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Marketing strategies RUGIJOHNSON85@GMAIL.COM Table of Contents Chapter 1.......................................................................................................................................... 3 Introduction.................................................................................................................................. 3 Report structure............................................................................................................................ 5
- Chapter 2: Amazon Strategic Planning............................................................................................
- Strategic Marketing Plan..............................................................................................................
- Amazon’s Mission and Vision.....................................................................................................
- Strategies and Approaches...........................................................................................................
- Action and Control.......................................................................................................................
- Chapter 3: Amazon Marketing Strategy Analysis.........................................................................
- Internal Marketing Strategy Adopted by the Amazon...............................................................
- 4Ps Marketing Mix Strategy Adopted by Amazon................................................................
- Product Mix Strategy Adopted by Amazon...........................................................................
- Place or Distribution Strategy Adopted by Amazon..............................................................
- Promotional Marketing Mix Adopted by Amazon.................................................................
- Price Mix Strategy Adopted by Amazon...............................................................................
- Amazon Market Segmentation Strategy....................................................................................
- Segment Acquisition..................................................................................................................
- Targeting Strategy......................................................................................................................
- Positioning.................................................................................................................................
- Strategic Gaps Analysis.............................................................................................................
- Recommendations and Scenario Forecast..................................................................................
- Chapter 4: Conclusion and Recommendations..............................................................................
- Reference List................................................................................................................................
Rank Company Market Share (2018) #1 Amazon 49.1% #2 eBay 6.6% #3 Apple 3.9% #4 Walmart 3.7% #5 The Home Depot 1.5% #6 Best Buy 1.3% #7 Qurate Retail Group 1.2% #8 Macy's 1.2% #9 Costco 1.2% #10 Wayfair 1.1% In fact, Jeff Bezos (2017) noted that his main delight is to see his customers contented and satisfied and this drives him to dedicate more of the company’s revenues to invest and expand the customers’ choices. This report shall evaluate the suggestion that “The best marketing strategies aren’t top down; they’re outside in, starting with the customers’ needs and wants” by using Amazon marketing strategy as a case study.
Report structure This report will critically discuss the customer centric marketing approach adopted by Amazon.com. The report will contain four main chapters whereby, the first chapter shall discuss the introduction and the report structure. The second chapter will focus on strategic planning whereby Amazon strategic marketing plan, specific strategies and tactics, and action and control will be discussed. The third chapter will evaluate the marketing strategies adopted by the Amazon team. Lastly, the fourth chapter will present the recommendations and conclusion of the report. Chapter 2: Amazon Strategic Planning The Oxford dictionary defines strategy as a “plan of action designed to achieve a long-term or overall aim”. Ghemawat et al (2010) defines strategy as “a set of plan of action that helps the company to achieve a certain objective”. Strategy play a crucial role in any company existence since it acts as a ‘heart’ that pumps ambition and purpose which help the firm to take advantage of economies of scale over a long-term. A strategy should be geared towards mobilizing available resources to help the firm to achieve its goals. Clearly defined and measurable goals provide a sense of direction which is guided by the firm’s strategic plan. Strategic plan is an indispensable tool since it acts as a road map for day to day journeys, communication medium, and as a point reference when a new plan is required to orchestrate the much needed transformation Hansen and Juslin (2011) indicate that strategic planning plays a crucial role in that it helps the business to adopt effective business strategies while giving firms to be flexible when new business environment arise. Consequently, strategic planning is a tool used by the managers to define organizational objectives, evaluate the current internal and external
