MAR704 Marketing Management Assignment: Zappos Case Study Analysis

This report is a comprehensive marketing analysis of Zappos, an online retailer. It begins by discussing the role of strategic marketing in an organization and evaluating growth opportunities using the diversification analysis framework, focusing on market penetration, product development, and diversification strategies. The report then details a marketing plan for Zappos, particularly the product development strategy of introducing children's clothing, including a SWOT analysis to assess internal strengths and weaknesses, and external opportunities and threats. The report outlines financial and non-financial objectives for the brand, aiming to maintain its service reputation, expand product lines, and increase online sales. It also emphasizes the use of the marketing mix improvements and digital marketing to reach new customers, leverage the brand, and ascertain growth opportunities. The plan includes an executive summary, situation analysis, major objectives, marketing strategy, implementation, and control measures.

NAME OF STUDENT
ASSIGNMENT ISSUE DATE 10 July, 2020
REGISTRATION NO. MAR704
UNIT TITLE Marketing Management
ASSIGNMENT TITLE Zappos
ASSIGNMENT NO Whole (W)
NAME OF ASSESSOR
SUBMISSION DEADLINE 10 August, 2020
TO BE FILLED BY STUDENTS
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brief MUST be attached together with this work)
DATE ASSESSMENT BRIEF IS RECEIVED
SUBMISSION DATE 10 August, 2020
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FTU BTEC L7 SMM ‘Zappos’ Jul 2021 Page 1
BTEC LEVEL 7 EXTENDED DIPLOMA IN
STRATEGIC MANAGEMENT AND
LEADERSHIP
Assignment Cover Sheet

TO BE FILLED BY STUDENTS
Please list the evidence submitted for each task. Indicate the page numbers where the
evidence can be found or describe the nature of the evidence (e.g. video, illustration).
Task Ref Evidence Submitted Page Number or
Description
1.1 Discuss the role of strategic marketing in an organisation.
1.2 Explain the processes involved in strategic marketing.
1.3 Evaluate the links between strategic marketing and
corporate strategy.
2.1 Assess the value of models used in strategic marketing
planning.
2.2 Discuss the links between strategic positioning and
marketing tactics.
2.3 Analyse the merits of relationship marketing in a given
strategic marketing strategy.
3.1 Use appropriate marketing techniques to ascertain growth
opportunities in a market.
3.2 Plan how to use marketing strategy options in a market.
3.3 Create appropriate strategic marketing objectives for a
market.
4.1 Report on the impact of changes in the external
environment on a marketing strategy.
4.2 Conduct an internal analysis to identify current strengths
and weaknesses in a marketing strategy
4.3 Propose strategic marketing responses to key emerging
themes in a marketing strategy
Additional comments to the Assessor:
FTU BTEC L7 SMM ‘Zappos’ Jul 2021 Page 2

Coursework Policies
1. All coursework submitted must include
a. A copy of the full brief given by the assessor (with the signed coversheet)
b. All source material must be cited in the text and a full bibliography of source
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submission.
2. All work must be submitted in the mode instructed by the assessor.
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FTU BTEC L7 SMM ‘Zappos’ Jul 2021 Page 3

TO BE FILLED BY ASSESSOR AND INTERNAL VERIFIER
Outcome Evidence for the
criteria Feedback
Assessor’s decision Internal
Verification
Task First
attempt
Re-
work
Understand
the
principles of
strategic
marketing
managemen
t
LO1
Discuss the role of
strategic marketing
in an organisation.
1.1
Explain the
processes involved
in strategic
marketing.
1.2
Evaluate the links
between strategic
marketing and
corporate strategy.
1.3
Understand
the tools
used to
develop
a strategic
marketing
strategy
LO2
Assess the value of
models used in
strategic marketing
planning.
2.1
Discuss the links
between strategic
positioning and
marketing tactics.
2.2
Analyse the merits
of relationship
marketing in a given
strategic marketing
strategy.
2.3
FTU BTEC L7 SMM ‘Zappos’ Jul 2021 Page 4

