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.

Marketing Exclusivity and Status

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Luxury goods can facilitate good discussions when talking about consumers and their buying behavior.  If you’re looking for a current topic to use when talking with your students, consider the new Lamborghini Aventador SVJ.  The new luxury sports car is faster and pricier ($518,000) than the base Aventador model.  Only 900 of the new model will be produced which can add to the status achieved by owners of the car (and can further influence purchasing decisions).  You might also use this in a discussion about segmentation or marketing strategy.  Who would be the target market for this car?  How can Lamborghini effectively target that market and what might their marketing mix look like?

Smartphones top $1000 price point

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Smartphones revolutionized the world and it wasn’t long after the first smartphone was released that everyone wanted one of their own. For years, smartphone manufacturers were able to capitalize on unmet demand but as the product-market reached maturity and demand became saturated, manufacturers needed to find ways to entice users to upgrade in order to protect their new revenue stream.

The classic approach in technology is to release new versions of products. If a manufacturer delivers enough added value with the new release, existing consumers will be willing to buy the new product to replace their old one. But how much is necessary to entice consumers to upgrade? That answer is dependent on several factors that influence consumer buying behavior. These influences are reviewed in detail in Chapter 5 – Final Consumers and Their Buying Behavior.

This article, “Your Next Phone Will Probably Cost $1000“, talks about the latest generation of smartphones to hit the market and the various influences that will determine their success or failure. In particular, the article notes that this is the first generation of products to pass the $1000 price barrier.  The article suggests that surpassing that psychologically significant price barrier may slow adoption of the new line of phones.

Ask your students how many have purchased or intend to purchase one of these new phones, when they purchased (or intend to purchase), and why they chose to upgrade.  This can lead to a good discussion regarding all of the influences that impact that purchasing decision. Some will choose to buy primarily because of psychological social needs – the desire for status or acceptance from peers.  Others will apply a more economic assessment.  Those individuals may justify the purchase based on faster performance, larger screen sizes, new features, etc.  A full discussion of the various factors that influence consumer purchasing behavior is covered in Chapter 5 – Final Customers and Their Buying Behavior.

This conversation can also apply when covering the adoption curve discussed in Chapter 13. In any given classroom you’re likely to have students that can be classified as members of the early adopters and early majority segments of the adoption curve but you may also have members of other segments.  Asking students from each group how they make decisions about when to buy can really help illustrate the differences between segments.

What’s Now? Chapter 5 – Millennials Consume Health Care Services Different from Previous Generations

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healthcare2According to “Here’s how millennials could change health care” (USA Today, February 7, 2016) the health care needs of millennials differ from those of the generations that precede them (generation X. baby boomers, and senior citizens – see chapter 3 for discussion of different generations).

Review the influences on the consumer decision process in chapter 5 (see Exhibit 5-2). From reading the article or drawing on personal observations, identify how at least one factor in each category (economic needs, psychological variables, social influences, culture and ethnicity, and purchase situation) could influences how a millennial consumer choose and consumes health care. 

Apple Advertising Over 40 Years

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Many of our students love Apple products and the brand in general. It usually ranks in the top 2-3 most frequently mentioned when I survey my students to share their favorite brands. Our textbooks use an Apple case study to open chapter 5 (Consumer Behavior). Over the last 40 years, Apple has produced some truly memorable advertising. Some have called the Apple 1984 Super Bowl commercial the greatest ad ever. I personally like the “Think Different” campaign and enjoy using it to demonstrate differentiation and positioning. Over at The Next Web you can find “The 40-year evolution of Apple ads” (April 5, 2016). It offers some commentary sprinkled between 12 ads from over the years. Most of the ads are from the last decade.

These ads could be shown to demonstrate how Apple’s strategy has evolved over the years — or a few could be shown to introduce chapter 5 and foster a discussion of this chapter opener. The ads could also be used to show how the personal computer market evolved (product life cycle) or as examples of advertising when that is covered in class. The video below provides a look at Apple’s history in 40 seconds.