Returns on e-branding investment: Linking pre-acquisition marketing activity to customer profitability

Consumer-centric organizations recognize customer relationships with brands as a source of sustainable competitive advantage that they can leverage to successfully introduce brand extensions. Marketers seeking to leverage brand equity associated with core off-line products to introduce e-brand extensions recognize that success depends on initiating brand relationships with prospective customers, as well as maintaining relationships with existing customers. This research proposes and empirically demonstrates that investment on e-branding relationships with current users generates higher returns for online extensions that have close fit with the core off-line product. In contrast, investments on nonusers have a higher return on adoption of online brand extensions that have low-fit with core products, compared to current customers and can increase overall profitability. Further, we show that Web site features like personalized e-mail and interactive aids have a significantly higher impact on customer profitability and motivate prospective consumers to move to higher levels of relationship with the firm, than financial incentives like sales promotions. Managerial implications for return on e-branding investments and future research directions are discussed.