Do Business Well

But everybody wants to grow, and you can’t blame them. So what should an Internet brand like Amazon.com do? There are five fundamental branding strategies for a leader in any category.

1. Keep your brand focused.

There are more than 5 million dotcom sites registered on the Internet, and you want your site to stand for more than one thing? Amazon.com should stay focused on books and music CDs. After all, the site accounts for just 4 percent of the $24.6 billion book market in the United States.

2. Increase your share of the market.

The time to think about getting into another business is after you dominate the business you’re already in. Until Amazon.com has at least 25 percent of the book market, they should stick to their knitting.

3. Expand your market.

Leaders should figure out how to expand their market, knowing that many of the benefits of a larger market will flow to them. What about book clubs, chat rooms with authors, and other book-building activities, including Amazon-sponsored seminars by famous authors?

4. Go global.

Sure, the Internet is a worldwide information and communications network already, but Amazon.com’s share of the book market outside the United States is minuscule. (Currently the company sells only 22 percent of its books overseas, where 95 percent of the world lives.)

Amazon.com should make a major effort to reach customers in the rest of the world. As English becomes the business language of the world, the market for books in English should skyrocket.

Why stop at English? Amazon.com should take its Internet expertise into all the major languages of the world.

Thinking often stops at the border. The most successful companies today treat the world as their oyster.

5. Dominate the category.

For a leading brand, a 25 percent market share should be a conservative goal. With a quarter of the U.S. book market, Amazon.com would rack up sales of $6.6 billion, enough to put the company on the Fortune 500 list, ahead of such companies as General Dynamics, General Mills, Ryder Systems, Nordstrom, Owens Corning, Black & Decker, and Hershey Foods.

Nothing works in branding as well as market domination. Coca-Cola in cola, Hertz in car rentals, Budweiser in beer, Goodyear in tires, Microsoft in personal computer operating systems, Intel in microprocessors, Cisco in routers, Oracle in database software, Intuit in personal finance software.

Amazon.com has a once-in-a-lifetime opportunity to dominate the book business on a worldwide scale. Why throw away this opportunity in order to chase a dozen other markets, none of which they are likely to dominate?

Still, when the vanity bug bites you, it’s hard to resist. “We can get into these other markets. We have the products, we have the people, we have the systems, we have the momentum, and we have the esprit de corps. Why not?”

Why not? You may have everything going for you, including the products, the people, and the systems, but you lack one thing. You lack the perception.

The issue in branding, Internet or otherwise, always boils down to the same thing: product versus perception.

Many managers believe it’s only necessary to deliver a better product or service to win. But brands like Coca-Cola, Hertz, Budweiser, and Goodyear are strong not because they have the best product or service (although they might have) but because they are market leaders that dominate their categories.

Which scenario seems more likely, A or B?

Scenario A: The company creates a better product or service and consequently achieves market leadership.

Scenario B: The company achieves market leadership (usually by being first in a new category) and then subsequently achieves the perception of having the better product or service.

Logic suggests Scenario A, but history is overwhelmingly on the side of Scenario B. Leadership first, perception second.

AltaVista bills itself as “the most powerful and useful guide to the Net.” We have no reason to doubt their claim. But is this enough to enable AltaVista to wrestle the portal leadership away from Yahoo!? Not in our opinion.

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