Amazon’s Alexa Spaghetti Strategy

Amazon is racing the likes of Google, Apple Inc. and Microsoft Corp. to position its technology
at the center of our Jetsons-like home of the future, where everything from the washing machine
to the thermostat can be controlled with voice commands. Amazon helped to pioneer this
concept with the introduction of the Echo in 2014. Last week’s new products, designed to extend
its advantage, fall into three main categories.

The first and most obvious constitutes the new kinds of Alexa-equipped devices aimed at
consumers, like better-sounding Echo speakers, a home security camera and a wall clock
receptive to verbal commands. The more Alexa stuff Amazon seeds into the market and into our
lives, the stronger its case that Alexa—and not Siri or the Google Assistant—has become a
ubiquitous new computing platform.

In the second category, Amazon wants to get customers to add voice capabilities to things they
already own. Thus we have the Amazon Smart Plug, which connects to an outlet and voice-
enables any device, and the Echo Auto for your dusty old station wagon, which you may not plan
on trading in anytime soon.

Finally, Amazon is giving manufacturers new tools like the Alexa Connect Kit, a chipset
designed to get them to integrate Alexa into their devices. And it’s working directly with
carmakers like Audi to build voice capabilities into their vehicle fleet.

This strategy, aimed at both companies and consumers, evoked some gruesome memories of
trudging to the Consumer Electronics Show in Las Vegas every January, and visiting the tents
outside the main convention hall. There, companies like Cisco Systems Inc., IBM, Sony Corp.
and Microsoft would invariably show off their idea of a smart home.  These visions, where
everything from door locks to dishwashers would supposedly be connected to the web, never
really took off.

One reason is that those companies mainly wanted to license their home networking
specifications to appliance makers and make money from sharing in product sales. The appliance
makers weren’t interested—they didn’t want to forfeit profits, and customers weren’t demanding
that their coffee makers connect to the internet.

Amazon, by contrast, is licensing Alexa to developers and manufacturers basically for free. Its

business revolves not around licensing proprietary technology to companies, or even really
selling gizmos to customers, but getting devices into people’s homes that will serve as gateways
to its massive online store, and to services like its streaming music and video catalog.
It has also demonstrated that voice control is appealing to consumers. Those old CES displays
usually showed homeowners impractically controlling everything from their PC. Even pulling
out your smartphone to turn off a light or turn on your air conditioning—a concept introduced by
Nest, now a Google subsidiary, back in 2010—isn’t exactly elegant.

And just in case appliance makers aren’t persuaded by all this, Amazon also has something of a
stick to make sure they fall in line. That’s where the $60 AmazonBasics Microwave comes in.

If manufacturers don’t get aboard the Alexa train, Amazon seems to be saying, it just might start
making and selling their products itself.
Product/Brand Analysis
In a time when technology is advancing so rapidly, it’s no surprise that Amazon has come out
with its new digital voice assistant, the Amazon Echo. Amazon is looking to position the Echo as
an all-around personal assistant that can be incorporated into all aspects of the user’s life, and is
more comparable to a household appliance than a typical smartphone accessory. The Echo is a
step toward a time when electronics can complete any task for us at the click of a button (or in
the Echo’s case, the call of a name). The Amazon Echo is a sleek black cylindrical Advertising
Strategy: Amazon Echo 14 speaker that stands 9.25 inches tall. It is advertised to answer to
“Alexa”, “Amazon”, or “Echo” from anywhere in a room. Amazon has created a free companion
app that allows its users to connect their smartphone to the Echo and make their experience even
more convenient (Amazon, 2018). The Echo can play music, report traffic and weather, give
information on nearby businesses, access Google calendar, create lists, control lights, provide
sports scores, order pizza, and even request an Uber. The Echo uses noise-cancelling technology
to be able to hear its name being called even while it plays music. Amazon.com is selling the
Echo for $179.99, and it is also being sold by over 3,000 retail locations such as Toys R Us,
QVC, Sears, and Staples. Amazon has also recently added the Dot and Tap to its list of Alexa-
enabled devices (Amazon, 2018). As for the Amazon’s marketing strategy, it has used the
Internet for most of the promotion of the Echo, releasing a video of the Amazon Echo being used
by a suburban family, demonstrating its features and capabilities, and during the 2018 Super
Bowl, Amazon paid an estimated $8 million for a one-minute commercial
Market Analysis
A trend towards cloud-based processing combined with technological products that can perform
tasks on command gives the Amazon Echo a unique opportunity. The Echo can capitalize on
increased interest of artificial intelligence and voice recognition software, increased use of
streaming music services, and increased desire for hands-free technological products (Horrigan,
2008). In spring of 2014, the electronics audio equipment and accessories industry can be a good
indicator of Advertising Strategy: Amazon Echo 23 sales for the Amazon Echo, which Amazon
considers to be in the home audio speaker category. For this category, both men and women
shave shown about the same likeliness of owning electronic audio equipment. By region, U.S.
census data has shown that out of people in the Midwest region, 50.8% of households own
electronic audio equipment, which the is the highest percentage just above the North East at
50.3%. In regard to income, of households that earn $150,000 or more, 66.5% own electronic
audio equipment (MRI handout).
Problems
1. Privacy concerns over how much information is actually collected by the Echo and how that
information is stored; trust issues for those consumers who aren’t technologically savvy and are
new adopters of products in the IPA category.

