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AMAZON.COM
Founded by Jeff Bezos, Amazon.com started as the “world’s largest bookstore” in July 1995.
A virtual bookstore that physically owned no books, Amazon.com promised to revolutionize
retailing. Although some may debate whether it accomplished that, Bezos clearly blazed a
trail of e-commerce innovations that many have studied and followed.
Amazon.com set out to create personalized storefronts for each customer by providing more
useful information and more choices than could be found in your typical neighbourhood
bookstore. Readers can review books and evaluate them on a one- to five-star rating scale,
and browsers can rate the reviews for helpfulness. Amazon.com’s personal recommendation
service aggregates data on buying patterns to infer who might like which book. The site
offers peeks into books’ contents, index, and beginning pages with a “search inside the book”
feature that also lets customers search the entire text of 120,000 books—about as many titles
as are in a Barnes & Noble bookstore. Amazon.com’s one-click shopping lets buyers make
purchases with one click.
Over the years, Amazon.com has diversified its product lines into DVDs, music CDs,
computer software, video games, electronics, apparel, furniture, food, toys, and more. In
addition, it has established separate Web sites in Canada, the United Kingdom, Germany,
France, China, and Japan. Amazon.com continued to expand its product offerings with the
2007 launch of Amazon Video On Demand, allowing consumers to rent or purchase films
and television shows on their computers or televisions. Later that year, Amazon.com
introduced Amazon MP3, which competes directly with Apple’s iTunes and has participation
from all the major music labels. The company’s most successful recent product launch was
the Amazon-branded Kindle, an electronic book reader that can deliver hundreds of
thousands of books, magazines, blogs, and newspapers wirelessly in a matter of seconds. As
thin as a magazine and light as a paperback, the device was Amazon.com’s number one
selling product in 2009.
To overcome the lag between purchase and delivery of product, Amazon.com offers fast,
inexpensive shipping. For a $79 annual fee, Amazon.com Prime provides unlimited free
express shipping for most items. While free shipping and price cuts are sometimes unpopular
with investors, Bezos believes it builds customer satisfaction, loyalty, and frequency of
purchase orders.
Amazon.com has established itself as an electronic marketplace by enabling merchants of all
kinds to sell items on the site. It powers and operates retail Web sites for Target, the NBA,
Timex, and Marks & Spencer. Amazon.com derives about 40 percent of its sales from its
million-plus affiliates called “Associates,” independent sellers or businesses that receive
commissions for referring customers who then make a purchase at the Amazon.com site.
Associates can refer consumers to Amazon.com through a variety of ways, including direct
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links and banner ads as well as Amazon Widgets, miniapplications that feature
Amazon.com’s wide selection of products.
Amazon.com also launched an affiliate product called aStore, which gives Associates the
ability to create an Amazon-operated online store easily and without any programming
knowledge. Amazon.com then supports these merchants by providing new tools for their
Web site, offering access to Amazon.com’s catalog of products, and handling all payments
and payment security through its Web Services. Amazon.com can also “pick, pack and ship
the products to the merchant’s customers anytime and to any place” through its Fulfillment
by Amazon (FBA). This essentially creates a virtual store for the third-party merchants with
low risk and no additional cost.
One key to Amazon.com’s success in all these different ventures was a willingness to invest
in the latest Internet technology to make shopping online faster, easier, and more personally
rewarding for its customers and third-party merchants. The company continues to invest in
technology, is focused on the long-term, and has successfully positioned itself as a
technology company with its wide range of Amazon Web Services. This growing collection
of infrastructure services meets the retailing needs of companies of virtually all sizes.
From the beginning, Bezos stated that even though he started as an online bookstore, he
eventually wanted to sell everything through Amazon.com. Now, with more than 600 million
annual visitors, the company continues to get closer to that goal with revolutionary products
like the Kindle and cloud computing Web services.
1. Why has Amazon.com succeeded online when so many other companies have failed?
2. Will the Kindle revolutionize the book industry? Why or why not?
3. What’s next for Amazon.com? Is cloud computing the right direction for the company?
Where else can it grow?
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RED BULL
Red Bull’s integrated marketing communications mix has been so successful that the
company has created an entirely new drink category—functional energy drinks—and has
become a multibillion-dollar brand among competition from beverage kings like Coca-Cola
and Pepsi. In less than 20 years, Red Bull has become the energy drink market leader by
skilfully connecting with the global youth. Dietrich Mateschitz founded Red Bull in Austria
and introduced the energy drink into Hungary, its first foreign market, in 1992. Today, Red
Bull sells 4 billion cans of energy drinks each year in over 160 countries.
