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Marketing Strategy of Amazon.
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MARKETING STRATEGY OF AMAZON.
INTRODUCTION
Amazon is an internet-based organization whose main activity is selling goods online.
Electronics, housewares, music, books, and toys are some of the goods the company sells. The
company sells goods directly or acts as a middleman between producers and consumers. Shipping
is usually done for products purchased online in the company. Apart from being the world’s largest
marketplace, the company is also a great participant in cloud computing and a host of the live
streaming market as measured in the revenue and market share. The company’s consumers are
assured of quality services and the freedom of making orders for their favorite products in the
comfort of their homes. The company has a great admiration from the customers because of its
competitiveness and the ability to offer the customers the best products on time and at their
convenient places.
HISTORY
According to McFadden (2021), in Washington, Jeff Bezos founded the company on July
5th, 1995. The organization started as an online market place the trading commodity being books.
The company has since grown to sell many products under different categories. The company also
has multiple operations branches, including Zoox, Kuiper system, the ring, vehicles, etc. The
company has earned a reputation as a significant competitor and challenger of well-established
companies in the country and worldwide. The company's extensive market coverage and
technological advancement have helped conquer the market. The company has also established
itself in streaming and downloadable content operations. Creating a publishing arm in the
organization is vital in publishing the company’s books (McFadden, 2021). Television content and
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film production have also been enhanced through the publishing sector. The company has
gradually grown among the big five American companies in the information technology sector.
The companies operate not only in America but in the majority of the world countries.
CULTURE OF AMAZON
The organization’s culture incorporates the following; Constant reinvention and
optimization of the organization’s culture. A reassessment must be done whenever the company
loses agility and innovation culture. The company is also one of the most customer-centric because
of the adherence to their statement, “to be the earth’s most consumer-centric company where the
customers are allowed to scroll and find anything they wish online. The company is also to be very
diverse in the workforce employed. In the organization, the diversity of the employees is among
the core targets. The GLAmazon affinity group comprises gay and lesbian employees and the
women and black employees’ network subgroups (Amazon organizational culture: Harsh, but
effectively contributing to the bottom line, 2020).
The organization’s culture has also been described as “breakneck-paced, and notoriously
cost-conscious, as befits a company that has run only a small profit, or a loss, under generally
accepted accounting principles for most of its life as a public company.” The company many
claims have unrealistic performance standards; in the work culture, there is fear in the company
organization of the knowledge of the employee participation. The company has been accused of
not allowing the recognition of employee participation. The culture of the company is also pushy
and bruising. Amazon is accused of not encouraging the employees (Amazon organizational
culture: Harsh, but effectively contributing to the bottom line, 2020). The company employees are
not treated well on most occasions, thus claiming that the company has an ancient culture.
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FINANCIAL PERFORMANCE
The minimum income from sales in the company for the last five years is 177.87B earned
in 2017, while the maximum revenue from the sales of products in the organization is 489.82B
earned in 2021. The median earnings were as of 2019 where the company made sales of 280.52B.
The average sales of the organization in the last five years is 309.43B. The earnings in the company
in the previous five years has seen a significant increase with the earning from the sales being paid
to the company through the international revenue channels. The sales were the largest in North
America, accumulating more than 279B US dollars in net sales in 2021.
Amazon is the second after Walmart in the market with 10% of the sales. The leading
organization, Walmart, has 15% of the market share. In September 2020, amazon had 39.9% of
the online retail sales in North America. In Europe, the organization had 9.8% of the retail shares
in 2020. These sales include the ones made to the third-party shales in the market.
In the third quarter of 2021, profitability fell by almost 50% compared to the same period
in 2020. The demand for online sales in the company has also led to an increase in the profits
earned in the year. The company is likely to improve its profitability shortly because the movement
restrictions have enhanced in the pandemic period.
STRENGTHS AND WEAKNESSES OF AMAZON.
Strengths
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According to Amazon SWOT 2021 | SWOT analysis of Amazon. (2020), the company is the
world’s leading online retailer. The cost leadership of the company is excellent in the
differentiation and focus. This strategy has led the company to gain profits from the course of the
action while also helping the company shareholders evaluate and discover the value of the
company.
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The competitive advantage of the company from leveraging Information Technology. The use of
ecommerce as an easy map in the company helps ensure the company is well ahead of its
competitors in the market.
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The company also enjoys top-of-mind recall from the company customers worldwide. The
recognition in the market has helped the company grow the familiarity even in new markets which
are otherwise out of access by other ecommerce companies.
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Using more advanced logistics and distribution systems, the company can actualize better
customer fulfillment, which helps maintain its customers, thus getting a competitive advantage.
Weaknesses
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The single-minded focus concerning online retailing may negatively affect the expansion plans in
the company because the company operates only online.
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The company also operates in the near-zero margin business models that severely have also
deterred the company's profitability. Despite the company's high volumes of sales, the company's
profits are not meaningful (Amazon SWOT 2021 | SWOT analysis of Amazon., 2020).
