Amazon - Marketing
Essay by am1234 • December 3, 2017 • Research Paper • 1,983 Words (8 Pages) • 975 Views
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Individual Case Study in Marketing Management
- Breve presentation of the company and industry
As web-usage was growing exponentially at that time, Amazon was created in 1994 and started officially online with book selling in 1995, offering a selection of more than a million positions through its e-catalogue (the equivalent at that time of 13 New-York city phone books) [2]. Company’s vision was from the beginning and till today to “be Earth’s most customer-centric company, where customers can find and discover anything they might want to buy online”. For the first years, until 2002, the company was rapidly growing focusing mainly on scaling and not on profitability, generating losses. Jeff Bezos, CEO and Founder, was targeting to reach a critical mass which would cover large investments done to lead an international e-platform and to run extensive logistics solutions (fulfillment centers), but also create an entry barrier to potential newcomers which could be taking market share of the newly created industry. In beginning of 2000s’ and considering the products accessible through internet diversified largely, Amazon signed partnership contract with retailers like Toys”R”us and Target, and implemented a free shipping offer for every order exceeding 25$. In the following years, the company made 2 more important and successful steps developing
- Amazon Web Services (in 2002 [1], called further AWS) – a service offering to customers to deal instead of them with capital intensive IT infrastructure (servers, data centers, maintenance, etc..), giving thus a possibility to focus more on the business development itself
- Amazon Prime (in 2005 [1]) – a loyalty program giving additional benefits to customers like free deliveries, larger music and video library, additional e-books downloading
Amazon invested also in high-end consumer electronics launching the Kindle (2007 [1]), Kindle Fire (2011 [1]), Fire Phone (2014 [1]), Echo (2014 [1]) but had issues to “pierce” in those markets.
At 2016 end the company registered sales exceeding 135 $US billion [9] [10] and net income 2.4 $US billion [11].
As for the internet linked industries, worth noticing that the web was used by only 0.4% of the world population in 1995, whereas today it is by more than 50%, representing approximatively 3.7 billion of people (exhibit 1). The e-commerce itself kept on also growing during the past years to reach a potential value of almost 2 trillion $US in 2016 end (only B2C business, B2B and C2C excluded) [15].
- Problem Statement
Amazon is known mainly for e-marketplace, and many people are surprised when it appears it is much more than that. Despite being customer centric company, Amazon did not inform correctly about all the products available and the path it wishes to take in the future.
A second issue rising is the “come back” of Walmart, which decided after years of passiveness to invest largely into e-business technology and new warehouses so to regain competitive advantage, whereas companies like Alibaba are tailing just behind.
Thus, the challenge for Amazon will be to still increase its e-commerce activity but without being strictly and only associated to it.
- Situation Analysis
E-marketplace | Web Services | High-end consumer electronics |
Products | ||
Amazon.com, Prime, Video, Music, Zappos, Woot, Fresh, IMDb, Kindle Store, App store for Android [3] | Cloud computing (Software as a Service, Platform as a Service, Infrastructure as a Service), tools for the internet of things [4] [13] | Kindle, Kindle Fire, Fire Phone, Echo, Echo Dot, Echo Tap, Fire TV [3] |
Environment | ||
With the internet expansion starting in the 90s’, the trade and store transactions have been influenced significantly – there is a continuous switch from physical to e-store purchase till today [15]. Customer service in physical and virtual stores has become key due to competition intensive industry, supply chain management importance has grown – products must reach customers fast and independently of location while offering low costs prices for services. | Hugely growing industry of IT services. Its main purpose is to deliver technological access to customers while lowering the costs and expertise needed to run the heavy infrastructure network. The competition is not intense as the demand is constantly increasing and the number of competitors will remain limited considering capital intensive industry. | Overcrowded industry becoming more and more a combination of hardware and software and with many competitors, but as the addiction to electronics is increasing, the demand does as well. In order to sell your product it has to be disruptive and high quality, so to differentiate from other producers, but at the same time it cannot be over expensive compare to competition, which leads to low margins (excluding for Apple). |
Customers | ||
Individuals, retailers | Startups, small businesses, large companies, public sector | Individuals |
Main Competitors | ||
Walmart, Alibaba and EBay (for e-commerce), Apple (for the apps, books and music through Apple Store), Google (through Play Store), Netflix | Google (Google Cloud Platform), Microsoft (Azure), IBM (SoftLayer) [8] [14] | Apple (iPhone, iPad, iWatch), Samsung (Galaxy phone and tablet, TV), Google (Home, Pixel C tablet, Chromebook,), Microsoft (Surface Pro, Surface Books) |
- Short, mid and long term recommended marketing objectives for the company
Amazon shall focus on developing strong logistics solution in the e-marketplace, keep on investing heavily in R&D for AWS and Electronics and use Amazon Prime as a promotion platform – bring the customer “in” through the e-retailer and Web Services business verticals and then, as being part of the package, focus the promotion on the 3rd segment. In the same time this will create a barrier to Walmart and Alibaba which do not have other parallel businesses to enlarge customers’ purchasing experience.
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