So how does Red Bull do it? The answer: differently than others. For years, Red Bull offered
just one product, Red Bull Energy Drink, in one size—a slick silver 250 ml. (8.3 oz.) can
with a European look and feel. Red Bull’s ingredients—amino acid taurine, B-complex
vitamins, caffeine, and carbohydrates—mean it’s highly caffeinated and energizing, so fans
have called it “liquid cocaine” and “speed in a can.” Over the last decade, Red Bull has
introduced three additional products: Red Bull Sugar free, Red Bull Energy Shots, and Red
Bull Cola—each slight variations of the original energy drink.
Since its beginning, Red Bull has used little traditional advertising and no print, billboards,
banner ads, or Super Bowl spots. While the company runs minimal television commercials,
the animated spots and tagline “Red Bull Gives You Wings” are meant to amuse its young
audience and connect in a non-traditional, no pushy manner.
Red Bull builds buzz about the product through grassroots, viral marketing tactics, starting
with its “seeding program” that micro targets trendy shops, clubs, bars, and stores. As one
Red Bull executive explained, “We go to on-premise accounts first, because the product gets
a lot of visibility and attention. It goes faster to deal with individual accounts, not big chains
and their authorization process.” Red Bull is easily accepted at clubs because “in clubs,
people are open to new things.”
Once Red Bull has gained some momentum in the bars, it next moves into convenience stores
located near colleges, gyms, health-food stores, and supermarkets, prime locations for its
target audience of men and women aged 16 to 29. Red Bull has also been known to target
college students directly by providing them with free cases of Red Bull and encouraging them
to throw a party. Eventually, Red Bull moves into restaurants and finally, into supermarkets.
Red Bull’s marketing efforts strive to build its brand image of authenticity, originality, and
community in several ways. First, Red Bull targets opinion leaders by sampling its product, a
lot. Free Red Bull energy drinks are available at sports competitions, in limos before award
shows, and at exclusive after-parties. Free samples are passed out on college campuses and
city streets, given to those who look like they need a lift.
Next, Red Bull aligns itself with a wide variety of extreme sports, athletes, teams, events, and
artists (in music, dance, and film). From motor sports to mountain biking, snowboarding to
surfing, dancing to extreme sailing, there is no limit to the craziness of a Red Bull event or
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sponsorship. A few have become notorious for taking originality and extreme sporting to the
limit, including the annual Flugtag. At Flugtag, contestants build homemade flying machines
that must weigh less than 450 pounds, including the pilot. Teams then launch their
contraptions off a specially designed Red Bull branded ramp, 30 feet above a body of water.
Crowds of up to 300,000 young consumers cheer on as the contestants and their “planes” stay
true to the brand’s slogan: “Red Bull gives you wings!”
Another annual event, the Red Bull Air Race, tests the limits of sanity. Twelve of the world’s
top aerobatic stunt pilots compete in a 3.5 mile course through a low-level aerial racetrack
made up of air-filled Red Bull branded pylons 33 feet apart and reaching 65 feet in height. In
other words, pilots fly planes with a 26-foot wingspan through a gap of 33 feet at 230 mph.
These Red Bull–branded planes crash occasionally, but to date no fatalities have ever
occurred.
Red Bull’s Web site provides consumers with information about how to find Red Bull events,
videos of and interviews with Red Bull–sponsored athletes, and clips of amazing feats that
will be tested next. For example, Bull Stratos is a mission one man is undertaking to free-fall
from 120,000 feet, or 23 miles high. The jump will be attempted from the edge of space and,
if successful, it will mark the first time a human being has reached supersonic speeds in a free
fall.
Red Bull buys traditional advertising once the market is mature and the company needs to
reinforce the brand to its consumers. As one Red Bull executive explained, “Media is not a
tool that we use to establish the market. It is a critical part. It’s just later in the development.”
Red Bull’s “anti-marketing” IMC strategy has been extremely successful connecting with its
young consumers. It falls directly in line with the company’s mission to be seen as unique,
original, and rebellious—just as its Generation Y consumers want to be viewed.
Questions
1. What are Red Bull’s greatest strengths and risks as more companies (like Coca-Cola,
Pepsi, and Monster)enter the energy drink category and gain market share?
2. Should Red Bull do more traditional advertising? Why or why not?
3. Discuss the effectiveness of Red Bull’s sponsorships, for example, Bull Stratos. Is this a
good use of Red Bull’s marketing budget? Where should the company draw the line?
