Marketing Strategy and Plan: A Deep Dive into Amazon's Success & Risks

This report provides a comprehensive analysis of Amazon's marketing strategy, focusing on the key success factors and risks associated with its business model. It examines Amazon's strategic priorities, including its dominance in the cloud computing market with Amazon Web Services (AWS) and its customer-centric approach. The report also discusses Amazon's growth-oriented management style, internal audit processes, and strategies for capitalizing on non-financial factors such as market share, brand reputation, and physical facilities. Furthermore, it identifies potential internal risks to the company's financial performance, including shipping costs and data security breaches. The analysis highlights Amazon's commitment to customer satisfaction and operational excellence, while also acknowledging the challenges and risks it faces in maintaining its competitive edge and profitability in the long run.

Running head: MARKETING STRATEGY AND PLAN
Marketing Strategy and Plan
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1MARKETING STRATEGY AND PLAN
Table of Contents
III: Success Factors and Risks....................................................................................................2
Answer to question A:................................................................................................................2
Answer to question B:............................................................................................................3
Answer to question C:............................................................................................................4
References:.................................................................................................................................6

2MARKETING STRATEGY AND PLAN
III: Success Factors and Risks
Answer to question A:
Amazon has created an e-commerce empire and provides its customers with the
lowest possible prices however not this appears to be changing.
Strategic Priorities and Business Decisions:
Amazon gains the benefit for being the first company to move under the infrastructure
as the service market with the Web Services and it has successfully maintained the market
leader position. However, its strategic decision involving the prices for the basic commodity
services such as virtual and storage machines have been constantly slashed by both the
Amazon and its competitors (Chernev, 2018). This can be seen as the difficult measure
adopted by Amazon of maintaining the profit in the long run from its cloud computing
business.
Amazon also has the operating loss of greater than $500 million during the third
quarter and the lower end of Amazon’s guidance is calling for the operating loss of the
similar magnitude in the subsequent quarter (Morschett et al., 2015). This can be considered
as questionable strategy whether Amazon can continue to be competing firm in the market of
cloud computing during the long run against the rival firms that are sinking both their cash
and profits.
Key Success factors:
The key success factors for Amazon is its mission to be customer centric company
and this helps in making any decision for the company. Below is the key success factors for
the company;
a. Customer obsession instead of competitors centric

3MARKETING STRATEGY AND PLAN
b. Commitment towards operational excellence
c. Long term business philosophy
Growth or Efficiency Oriented:
The management at the amazon is the growth oriented. The business model of amazon
regularly administers the individual business segments and opportunities for investment to
yield around zero net income every quarter. The management of Amazon focuses on growth
rather than amassing net revenue (Hollebeek et al., 2016). The rise in capital expenses has
centrally been focussed on increasing the physical infrastructure particularly acquiring
warehouse and AWS investment.
Amazon approach to risks:
Internal audit: Amazon performs the internal audit with the aim of constant improvement.
The company focuses on business procedure and technologies that would support
improvement and look for risks that may harm the business (Felix et al., 2017). Amazon has
established Enterprise Risk Management and Compliance team to recognize top business
risks and develops remediation plans for continuous response and fight against the risks.
Answer to question B:
Capitalization on Non-financial factors:
The non-financial factors that amazon capitalizes on are given below;
Market share: To capitalize on the market share amazon makes the use of demographic and
psychographic segmentation strategy to segment its market. The segmentation of amazon is
mainly based on the customer purchase behaviour (Conaway et al., 2018). The company uses
the market-level segmentation target where each of the customers individually allows the
corporation to adapt the visitors in the long term, high value customers.