2. Inability to pinpoint target market has led to inefficient advertising and product awareness for
the Echo, which was apparent by their inability to reach any specific segment in their Super
Bowl ad.

3. The Echo is compatible with all other music streaming platforms except for iTunes and Apple
Music, potentially eliminating a large segment of the market that consistently uses those
platforms.

4. Customers can only unlock all of the Echo’s capabilities if they are Amazon Prime members,
prohibiting non-Prime users from experiencing the benefits of the Echo in full.

5. There is strict competition within the digital voice assistant industry from companies like
Apple with Siri, Microsoft with Cortana and Google with Google Now. Additionally, Amazon is
facing direct competition from tech companies LG and Ivee with their SmartThinQ and Ivee
Voice products, which are smart home devices just like the Echo. Also, Google reportedly has
Advertising Strategy: Amazon Echo 25 their own in-home digital assistant in the works,
presenting a formidable competitor to the Echo.

6. Amazon is often viewed solely as an e-commerce company rather than a technology

development company, which can make it difficult for some consumers to trust Amazon’s new
family of products in a product category that is outside the bounds of the Kindle and Amazon
Fire TV.
Opportunities
1. Utilizing Amazon’s existing brand power and image as a trustworthy and reliable company,
their reputation as being innovative, and their ability to disrupt markets with new
products/services to push sales of the Echo and its family products.

2. Increased interest in, and acceptance of, artificial intelligence (AI) technology, voice
recognition software and cloud-based processing applications; this has given the Amazon Echo a
more favorable and welcoming reception as a unique product that is a culmination of all three.

3. Continued investment in integrating with outside companies like Uber, Samsung, Ford and
Domino’s makes the Echo more of a “do all” product in comparison to other IPA’s.

4. Integrating the Echo with more in-home devices such as garage doors, electronics, appliances,
etc. to remain competitive with other smart home devices entering the market. Advertising
Strategy: Amazon Echo 26

