Analyzing Amazon's Marketing Strategies

This assignment examines Amazon's marketing strategies, highlighting their strengths in tier 1 cities and developing markets. It analyzes challenges such as inventory management issues in fulfillment centers and the failure of products like Firefly and Kindle. The analysis emphasizes the importance of considering micro and macro environmental forces, using metrics like BCG, SWOT, and Porter & Pestle, for effective marketing strategy development.

Running Head: Marketing Management
Table of Content:
Company Introduction...........................................................................................................................2
Marketing Planning...............................................................................................................................3
Marketing Mix of Amazon.................................................................................................................3
Product..........................................................................................................................................3
Place:.............................................................................................................................................4
Promotion:.....................................................................................................................................4
Price:..............................................................................................................................................4
Problems with the Marketing mix of Amazon:......................................................................................4
STP of Amazon.......................................................................................................................................5
Distribution Strategy in the marketing Strategy of Amazon..................................................................5
Brand equity in the marketing strategy of Amazon...............................................................................6
Competitive analysis in the marketing strategy of Amazon...................................................................6
The short comings in marketing plan of Amazon..................................................................................6
Amazon.com
Marketing Management

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References:............................................................................................................................................8

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Company Introduction
Amazon.com is an American e-commerce and a cloud computing company based out of Seattle. The
company was formed in the year 1994-95 and is working under the leadership of Jeff Bezos. The e
commerce giant is the largest player in the entire world. The company started off as an online book
store, but later diversified the business into the entire shopping space. The company also produces
consumer electronics devices like Echo, firefly which are revolutionizing the tech space. In the year
2015, Amazon surpassed Wal-Mart to become the biggest retailer in the world. The company made
revenue of $ 135.98 Billion in the year 2016 and is on the verge of becoming one of the most
successful companies in the world (Martin, 2017)

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Marketing Planning
It is a known fact that success of a company depends largely how well the company position itself in
the minds of the customer. This in turn depends on the marketing strategy and planning of the
organization. Companies in the past have not been able formulate the marketing strategies
according to what their competitors have been doing, but they have been solely focussing on where
their customer is and thus targeting him. This though is not the right way to formulate the strategy
and in the longer run the company would have a setback. Thus it is advised, that the strategic
planning process needs to do a close competitor analysis, select the target market, do the marketing
mix of the company and management of the marketing plan (Hollensen, 2015)
Marketing Mix of Amazon
Amazon being world largest e-commerce company understands and focuses on the importance of its
marketing mix.
Product: Amazon being an international player connects sellers to the customers via the internet.
They provide the platform for selling and purchasing. Although it is really hard to quote the entire
product line of Amazon, as it basically sells anything to everything (Cain, 2014). Some products of the
company are:

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 Consumer electronics
 Kindle
 Books
 Gaming console
 Jewellery
 Lifestyle items
 Gardening equipment
The company sells millions of products on its website.
Place: Place is a very important concept in the marketing mix, Amazon sells almost its entire
inventory through the online channel, that is, its website and the application. In the past, it has also
opened some service centres in the USA, the employees there are friendly and customer centric. The
interface of website and the application is quite enriching and focussed on making the consumer
journey smooth (Talpau, 2014)
Promotion: Although amazon does TV, Print, billboard, Radio ads, but its prime targeting is
through web advertising. The company effectively manages its online web advertising to extract
maximum benefits out of it. Amazon uses millions of publisher’s site to display its ad. It spends
heavily on online advertising. The remarketing of Amazon is so sticky, that if a user has seen an
amazon product once, the entire web will keep showing him the same product, in order to trigger
him to make a purchase (Baker & Saren, 2016)
Price: The pricing strategy of Amazon is competitive keeping in mind its rivals. The company also
focuses on improving the service delivery, therefore provide premium services for it. The company is
able to keep its price low due to less overheads, still does not compromise on the quality of its
employees (Llorens, 2014)
Problems with the Marketing mix of Amazon:
 The company is not in the market of selling of second hand goods, or the goods which can
be put on resale, thus they lose some share of market size to its competitors. E-Bay the
market leader in resale of goods enjoys a monopoly. This can be seen as the segment which
is being overlooked by the company (Sinha & Sheth, 2017)

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 Amazon has been facing some issues with the management of the sellers, it is due to the low
margins it provides to its sellers in some of the markets like India, thus, seller conflict arises
and the company at times fails to deliver some products on time(Rust & Huang, 2014)
 Amazon has identified a huge target audience, and the company is doing everything to
target them, using the AIDA model, showing impressions of ad wherever possible and this is
largely working in their favour. At times, this marketing strategy of targeting the customer
annoys him to the extent that he stops ordering form the website clears his cookies and
cache and amazon loses its grip. Thus it is extremely important to understand the tolerance
limit of an individual before pushing him on the retargeting cluster(Varey, 2015)
STP of Amazon
Amazon does its segmentation on the actual purchase behaviour of its audience and not in what his
audience shows the interest in. It’s really interesting to see amazon foregoing one strategy to
segment its audience and giving weightage to other strategy. At micro level the company targets
each consumer individually which allows the company to convert its visitors into long terms and high
value driven customers (Eva & Shea, 2014)
Amazon has identified its target market as the middle class and the upper class, predominantly the
people who are adept with the basic technology and don’t have time to go outside and shop, it
forms the customer target base for Amazon (Aral, 2014)
The company has clearly positioned itself as a reliable e-tailer and a cloud computing player, which
can deliver goods quickly with great perfection to even the remote locations. The company is soon
launching its drone services to cut out the delivery staff, and rely on the technology.
Distribution Strategy in the marketing Strategy of Amazon
There lies a direct correlation between the distribution strategies and marketing strategy, if the
company knows it has a strong distribution network, the same is promoted in its marketing
campaigns and vice versa. Amazon has almost 55 Fulfilment centres, where it stores some of the
inventory to distribute to its customers at a quick pace. This also includes the amazing and the
reliable packaging of the items, and this does not hamper its delivery speed. Hence, the strategy of
building an extensive distribution network helps amazon to serve its customer well, and the same is
boldly communicated in its marketing plan.

