amazon marketing strategy case study

amazon marketing strategy case study

Amazon Marketing Strategy

1. Introduction

Retail industry (NACE2). Here the company can consume more energy. So, competitive doctrine should pursue to be achieved by getting lower price with same or even better quality of product. To solve this matter, Amazon should make an evaluation on each supplier performance. Supplier with better performance should get a reward and supplier with bad performance should get punishment or even to be fired from supply chain trading. In long term, implementing this competitive doctrine may increase cost efficiency and also save company’s energy because there won’t be any do-over in product. To put all those principles in concrete form, Amazon do the right thing by developing software named DoCT (Decision and Operation Control Tool). This software help to do decision making in supply chain operation. In 2007 Amazon decided to enhance DoCT with presented doctrine principle. With doctrine, Amazon can evaluate decision suggested by DoCT software if it is already in accordance with doctrine principle. If there’s a decision which is not in accordance with the principle, DoCT will suggest to make over the decision. With this superior software, Amazon become world-class company in managing supply chain operation and become the most concern of other companies in managing their supply chain.

2. Market Analysis

Market Share and Brand Recognition: Amazon’s Echo smart speaker was introduced in 2015, and it has since gained a significant portion of the smart speaker market. The device was the first of its kind and now holds an estimated 70% of the market, with 15 million units sold to date (Li, 2017). This number suggests that the Echo has been very successful for Amazon, and has confirmed the decision to continue investment in the smart speaker industry. In comparison, Apple has an estimated 25% of the market with its HomePod and Google has 5% with Google Home. When referring to smart speakers as a whole, Amazon holds 2.2% of all smart home gadgets, compared to 1.4% for Apple and 0.4% for Google (Rana, 2018). This indicates that the Echo has been driving an increase in consumption of smart home devices, which is beneficial for the industry due to the incentive for substitution of smart devices for traditional ones, such as lightbulbs and thermostats.

In order to gain an understanding of Amazon’s current position in the smart speaker industry, a market analysis was conducted. Trends in performance, financials, and strategies as well as consumer perceptions and expectations were discussed to evaluate Amazon’s standing with the Echo product line. In addition, a SWOT analysis was conducted to summarize the major findings of the industry analysis.

3. Amazon’s Marketing Tactics

Amazon has several unique marketing tactics. As the previous content section mentioned, Amazon does offer free bundled shipping on orders of 25 dollars or more. This is a great marketing tactic in getting consumers to buy more. The 25 dollars is usually in between the range of what a consumer initially wants to spend. So to avoid additional shipping costs they will add additional items to get them past the 25 dollar mark. This is a very effective tactic at getting consumers to spend more money. Additionally, Amazon will price items at the lowest price in comparison to competitors, making it very convenient for consumers to purchase online rather than going out to the store. Although it has been a tough fight since the original release of the Kindle in 2007, Amazon has had a lot more success in its eBook sales. According to eMarketer, Amazon’s share of the U.S. digital book market is even higher than its share of physical books. This is due in part to taking price as a variable to stimulate demand. On eBooks priced between 9.99-14.99, Amazon only takes a 30% revenue, which is higher than the standard 70% revenue taken for eBooks priced out of that range. This encourages publishers to lower the price on books creating an increase in demand for Kindle products. Finally, Amazon will often use their own website as a means to promote its other products. If you have ever searched anything electronics related on the Amazon website, you have probably come across some sort of advertisement for an Amazon Kindle or Kindle Fire. Amazon has also used its movie streaming service Instant Video to promote Kindle products. According to Kantar the firm spent $59.6 million in U.S. measured media in 2013 to advertise the Kindle Fire, a 56% increase from the year before. This is what is known as mixed-mode communication, when a company uses their own website and other promotional tools to communicate with customers about its products. Amazon does so with the intent to offer information about desirable products thereby delivering immediate sales opportunities. Overall, this has been a major contribution in company sales because a lot of what consumers want is based off what Amazon believes is the right product.

4. Success Factors

Accelerated time to market on new products We know that one of the ways to win the long-term loyalty of a vendor is to help them grow sales for new products, and a simple way to do this is to increase the speed at which we can take the vendor’s product catalog and get it live on the Amazon.com website. This sounds straightforward, but there are many steps involved in this process too detailed to address here, but it is an area where we have made and continue to make good progress.

Sustainable cost structure We have been very focused on creating a sustainable cost structure, and a key driver behind this is automation tools that help thousands of our vendors be more efficient—to go back to the earlier example, our vendors use automated systems to reprice products, and this is just one of many examples of operational cost savings that we push hard to enable at both the vendor and seller level.

Focus on the user Amazon has always focused on providing an excellent customer experience and I know this is the kind of long-term approach that is easy to misinterpret in today’s marketplace. As an example, many marketers might say, “Amazon is all about price. I don’t compete with Amazon.” That’s not the case though, and I think it’s quite clear our focus in the long term is on the customer and the experience. So we’ve done a lot of work to help vendors understand how they can create detail pages that are rich in content and really deliver a great experience to the customer.

5. Conclusion

There can be no doubt that Amazon.com defines a clear set of goals and objectives for their consumer base. With new ideas and expansion on the global horizon, Amazon showed a clear understanding of where they wanted to be, and where they want to go. Understanding that their main competitive advantage is the company’s sole focus on a single industry (online retailing), Amazon realigned their plan to ensure future success. Located in the Mission and Objectives portion of the analysis, AMR has constructed a detailed outline for its consumer base. These comments and objectives made by company execs proved useful in understanding the clear definition of Amazon’s marketing plan. Both mission and vision are statements that provide a sense of direction to the company as well as aids in making decision about what to do in the future. Statements made by Jeffery Bezos at a shareholder’s call clearly identified that a down economy hindered the growth and profits of the company, but with a new focus and heavy investment in consumer retail it could achieve greater profits in the future. This was a clear suggestion of redirecting the company to its original focus in online retail and has since proven with the success of the Kindle and even newer eBook sales. This insight led to the plan to invest in new products and services (efficiently using resources and valuable time). Finally, through recent acquisitions and a proven record of customer satisfaction, Amazon has shown an increase in determination to build value for shareowners. With no timeline specified, these objectives are ongoing, but improvements can be seen through 2010-2014. These long term objectives are key for success and should not be forgotten as the company pushes towards them.

In the final analysis, it has become evident that Amazon is a very powerful company. They are selling a diversity of products to many different types of consumers. They are trying to satisfy each consumer that visits the website, even if it means making a personal webpage for them. They have revived the distribution systems of the Internet and are making a new global economy.