5. Developing brand loyalty through synchronization of products and services that Amazon
offers (Amazon Echo, Amazon Prime, Prime Music streaming, Fire TV, etc.) to compete with
other technology companies, such as Apple and Microsoft, who offer the same synchronization
abilities across their platforms.
Recommendaion
In order for Amazon to grow its market share within the intelligent personal assistant category,
we recommend that the company take better advantage of the already-existing strong brand
power of Amazon to position itself to a narrower target market and drive sales of the Echo.
Based on our situation analysis, there are opportunities that Amazon could capitalize on to give
them this edge over competitors. For Amazon to emerge as a primary player in the IPA category,
we recommend that the company continue to integrate with exclusive outside companies to make
the Echo a unique “do-all” product. By partnering with companies like Uber, Spotify and
Domino’s, who already are established brands within a younger population of users, Amazon has
a large opportunity to further engage with a younger, tech-savvy market and position the Echo to
this segment. Amazon’s huge customer base and brand power attracts the attention of outside
companies and creates the opportunity for both parties to mutually benefit from a partnership.
While utilizing their brand power to integrate with outside companies creates a great opportunity
for Amazon to position the Echo to the millennial and younger baby boomer market, there are
risks that come with this strategy. These risks include alienating potential users of the Echo that
use competing services to the services Amazon chooses to partner with.
Communication Strategy To Convince -25-50 year old working professionals who need the latest
technology products to make their hectic lives more efficient That - the Amazon Echo is the intelligent
personal assistant that provides the ultimate hands-free, artificially intelligent technology to satisfy your
in-home needs Because -it has a unique ability to integrate with your mobile devices and outside
companies to assist you with a variety of household tasks from calling an Uber to streaming your
favorite playlist. Advertising Strategy: Amazon Echo 35 IMC Strategy 1. To increase awareness of the
Echo, we recommend Amazon place a TV spot advertisement on major networks that are commonly
watched by our target market. • Frequency: The spot will run in a primetime spot on weekdays and a
late-night spot on weekends. • Time of Year: November 1st-April 30th, the last six months of our
campaign; this range includes the Holiday season, which also includes Black Friday and Cyber Monday,
where a large percentage of Echos were purchased last year. 2. To better inform the target market
about the Echo and generate interest in the product, we recommend Amazon partner with the Olympics
to create a video mini series on YouTube starring major Olympic athletes and running over the course of
the 2016 Summer Olympics in Rio de Janeiro. • Frequency: 1-2 new videos per week over the course of
the Olympics • Time of year: August 5th - August21st; this time range runs from the opening ceremony
for the Olympics to the closing ceremony 3. To stimulate interest and awareness of the Echo, as well as
remind people of the reliable and positive nature of Amazon as a brand, we recommend Amazon host
an experiential event where consumers can personally come Advertising Strategy: Amazon Echo 36 and
test out the Echo, interact with other consumers and enjoy food, prizes and fun. This event will give
consumers a chance to see how efficient Alexa can be themselves and will also generate buzz about the
product. In addition, we will run a sales promotion at the event to encourage new people to join Prime
and already existing members to complement their Prime experience by purchasing an Echo. •
Frequency: One day event held in several popular locations across the United States • Time of year:
September-about halfway through our campaign; to raise awareness before the holiday season begins 4.
To further increase brand consciousness among the target market, we recommend Amazon place an ad
in the Wall Street Journal publication. • Frequency: each Saturday issue • Time of Year: May 1st –
October 31st; the first six months of our campaign Advertising Strategy: Amazon Echo 37 Promotions
Tactics 1. TV Spot Advertisement on NBC, CBS, ABC and FOX • We recommend Amazon place a 30-
second television ad on the “big four” national networks in a primetime slot on weekdays and a late
night spot on weekends. The commercial will feature footage of a 30-40 year old asking Alexa what
places are having good drink deals that night, using Alexa to stream a party playlist while getting ready
and then using Alexa to call an Uber to take that person out to meet some friends. The ad will show the
Echo several times and will have Amazon’s logo on the screen at the end, along with the Amazon
website URL where consumers can purchase the Echo. o Explanation: We chose to use a TV spot
because it remains a good medium for consistently reaching a large portion of our target market. The
four major networks of ABC, NBC, CBS and FOX reach across the nation and show nightly news reports
and evening shows that are viewed by a significant section of our target audience throughout the week.
This tactic will help address our first and second communication objectives, to increase awareness of the
Echo and to help inform consumers of the unique capabilities of the Echo. Advertising Strategy: Amazon
Echo 38 2. YouTube Mini Video Series Partnering With The 2016 Summer Olympics • We recommend
creating a video series to air on YouTube over the course of the 2016 Summer Olympics. This series will
run from August 5th (opening ceremonies) until August 21st (closing ceremonies), and will feature
footage of famous Olympic athletes utilizing Alexa in different ways in their preparation for the Olympic
games. There will be two new videos released each week over the 17-day period, with a total of five
videos. The videos will reflect a comedic and casual tone, but showcase the many ways Alexa can be
used, even by the biggest stars in sports. o Explanation: We chose to create a YouTube video series
partnered with the 2016 Summer Olympics because it will be one of the most followed and watched