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The costs incurred in the free shipping services of the company to its customers are a challenge
incurred in the bid to maximize the profits earned in the company.
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The company has changed its focus from the primary competence of retailing books online and
has majored in the new focus areas. Even though this has is an effective defense against the risks
of diversification in the future, the company is likely to lose its main advantage since it is leaving
behind its core objective.
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MARKET SERVED
Chosen market targets
According to Walsh (2015), the United States is Amazon’s main chosen market target. This
is due to its recent performance in the market for Amazon’s goods and services. The United States
was the company’s biggest market, followed by Germany, ranked second. The company has since
established the respective countries as the primary target markets in the current operations. The
263.5 billion in net sales for the US followed by 29.6 billion in Germany made the two nations the
main targets for the sales in the company. This implies that the consumer preferences in these
countries are catered to in the company.
Market analysis
The organization must increase the number of offices in the US and Germany to ensure
that the customers are served with the necessary urgency. Increasing the number of stores in the
countries provides that the target customers' free deliveries are done very quickly. Serving the
customers fully ensures that the organization maintains them (Walsh, 2015).
Some of the essential resources required in attaining the targeted customers include an increase in
workforce and the increase in the number of machines available in the offices. The company must
also encourage technological advancements that will ease customer services. The restriction in the
market includes the competition expected from other companies like Walmart and the Alibaba
Group. There are also other upcoming retailers in the countries, which would negatively affect the
organization's market acquisition.
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COMPETITION
The main competitors of the company include a mix of online-only business models. They
all have their advantages over Amazon and compete with one another (Walsh, 2015). The
competitors include; eBay, Flipkart, Target, Otto, Alibaba group, Netflix, Rakuten, and Walmart.
The online stores in the US are mainly small business that uses e-commerce as a form of
trading. E-commerce has increased the total retail sales in the country by more than 21% in the US
alone. Despite Amazon’s large market, the small business owners have been accruing massive
profits from their businesses. The online stores which operate with unique products that one cannot
get anywhere else always have the advantage over Amazon. For example, the Treehouse kid and
craft-based in Georgia specializes in kids’ toys and books that are unique products made
worldwide. The scale covered by Amazon is massive, but it is possible to outshine the company
in terms of the fantastic products offered, and the customer desires met by personalized shopping
experiences.
ENVIRONMENT
Economy.
Economic growth has always positively affected Amazon and its competitors because there
is an availability of market for its products. The taxes paid by the organizations in a growing
economy negatively affect the companies because an increase in the percentage taxed on the
organizations’ income decreases the company's income. Creating job opportunities for people in
the country helps the company grow its market availability.
Technology.
The recent innovation in technology has only improved the sales of online-only retail
companies. Amazon, for example, started in 1994 selling books online. In that year, there were
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only computers and no smartphones. Communication efficiency was little since one could not call
or be called for the deliveries in an emergency (Elliot, 2018). The invention of mobile phones in
2007 and the development of applications for such companies have improved the companies’ sales.
The spread of advanced technology has helped the companies access more customers quickly
because both parties have access to the internet, which is the marketplace.
Government policies
According to Elliot (2018), the government involvement in enhancing the online marketing
infrastructure, including the promotion of fast internet in the country, positively affects the sale of
products by Amazon and others. The increased taxes for exported products will likely discourage
international customers from importing products online. Highly taxing the products sold in the
company negatively affects the organization and its competitors. The Amazon company is already
established that cannot quickly go broke due to taxation. This gives the company an advantage
over its competitors because the growing companies are likely to go bankrupt. Subsidizing online
marketing by the government helps reduce the cost of sales of the online products, which
encourages the buyers, thus more income.
Culture
According to Understanding how culture impacts local business practices (2020), the
different cultures of the targeted market by Amazon and other online-online retailers affect the
companies differently. In a country, for example, where certain products sold online are not
consumed, the products are not likely to be sold in the country. This means that the company will
depend on the market from other parts. This means that the sale of different commodities in the
government cannot estimate the sale of the other. The level of education for various communities
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worldwide affects the company's market since the company sales depend on the customers' ability
to operate their electronic devices like phones and computers.
Natural Environment
The natural environment affects the input of infrastructures in a country. In a country where
there are no good infrastructures necessary for shipping the products to the customers, it can
challenge the company to deliver all the products ordered online. In some countries, bad weather
affects the power generated by water sources which can temporarily lose power access. This
propagates a disruption in access to the online market, leading to significant loss to the company.
MARKETING MIX OF THE ORGANIZATION
Product Lines
Amazon launched the Kindle and e-reader, which can download content over a wireless
network. The e-reader was used in the company to launch different books and also market them
on the platform. This makes it easier for the company customers to acquire similar products easily.
