A Case for Dot-Outlet TLD
Alex Tajirian
October 29, 2009
The essay outlines the correct use of an outlet
strategy, points out the value of such a strategy, and the
advantages of executing the strategy through a new ICANN top-level domain (TLD) instead
of a second-level domain name.
Some companies need to signal a brand name with
low prices and quality/utility, whether the strategy is for a
primary or secondary corporate brand. A successful strategy has to
explicitly include lower price and quality. Otherwise, with only a
lower price, a brand owner would cannibalize the main brand and
cause damage to brand equity.
Dot-outlet and dot-bargain are two TLD
candidates for achieving the signal. For example, established brand
owners can use dot-outlet instead of dot-bargain because high-price
items of high quality can be bargains. Others may use dot-bargain to
signal low prices and possibly low quality.
Such TLD signaling is valuable only when there
is a robust demand for the implied messages. In addition to
signaling outlet features noted above, the TLD can be used by
established firms in good times to capture adjacent markets and to
deter competitors from adopting a low-end entry strategy. Moreover,
when economic conditions are tight, the price-quality signaling
strategy can be a desirable complement to the main brand when lower
quality is properly communicated. Nonetheless, dot-outlet can be
used as a low-end market entry strategy in its own right.
There is also an indirect benefit to an outlet
message, namely that it can reduce certain customer motivations to
purchase counterfeits. People who want a low price but who don’t
want to buy counterfeits may find what they’re looking for at an
outlet. But brand owners need to do their part by educating
customers that fakes are of inferior quality.
The benefits of signaling through a TLD instead
of a second-level domain name (say, “BrandOutlet.com” vs. “Brand.Outlet”)
are:
-
A potential customer who is not familiar
with the brand may not realize there is a strong brand name
associated with the outlet. Thus, the domain name signal might be
interpreted as an inferior brand name.
-
New TLDs may lead to the reemergence of
Web site indexes, similar to earlier versions of Yahoo but with
automated indexing based on the TLD. Under such a scenario, BrandOutlet.com may not be indexed or receive a high result rank.
-
Dot-Outlet is a sharper, shorter, and
concise signal, which need not be the case with some of the new TLDs
(see Benefits of New TLDs as Shorter Domain Names Are Dubious).
-
In crafting their domain names, cybersquatters may use not only the brand but also potentially
confusing descriptors, such as “low prices” and “genuine.” Thus,
under a dot-outlet regime, customers will be suspicious of such
domain names and there will be less demand for them, which will also
reduce counterfeits. Nevertheless, there is no guarantee that
suspicious descriptors would not be introduced as new TLDs. The
difference is that there are forces working against such new TLDs:
-
High fixed application fees and
operating costs act as an entry barrier.
-
The importance of educating the public
about various aspects of online crime will increase. Such education
should include warnings about certain types of new TLDs.
-
Search engines may exclude TLDs that are
primarily intended to confuse customers.
Demand for brand enhancement through
“Generics.outlet” will increase competition for the TLD. These
domain names will provide complementary information to an existing
branded domain name. But they are also valuable as independent
sites.
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