Outcome Evidence for the
criteria Feedback
Assessor’s decision Internal
Verification
Task First
attempt
Re-
work
Be able to
use strategic
marketing
techniques
LO3
Use appropriate
marketing
techniques to
ascertain growth
opportunities in a
market.
3.1
Plan how to use
marketing
strategy options in
a market.
3.2
Create
appropriate
strategic
marketing
objectives for a
market.
3.3
Be able to
respond to
changes in
the
marketing
environment
LO4
Report on the
impact of changes
in the external
environment on a
marketing
strategy.
4.1
Conduct an
internal analysis
to identify current
strengths and
weaknesses in a
marketing
strategy
4.2
Propose strategic
marketing
responses to key
emerging themes
in a marketing
strategy
4.3
FTU BTEC L7 SMM ‘Zappos’ Jul 2021 Page 5

Assignment
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Areas for improvement:
Figures should go with nessary information to make it more academic, for example:
figure number, figure title, sources of information…
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NAME :..............................................................................
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FTU BTEC L7 SMM ‘Zappos’ Jul 2021 Page 6

MARKETING MANAGEMENT
CASE STUDY: ZAPPOS
3.1 Use appropriate marketing techniques to ascertain growth opportunities in a
market.
Companies need growth if they are to compete more effectively, satisfy their
stakeholders and attract top talent. At the same time, a firm must be careful not to make growth
itself an objective. The company’s objective must be to manage ‘profitable growth’. Marketing
has the main responsibility for achieving profitable growth for the company. Marketing needs to
identify, evaluate and select market opportunities and establish strategies for capturing them.
One useful device for identifying growth opportunities is the Diversification analysis (Kotler et
al., 2017).
Market penetration - a marketing strategy to increase sales of current products in current
markets, such as selling more Zappos’s shoes to Americans. Zappos uses this strategy to achieve
deeper market penetration – making more sales without changing its original product.
Zappos might consider possibilities for market development – identifying and developing
new markets for its current products. Given the global population growth, various markets could
be promising. For example, China has a large, affluent ageing population who could prove to be
a profitable long-term market.
Product development – Company growth by offering modified or new products to current
market segments. Zappos could leverage its brand by selling new product such as children’s
clothing in the United States. Although this strategy would put the company into direct
competition with other internet retailers, it also offers promise for big growth.
Zappos might consider diversification – a marketing strategy of developing new products
and selling them in new markets. This is considered to be the riskiest strategy for Zappos if it
decides to try to sell children’s clothing in China as the firm may have grown too fast or entered
areas where it lacks experience.
With Zappos, the market penetration and product development strategy are the priorities.
As Zappos expands, it will have to work harder and use different marketing techniques to
ascertain growth opportunities in the market. For instance, the company can spur growth through
marketing mix improvements to reach new customers, increase sales and maintain its reputation
for offering the best service and selection. In addition, Zappos can use digital marketing by
developing its digital technology or effectively using social media to improve the shopping
FTU BTEC L7 SMM ‘Zappos’ Jul 2021 Page 7

