Promotional Campaigns

Predictions from the past decade have now been realized and the era of the brick and mortar bookstore can now officially be closed — as of January 2009, Amazon.com became the world’s largest book retailer in the world. This has resulted in numerous changes; both to the industry, the publishing world, and the way consumers find and choose options. If we think logically about the retailing model in the 21st century, this makes sense — the key to business profitability is innovation and strategic flexibility. The large bookstores (e.g. Barnes and Nobel, Borders, etc.) are built, and function quite well, as large retail chains. They cannot change course overnight — they have long-term leases, hundreds of millions of dollars in inventory, and require a great deal of cash just to stay open. Amazon, however, can switch its strategy with almost the touch of a button, and has such a sophisticated set of algorithms that it is almost as if one has a personal shopper at all times (Rosenthal 2009).

The statistics are quite amazing. When reviewing the data from 2009, we find that in just North America, almost $13.5 billion dollars was spent on books. Barnes and Noble, B. Dalton, Borders, Waldenbooks are all down 5-15% while Amazon and BM.com are all up; Amazon’s total domestic market share is a whopping 44%. This is particularly interesting when looking at U.S. Census Data from 2002 to 2009 regarding purchases of books; and one sees that the trend is most certainly not growing as rapidly as the e-book retailers (Rosenthal 2010). What, then, could be the reason for this dramatic and almost unprecedented growth? Each large chain was deeply entrenched and aggressive in marketing campaigns, many of the brick and mortar’s had huge amounts of Mall traffic, yet sales do not match with the established marketing trends. Instead, what we find are two major forces playing off one another: the rise of electronic sales and the promotions that are engendered, and the very specific and targeted promotional activities that some of the online companies have done to recapture market share. Since Amazon.com is the most successful, we will concentrate on their promotional model.

Promotional Activities and E-Sales- Marketing is so ingrained in the modern way of life we almost do not notice it — yet we are all ingrained and enraptured by its very power and existence. Marketing is the process of creating consumer value in the form of goods, services, or ideas that can improve the consumer’s life. Amazon.com is the largest online retailer. The company opened its virtual doors in July 1995 by Jeff Bezos in Seattle. Since then it has enjoyed rapid expansion in all aspects of its operations, including business turnover, and a spectacular rise in share value since public floatation in 1997.

Amazon.com sells only online and is essentially an information broker. Amazon.com has constantly growing database of over 12 million customers in more than 160 countries. Amazon.com is the place to find and discover anything customers want to buy online. They have earth’s biggest selection of products, including millions of books, free electronic greeting cards, online auctions, videos, CDs, DVDs, toys, games, electronics, kitchenware, computers, and more. Amazon transformed itself from a specialty retailer into an online shopping portal, taking a cue from auctioneer eBay, which set itself up as a mediator between buyer and seller. Amazon’s marketing strategy has been to provide a sophisticated website that cross-promotes products; materials at a significantly lower price, and an ability for the consumer to personalize their “store,” receive updates about products they may be interested in, have browsed, or seems appropriate for their buying patterns (Spector 2000).

What does this mean for promotional activity, though, and why has Amazon been so successful? Essentially, Amazon uses an integrated marketing communications paradigm that focuses on controlling the messages that the company releases so that they have greater synergy, and less conflict, with other messages. Rather than having one strategy for the Midwest, one for Canada, it is all integrated into one message. This integration moves into promotions — promotions are used regularly in three major ways: personal promotions designed for “Your Daily Deals,” promotions based on themes (holidays, particular authors, genres, etc.), and promotions based on a marketing niche (back to school, college students, etc.). Each of these promotions is designed in a way that will also be integrated into the overall communications message; as well as change the data within the individual algorithm to reflect the efficacy and interest of that promotion (e.g. If you purchase from the college student textbook site, you receive promotions based on that field of interest or materials other college students enjoy) (Dysart 2002).

Too, depending on what Amazon wishes to promote within their lineup, they offer online coupons that can be found at their site, emailed to the client, or through the third-party coupon code offers online. Some of their promotions include:

Offer

Niche

Comments

Free Shipping

Free Shipping on Gourmet Foods and Groceries

Food and Food Products

Rotating, sometimes a specific manufacturer (General Mills, etc.)

but URL takes client directly to daily deals. http://www.amazon.com/Sales-Grocery/b?ie=UTF8&node=52129011&ref_=amb_link_353229922_2

Free Shipping

Free Shipping on specific products

Specific product push

Rotating, ranges from daily specials, hardcovers, pre-book specials, or niches. Essentially a preview for Amazon.Prime (their pre-paid shipping promotion). http://www.amazon.com/gp/help/customer/display.html?ie=UTF8&nodeId=200337010

