Abstract

This case is about the brand building strategies followed by the Indian ecommerce companies in order to increase the loyalty of customers to their brands. After growing at a moderate pace since the first online B2B directory was launched in the year 1996, the Indian ecommerce sector experienced exponential growth between 2009 and 2015. Initially, online services led the growth of the sector in the country. However, companies that sold physical goods started gaining importance in the later years. The leading ecommerce companies relied on the business model of providing deep discounts to attract more customers to their portals. As a result, customers started switching between the companies depending upon the discounts offered by different ecommerce companies for each purchase. They did not stay loyal to any ecommerce brand in the long run. Discounts started eating into the revenues of ecommerce companies and many of them accumulated huge losses. In order to improve customer loyalty, ecommerce companies started focusing on building strong brands. They started spending aggressively on advertising and launched big advertising campaigns. Most of the new advertising campaigns tried to build an emotional connect with the customers rather than announcing price promotions and discounts. Celebrities were roped in for the high budget campaigns of some big ecommerce companies. Taking into account the prevalent market conditions, ecommerce companies mainly focused on digital marketing channels. However, smaller companies (and some bigger companies) also focused on traditional advertising channels like print and television. In spite of the change in focus from offering discounts to building strong brands, analysts had mixed opinions on the new advertising campaigns of the Indian ecommerce companies. While some analysts supported the advertising spend, others criticized that they should also focus on other marketing tools like good customer service and differentiation. According to some analysts, heavy spending on advertising could further push the Indian ecommerce sector into losses. But many Indian ecommerce companies opined that heavy advertising was required to build the image of their brands and that the benefits of advertising would accrue in the long run.

Learning Objectives

The case is structured to achieve the following Learning Objectives:

• Understand the importance of building a good brand image by the companies
• Appreciate the importance of advertising in building strong brands
• Analyze the different marketing communication options available for a company to build brand equity
• Understand the importance of digital media channels to reach the target customers
• Analyze the effectiveness of the current advertising campaigns of Indian ecommerce companies in building the image of their brands and improving customer loyalty

Keywords

Ecommerce, Advertising, Snapdeal, Amazon India, Discounts, B2B, B2C, Portals, Online Classifieds, Etail,Alibaba, Brick and Mortar Retailers, Branding, Customer Service, Venture Capitalists