The strongest brands in the world all share in their ability to conjure up demand for products that consumers hadn't known they wanted yet. These companies aren't reinventing the wheel; they're simply rethinking the customer's needs. As Peter Drucker once said, "The customer rarely buys what the company thinks it sells him." Businesses succeed today by making customers happy. The payoff for you is that these companies often make the best investments.
Consider the world's leading e-commerce site, Amazon
Priced to perfection
In 2011, Amazon's net sales totaled $48.1 billion, marking more than a 40% year-over-year increase for the retailer. However, some investors worry that Amazon's burning cash faster than it can make it. For example, Bezos launched the $79 Kindle Fire last year at a $5 loss. Still, I see this as a small investment that will repay itself many times over as customers become loyal to its massive media ecosystem. Nearly half of Amazon's revenue comes from sales of books, videos, and other media, and its Kindle products act as a gateway to those services.
Amazon's ecosystem is what sets it apart from rival Barnes & Noble
Regarding his occasionally offbeat strategy, Bezos says, "I believe you have to be willing to be misunderstood if you're going to innovate." People tend to misunderstand what is new, as original ideas often are. However, shrewd investors know to look for the companies thriving amid market disruption.
From an investment lens, you could argue that Amazon's future growth is already factored into the current stock price. However, looking forward, I think Amazon's initiative to sacrifice short-term profitability for long-term growth will propel the e-tailer to new heights. For these and many other reasons, I'm giving Amazon an outperform rating on my profile in Motley Fool CAPS. But there's even more. You're invited to get this free report that reveals The Motley Fool's top stock pick for the year ahead. To unlock your free copy now click here.