Aggressive and Innovative Promotions — Because it is far less expensive, and easier to format, Amazon is able to use its promotional tool to deliver promotions more regularly. About every six weeks, for instance, they promote new releases in DVDs and advertise as low as $6.49. The email gives the reader several options, but allows them to click through to: 1) Their personal Amazon.com, 2) Today’s Deals, 3) All Departments, 4) TV Shows, 5) New DVDs. Once in the site, the user can select by price, genre, sale, or even star (http://www.amazon.com/b/ref=pe_14980_16685520_hi_img_1/?node=1061354). The promotional power of this technique is the use of literally hundreds of permutations 365 days per year at almost no cost, except for the specific electronic ad set up, the URL creation, and computer maintenance.

Amazon is also quite effective in its promotions using affiliate marketing. It is a practice in which amazon rewards individual sites for each visit brought about by that affiliate’s own marketing efforts. For example, if one had a flower shop, one could put links to Amazon for books on Flower Arranging, Gardening, or other ancillary issues. It is using one website to quickly drive traffic to another, in this case, thousands of sites pouring millions of clicks into Amazon on a regular basis (Collins 2000). Amazon.com was actually one of the first companies to launch, and perfect, an affiliate marketing program. It was launched in 1996, and while it has undergone several improvements, it is still one of Amazon’s most effective promotional activities (Brown 2009) (see Appendix A).

An extremely innovative cross promotional technique is Amazon’s new Kindle book reader. In November 2007, Amazon.com released The Kindle, a software and hardware platform that displays, stores, and allows for manipulation of digital media. Concurrent to this release, Amazon put special efforts into converting and releasing a variety of materials compatible with the Kindle. There are Kindle applications for numerous phone and computer platforms as well, and almost any e-book or publication may be read and stored on the device. As of December 2009, over 1.5 million Kindles had been sold, and the newest generation, just released in July 2010, is already sold out and on backorder; most estimates believe there are about 2 million Kindles in the market place. At an average price of $200 (taking into account all generations thus far), that is a respectable $400 million just in hardware, without accessories, subscriptions, or additional books and magazines (Ratcliffe 2009).

To be effective, though, the Kindle needs books loaded in to read. Amazon’s promotion of both hardware, software, and subscriptions allows them to capture the entire market of that particular consumer. Within 1 year of launch, Amazon reported that Kindle book sales accounted for more than 10% of its entire book line. They describe that in their references to promoting the Kindle, “At Amazon, we’ve always been obsessed with having every book ever printed, and we know that even the best reading device would be useless without a massive selection of books. Today, the Kindle Store has more than 270,000 books available, plus top newspapers, magazines, and blogs. This is just the beginning. Our vision is to have every book ever printed, in any language, all available in less than 60 seconds on Kindle. We won’t stop until we get there” (Robinson 2010).

Examples of Amazon’s current promotions are listed below, each with its own unique niche, but each with enough links to provide cross-marketing to other unique promotions.

Product

Promotion

Focus

Market

Comments

Amazon Prime

First order over $25 ships free

Free 2-day shipping for a $79 yearly membership

Frequent purchasers; saves about $4.00 per book per order.

Only available to use on amazon products, anything used, if not fulfilled by Amazon, is regular shipping.

Bestseller Bargains

Former bestsellers, now in paperback, discounts on hardcover.

For those who prefer having hardcover books.

Allows price of Hardback to be within range of trade or PB.

More for gifts of collectibles.

Friday Sale

Deep discounts at Amazon’s outlet

All product categories

Deals dependent on close out, etc.

Designed to drive traffic to site on low e-commerce day.

Gift Cards

Gift cards sent or emailed to anyone, anywhere

Keeping fiscal shopping with Amazon even if one cannot decide on a particular gift.

Gift cards are extremely popular in the contemporary gift giving market.

Also can be used as part of a wedding or baby registry.

Gold Box

Timed deals in all merchandise, changes every 4 hours.

Up to 70% discounts on many items.

People who like to shop; ex. HSN and ShopNBC types.

Sometimes great bargains, but one must check regularly to find them.

Music Deals/

Video/DVD

Offers newest releases, updates customer preferences

MP3 downloads available, albums, etc. competing with I-Tunes

Ease of shopping and collecting. Hourly updates on bestsellers.

Often less expensive than through Blockbuster or Netflix

Toys

Exceptional savings, many direct from the manufacturer

Again, designed to keep the dollars in the e-marketing field.

Targeted to price and age range; reviews and recommendations.

Even with shipping, often less expensive than shopping brick and mortar.