COCA COLA
When it comes to mass marketing, perhaps no one does it better than Coca-Cola. Coke is the
most popular and best-selling soft drink in history. With an annual marketing budget of
nearly $3 billion and annual sales exceeding $30 billion, the brand tops the Interbrand
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ranking year after year. Today, Coca-Cola holds a current brand value of $68 billion and
reaches consumers in over 200 countries, making it the best-known product in the world. In
fact, Coca-Cola is such a global phenomenon that its name is the second-most understood
word in the world (after okay).
The history of Coke’s success is astonishing. The drink was invented in 1886 by Dr. John S.
Pemberton, who mixed a syrup of his own invention with carbonated water to cure
headaches. The company’s first president later turned the product into a pop culture
phenomenon by introducing it to pharmacists and consumers around the world and handing
out clocks, posters, and other paraphernalia with the Coca-Cola logo.
Coca-Cola believed early on that to gain worldwide acceptance, the brand needed to connect
emotionally and socially with the masses, and the product needed to be “within arm’s-length
of desire.” So the company focused on gaining extensive distribution and worked hard at
making the product loved by all. In World War II, it declared that “every man in uniform gets
a bottle of CocaCola for 5 cents, wherever he is, and whatever it costs the company.” This
strategy helped introduce the soft drink to people around the world as well as connect with
them positively in a time of turmoil.
Why is Coca-Cola so much bigger than any other competitor? What Coke does better than
everyone else is create highly current, uplifting global campaigns that translate well into
different countries, languages, and cultures. Coke’s advertising over the years has primarily
focused on the product’s ability to quench thirst and the brand’s magical ability to connect
people no matter who they are or how they live. Andy Warhol said it best, “A Coke is a Coke
and no amount of money can get you a better Coke than the one the bum on the corner is
drinking.” One of Coca-Cola’s most memorable and successful commercials was called
“Hilltop” and featured the song, “I’d like to buy the world a Coke.” Launched in 1971, the ad
featured young adults from all over the world sharing a happy, harmonious moment and
common bond (drinking a Coke) on a hillside in Italy. The commercial touched so many
consumers emotionally and so effectively showed the worldwide appeal of Coke that the
song became a top ten hit single later that year.
Coca-Cola’s television commercials still touch upon the message of universal connection
over a Coke, often in a light-hearted tone to appeal to a young audience. In one spot, a group
of young adults sit around a campfire, playing the guitar, laughing, smiling, and passing
around a bottle of Coke. The bottle reaches a slimy, one-eyed alien who joins in on the fun,
takes a sip from the bottle, and passes it along. When the next drinker wipes off the slime in
disgust, the music stops suddenly and the group stares at him in disappointment. The man
hesitantly hands the bottle back to the alien to get re-slimed and then drinks from it, and the
music and the party continue in perfect harmony.
Coca-Cola’s mass communications strategy has evolved over the years and today mixes a
wide range of media including television, radio, print, online, in-store, digital, billboard,
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public relations, events, paraphernalia, and even its own museum. The company’s target
audience and reach are so massive that choosing the right media and marketing message is
critical. Coca-Cola uses big events to hit huge audiences; it has sponsored the Olympics since
1928 and advertises during the Super Bowl. Red Coke cups are placed front and center during
top-rated television shows like American Idol, and the company spends over $1 billion a year
on sports sponsorships such as NASCAR and the World Cup. CocaCola’s global campaigns
must also be relevant on a local scale. In China, for example, Coca-Cola has given its
regional managers control over its advertising so they can include appropriate cultural
messages.
The delicate balance between Coca-Cola’s local and global marketing is crucial because, as
one Coca-Cola executive explained, “Creating effective marketing at a local level in the
absence of global scale can lead to huge inefficiencies.” In 2006, for example, Coca-Cola ran
two campaigns during the FIFA World Cup as well as several local campaigns. In 2010, the
company ran a single campaign during the same event in over 100 markets. Executives at
Coca-Cola estimated that the latter, more global strategy saved the company over $45 million
in efficiencies.
Despite its unprecedented success over the years, Coke is not perfect. In 1985, in perhaps the
worst product launch ever, Coca-Cola introduced New Coke—a sweeter concoction of the
original secret formula. Consumers instantly rejected it and sales plummeted. Three months
later, Coca-Cola retracted New Coke and relaunched the original formula under the name
Coca-Cola Classic, to the delight of customers everywhere. Then-CEO Roberto Goizueta
stated, “The simple fact is that all the time and money and skill poured into consumer
research on the new Coca-Cola could not measure or reveal the deep and abiding emotional
attachment to original Coca-Cola felt by so many people.”
