Effect of Brand Associations on Consumer Reactions to Unknown On-Line Brands

The temporal and spatial separation between on-line retail brands and their customers means that on-line transactions are characterized by uncertainty, anonymity, and lack of control. The resulting high perception of risk and fear of opportunism make trust a crucial element of electronic commerce. New on-line brands have a substantial barrier to the initiation of transactions by consumers because they are relatively unknown in comparison to their established and known counterparts. This study focuses on how new on-line brands can persuade consumers to engage in on-line transactions. Drawing on the branding and social psychology literature, an experiment was designed to ascertain how association with well-known brands increases customers' trust of an unknown on-line brand, along with other desirable behaviors, such as bookmarking, intention to purchase, and willingness to provide personal information. The results obtained from a sample of 265 subjects faced with the decision of buying a travel package from an unknown online travel agency show that association and similarity with a known brand are factors that promote customers' trust and behavioral intentions. The implications for theory and managerial activities are discussed.