4MARKETING STRATEGY AND PLAN
E-commerce companies often segments the market that comprises of customers who
would purchase in a certain manner or particular products. Simply amazon aims the medium
class and the higher class customer that have the understanding of basic technology and
prefer convenience shopping over the physical outlets. By using variety of catchphrase in its
campaign it has further helped amazon in gaining a wider market share by creating crave in
the minds of customers.
Brand Reputation: From the being the provider of E-book to the emerging second largest e-
commerce corporation across the world, Amazon has slowly but progressively amplified its
advertising expense and promotional cost to make its brand sturdier and also have the brand
equity among the consumers (Zeng, 2017). By the year 2017 the brand reputation of Amazon
was worth USD 176 billion. In simple words a brand for the corporation is simply the
reputation for an individual. Amazon holds its brand reputation by getting more than 55% of
the repeat purchasers and the numbers itself says all about the brand reputation of amazon.
Furthermore, the brand of Amazon is regarded as the 13th world’s most valued brand.
Physical facilities: Amazon understands that its customers wants faster and speedy delivery
of their products. This is where the extensive physical facilities of Amazon comes into act.
Currently Amazon has around 55 fulfilment centres that surpasses 43 million square feet
(Smith et al., 2017). It also includes the Amazon’s strategy of “under the tent” that uses the
existing vendor warehousing space for packing of its consumer goods to serve its customers
more quickly. This aggressive strategy undertaken by Amazon helps in bringing the new
areas and customers which also helps in improving their lines of distribution.
Answer to question C:
Internal risks to company’s financial performance:

5MARKETING STRATEGY AND PLAN
The Amazon lists of risks comprises of certain probable problems that might take
place. However, neither of this would disrupt the business of Amazon but either of the
problem can slow stupendous growth or may create a major impact on its profitability. The
internal risks are stated below;
Shipping costs may be a problem: Amazon has been successful in optimizing the shipping
operations. Serving the customers and keeping them happy is regarded as the central principle
of Amazon business. However, the company also admits that cost of shipping may turn out to
be a problem (Amazon.com, Inc, 2019). This is because Amazon failure in optimizing the
inventory in its network of fulfilment would shoot up the net cost of shipping that may
require long-zone or part shipping. The company also acknowledges the potential inventory
management issues because Amazon works with restricted number of shipping firms and may
result an increase in the cost of shipping. If Amazon fails to negotiate the acceptable terms
with its shipping companies then it may experience major problems that may negatively
create an impact on its operating profit and customer experience.
Data loss and security breaches: Amazon faces the greatest risks of hackers. One of the
largest concern for Amazon is that the hackers may knock down its store offline or may steal
the information relating to credit cards that holds the information of millions of customers
(Amazon.com, Inc, 2019). The company also acknowledges that it uses the third party
technology that may be breached. It has the developed system and process which protects its
customers however such measures cannot completely provide security.

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References:
Annual reports, proxies and shareholder letters | Amazon.com, Inc. - IR. (2019). Retrieved
from https://ir.aboutamazon.com/annual-reports
Chernev, A. (2018). Strategic marketing management. Cerebellum Press.
Conaway, R. N., Regester, K., Martin, S., Nixon, C., & Senior, B. (2018). Amazon Whole
Foods: When E-Commerce Met Brick-and-Mortar and Saved the Brand of
Conscientious Capitalism. Journal of Marketing Development and
Competitiveness, 12(3).
Felix, R., Rauschnabel, P. A., & Hinsch, C. (2017). Elements of strategic social media
marketing: A holistic framework. Journal of Business Research, 70, 118-126.
Hollebeek, L.D., Conduit, J. & Brodie, R.J., (2016). Strategic drivers, anticipated and
unanticipated outcomes of customer engagement.
Morschett, D., Schramm-Klein, H. & Zentes, J., (2015). Strategic international
management (pp. 978-3658078836). Springer.
Smith, A. D., Rupp, W. T., & Offodile, O. F. (2017). Amazon. com, Inc.: Retailing Giant to
High-Tech Player?.
Zeng, J. (2017). Latent Factor Models for Recommender Systems and Market Segmentation
Through Clustering(Doctoral dissertation, The Ohio State University).