TERM REPORT

Amazon Inc.
Contents
Executive Summary.......................................................................................................2
Introduction:.......................................................................................................................3
Online presence:............................................................................................................3
Current Marketing Strategies:............................................................................................4
STP MODEL..................................................................................................................4
Segmentation.............................................................................................................4
Targeting.....................................................................................................................4
Positioning..................................................................................................................4
Marketing Mix (4P’s):.....................................................................................................4
Product:......................................................................................................................4
Price:...........................................................................................................................4
Place:..........................................................................................................................5
Promotion:..................................................................................................................5
BCG MATRIX OF AMAZON..........................................................................................6
CASH COWS:............................................................................................................6
STARS:.......................................................................................................................6
QUESTION MARKS:..................................................................................................6
DOGS:........................................................................................................................6
COMPETITIVE ADVANTAGE OF AMAZON:................................................................6
Customer Relation Management...................................................................................7
CRM Amazon.............................................................................................................7
The secret to CRM success.......................................................................................7
Tactics by Amazon.....................................................................................................7
McKinsey Model.............................................................................................................7
Strategy......................................................................................................................7
Structure.....................................................................................................................7
Systems......................................................................................................................7
Skills...........................................................................................................................8
Staff............................................................................................................................8
Shared Valued............................................................................................................8
Style............................................................................................................................8
SWOT ANALYSIS FOR AMAZON:................................................................................8
Strengths:...................................................................................................................8
 Weaknesses:..............................................................................................................9
Opportunities:.............................................................................................................9
Threats:.......................................................................................................................9
1. Competitive advantage.........................................................................................9
2. Competitive Analysis in the Marketing strategy of Amazon...............................10
Rapid-penetration Strategy..........................................................................................10
b. Price-discount Strategy............................................................................................10
References.......................................................................................................................11
Executive Summary

In this report, the main focus is on Amazon’s marketing strategies and its online
presence all across the world and also the competitive advantages generated by its
online presence. STP Model is also discussed, which means how Amazon has done its
segmentation, targeting and positioning activities at specific groups of people as
customers and developing products and services attractive to this group.

Amazon’s current marketing strategies or plan, which include marketing mix strategies
competitive advantages due to online marketing edge, CRM, SWOT analysis. BCG
metrics and McKinsey model is also explain in this report. Amazon offers discounts or
deals on specific days like Cyber Monday, prime day, Deal of the day to promote their
sales and generate profit. As a leading e-commerce platform Amazon is investing more
on advertising and marketing, mainly digital advertising, to build strong brand equity. By
2015, the brand worth of Amazon was US$176 Billion.

Considering the marketing strategy opted by Amazon, following are the results drawn
out from the extensive research carried out on the Amazon: competitive advantages,
competitive analysis in marketing strategy of Amazon like market penetration,
distribution innovation strategy, price-discount strategy). The business sector in which
Amazon stands is E-commerce, it is evolving. There is a great opportunity and potential
market. In the days to come traditional method of shopping in Pakistan will be replaced
by Amazon.
 AMAZON and you are done.
Introduction:
Amazon is the world largest e-commerce market place of retailers and one stop shop
for every product imaginable. It has become the market leader of online sales. An
ambassador and bridge builder. Today Amazon is the largest revenue earning company
in the world. Providing the range of products from A to Z to its customers and
consumers its products includes Merchandise. It also manufactures and sells electronic
devices and content.

It was incorporated in 1994 by JEFF BEZOS in Seattle, Washington. An American

international company that was launched with the name of Cadabra but then changed
after to Amazon depicting the phenomenon of world wide range from A to Z on the
perspective of world largest river.

Being a visionary company amazon’s vision is to be the earths most customer centric
company where people can come online and buy what they want with confidence and
convenience. The mission is to provide its customers with the best online shopping
experience.

Amazon's strategy seems simply to be more attractive and functional. More industries,
more products, more services, more delivery options that lead to more customers, more
revenue, and more profit.

Online presence:
Being a global brand, Amazon has a presence all around the world. Amazon customers
buy the products through their website, customers can create user accounts to make
purchases. Products are delivered to customers through Amazon’s different distribution
channels.
 Current Marketing Strategies:
STP MODEL
Amazon segmentation, targeting and positioning involves a set of activities aimed at
determining specific groups of people as customers and developing products and
services attractive to this group.

Segmentation
In geographic, Amazon is delivering worldwide. In demographic, for those who has
access to internet and from the age of 18 to above of all genders belonging to every
sector of profession. In behavioral, easy going, determined and ambitious. Loyalty could
be soft to hard with the level of convenience. In psychographic, all social classes
belonging to any sector of society especially reformer.

Targeting
The main target market is the internet users from all over the world.

Positioning
 Multi-segment positioning.
 Adaptive positioning.