experience, get closer to the consumer and allow the company to maintain positive interaction
with the target market, increasing visibility and promoting the brand as well as gain direct
feedback from customers.
In conclusion, by using appropriate marketing techniques such as the marketing mix
improvements and digital marketing, Zappos can reach new customers, leverage its brand and
ascertain growth opportunities in the market as well as retain its present image as the company
with the best service and selection.
3.2 Plan how to use marketing strategy options in a market.
Marketing planning involves choosing marketing strategies that will help the company
attain its overall strategic objectives. The plan begins with an executive summary that quickly
reviews major assessments, goals and recommendations. The main section of the plan presents a
detailed SWOT analysis of the current marketing situation as well as potential threats and
opportunities. The plan next states major objectives for the brand and outlines the specifics of a
marketing strategy for achieving them (Kotler et al., 2017).
A marketing strategy consists of specific strategies for target markets, positioning, the
marketing mix and marketing expenditure levels. It outlines how the company intends to engage
target customers and create value in order to capture value in return. In this section, the planner
explains how each strategy responds to the threats, opportunities and critical issues spelled out
earlier in the plan. Additional sections of the marketing plan lay out an action programme for
implementing the marketing strategy along with the details of a supporting marketing budget.
The last section outlines the controls that will be used to monitor progress, measure return on
marketing investment, and take corrective action (Kotler et al., 2017).
Strategic marketing plan is a process of leading the organization to achieve its strategic
marketing goals. Steps in the plan include: executive summary; situation analysis; major
objectives for the brand; marketing strategy; implementation and control. In this assignment I
will conduct a plan how to use the Product development strategy for Zappos - Selling a new
product such as children’s clothing to Americans.
1. Executive summary
Zappos, based in Las Vegas, is an online retailer. Its initial goal has been to be the best
website for buying shoes, offering a wide variety of brands, styles, colors, sizes,
and widths. Zappos has grown to offer shoes, handbags, eyewear, watches, and accessories for
online purchase and it is preparing to launch a new lines of children’s clothing.
2. Situation (SWOT) analysis
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This situation analysis starts with a snapshot of the current environment in which Zappos
finds itself by providing a brief SWOT (strengths, weaknesses, opportunities, threats) analysis.
Table 3 shows the internal (Strengths & Weaknesses) and external factors (Opportunities &
Threats) affecting the market opportunities for Zappos.
Table 3: SWOT analysis for Zappos
Strengths Weaknesses
 Zappos has strong brand image
 Zappos has strong customer relationship
management and has a reputation for
delivering customer service that is
unmatched by any competitor
 Believe in transparency
 Positive work culture and a unique
atmosphere
 Clear vision of higher management
 Positive feedback from customers results in
free marketing by “Word of mouth”
 Very high customer return rate - 75% of
sales are to returning customers.
 Focus towards social corporate
responsibility
 Strong online presence
 Strong supply chain management
 Possibility to obtain knowledge from
Amazon’s resources, technology,
operational experience
 Zappos has received number of
recognitions on best customer service,
corporate culture, business model and etc
 Customers were not pleased with the
merger of Zappos with Amazon and
expressed concerns about the future of the
company’s culture and customer service.
 Amazon and Zappos deals in similar
product lines of children’s clothing which
create competitions among themselves.
 Limited base of customers due to lack of
possibility to try on clothing products
immediately
 No shipping for international customers
 Technical Difficulties - Theft of 24 million
customers’ critical personal information
that included last four digits of their credit
cards raises the question mark on Zappos
online system security measures.
Opportunities Threats
 Expand into new product categories will
help the company to grow and reduce
dependency on shoe products (80 percent
of Zappos’ orders come from shoes)
 Improve online system security to avoid
technical issues and share the same
information with customer to develop more
trust.
 Zappos can expand their services by
shipping products in international countries
 Rate of cyber-crimes are increasing
 Intense competition with competitors in the
children’s wear online segment – Target,
Macy’s Inc,…
3. Major objectives for the brand:
FTU BTEC L7 SMM ‘Zappos’ Jul 2021 Page 9

After analys the current marketing situation as well as potential threats and opportunities,
for the coming five years Zappos seeks to achieve the following goals:
Non-financial goals
1. To retain its present image as the company with the best service and selection
2. Add new lines of product every third year to reach new segments of buyers.
3. To be the online service leader
Financial goals
1. Online sales will account for 30 percent of all retail sales in the United States.
2. To obtain a return on equity of at least 20 percent.
3. Children’s clothing category will account for 5 percent of all company’ net sales.
4. Marketing strategy
Segmentation and targeting: Zappos’ target customer segment originally consisted of
people who wanted to have a wide selection of product, shop online in the convenience of their
own homes, and receive quick delivery and free returns.
Differentiation and positioning: Zappos has a reputation for delivering customer service
and offering a wide range of product that is unmatched by any competitor.
The marketing mix
 Product strategy: Zappos continues to focus on its original product bundle that includes
shoes and continues to add new products slowly, ensuring it can maintain its quality service.
Zappos keep its focus and attention to the details of great execution and service. Zappos’ success
in selling footwear enables it to add lines of children’ clothing to reach new segments of buyers.
 Price strategy: Zappos is not the low price leader. In fact, its prices are often 5–10
percent higher than other online shoe retailers. Nor does the company do a lot of national
advertising to build its brand. Instead, Zappos has focused on creating a “Wow” customer-
service experience that not only exceeds customers’ expectations but brings people back again
and again.
 Promotion strategy: Zappos does engage in paid advertising, however most of the
brand awareness comes from word-of-mouth. "We actually take a lot of the money that we
would have normally spent on paid advertising and put it back into customer experience," says
Tony Hsieh, Zappos' CEO. "We've always stuck with customer service, even when it was not a
sexy thing to to do" (Zumda, 2008). Keeping your customers satisfied encourages them to share
your brand with others, a strategy Zappos knows well. The company considers word-of-mouth
marketing to be the best way to reach new customers. CFO/COO Alfred Lin says, “The
customer is more powerful than paid advertising.”
FTU BTEC L7 SMM ‘Zappos’ Jul 2021 Page 10