advantage over its rivals (Madsen and Walker, 2015). During this troubling moment, Amazon opened its first stores in India, a populous country which has one of the fastest growing economies in the globe. Further, in 2004 Amazon established its presence in China which has the highest business trade in volume for the few years around the globe. Through international expansion coupled with the ‘customer-centric’ approach, Amazon is dubbed to be one of the best companies which have undergone change within two decades (Walton, 2012). Moreover, the success acquired by Amazon in the few years of its existence reveals the power and potential held by internet and research & development. Strategic Marketing Plan Marketing is a critical function of any business as it identifies untapped gaps in the market by identifying consumer needs and wants and bridges the gaps by introducing products which meets the customers’ unmet needs in the market. Kotler and Armstrong (2012) views marketing as “a function of managing a profitable customer relationship”. Kotler et al (2015) notes that an extensive market research should be conducted so that the companies design products or services which will fulfill the customers’ needs and wants. In order to create awareness that a particular product exists, companies conduct market research and then employs different product promotional practices such as advertising to reach to their prospective customers. Further, companies usually design products which are unique and are tailored to meet the customers’ expectations. Amazon usually conducts a research on customer’s needs and wants before they introduce a new product in their platform. Studies have shown that introduction of products which exceeds customers’ expectations, companies are able to create
customers loyalty which is usually expressed through repeat customers an element which Amazon has been able to exploit and it has given them an unrivaled competitive advantage in the market. For instance, Amazon shipped more than 5 billion items last year which was done mainly through its prime program and this has proven that the best marketing strategies are the one designed to meet the customers’ needs. In order to have a successful and efficient marketing campaigns, organizations need to come up with a comprehensive plan which will act as guidance and precisely define a set of attainable goals. In this regard, Kotler et al (2015) suggest that strategic marketing plan is an important managerial tool that “helps to develop a strategic and viable fit between the firm’s objectives, skills and resources with the market opportunities available”. Therefore, marketing plans should be derived from the strategic objective, vision and mission of the firm; and perceived viable market gaps which remains unexploited but still have high potential for profitability. As mentioned before, a thorough market research is then conducted whereby the market data is collected, analyzed, and projections made to ensure that the company long-term goals are secure. Further, a comprehensive analysis is required to ensure that the marketing strategy developed can be able to accommodate the market shocks and changes which might occur in the future. Amazon management mainly rely on the size of the market needs and wants to make the final decision on whether to invest and provide the new products to the consumers. Amazon obsession with satisfying customers need has been able to come up with a marketing plan which is centered at ensuring that customers are given excellent services and this has helped the company to attract and retain most of its customers (Perreault, Cannon, and McCarthy, 2011). Hence, the suggestion that, “The best marketing strategies aren’t top down, they’re outside in, starting with the
Action and Control When Jeff Bezos founded Amazon, it was only offering online bookstore services but later diversified to other products and currently it has developed three main product portfolios’ which include; e-commerce, cloud computing, and artificial intelligence which are mainly driven by the evolving customers’ needs and wants. E-commerce has proved to be a critical segment as it not only helps the company to market its products throughout the world and make sales virtually; but it has also helped the company to collect important data on customers purchasing behaviors and use it to improve customer services (Fahy and Jobber, 2015). Moreover, by recording customers purchasing behaviors, Amazon has been able to offer its customers personalized services and improving their shopping experiences by being innovative. Therefore, Amazon employs the outside in and bottom top strategies derived from the customers’ needs and want to satisfy the unmet consumer demands. Chapter 3: Amazon Marketing Strategy Analysis This report disposition is anchored and influenced by the assumption that “the best marketing strategies aren’t top down; they’re outside in, starting with the customers’ needs and wants”. The main aim of this chapter will be to evaluate Amazon’s marketing strategies by paying attention on the assertion of the above assumption that excellent marketing strategies originate from bottom to top and they start with the customers’ needs and wants. Internal Marketing Strategy Adopted by the Amazon
Kaushik, (2013) notes that firms are pushed to adopt customer-centric approach mainly due to ever changing business environment and the rising customers’ expectations for more personalized services and greater user experiences. Consequently, for any company to deliver and meets its customer’s expectations, it must have efficient and effective employees who are well educated in various marketing processes so that they can be able to satisfy customers’ requirements. Internal marketing is the process of promoting and selling product ideas to the company employees and it is usually done using the top down approach. According Rothaermel (2013), a series of activities such as capacity building, developing efficient lines of communication, and educating and helping all employees understand the company marketing strategy and objectives to be realized. However, for the strategy to succeed, the entire top level