Marketing Mix (4P’s):

Product:

Amazon is a renowned and a leading ecommerce platform globally. Products available

on the website are not sold by amazon exclusively, several 3 rd party sellers have also
been listed with the brand. Amazon also has a range of gadgets available for purchase
like e-book readers, phones, kindle, fire tablets etc. Major sale contributing products of
Amazon include on demand music’s digital service, video and e-book readers

Price:

Prices are also variable. Usually the prices are set according to the competitive pricing
strategy. Low prices compared to competitors are provided by Amazon. Prices are
adjusted according to the categories of products, daytime and seasons. Certain value
added services are also provided by Amazon such as Prime, where users subscribe for
one-day delivery and advance access to deals. AWS is also known for being a market
leader and offering high quality web hosting solutions on lower prices.

Place:

Amazon is a large globally renowned brand with presence all across the world.
Customers can easily buy the products through their website and app. As soon as the
customer places the order, distribution channels come into play. [CITATION Ama1 \l
1033 ]

Distribution strategy

Amazon is aware of the fact that as soon as the customer places an order, they expect
the order to be delivered as soon as possible. More than 55 fulfillment centers are
owned by Amazon. Amazon has strategy of using existing vendor’s warehouses so that
customer orders can be delivered more quickly. [ CITATION Hit1 \l 1033 ]

Promotion:
Most of the time web based marketing is used by Amazon for its promotion, sometimes
use of billboards and other small methods are also used by the brand. Another smart
promotion strategy used by Amazon is search engine marketing, getting company’s
name in the top results while searching is beneficial for its promotion. Updating different
promotions on their social media platforms like twitter, Facebook, interest etc. has
helped the company to make more sales than any other online store. [ CITATION Hit \l
1033 ]

Other Marketing strategies of Amazon

Sales promotion strategies

CYBER MONDAY:

 Excellent deals can be availed by the customers the day after Thanksgiving.
 Amazon generated a lot of profit on this day hence it’s one of the biggest days of
the year.
PRIME DAY:

 An annual promotion day on which Amazon cuts prices on a large number of

items for prime members.
 New discounts and deals can be availed throughout the day.

DEALS OF THE DAY:

 Selected items are put on sale for a day.

 Helpful in increasing sale and getting rid of extra stock [ CITATION Mic18 \l
1033 ].

BCG MATRIX OF AMAZON

CASH COWS:
The industry is also strong enough to support the high sales and high customer
demands are fulfilled. The product is made as a cash cow. Amazon has a cash cow
through the sales of electronic books. It has provided the seekers with the variety of
books at low price Another cash cow of amazon is its audio books.

STARS:
For amazon, the electronic items sold are the rising star. Industry for electronic items is
growing and creating vast opportunities for the coming future. The trend is further
expected to increase due to increase in trend of online shopping.

QUESTION MARKS:
The industry falls in the growth phase. The question mark by name tells it to us that
either the business will rise up or fall. For amazon, the segment for video on demand
acts as a question mark, such as poor connectivity has limited scope for it.

DOGS:
For amazon, the dogs are the mp3 that have not given the company any financial gain.
Dogs consume cash investment, so they are also called as the traps.
COMPETITIVE ADVANTAGE OF AMAZON:
The companies’ competitive advantage is the low price and the wide range of variety of
products.

Customer Relation Management

CRM Amazon
“We see our customers as invited guests to a party, and we are the hosts. It’s our job
every day to make every important aspect of the customer experience a little bit better.”
– Jeff Bezos, founder and CEO of Amazon
The secret to CRM success
So why do customers keep coming back? Well, Amazon’s interface is simple and easy
to use. You can view your own order history and how much you’ve been spending, and
returns are handled swiftly through the system. Re-ordering is a breeze, and you can
track your purchase through every stage of the delivery process.

Tactics by Amazon
Top five tactics that are used by Amazon in CRM.

 Tailored offers and promotions

 Personal data collection and storage
 Recommendations
 Customer support
 Evolution of services
McKinsey Model
Amazon McKinsey 7S model illustrates the ways in which seven elements of
businesses can be united to increase effectiveness. According to this model strategy...

Strategy
Amazon adheres to cost leadership business strategy.

Structure
Amazon organizational structure is hierarchical. It is difficult for the company to adapt an
alternative structure such as divisional or matrix due to its gigantic size that contain
560000 employees serving more than 300 million customers worldwide
Systems
There is a wide range of systems that facilitate Amazon business. These include
employee recruitment and selection system, team development and orientation system,
transaction processing systems, customer relationship management system, business
intelligence system, knowledge management system and others.

Skills
The list of skills and competencies required to be successful at Amazon is extensive
and include creativity, ability to work under pressure, resourcefulness, physical
endurance and others.

Staff
Amazon employs more than 560,000 full-time and part-time employees referred to as
Amazonians.

Shared Valued
 Customer Obsession
 Ownership
 Impact
 Honesty
 Selflessness
 Communication
 Innovation

The mission and values of organization, they are sync with each other.

Style
Amazon has a very strong leadership position with over 60% market share of the m-
commerce market, more than 50 million customers and clear leadership in smartphones
and fashion.