events of the entire year. YouTube is a popular platform among our target market, and combining that
with the familiar faces of sports will create a way for consumers to connect the Echo with such a high
profile event. The appearance of some people’s favorite athletes using the Echo will establish consumer
trust in Amazon as a brand as well. In addition, the series will create excitement around the product and
in turn generate buzz and product awareness. 3. Amazon Echo Experiential Event Advertising Strategy:
Amazon Echo 39 • We recommend Amazon host an experiential event at various populated cities
around the United States to help promote the Echo and give consumers an opportunity to try out the
Echo before purchasing it. This event will feature booth appearances from several collaborators on the
Echo, such as Uber, Domino’s and Spotify, who will supply collateral media. The event will include food,
drinks, prizes and more fun, interactive activities for attending consumers. In addition, the event will
include social media interaction, with a hashtag on Twitter and Instagram referencing the location of
specific events (#EchoExperienceOrlando) for consumers to track, and a SnapChat filter promoting the
Echo. To provide incentive for both Prime members and non-Prime members, we will run a sales
promotion at the event. For non-Prime members, we will give them a one-time opportunity to get $50
off of a year Prime membership if they place an order for the Echo at the event. For existing Prime
members, we will also give them a one-time opportunity to receive $50 off of their next year of Prime if
they place an Echo order at the event. o Explanation: These events will help address all segments of our
communication strategy, including building brand awareness, stimulating interest in the product,
informing consumers of the unique benefits of the Echo and reminding consumers of the strong brand
power/positive nature of Amazon. They will be strategically held in cities with a dense population of the
target Advertising Strategy: Amazon Echo 40 market. With the Echo primarily being an e-commerce
product, this event will give consumers a chance to experience the Echo themselves before purchasing.
In addition, the opportunity for discounts, promotions and prizes will provide further incentive for
consumers to come to the event and join Prime. The Twitter and Instagram hashtags will allow
individuals to see other consumers in the area attending their event, and will also allow individuals not
attending to track the event and learn about the product. The buzz and the publicity surrounding the
events will increase exposure of the product and will hopefully encourage more members of the target
market to purchase the Echo, or at least bring awareness about the product to consumers in the
preHoliday season. 4. Wall Street Journal Ad • We recommend Amazon place an ad for the Echo in every
Saturday publication of the Wall Street Journal for the first six months of our campaign. The banner ad
will feature a photo of the Echo, the Amazon URL and the Amazon logo, and the price of the product
along with a simple catch phrase about in-home efficiency. The ad will appear following the business
section of the newspaper. Advertising Strategy: Amazon Echo 41 o Explanation: The Wall Street Journal
is a newspaper that is read by a good portion of our target market, especially those interested in
technology and business. It is a publication that has a national reach, and sends out its largest paper on
Saturday mornings. The ad, though simple, will catch the eye of those who are reading about the latest
business and tech news through the word “efficiency.” In turn, the ad will stimulate interest in the
product and generate brand awareness. Advertising Strategy: Amazon Echo 42 Evaluation and
Measurement We recommend that an evaluation be conducted before, during or after for each media
component in our strategy to determine the effectiveness of each tactic. 1. ABC, NBC, CBS and FOX TV
Spot Ad • We propose doing a concept test prior to the TV spot being run. This will allow us to evaluate
the accuracy of the commercial content and ensure that the benefits being showcased are useful and
relevant to the target market. • Following the airing of the commercial, we propose conducting a
posttest to view the difference (if any) in brand consciousness and measure the level of brand recall
among the target audience. In addition, we will compare the results from the post-test to the results
from our Wall Street Journal ad, which ran before this in the first six months of the campaign. 2.
YouTube Mini Series During the 2016 Summer Olympics • We propose doing a concept test prior to
creation of the video series to gather which athlete appearances and which benefits would resonate
better with the target audience; concept test is suggested to also determine budget allocation and
ensure that production is possible Advertising Strategy: Amazon Echo 43 • During the time that the
videos are being released, we propose doing a concurrent test of the series to evaluate and measure
how the target audience is responding to the videos, if there is excitement surrounding the upcoming
releases and how many views each spot is generating. 3. Echo Experiential Event • Prior to the events
happening across the country, we recommend conducting a concept test to gauge the consumer
interest in the event and gather ideas that consumers might want to see at the event. • During the
event, we propose conducting a concurrent test halfway through the event’s completion to evaluate
consumer attitudes towards the product and intent to buy as well as measure reach, buzz and responses
on social media. • Following the event, we propose running a post-test to evaluate consumer perception
of the event, sales numbers in comparison to before the event and consumer attitudes towards
Amazon. 4. Wall Street Journal Ad • Prior to the ad running in the Wall Street Journal, we propose
running a concept test to evaluate whether the simplicity of the ad is something that will be effective to
the target market. Advertising Strategy: Amazon Echo 44 • After the ad has run, we propose conducting
a post-test to measure the exposure, effectiveness and recall of the ad, and evaluate how well the ad for
the product works in the print medium compared to other mediums