Coca-Cola’s success at marketing a product on such a global, massive scale is unique. No
other product is so universally available, universally accepted, and universally loved. As the
company continues to grow, it seeks out new ways to better connect with even more
individuals. Referring to itself as a “Happiness Factory,” it is optimistic that it will succeed.
Questions
1. What does Coca-Cola stand for? Is it the same for everyone? Explain.
2. Coca-Cola has successfully marketed to billions of people around the world. Why is it so
successful? 3. Can Pepsi or any other company ever surpass CocaCola? Why or why not?
What are Coca-Cola’s greatest risks?
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VODAFONE
One of the oldest principles of marketing is that sellers may sell features, but buyers
essentially buy benefits. This is a distinction sometimes lost on technology led organizations,
and the service sector is no exception. Recent experience of the UK’s largest
telecommunications company, Vodafone, illustrates how crucial it is to see service offers in
terms of the benefits they bring to customers. The company was aware of extensive research
which had found high levels of confusion among purchasers of mobile phones, with a
seemingly infinite permutation of features and prices. With four main networks to choose
from, dozens of tariffs and hundreds of handsets, it easy to see why buyers sought means of
simplifying their buying process. Throughout the 1990s, Vodafone had positioned its UK
network as superior technically to its competitors. Advertising focused on high coverage rates
and call reliability.
Vodafone was the UK's most popular mobile phone operator, with almost eight million
customers, including 4.2 million Pay as you Talk customers. It had opened the UK's first
cellular network on 1 January 1985 and was the market leader since 1986. Vodafone's
networks in the UK - analogue and digital - between them carried over 100 million calls each
week. It took Vodafone more than 13 years to connect its first three million subscribers but
only 12 months to connect the next three million. Vodafone had the largest share of the UK
cellular market with 33% and had more international roaming agreements than any other UK
mobile operator. It could offer its subscribers roaming with 220 networks in 104 countries.
Despite all of the above, Vodafone was aware that although it was recognized as an
extremely strong business in the corporate marketplace, it was not so strong in the market for
personal customers. Research indicated that personal buyers bought Vodafone for essentially
rational reasons rather than having any emotional attachment to the brand. The success of the
competing Orange network, which had developed a very strong image, was a lesson to
Vodafone that many people did not understand many of the product features on offer, but
instead identified with a brand whose values they could share. Vodafone recognized that it
needed to be perceived as adding value to a consumer’s lifestyle. Given the increasing
complexity of product features, positioning on technical features was likely to make life more
confusing for personal customers. An alternative approach was needed which focused on
image and lifestyle benefits.
The company decided to hire Identica – the consultancy that originally created the One 2 One
brand – to revamp its brand communications and advertising strategy in an effort to make
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Vodafone more appealing to personal customers. Identica created a new ‘visual language’ for
the Vodafone brand. Vodafone became involved in the biggest ever TV, press, poster and
radio advertising campaign in its 15 year history. Employing a completely new style, the new
advertising centred around the theme: 'You are now truly mobile. Let the world come to you'
and featured a new end-line - Vodafone ‘YOU ARE HERE’. The campaign demonstrated
how Vodafone's products and services were designed to make life easier for its customers.
The campaign, created by BMP DDB, was worth £20 million over two months alone and ran
for the whole year. Bringing meaning to the Vodafone brand and what it represented, a series
of advertisements, through a range of media, showed how Vodafone let the world come to its
customers, enabling them to be truly mobile. This portrayed how Vodafone always pioneered
to make things more possible for its customers in a wire-free world.
In press and poster executions, Vodafone used arrows photographed in various real life
situations to depict its flagship services, e.g. a weather vane was used to illustrate the
Vodafone Interactive weather service showing how weather information could be brought to
customers through their mobile. Each advertisement again had the Vodafone ‘YOU ARE
HERE’ end-line. The arrows indicated the directional approach of Vodafone, letting the
world come to the customer. Other executions illustrated cinema listing information, sports
updates, share price information, international roaming and the Vodafone Personal
Roadwatch 1800 service.
The change in emphasis by Vodafone seemed to be timely. The mobile phone industry was
facing a new wave of confusing product features hitting consumers, with the development of
Wireless Access Protocol (WAP) phones and the newer “Third generation” phones due to be
launched in 2001. It seemed inevitable that all of the competing networks would be offering
confusing permutations of features with their service, so Vodafone calculated that, given
similar levels of reliability and sophistication by all networks, a favourable image and
lifestyle association would be an important source of competitive advantage. Given the right
image with existing technology, there would be a strong probability that consumers would
migrate with the brand to the new technology when it arrived.
