Amazon’s Marketing Strategy Online Tutoring

Introduction

            Amazon is one of the giant company and captured almost 50% of online market with the help of rapid technological innovation. Amazon has greater focus on its customers rather than its rivals. In order to capture larger market, Amazon adopted reliable marketing strategy. Amazon has adopted different marketing strategies for its different products (Chaffey, 2020).

In order to attract number of customers, Amazon applied cost leadership and customer centric approach. With the help of analyzing actual buying behavior of customers, Amazon targeted upper-class and middle-class people by categories them into two broad categories such as psychographic and demographic. It’s all marketing strategies is based on online media marketing, search engine marketing and mass marketing. In addition to this, Amazon product portfolio is wide which include books, DVDs, Kindle, Mobile phones, gamming consoles, clothes, jewelry and consumer durable goods. Such a large product portfolio keeps prices low and larger audience (Dudovskiy, 2020).

Moreover, Amazon has invested in e-commerce and online business by acquiring IMDB.com, Zappos.com, audible.com and Jungle.com. Amazon attract its customers with the help of online marketing channels such as sponsored search, associate programs, email marketing, TV advertising and promotional activities. Its promotional activities include free shipping, discounted coupons, lightening deals and low cost (Phillips, 2019).

Problem Statement

            The study has been performed in order to examine and evaluate the Amazon’s current marketing strategy and its effectiveness with respect to the current external and internal environment with the help of different analysis frameworks such as SWOT analysis, PESTEL analysis and BCG Matrix.

Situational Analysis

            In order to examine the Amazon’s marketing strategy and its competitive an extensive research has been performed by approaching different official websites and related articles.

SWOT Analysis

It is the mostly used tool for having an internal analysis. It is the preliminary part of the strategic decision-making process of an organization. A detailed SWOT analysis of the Amazon’s marketing strategy has been performed in order to examine the internal position of the company (İ Yüksel, M Dagdeviren, 2010).

Strengths

Strengths are strong points of your organization. It is the area in which the organization is performing well and has excellent working abilities at. Currently, Amazon has 90 million prime members along with active 310 million members. Amazon helps small sellers to introduce their products and successfully capturing 2000 sellers every day. With the help of extensive marketing tools, Amazon’s customers are 55% repeat buyers, which lower the cost for attracting new customers. Amazon’s media sales accounted for 17%, in 2011. Amazon has a brand value of $125 billion and ranked at third position in the Global Brand Ranking 2019 (Yua, 2020).

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Weaknesses

They are the weak characteristics of your organization. Amazon is offering free shipping, which lowered down its profits. Some of the products such as VOD and website services are questionable because they have low growth rate. Moreover, only accessing online marketing tools will capture online users (Albane, 2019).

Opportunities

Opportunities are also the external factors like threats. They could be considered as development in the technology or market, a profitable deal/contract or an expansion of the business operations. Amazon should capture and expand its business in developing countries by using online and offline marketing tools. Gorilla marketing and offline marketing tools will also capture larger audience. In addition to this, promotional activities for promoting online purchasing will also yield additional long-term advantage (Dudovskiy, 2020).

Threats

Threats are those factors which can harm your business, they exist outside the organization. Amazon is facing high threat of competition from its rivals, which is lowering down its profits. Internet low power and offline audience is another threat. Another threat is the technology security system and restricting customers to trust on online purchasing. Thus, Amazon should apply technological security system for strengthening its business (Phillips, 2019).

PESTEL Analysis

            A detailed PESTEL analysis has been performed in order to examine the prevailing external situation of the market and the co-respondence of the company’s marketing strategy with respect to the external environment (Iveta Dočkalíková – Kateřina Kashi, 2014).

Political Factors

            Prevailing political and legal conditions also play an important role for the growth of a firm. Developed countries has stable political conditions, which led toward better governmental regulations and policies. European countries and USA have stable political conditions (Yua, 2020).

Economic Factors

Demand and supply forces play a crucial role in developing an economic environment. Sometimes economic conditions are considered as threat, while sometimes as opportunities. In developing countries, disposable income is increasing which provide a greater opportunity to expand in these markets. Moreover, in different countries labor and exchange rates are different which provide high dependency (Albane, 2019).

Social Factors

An industry could also get affected by the social and cultural changes. Amazon targeted upper-class and middle-class individuals by categories them into two wide-ranging categories such as psychographic and demographic (Phillips, 2019).

Technological Factors

Now a days, technology changes very fast and requires more R&D work. In this fast-changing technological era, Amazon adopted online marketing tools along with making extensive technological innovations, which enabled it to compete with rivals. Now a days, technological innovation is become main competitive advantage in e-commerce business. Increasing trend of cybersecurity and technological security is another main concern and get higher attention from the government as well as companies  (Shaw, 2018).

Environmental Factors

If the product’s features are against the cultural values and have an ethnicity impact, then it is considered as a threat, because the customers will not accept the product or boycott it. Moreover, online purchasing trend is increasing which ultimately helps to increase the Amazon market. Online marketing channels are become main source to capture larger audience globally. It has been analyzed that online selling is yielding larger revenues and profits (Shaw, 2018).