Conclusions — Promotion is simply the way Amazon.com works. Everything is promoted — nothing is at retail price, and everything cross-links to everything else. The naturally good deals of the day are enhanced by the Gold Box, Friday Sale, or Personalized recommendation deals. Amazon promotes its own credit card as well, allowing an almost complete shopping stream and experience: Food, medicines, toys, games, books, music, electronics, furniture, anything a homeowner would want — including fresh produce and groceries in selected areas. This, all shipped to your door — often free, with the option of using their credit card to pay for the order. Truly, all-encompassing and amazing promotional paradigm.

REFERENCES

Brown, B 2009, The Complete Guide to Affiliate Marketing on the Web, Atlantic Press,

Ocala, FL.

Collins, S 2000, History of Affiliate Marketing, viewed August 2010,

< http://www.clickz.com/clickz/column/1699440/history-affiliate-marketing >.

Dysart, J 2002, ‘Click-Through Customers’, ABA Banking Journal, vol 34, no. 3, p. 36+.

Ratcliffe, M 2009, Updating Kindles Sold Estimate: 1.49 Million, viewed September

2010, < http://www.zdnet.com/blog/ratcliffe/updating-kindles-sold-estimate-149-

million/486 >.

Robinson, T 2010, Jeff Bezos: Amazon.com Architect, ABDO Group, Edina, MN.

Rosenthal, M 2009, Amazon Sales and New Economies of Scale in Publishing, viewed

September 2010, .

Rosenthal, M 2010, Book Sales Statistics, viewed September 2010,

< http://www.fonerbooks.com/booksale.htm >.

Spector, R 2000, Amazon.com – Get Big Fast: Inside the Revolutionary Business Model

That Changed the World, Harper Collins, New York.

Appendix A — Amazon Promotional Links

Amazon Associates – https://affiliate-program.amazon.com/

Amazon Prime — http://www.amazon.com/gp/prime//ref=amb_link_84306931_4?pf_rd_m=ATVPDKIKX0DER&pf_rd_s=auto-sparkle&pf_rd_r=06FTFH02FQR1BS89MNY3&pf_rd_t=301&pf_rd_p=1268299782&pf_rd_i=Amazon%20prime

Bestseller Bargains – http://www.amazon.com/Bargain-Books/b/ref=bf2010_books?ie=UTF8&node=45&pf_rd_m=ATVPDKIKX0DER&pf_rd_s=left-1&pf_rd_r=1DS2HHY1Y9JW77QCD7WR&pf_rd_t=101&pf_rd_p=74831822&pf_rd_i=909656

Friday Sales – http://www.amazon.com/Friday-Sale/b/ref=sv_gb_3?ie=UTF8&node=548166

Gift Cards – https://www.amazon.com/gp/gc/order-email?ie=UTF8&design=a_birthday_balloons

Gold Box – http://www.amazon.com/gp/goldbox/ref=cs_top_nav_gb27

Music/Video Deals – http://www.amazon.com/music-rock-classical-pop-jazz/b/ref=sa_menu_mu1?ie=UTF8&node=5174

New York Times Bestsellers- http://www.amazon.com/Books/b/ref=sv_b_4?ie=UTF8&node=549028

Toys – http://www.amazon.com/toys/b/ref=sa_menu_tg8?ie=UTF8&node=165793011

Appendix B — Additional References Not Citied

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21st Century. New York: Butterworth.

Barsh, J. et.al. (2000). How E-Tailing Can Rise from the Ashes. The McKinsey

Quarterly. 98+.

Calkins, J. et.al. (2000). From Retailing to E-Tailing. The McKinsey Quarterly.

Chan, P. And D. Pollard. (2002). Global Challenges in E-Commerce. International Journal of Management. 19 (3): 445+.

Clay, K. (2002). Retail Strategies on the Web: Price and Non-Price Competition in The Online Book Industry. The Jounral of Industrial Economics. 50 (3): 351-67.

Feinberg, F. et.al. (2002). Do We Care What Others Get? A Behaviorist Approach to Targeted Promotions. Journal of Marketing Research. 39 (#): 277.91.

Filson, D. (2004). The Impact of E-Commerce Strategies on Firm Value. Journal Of Businessi 77 (2): S135-54.

Hade, D. (2001). Curious George Gets Branded: Reading as Consuming. Theory Into Practice. 40 (3): 158-65.

Hanna, R.C., et.al. (2005). Optimizing Time Limits in Retail Promotions. An Email

Application. Journal of the Operational Research Society. 56 (1): 15-.24.

McNamara, T. (July 2000). Defining the Blurry Line Between Commerce and Content.

Columbia Journalism Review. 39 (2).

Moe, W. (2004). Dynamic Conversion Behavior at E-Commerce Sites. Management Science. 50 (3): 326-35.