CASE STUDY REVIEW QUESTIONS
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2.
Identify the principal benefits to customers which derive from a mobile phone. What
differences are likely to exist between market segments?
Is a strong brand identity on its own a source of sustainable competitive advantage? To
what extent must this be backed up by real product features?
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3.
Are goods different to services in the way that a distinction is made between features
and benefits?
GILLETTE
Gillette knows men. Not only does the company understand what products men desire for
their grooming needs, it also knows how to market to men all around the world. Since the
invention of the safety razor by King C. Gillette in 1901, Gillette has had a number of
breakthrough product innovations. These include the first twinblade shaving system in 1971
named the Trac II, a razor with a pivoting head in 1977 called the Atra, and the first razor
with spring-mounted twin blades in 1989 dubbed the Sensor. In 1998, Gillette introduced the
first tripleblade system, Mach3, which became a billion-dollar brand surpassed only by the
2006 launch of the “best shave on the planet”—the six-bladed Fusion, with five blades in the
front for regular shaving and one in the back for trimming.
Today, Gillette holds a commanding lead in the shaving and razor business with a 70 percent
global market share and $7.5 billion in annual sales. Six hundred million men use a Gillette
product every day, and the Fusion razor accounts for 45 percent of the men’s razors sold in
the United States. Gillette’s mass appeal is a result of several factors, including extensive
consumer research, quality product innovations, and successful mass communications.
While Gillette’s product launches have improved male grooming, it’s the company’s
impressive marketing knowledge and campaigns that have helped it reach this international
level of success. Traditionally, Gillette uses one global marketing message rather than
individual targeted messages for each country or region. This message is backed by a wide
spectrum of advertising support, including athletic sponsorships, television campaigns, instore promotions, print ads, online advertising, and direct marketing.
Gillette’s most recent global marketing effort, “The Moment,” launched in 2009, is an
extension of its wellrecognized campaign, “The Best a Man Can Get.” The campaign features
everyday men as well as the Gillette Champions—baseball star Derek Jeter, tennis champion
Roger Federer, and soccer great Thierry Henry— experiencing moments of doubt and
Gillette’s grooming products helping them gain confidence. The campaign was designed to
help Gillette expand beyond razors and shaving and increase sales of its entire line of
grooming products. The massive marketing effort launched around the globe and included
television, print, online, and point-of-sale advertising.
Another crucial element in Gillette’s marketing strategy is sports marketing. Gillette’s natural
fit with baseball and tradition has helped the company connect emotionally with its core
audience, and its sponsorship with Major League Baseball dates to 1939. Tim Brosnan, EVP
for Major League Baseball, explained, “Gillette is a sports marketing pioneer that paved the
way for modern day sports sponsorship and endorsements.” Gillette ads have featured
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baseball heroes such as Hank Aaron, Mickey Mantle, and Honus Wagner from as early as
1910.
Gillette also has ties to football. The company sponsors Gillette Stadium, home of the New
England Patriots, and is a corporate sponsor of the NFL, making four of its products, Gillette,
Old Spice, Head & Shoulders, and Febreze, “Official Locker Room Products of the NFL.”
Gillette’s partnership includes sweepstakes to win NFL game tickets, Web site promotions,
and ties to the NFL, such as the presence of some NFL players in its commercials. Gillette
also sponsors several NASCAR races and drivers and the UK Tri-Nations rugby tournament.
It even created a Zamboni at the Boston Bruins game that looked like a huge Fusion razor
shaving the ice.
While sports marketing is a critical element of Gillette’s marketing strategy, the brand aims
to reach all men and therefore aligns itself with musicians, video games, and movies—in one
James Bond film, Goldfinger, a Gillette razor contained a homing device.
When Procter & Gamble acquired Gillette in 2005 for $57 billion (a record five times sales),
it aimed for more than sales and profit. P&G, an expert on marketing to women, wanted to
learn about marketing to men on a global scale, and no one tops Gillette.
Questions
1. Gillette has successfully convinced the world that “more is better” in terms of number of
blades and other razor features. Why has that worked in the past? What’s next?
2. Some of Gillette’s spokespeople such as Tiger Woods have run into controversy after
becoming endorsers for the brand. Does this hurt Gillette’s brand equity or marketing
message? Explain.
3. Can Gillette ever become as successful at marketing to women? Why or why not?
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