management must own the strategy. Internal marketing has been critical in shaping the customer-centric approach adopted by Amazon and has helped the company to exceed customers’ expectations by constantly improving customer’s experiences through their marketing strategies which first focuses on customers’ needs and wants. As a result, Amazon’s emphasis on bottom top and outside in marketing strategies, which originate from their customers’ needs and wants excellent have assisted them to attract and create customer loyalty around the globe; consequently building a strong competitive advantage over their rivals in the space of two decades (Ahmed, and Rafiq, 2013). Research has shown that Amazon’s closest rivals has for long employed inflexible internal marketing strategies which were solely motivated and designed to pursue profits; however, Amazon led by Jeff Bezos belief on serving his customers over profits resulted in the company’s growth and allowed them to surpass their rivals who had been in the market for decades. Therefore, for any company to successfully penetrate any given market, it should clearly understand the customers’
mainly, due the way it has helped the company to attract and retain new customers. As Ahmed and Rafiq (2013) note a marketing mix which is well implemented helps the firm to infiltrate its target market and establish its position and obtain its market share. Following four sections will center on the 4Ps as applied by amazon in its marketing mix strategy. Product Mix Strategy Adopted by Amazon Product mix strategy defines the number of products the firm intends to bring to market and it is usually determined by the potential the product may have and viability of introducing these products. Studies have shown that companies which use product marketing mix mainly rely on product quality, design, packaging, brand name, and other distinctive features to create awareness about the existence of this product. Currently, Amazon offers a wide range of product portfolios in its online stores such as the Amazon fresh, video, web services, digital content distributions among others (Davari, and Strutton, 2014). Amazon is still striving to expand its product portfolio especially those relating to technology, cloud computing, software and robotic science. The wide range product portfolio supports the company strategic objectives derived from its mission in that it has been striving to be more customer-centric by creating a wide market place where customers’ needs and wants will be satisfied in one location. According to Fernandes, Gouveia, and Pinho, (2012) product diversification is geared towards bridging unmet market needs and this in turn creates customer satisfaction when these products are easily accessed by consumers. As discussed above, Amazon’s customers’ needs and wants play a crucial role in building a wide product portfolio that also helps firm to publicize it services and
products as many people shop different items offered in one main online platform. Another feature which has helped Amazon to attract and retain customers is its product membership plan which also covers shipping costs for those who shop in their retail websites. All these are enabled by the marketing strategy which propelled by the belief that “ The best marketing strategies aren’t top down, they’re outside in, starting with the customers’ needs and wants .” Another important feature is the verification processes by which other retailers who wish to sell their products on Amazon platform need to undergo in order to ensure that their products meets standards required. This measure ensures that customers’ needs and wants are met by the goods and services offered by the Company’s business affiliates. Moreover, this process helps to remove scammers and ensure that only serious traders are allowed to post their products in the platform. This approach has also been important in furthering the company mission and product marketing mix as different parties post their products which help Amazon to acquire new markets while attracting and retaining customers by satisfying their needs and wants. Further, the new products added in the platform reflect its resolve in creating a global space where everybody can purchase anything (Fernandes, Gouveia, and Pinho, 2012). Place or Distribution Strategy Adopted by Amazon Place or location refers to locations, transaction channels, inventory coverage, and transportation and logistics involved in bringing products near to customers. Amazon is an online retail business and it relies on its official e-commerce website and its books to conduct business with
charitable organizations as a way of giving back to the very society it relies on for survival. Studies have shown that companies which participate in philanthropic activities are positively perceived in the eyes of public and through such acts; some customers are won and retained for an extended period (Hawkins and Mothersbaugh, 2010). The above strategies are some of promotional activities employed by Amazon to communicate to their existing and prospective customers to continue partnering with the company by purchasing its products in its e-commerce platform and its physical stores. Moreover, the above promotional strategies show that Amazon mainly employs marketing strategies which are designed on basis of “customers’ needs and wants”. Price Mix Strategy Adopted by Amazon Pricing is a marketing strategy employed by firms for ages to attract and retain customers by setting up using different pricing strategies such as premium pricing, economy pricing, price skimming, and bundle pricing depending among others (Acquisti, and Varian, 2005). Also other elements and tactics of pricing used to attract customers include; payment period, discounts, allowances, and credit terms. Amazon mainly utilizes advertising to attract customers to shop from its diversified product portfolio. However, amazon employs different pricing strategies with the prominent one being price discrimination, market-oriented pricing, and value-based pricing. The latter pricing model mainly relies on averaging different prices offered by competitors in the market to come up with the most affordable and competitive prices. Therefore, Amazon relies on an “outside in” approach while determining different prices to charge their customers for them to satisfy their needs and wants. Amazon has been using price discrimination and this involves charging different prices for the same product in different locations which also confirms that the