SWOT ANALYSIS FOR AMAZON:

Strengths:
I. The revenue increased to 28million dollars which 25% up than previous year.
 II. Has expanded its services to new markets like it has expanded on demand TV
subscription channels in UK,two hour delivery prime now service in Singapore
and delivery of fresh groceries in Germany.
III. Has great coordination with research universities like Edinburg University to
upgrade its research activities.

Weaknesses:
I. Amazon shares heavily shrunk due to foreign investments recently and loss of
profits.
II. Google and Apple having more technological offerings as compared to Amazon,
it has less attraction of customers than expectations.
III. As all the business is digital and online it is easily imitable by many competitors
like eBay etc.

Opportunities:
I. Amazon can penetrate and expand in new markets.
II. Can fight competitors with by expanding physical stores.
III. Can do acquisition of more e commerce companies

Threats:
I. Though it has expanded its business in South East Asia yet it faces a great
competition in the region, especially in China.
II. For example Alibaba is a great competitor and has great advantage.
III. A magazine name VOX published negative news about Amazon, like poor air
conditioning, timed bathroom breaks and constant video surveilling. This thing
has affected its image.
IV. Government regulations in some countries can also threaten its business.

Considering the marketing strategy opted by Amazon, following are the results drawn
out from the extensive research carried out on the Amazon:

1. Competitive advantage
One of the distinctive advantages that Amazon has gained over competitors like
Walmart in United States and Alibaba Group, Ebay and Flipkart etc. is by achieving
Economies of Scale. Due to this edge they are offering extensive product range at
lowest prices one can have. According to result of the online survey on purchasing
behavior of Customers at Amazon; more than 50% of the consumers do repetitive
purchasing from Amazon.

2. Competitive Analysis in the Marketing strategy of Amazon

If we consider US market, Walmart is giving a tough time to Amazon. Walmart is testing
same-day-delivery system which is being practiced by Amazon in the countries where it
is operating.

Rapid-penetration Strategy
Amazon adopts Rapid-penetration strategy; which means they products whether:

1) Durable

2) Nondurable

3) Services

These all are given at cheapest prices at Amazon. And Amazon spends a large amount
of budget on its marketing. By adopting this strategy, Amazon enjoys greater market
penetration for its new products and a large market share.

b. Price-discount Strategy
Amazon is also practicing this strategy. The traffic that was observed at Amazon
website was tracked to be price sensitive. The consumer’s insight was they want to buy
the Amazon products. So, Amazon adopted the strategy and more than 50% of the
consumers visiting Amazon became the regular customers of Amazon.

c. Product-proliferation strategy

In this strategy the company provides its customers with a large variety of products.
Thus, giving more choice to potential buyers. Amazon adopting this strategy caught the
customers from Super Marts and Metro to online shopping.

d. Distribution-Innovation Strategy

Amazon when observed the consumer insights for future, it went for innovation in its
distribution channel strategy of products also. It introduced Same-day-Delivery system
and Drone-Delivery- System also.
The business sector in which Amazon stands is E-commerce, it is evolving. There is a
great opportunity and potential market. In the days to come traditional method of
shopping in Pakistan will be replaced by Amazon.

References
Anon., n.d. Amazon Marketing Mix (4Ps) Strategy. [Online]
Available at: https://www.mbaskool.com/marketing-mix/services/17022-amazon.html

Bhasin, H., n.d. Marketing mix of Amazon. [Online]

Available at: https://www.marketing91.com/marketing-mix-amazon/

Bhasin, H., n.d. Marketing strategy of Amazon – Amazon marketing strategy. [Online]
Available at: https://www.marketing91.com/marketing-strategy-of-amazon/

Quiroz, M. A., 2018. Amazon.com’s Integrated Marketing Communications 2018.

[Online]
Available at: https://medium.com/@michaelangelo_q/amazon-coms-integrated-
marketing-communications-901a6a2a77ef

John, D., 2018. Reaserch Gate. [Online]

Available at: https://research-methodology.net/amazon-segmentation-targeting-
positioning-widest-range-target-customer-segment/

Krishnamurthy, S., 2017. A Comprehensive Case History. [Online]

Available at: https://www.researchgate.net/publication/228319552_Amazoncom_-
_A_Comprehensive_Case_History/citation/download

Marketing91, n.d. marketing strategy of amazon. [Online]

Available at: https://www.marketing91.com/marketing-strategy-of-amazon/

Bartz, D. (2019) 'Deceptive Amazon discounts under investigation by Federal Trade

Commission. ‘Independent. [Online] [Accessed on 30
Feb,2019] http://www.independent.co.uk/news/business/news/amazon-discounts-
deceptive-federal-trade-commission-whole-foods-buy-out-prices-online-a7852516.html
BBC. (2019a) 'Amazon Prime makes first foray into South East Asia.' [Online]
[Accessed on 30 Feb 2019] http://www.bbc.co.uk/news/business-40736830