Amazon’s advertising platform turns off customers…

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It seems like we talk about Amazon a lot here at Teach the 4 Ps. For several reasons Amazon is a great class example. First, it is a brand that everyone knows and most of our students use on a regular basis. Second, they are at the leading edge of so many new marketing practices. Third, Amazon offers the opportunity for examples that reflect many marketing practices (and many chapters). Today, we are talking about Amazon the online retailer, as an advertising medium. After Google and Facebook, Amazon is growing fast as an advertiser. A Wall Street Journal article earlier this year pointed out that “54% of people looking for a product now begin their search directly on Amazon…” Search advertising has traditionally been Google’s sweet spot.

This article, “Ad Business a Boon for Amazon But a Turn-Off for Shoppers,” (November 26, 2019) points out that Amazon may need to be careful with all the advertising. Some customers are getting annoyed with the online retailer for serving up too many ads. Customers just want the product they are looking for–but they often have to search through many “sponsored posts” before they get there.

This article or example may be used in your marketing classroom in a number of ways. If Amazon wants to do well by customers, is this the right way? Is this customer-oriented behavior (Chapter 1)? An interesting counter-example might be drawn out by asking students if they have ever gone to Amazon looking for one thing, then seeing an ad for a competing product, and ended up buying the competing product. Was that information useful?

The question gets further muddled when the article also notes that ads like this might help Amazon deliver one-day service that customers love (Chapters 10 and 12). It also suggests changes in consumer behavior (Chapter 5). And then of course the article highlights how Amazon is becoming a new advertising medium (Chapter 15). Lots to potentially talk about here.

Snap Kitchen’s Healthy and Convenient Meals Gain Foothold

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packagingSnap Kitchen is trying to find that sweet spot many consumers want — tasty, convenient and healthy food at a fair price. There is a good sized target market that wants a healthy grab-and-go meal. And if it’s tasty, they might even pay a premium for it. This is the target market that Snap Kitchen is finding. The fast-growing chain now has 44 stores and also sells through 5 Whole Foods Markets stores. You can read more in this Bloomberg Businessweek article, “Forget the Salad Bar. A $50 Million Startup Best on Healthy Grab-and-Go Meals” (August 25, 2016).

This article might be useful in a number of places in the introductory marketing class. In chapter 3 we cover social cultural trends – and more Americans are seeking healthy food choices. The article sets up a potential discussion of consumer behavior and competition. How can Snap Kitchen keep out the competition? Especially from grocery stores that seem to be trying to move into that same upscale grab-and-go food market with fresh in-store sushi and deli counters. There are also distribution questions (consider Place chapters 10 — introduction and 12 — retailing).

Why prices fall

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hdmiSome products typically get more expensive over time (think food, college tuition, healthcare). Other products exhibit falling prices. Technology markets often exhibit declining prices (and often improving quality). Think about that smartphone in your pocket — in real terms (after inflation) an iPhone is cheaper today than five years ago. Plus, it offers significantly more benefit (more computing power, more apps, more services, etc.).

Competition often fuels attention to price. In tech markets, one company fueling rapidly lower prices is Monoprice. I first became aware of Monoprice after reading that there was little technical performance difference among HDMI cables (those cables that connect your TV to your DVD player or cable box). So one didn’t have to pay $50 for a Monster cable but could pay less than $4 for a Monoprice cable. For more details, I encourage you to listen (or download the transcript) to the Planet Money podcast “How Stuff Gets Cheaper” (November 28, 2014). It includes some interviews with Monoprice managers.

The Monoprice example could be leveraged into a class discussion of how a competitor of Monoprice’s should react. What can Monster do? What can Apple do when Monoprice’s CrystalPro, which sells for as much as half as much as the $1000 Apple Cinema display? The Apple model has more features, but both of these examples point to the power of a brand like Monster and Apple. Of course the Monster brand was not as strong and they have consequently lost a lot of share in the cable market. Is Apple’s display Monoprice’s next victim?

“Why does popcorn at the movies cost so much?”

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moviepopcornAmerican Public Media’s Marketplace radio show recently asked (and answered) “Why does popcorn at the movies cost so much?” (August 4, 2014, you can listen or read the transcript). The article also has some fun GIFs you might add to your PowerPoints. While I thought I knew the whole answer, I only knew half. Check if you know the whole answer – and perhaps use this as a discussion topic when you cover pricing.

Product-Market: Breakfast Food in the U.S.

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downloadyellow_shadow2_v3All kinds of big-name companies are battling for our breakfast dollars. This market is one that our students typically understand and provides some insights relative to competition, product-market definition, market research, product line management, and other marketing concepts. Reading a few recent articles will give you a great deal of knowledge about the current state of the breakfast food product-market in the U.S.:

The series of articles offer a pretty in-depth look at the breakfast market (the first article has a lot of great data). Cereal makers are fighting social cultural trends — eat less carbs and more protein. One of the strategies has been to promote cereal for dinner or late evening snack (as described in the second article). And the last article adds competition at a different level by looking at Dunkin’ Donuts and its fast-food rivals.

These articles might help you talk about competition, consumer behavior, and product management. The last article provides a bit more context on Dunkin’ Donuts, the chapter opening case study in our marketing research chapter.