company pricing model is not top down, but it is influenced by customers’ purchasing power. For instance, Amazon as Ferguson (2017) notes has been observed to charge different prices for the same products between its UK and USA customers. Prevailing market conditions and buying in bulk are some of the main conditions Amazon uses when using price discrimination. From the above explanation, it is clear that Amazon price mix marketing strategy is mainly influenced by the “customers’ needs and wants” and therefore it can be said to be determined by an “outside in” approach. Amazon Market Segmentation Strategy Businesses are formed to generate revenues and profits by serving and satisfying customers’ needs and wants. Hughes (2000) notes that, “ organizations have to focus on their customers and commit themselves to identify and relate themselves to their customers’ needs and wants. ” For any company to successfully convert its marketing efforts to real sales it must relate itself to certain customers and fight for more market share for it to survive in future by focusing on evolving customers’ needs and wants. Market segments refer to a group of customers who bears similar attributes. Market segmentation on the other hand refers a marketing strategy which brings customers who have similar needs to try to understand them and serve them better. Companies group customers in order to conduct a viable research and identify similar needs which are demanded but are not fully satisfied. Then products or services are made to satisfy the perceived needs and wants in the market which are not yet met (Hughes, 2000). Market segmentation can be done using different variables such as age, gender, demography, geography, and customer behaviors to name but a few.
purchasing trends used in the development of marketing strategies. For instance, the company has been involving its customers in their daily activities especially by informing them about upcoming activities such as promotions and newsletters (Dolata, 2017). These strategies indicate that Amazon as a company aims at increasing its customer base. Also, it focuses on a high retention rate of the existing customers. The exceptional results gained by the Amazon during the last two decades are attributable to their believe that “ The best marketing strategies aren’t top down, they’re outside in, starting with the customers’ needs and wants .” Targeting Strategy Market segmentation is followed by targeting strategy. The management decides on which market segment to sell their products depending on the consumer spending of that particular area and the ability of the company to meet their needs. Also, a targeting strategy involves exertion of sales and marketing drives in specified market segments with the aim of generating adequate potential leads. However, market segmentation discriminates the customers outside the segment. It leads to the loss of business opportunities. Amazon has been able to solve the issue of discrimination by maximizing on the market segments which offer them huge benefits (Hu et al., 2018). Micro-level segmentation evident in Amazon has helped the company to increase the conversion rate of its potential leads and is mainly driven by the perceived customers’ needs and wants in different segments the company is focusing on. Mostly, Amazon’s website clients tend to be loyal customers in the long-term. However, market segmentation still exists in the company since it serves only the literate section of the market; that is, only the population equipped with technical knowledge can benefit from the products. Therefore, most of the customers are middle-class consumers and business professionals who aim at saving time by purchasing their goods and services online (Antoun et al., 2016). Also,
they benefit from the constant discount benefits offered by the company. Due to the increased demand for online services globally, Amazon’s customer base has also increased whereby new types of customers have started flocking in the company. Content creators, developers form the new customer base. Their needs vary. Therefore, the company is continuously improving its services based on their specific needs. Positioning After the company has clearly defined its targeting strategy, it focuses on evaluating customer feedbacks. Also, the company evaluates consumer perception of the product about the available substitutes in the market. Positioning can be set based on quality, price and product use among other factors. Amazon applies price positioning strategy since its consumers have an alternative to obtaining the services from offline stores (Kannan, 2017). The company has fixed the issue by offering customer service centers in different countries where the consumers are served in their respective languages. It is a recommendable step that enhances convenient customer-service delivery. The company initiated a 24-hour customer service, free shipping, and introduced numerous local payment options that enhanced the payment process. All these factors are designed to bridge the existing market gaps by introducing a wide range of products where customers can choose from depending on their needs and wants.