 Place (distribution) strategy: Since Zappos' is an online only retailer, the place of its
business is through their website and call center. Zappos does not have any outlet locations,
other than their headquarters in Las Vegas and ships the majority of their inventory from
warehouses in Kentucky. Most of Zappos’ orders are placed directly on the Internet, calls are
also made to the Zappos call centre which is staffed 24 hours per day. The call centre operators
are there to solve customer problems, even if that means helping a customer to find a non -
stocked item by searching competitors websites . Call- takers are encouraged to take as much
time as necessary to assist customers with their orders, answer their questions and troubleshoot
their problems to make the customers’ experience convenient.
5. Implementation:
 Allocate financial, human and other resources to implement the marketing strategies
and integrated programs planned before.
 Strictly follow the scheduled timeline and plan to ensure they go in line with the
strategic marketing goals.
6. Controls:
 Continuously control and supervise the process of implementing strategic marketing
plan to identify the mistakes, the deviations from the goals and plan for correction and
adjustment in advance.
 The final step is reviewing and evaluating the results, impacts to gain the experience
for successful future plans.
3.3 Create appropriate strategic marketing objectives for a market.
A marketing objective is the quantification of what the organization sells (its products)
and to whom (its markets). Marketing objectives are generally accepted as being quantitative
commitments, usually stated either in standards of performance for a given operating period, or
conditions to be achieved by given dates. Performance standards are usually stated in terms of
sales volume or value and various measures of profitability. The conditions to be attained are
usually a percentage of market share and various other commitments, such as a percentage of the
total number of a given type of distribution outlet (McDonald, 2007).
After analyzing both the internal and external factors to have a deep insight into the
marketplace and customers’ needs, wants and demands, the company has to set marketing
objectives which are aligned with overall business objectives and drive the direction of
marketing strategies. The strategic marketing objectives are the group of goals set by a business
when promoting its products or services to the potential customers that should be achieved in a
FTU BTEC L7 SMM ‘Zappos’ Jul 2021 Page 11

given time frame. According to McCorkell (1997), a good marketing objective is SMART -
Specific, Measurable, Achievable, Relevant and Time-bound.
At the corporate level, the company starts the strategic planning process by defining its
over-all purpose and mission. This mission is then turned into detailed supporting objectives for
each level of management that guide the entire company. Zappos' mission statement is to
“Provide the best customer service possible. Deliver WOW through service.” This broad mission
leads to a hierarchy of objectives, including business objectives and marketing objectives.
Zappos’s overall objective is to build profitable customer relationships by offering the
best selection and best service. It accomplished this by setting up a strong behind-the-scenes
infrastructure that puts the customer experience at the forefront. Strong infrastructure is
expensive and must be funded through improved profit, so improving profits becomes another
major objective for Zappos. Profits can be improved by increasing sales or reducing costs. Sales
can be increased by attracting new customers and improving the company’s share of markets.
These goals then become the company’s marketing objectives. Therefore, strategic marketing
objectives for Zappos may include:
• Attract new customers: New customers increase the amounts of sales and Zappos gets
more endorsement which will help to accelerate the cycle of money for the company.
• Increase the market share: market share is a key indicator of a company's
competitiveness. When a company increases its market share, this can improve its profitability.
• Increase sales: Increasing sales is one of several common marketing objectives.
Companies often employ this objective initially to build a customer base, and as time goes on, to
generate cash flow or to turn over merchandise near the end of a season.
• Increase company profits: Profits can be improved by reducing costs or increasing
profits, or both.
• Retain current customers: Acquiring new customers is important, but retaining
customers accelerates profitable growth. In order to retain current customers and increase
customer loyalty, it is necessary to improve customer satisfaction.
Strategic marketing objectives are a pivotal part of a marketing plan as they drive the
direction of marketing strategies. Appropriate marketing objectives should be SMART -
Specific, Measurable, Achievable, Relevant, Time-bound and aligned with overall business
objectives.
4.1 Report on the impact of changes in the external environment on a marketing
strategy.
FTU BTEC L7 SMM ‘Zappos’ Jul 2021 Page 12