Offline Versus Online Brands – The Winners and Losers

It took more than 50 years for Coca-Cola to become a worldwide market leader, but only five years for online search engine Yahoo to gain market dominance. The role of the brand has changed dramatically and has created a vacuum between offline and online brands.

Why? Offline brands lack interactivity. They are passive. Offline brands can only communicate one way via television, print and radio. Online brands “listen” to the consumer, learn from them, and react based on the consumer’s needs. This new skill — this interactivity — is an online brand’s strongest asset. It enables the brand owner to form a one-to-one relationship with the consumer.

Brand Suicide

Five years ago, Kodak was considered to be one of the world’s strongest brands. However, as the market moved from chemical film to digital photography, Kodak lost its dominant position to the growing army of personal computers appearing in businesses, at home, and in home-based offices. The appearance of the PC has enabled Kodak’s competitors to leapfrog Kodak’s leadership position and take the dominant position in the market with digital photography.

The introduction of digital cameras has also spawned a number of new brands. The monopoly Kodak enjoyed with 100,000 film development outlets around the world is no longer impressive when compared to the 100 million outlets that digital cameras now represent (i.e., the computers on every desk and in every home).

Kodak is attempting to regain its leadership position in the new digital market with the introduction of Kodak PhotoNet — a concept which offers customers a digital copy of their photo prints delivered to their personalized online Kodak photo album.

The question is, is it a case of too little, too late?

It took Kodak four years to see the writing on the Internet wall — a delay that opened the door to hundreds of competitors. This situation could easily happen with any dominant offline brand where the value of the brand is not extended online.

LEGO — one of the strongest toy brands in the world — is another victim of the interactive world. The brand faced the specter of digital competition back in 1984 when pocket computer games appeared just before Christmas and managed to cut LEGO’s worldwide sales by 30 percent.

Even though the warning was clear, LEGO didn’t change its strategy. For more than 20 years the colorful plastic bricks have remained unchanged in the face of competition from Playmobil, Tyco and Matchbox. It took LEGO more than 13 years to realize that the real competition was from online games, puzzles and challenges. Kids no longer considered it to be “cool” playing with LEGO — the role was replaced by computer games.

In 1997, LEGO released its first attempt to re-capture market share — the LEGO CD-ROM. In the meantime, Sony Play Station, Nintendo and Sega have already taken the lion’s share of the online/interactive games market.

If You Can’t Beat Them — Join Them!

A characteristic of all of these offline brands is the inability to change in the face of shifting customer needs. Too much trust was placed in the historical brand value. However, with changing consumer tastes, greater choice, and a reduction in consumer loyalty, a historical brand proposition is no longer valid in today’s fast-moving consumer economy.

Creating a brand is now easier (thanks to the Internet) than it ever has been. However, committing brand suicide is even easier – it’s happening much faster than marketers thought possible.

The brand survival kit has proven to be a fast, but clever migration to the online world with a foot in both worlds to ensure capturing the mind of the consumer regardless.

The Offline Brand’s Survival Kit

A strong brand is invaluable as the battle for customers intensifies day by day. A survey conducted by Time and CNN among 13- to 17-year-old kids shows that only 13 percent of all kids trust the Internet — compared with 39 percent trusting TV or the newspaper. On the Internet everybody can be a dog.

The enormous choice and an increase in discerning online buyers will require trust in an online brand before users are willing to release personal details to the organization representing the brand.

It is not surprising that online consumers tend to visit their preferred main brands on the Internet within a relatively short period of time, predominantly for curiosity, but also because they already have a positive relationship with the product in the offline world.

For many users, brands will act as a trusted “consumer guide” to the Internet — a development that will make greater demands of the online brand. And this might be the offline brand’s survival kit.

One of the emerging problems of today’s Internet world (and a major opportunity for offline brands) is the lack of trust consumers have in web sites and online brands.

Leveraging Real-World Brand Equity

Only a few international brands have managed to transfer offline brand values to the online world without cannibalizing the existing brand.

Disney is one of the few “real world” brands which has managed to control its brand image worldwide when it extended its business online. The difference between Disney and the “online-only” brands is that Disney not only represents a depth, but it also portrays “trust” — a key value which no other online brand has been able to represent in the same way.

You can’t buy goodwill and trust — you earn it over time. Considering no online brand can represent more than a five-year history there have been only a few online brands that have earned consumer trust such as Yahoo, Amazon, AOL and Excite.

It could be said that “real world” trusted brands such as Disney have a free ticket to consumer trust on the web while the online brand market is still immature. However, established brands like Disney realize the need to extend the same brand management and respect for the customer from the real world to maintain the “Disney-esque” trust in the online world. Disney takes all that’s good about the company (family values, safe community and trust) and transfers it online.

Who will be the winners and the losers in the online versus offline brand war? Ultimately, the consumer will decide.

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