The invention of the kindle fire has helped introduce several products, including tablets
(Amazon.com Inc.’s marketing mix (4Ps) analysis., 2017). The kindle also runs in the android
operating system, which means that a single brand has plenty of products that can also be
introduced in the brand. The company has been releasing successive generations of tablets under
kindle. The introduction of the amazon fire tv set-top box has seen many systems like the apple tv
or the google chrome cast be introduced under the brand. In 2014, the company began selling a
voice-enabled bright called the echo. In 2016, the company launched the Echo Dot, a cheaper and
smaller version. This helps the company promote sales because people are likely to buy from a
brand they already know about.
Pricing
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According to Amazon.com Inc.’s marketing mix (4Ps) analysis. (2017), Amazon uses low
prices to attract customers to its business and give reasonable offers for its products on the website.
Some of the pricing strategies used in the company include; the price discrimination strategy, the
market-oriented, and value-based pricing strategies. The primary pricing strategy in the company
is market-oriented pricing. The company first evaluates the pricing by the competitors to determine
the prices of their products. The main con of this strategy is that it makes the sale of products more
competitive. The target customers find this marketing strategy attractive and affordable.
The price discrimination pricing method involves setting different prices for a similar
product. Under the other websites, Amazon applies this strategy. For instance, in the US and the
UK, the costs for the same product are different. The pricing method is suitable as it enables the
company to apply different prices on the products depending on the national market strategy, the
consumer expectations and preferences, and the perceived value of the products. The company
also uses value-based pricing, which involves the determination of the prices using the product
values and considering the customer’s views on the values.
Channels of distribution.
Amazon uses the company platform to sell the products to the consumers directly. An
example is the use of the kindle, which avoids intermediaries in business. This is also the most
natural process used in marketing. The organization sells directly on its website to prevent costs
incurred in using intermediaries. This also helps to maximize the profits and sell the products to
customers at low prices.
Advertising
Video Ads placed on the sites owned by the organization are the most common form of
advertisement. The company uses such sites as Amazon fire tv, IMDb, and amazon.com to place
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the Ads. The Amazon marketing services is also an online service operated by the organization to
advertise their products and other sellers’ products (Amazon.com Inc.’s marketing mix (4Ps)
analysis., 2017).
Personal Selling
The company allows individual sellers to advertise and sell their products on their websites.
The company itself does not sell products that need personal selling.
Public relations in Amazon
The organization has more than 500 employees working in public relations working in the
world. Unlike many others, the company does not require its public relations workers to report to
marketing. Therefore, the company’s public relations team is allowed a direct line to the internal
business owners. The public relations officers in this company also work independently of the
marketing department in the company. The public relations workers have the task of maintaining
the company’s reputation and creating goodwill. They are also tasked with growing the trust of
buyers around the world. The company is highly trusted, implying that public relations workers
are good.
Sales promotions.
The global promotions sales dashboard in the company website enables the cross-border
sellers to monitor the market-level sales generated in the organization (Amazon.com Inc.’s
marketing mix (4Ps) analysis., 2017). The seller affiliate links where the sellers have their blogs
and YouTube channels are also a standard promotion method used by the traders in Amazon. The
free shipping services offered by the company are also a method used by the organization to
promote their products over their competitors. The promotions offered on the company website by
a specific seller do not apply to other sellers’ products, although they might be similar.
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Service
The Amazon company uses a combination of promotions, pricing, and advertising to offer
services to its customers. The company has various services provided to its customers through its
website. Services including networking, storage, and security are provided on the company website
(Amazon.com Inc.’s marketing mix (4Ps) analysis., 2017). The product buyers do not need to
move to the company stores as the required services are provided online. The company also helps
other traders promote their products to the customers by offering a website to make bookings for
the shipping and advertise their products. The organization provides services to customers and
traders who wish to use their websites to improve sales.
EVALUATION OF THE COMPANY’S STRATEGY & MY RECOMMENDATIONS.
The primary strategy of the Amazon organization is concentric diversification. The strategy
is based on promoting the technological capabilities for the organizational progress and the cost
leadership strategy in the company that helps in offering the best products to the customers at the
lowest prices. The sale of their products in the online platform allows the company to maintain the
physical workers as the required number of workers is minimum. This is enhanced because
advertising online helps a single worker using the computers do tasks equivalent to several
physical workers’ jobs.
This strategy has been paying off well because the company has moved from a simple
bookselling retail business to become the world’s largest online retailer leading consistently in the
market segments of its operations. The company also offers discounts to its regular customers,
which helps maintain its reputation; thus, their customers can purchase from them continuously
("Analysis of Amazon's Corporate Strategy." Management Study Guide - Courses for Students,
Professionals & Faculty Members, 2022). The recommendations by the company made online also
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help ease the selection dilemma on the customers because they can choose from the comfort of
their homes. The free shipping offered in the company supports the customers saving on the
transport costs, which allows the company to manage their customers over the competitors who
do not deliver to ship the purchases.
I recommend that the company adopt a global approach in the international market that
helps the global business model integrate the logistics supply chain and the local deliveries. This
will help create a globally accessible chain where one can purchase anything from any part of the
world. The company should also maintain its core competencies which will help keep the market
while also expanding the local value chain in the company.
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References
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