Joseph Andrew Mangione, Student ID: 216022759, Jmangion@deakin.edu.au
Amazon’s mission Statement – “to be Earth’s most customer centric company; to build a place where people can come to find and discover anything they might want to buy online”
But how can brand strategy help them get there?
Amazon has come a long way from its beginnings back in 1994. It started as a online retailer for books and CD’s and in just over 20 years has become the largest e-commerce retailer in the USA with an estimated 480 Million products offered in the USA alone “all of which have the Amazon imprint” (lacobucci, 2014). Amazon has also had enormous success with rolling out the Amazon Brand globally enabling them to “achieve and maintain similar positioning in all their markets” (Iacobucci, 2014). Just look at the 15-year growth story in the UK.
The company has come a long way but so too has the Amazon Brand which has now made it into the top 10 of Interbrands Brand value rankings valued at a whopping $38billion.
Amazon being Amazon…
The name Amazon was selected by founder Jeff Bezos in reference to the Amazon river. “He picked the largest river in the world to communicate Amazon’s vast selection of books. Amazon is now the largest everything store, selling everything from portable dressing rooms to Obama nail clippers. They have it all, from A to Z” (Lang, 2013). Amazon has also released a number of products and services over the years using an Umbrella Brand approach, including the Amazon Kindle, Amazon Prime, right through to the fresh grocery and everyday essentials brand called Amazonfresh.
No longer does the Amazon name relate to an online Book and CD retailer but to a brand that “transcends well to other brands across the firm” (Iacobucci, 2014). Why has Amazon used the umbrella brand approach, rather than developing a house of brands? Well “a commonly advanced rationale for umbrella branding is that it allows firms to leverage the reputation attached to a brand name” (Miklós-Thal, 2012). Furthermore, it allows companies to “capture a market by using umbrella branding to make high quality credible at a lower price” (Ramison, 2015). With Amazon being one of the most highly regarded brands in the United States it makes sense to leverage the powerful Amazon brand and it’s fair to say this approach has seemed to work for Amazon.
But that’s all about to change…
“In the coming weeks Amazon is set to roll out its new lines of Private label brands that will include its first push into perishable foods” (Bensinger, 2016). This will include brand names such as Wickedly Prime (Snack foods), Happy Belly (food line), Mama bear (Baby Products) to name a few. It seems that Amazon is diversifying and trying out a house of brands approach in developing these new product lines. This approach has its advantages as “any problems with one brand shouldn’t negatively affect any of the others” (Iacobucci, 2014). “Amazon is ‘carpet-bombing’ the market with new products…” said Bill Bishop, chief architect of brand consultancy Brick Meets Click, “…Private labels allow them to test out new prices and distinctive flavors with less risk.” Also with Store brands (private labels) reaching $118.4 billion in U.S. sales in 2015” (PLMA, 2016) it isn’t all that surprising that Amazon would want a piece of this market share. By adopting an autonomous store brand approach, any unsuccessful product lines can fizzle away with no damage done to the Amazon brand. If, however, the store brands take off, Amazon’s private label approach could really pay off for the company.
Amazon – Breaking the rules!
It would seem Amazon is adopting a product line strategy of multiple products across multiple segments. As outlined by Iacabucci this strategy can be “rather inefficient given that it doesn’t leverage the company’s knowledge of its customers or its products” (Iacobucci, 2014). This is where Amazon is able to avoid these inefficiencies and go against the marketing norms; “with Amazon’s rich trove of data, it may better predict which products will sell well to its customers” (Bensinger, 2016). Amazon is able to leverage their knowledge of customer buying habits and invest research and development into product lines that meet customer needs.
So in the end what is really interesting is the branding strategies that Amazon is using as part of their marketing strategy. It seems they have got their hand in every box. They are leveraging the company brand with their Umbrella branded products and combining it with exploring House of Brands through the development of their private label brands and by doing this it has enabled them to diversify whilst mitigating risk to the company brand. Finally to top this off they are also doing this whilst breaking more predictable marketing rules of product line strategies.
The question has to be asked, is this approach ludicrous or is it the sort of marketing genius that will help the company achieve its mission ‘to be Earth’s most customer centric company; to build a place where people can come to find and discover anything they might want to buy online’
Only time will tell!
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