Immense implications of marketing changes

DOOMSAYERS have been predicting the death of marketing as we understand it today.

The Internet, so the argument goes, will kill off traditional brands leaving price as the all-important determinant of purchasing decisions in the new on-line economy.

If this view is even half-right, the implications for WA business are immense. Consumers and business purchasers may use the Internet to find the world’s cheapest price, then order on-line from overseas suppliers or force local companies to match the global benchmark.

In contrast, the alternative view emerging is that brands will be just as critical in the age of electronic commerce as they have been in the past. But the nature of brand equity and the means to optimise it will be transformed.

These themes are outlined in the Curtin University of Technology (Curtin Business School) research paper ‘Brand Management in the New Economy: Towards a Research Agenda’, which aims to clarify the fundamental questions the Internet poses for brand management.

The Curtin School of Marketing paper was a collaborative effort by myself, fellow lecturer Dr Michael Ewing, CBS development and marketing manager Kenley Gordon, and Professor Leyland Pitt.

If the marketing pessimists are correct, brands in the new economy will be reduced to mere commodities, undermining the very raison d’être of marketing theory and practice.

We disagree, but marketers must wake up to the fact that the methods of building brand equity are undergoing their greatest transformation since the advent of television. In the past 20 years, global annual advertising spend has quadrupled. Below-the-line expenditure has, if anything, grown even more strongly.

Through developments in information technology, both consumers and industrial purchasers are now more savvy, the modern marketplace has become more complex and large brands have to work much harder to build equity.

The fact that all aspects of on-line buyer-seller interaction, from initial contact to delivery and after-sales service, are readily controllable by brand managers, is simultaneously the Internet’s greatest challenge and opportunity.

To succeed on-line, companies must fulfil a new set of customer expectations – in particular a renewed emphasis on added value and performance.

Companies now not only have to have quality products and efficient distribution systems but also have to listen, learn, understand and speak to an audience.

Branding is being transformed by the Internet from being based on what a company says, to what a company does.

We strongly suspect that the importance of price in on-line purchasing decisions decreases in inverse proportion to the perceived added value offered by the brand web site and the perceived performance of the brand. The next stage in our research program is to test this proposition in the marketplace.

l Nigel de Bussy is a lecturer in the School of Marketing at Curtin Business School (

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