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Brand equity in the marketing strategy of Amazon
Amazon is next only to Alibaba in e-commerce players, the company in a span of 13 years have
quickly moved up the ladders and is giving strong competition to the Chinese giant. The company is
valued at $176 Bn, which is absolutely great seeing the tenure. The company has a repeat customer
base of 55%; this says a lot about the way amazon is doing business. Brand equity directly relates
with the reputation, hence amazon has a great reputation for itself. It is among Forbes 13 most
valued company.
Competitive analysis in the marketing strategy of Amazon
Apple and ITunes are a strong competitor to amazon’s when the products are books, music,
magazine and audiobooks. In terms of web services Google is the largest competitor to amazon.
Wal-Mart on the other hand is doing a beta testing on same day delivery in 4 cities and is still the 4th
largest online retailer, which has the potential of leading the race. In developing countries players
like Flipkart, Snap deal are giving tough competition to amazon and are going neck by neck with it.
Hence, with the evolution of the technology and the increase in market size, Amazon has to quickly
adept to new technological innovation if it wants to maintain its lead in the market.
The short comings in marketing plan of Amazon
Over and over, Amazon has maintained that its marketing communication strategy is aimed at the
following pillars:
 Increasing the traffic of customers on the web and app
 Creating awareness regarding its products
 Creating a strategy to promote the repeat business
 Work towards strengthening the brand image
 Developing incremental product and service revenue opportunities
Target market is not focussed on Tier 2 & Tier 3 cities- It is an established thing, that the higher
margins lie at Bottom of the pyramid, Amazon though target the customer only in tier 1 cities and
some in tier 2, in the developing countries. Though the penetration is good, it has a scope of
becoming much better. Players like shop clues are going forward with the concept of flee market
which is highly targeted towards the rural market.

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Amazon has been facing some issues with its fulfilment centres, and due to which in some of the
centres the company is unable to keep a track of its inventory, thus a lot of mismanagement
happens. This is something which the company should take seriously, come up with better processes
to monitor the inventory flow, because this directly affects the service capability of amazon.
Amazon had spent huge chunk of money on two of its most promised products, Firefly and Kindle,
both of them did not pick up in sales. The company lost a great sum of money behind these two
products. These products were launched after spending a sizable amount of money dedicated
towards its marketing and ad spend, hence hurting the pockets of the company. More than the
product failure, it was more of losing the loyal customer base, because now people would think
twice or thrice about buying original product from amazon in comparison to the earlier times. Thus it
becomes imperative for the research team to do its work effectively before involving the marketing
team. The efforts and fruits of marketing are realized only after the product steps into the market.
Putting all the points above, it is clear that the company should not only be customer centric while
planning its marketing strategy but should also consider various micro and macro environmental
forces. Metrics like BCG, SWOT, and Porter & Pestle analysis should be used before coming up with
any marketing strategy

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References:
Baker, M.J. and Saren, M. eds., 2016. Marketing theory: a student text. Sage.
Cain, P., 2014. Marketing-mix Modelling Big Data.
Eva, N. and Shea, E., 2014. Marketing comes to reference and user services. Reference & User
Services Quarterly, 54(2), p.41.
Hollensen, S., 2015. Marketing management: A relationship approach. Pearson Education.
Llorens, S., 2014. Start-Ups and the Internet: The case of Strutz'Sole Angel®. Journal of Business
Cases and Applications, 11, p.1.
Martin III, Q., 2017. Good College, Bad College: Seattle, WA: CreateSpace Independent Publishing, an
Amazon Company, 2015. pp. iii+ 173, $3.49 (ebook). ISBN: 978-1511957298.
Rust, R.T. and Huang, M.H., 2014. The service revolution and the transformation of marketing
science. Marketing Science, 33(2), pp.206-221.
Sinha, M. and Sheth, J., 2017. Growing the pie in emerging markets: Marketing strategies for
increasing the ratio of non-users to users. Journal of Business Research.
Talpau, A., 2014. The marketing mix in the online environment. Bulletin of the Transilvania University
of Brasov. Economic Sciences. Series V, 7(2), p.53.
Varey, R.J., 2015. Corporate reputation and the discipline of marketing communication. In Handbook
of Communication and Corporate Reputation (p. 104). Wiley Blackwell.