Instead of lavish ads, it invests in technology and distribution—and the results are startlingly effective
http://www.businessweek.com/magazine/content/09_39/b4148053513145.htm
This article talks about how the company Amazon, does not spend hundreds of millions of dollars to advertise and promote their brand. Instead, they have avoided the uses of conventional tactics of marketing and use their money into the technology of their website like distribution capability and good deals on shipping. As a result, customers are satisfied with a smooth shopping experience. With a jump of 13 spots to a No. 43 in the ranking of the Best Global Brands, Amazon has been successful during the recession earning a reported 16% revenue growth.
Unit 4.1 – The Role of Marketing, Unit 4.3 – Product (Branding, Brand development and brand loyalty)
This article basically argues that a company does not need to spend millions of dollars to promote themselves and one such example is the thriving company of Amazon. Amazon has taken a big risk to spend their money on technology rather than advertising but they predicted that in time, this would be useful to them. This is due to the account of its brand and high market share. Amazon has been known for its low prices, wide selection of products and quality service that has increased its customer base and customer loyalty. They have developed their brand through this where customers are very satisfied with the results of their shopping experiences. Although the company did not focus on promoting their brand, their investment into the technology of their website proved very advantageous in the long term because the company thought of the user experience to please their customers.
Saturday, September 19, 2009
At Amazon, Marketing Is for Dummies
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Hi Tiffany,
ReplyDeleteA really good article! It's definitely a different take on how the marketing management world is generalized to function. Though I agree with you that this article talks a lot about the branding and brand development, I'd like to argue that I think this article talks more about the management and the decisions made when deciding upon the appropriate marketing mix. The reason Amazon has chosen to redistribute their spending budget is because they've accounted for their INTANGIBLE ASSETS as apart of their marketing mix. Amazon, as we all know, is a popular online store, which has, over a long period of time, gained its image as the reliable, fast and user friendly online store. It's because of their hard work and extensive investment into becoming such a household-internet site name, that they have earned the ability to reduce their amount of above the line advertising. However, if we search on youtube, you'll find that they still do invest a lot of money into make 1-2 minute commercials for their weaker departments - such as music, in which, I can justifiably say, is most likely competing against iTunes.
However, I feel you did an excellent job explaining and relating the article to our class course. Perhaps you'd like to put in your opinion also?
My opinion, is that Amazon should be proud of their brand equity and continue using alternative promotions to keep their customers satisfied and have books remain at competitive prices despite the mailing fees.
Sam.
Hi,
ReplyDeleteAmazon has made a very smart move by using their money on technologies of their website, such as distribution capability and better deals for shipping. One of the major benefits of using E-commerce is the large amount of potential customers, since internet is very easy to access across the globe. The efficiency (for customers) of e-commerce is one of the reasons why it is so successful, and as a result, more and more businesses are trying to use the internet as a distribution channel. Not only that, but it also reduces the costs and risks of international marketing due to the low costs, since they do not have to set up retail stores etc.
Although they did not spend hundreds of dollars in marketing their services, they probably understood that once they were able to please their customers with satisfying shopping experience, these customers will help promote their services through word of mouth promotion (which refers to the spreading of information from 1 person to another through oral communication) and peer to peer (which refers to electronic transfer of messages). Morever, with more and more people gaining access to internet and stronger communications through the internet (such as message boards, social networking sites such as Facebook etc), P2P marketing has become more and more effective.
Therefore, by putting money into improving Amazon's services, they were not only able to satsify their customers, but also gain customers through P2P and WOM promotion (without the actual costs of marketing).