Legal Factors

If there are rigid legal rules and policies, then the investors will be reluctant to invest in a company. Legal factors are widely affected by governmental policies and has major impact on all type of businesses. In developed countries, legal policies for business is reliable and appropriate that could generate larger revenues along with capturing larger audience (Iveta Dočkalíková – Kateřina Kashi, 2014).

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BCG Matrix

BCG matrix is a strategic planning tool that is used to evaluate a company’s brand or product portfolio in accordance with the market share and industry growth rate. It was introduced by Boston Consulting Group (BCG). A detailed BCG Matrix analysis has been performed in order to examine the company’s brand image in the market with respect to its marketing strategy (DC Hambrick, IC MacMillan, DL Day, 2005).

  • Cash Cows: Cash cows are those products or units that are on the stage of their maturity and thus have low growth, but have large market share, so they still have an ability to create cash. Amazon started its business as a bookstore and thus, E-book lies in Cash cows (Yua, 2020).
  • Stars: Stars are those products or units that have high growth rate as well as high market share. Consumer durable goods and Electronics goods lies under stars because these products have high market share along with high growth rate (Iveta Dočkalíková – Kateřina Kashi, 2014).
  • Question Marks: Question marks are those products or business units, which have high growth rate, but they suffer from lower market share. Amazon websites services and VOD has lower demand and thus, lies under the question mark category (Albane, 2019).
  • Dogs: Dogs are those products that have low growth rate along with low market share. Amazon has adopted good marketing strategy and minimize all chances of low growth rate and market share (Phillips, 2019).

Alternative Solutions

After evaluating Amazon’s digital marketing strategy, following alternative solutions has been suggested in order to increase number of customers and market share.

It is suggested that Amazon should incorporate online as well as offline marketing techniques in its current marketing strategy plan. Because adoption of only online tools will cut down potential target market. In addition to this, Amazon should incorporate its CRS activities in its marketing strategy that will help to capture larger audience and create awareness. Furthermore, expansion in developing countries is another greater opportunity, because of increasing disposable income. Technological security is another issue that hinder in online purchasing. Amazon should consider protective measures to secure and strengthen its security system.

Recommendations

            After evaluating all the information, facts and figures of the Amazon’s marketing strategy with the help of different analysis frameworks, it is recommended that incorporating Marketing online and offline techniques is viable that could attract potential buyers with the inclusion of incorporating CSR activities in marketing strategies. Many potential offline buyers seeking online purchasing opportunity and guidance. Amazon should attract these customers by using gorilla and mass marketing tools. Moreover, currently COVID-19 pandemic is yielding greater opportunity for the e-commerce business.

Implementation Plan

            Amazon could implement this recommendation at larger scale by using mass advertising and gorilla marketing tools. This will require to place billboards, posts, video advertisement, signs and pamphlets at the front place that could capture larger audience. Additionally, Telemarketing, print media, radio and television ads are other tools that could be used. It will require to invest more capital and human resource to implement this procedure.

 

References

Albane. (2019, 4 16). Amazon’s marketing strategy: 5 ways to win on social. Retrieved from Talkwalker: https://www.talkwalker.com/pt/blog/amazon-marketing-strategy

Chaffey, D. (2020). Amazon’s business strategy, revenue model and culture of metrics: a history. Retrieved from Smart insigth: https://www.smartinsights.com/digital-marketing-strategy/online-business-revenue-models/amazon-case-study/

DC Hambrick, IC MacMillan, DL Day. (2005). Strategic attributes and performance in the BCG matrix—A PIMS-based analysis of industrial product businesses. Academy of Management, 25, 510-531. doi:https://doi.org/10.5465/256077

Dudovskiy, J. (2020, 3 28). Amazon Marketing Strategy: a brief overview. Retrieved from Research methodology: https://research-methodology.net/amazon-marketing-strategy/

İ Yüksel, M Dagdeviren. (2010). Using the analytic network process (ANP) in a SWOT analysis–A case study for a textile firm. Information sciences, 16, 177. doi:10.1016/j.ins.2007.01.001

Iveta Dočkalíková – Kateřina Kashi. (2014, 11 13). MCDM Methods in Practice: Determining Importance of PESTEL Analysis Criteria. The 8th International Days of Statistics and Economics, Prague,. Retrieved from https://msed.vse.cz/msed_2014/article/362-Dockalikova-Iveta-paper.pdf

Phillips, P. (2019, 10 26). Amazon Marketing Strategy: The Best Practices For Ecommerce. Retrieved from Kenshoo: https://kenshoo.com/blog/amazon-marketing-strategy/

Shaw, A. (. (2018). Technological Factors Affect Business Environment. Retrieved from Marketing tutor.net: https://www.marketingtutor.net/technological-factors-affect-business/

Yua, A. (2020, 2 10). Amazon Marketing Strategy 2020 – The Ultimate Overview. Retrieved from Sellic: https://sellics.com/blog-on-amazon-advertising-marketing-overview/

 

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