customers choosing a 30
minute window for delivery and made their choice from 20,000 items of groceries
and prepared meals
 On July 9th, 2001 and just 16 months after their successful IPO the company
ceased operations and filed for chapter 11 protection
 The company burned through $ 1.2 Billion Dollars in investor capital, making it on
of the most spectacular failures of the dot.com era
 Reasons for failure
 Grew too fast, too big 20 years a head of their time
 Chicago; Los Angeles; Orange County, California; Portland, Oregon; San
Diego; San Francisco; and Seattle.
Late Mover Success – Dell
 Founded in 1984 – Michael Dell
 Key focus – Improve delivery time, cut costs, maintain
quality customer service
 Model – sell direct to consumer, eliminate the
intermediary
 Strategy
 Rely on standardized components (867 patents in 19 years) – R&D not
necessary spending
 Easy to use interfaces
 Superior customer service
 HR recruitment, promotion strategy
Late Mover Failure – Barnes &
Noble

 Went online 1997 (barnesandnoble.com)

 Suffered from customer affinity (traditional retail outlet – cozy ambience)
 WEB site was difficult to find
 Traditional brand did not translate well online (lesson)
 New strategy – separate brands, best of both worlds
 Bn.com – pursued the hybrid customer
 Nielson ratings (1999) – 47% bn.com customers shopped at Amazon .com
 Amazon.com dropped AOL 3 yr contract ($17 M) – bn.com jumped at it –
sales increased 25%
 Amazon pursued affiliate program – commission based model