Amazons Business Strategies - Essay Example

?Part About Amazon Amazon.com is stationed in the United s. It is a multi-national electronic commerce company. Its headquarters are based inSeattle, Washington. Currently, it is America’s biggest online retailer. Its sales are three times the Internet a sale of Staples, Inc. Amazon was found in 1994 by Jeff Bezos. He launched it online in 1995. The company’s first name was Cadabara Inc. Amazon’s name was very strategically chosen. It was chosen in conjunction with Amazon River. It is the largest river in the world, and begins with the letter “a”. Amazon.com hit off as an online bookstore. However they soon diversified their portfolio and ventured into selling DVDS, CDs, and MP3 downloads software’s, games, electronics, food, toys, furniture and apparel. They started spreading out from United States and established bases in Canada, the United Kingdom, Germany, France, Japan and China. Amazon’s target audience: Amazon has segmented its target market on the basis of various variables. Their target market is segmented on the basis of demographic, geographic, and psychographic variables. Demographically talking, Amazon attracts customers who have constant access to the internet. In a recent survey conducted by Cyber Atlas, 55% men and 49% women amongst the internet using population admitted that Amazon.com is their favourite site for shopping. (CyberAtlas ; 2001)Geographically speaking, Amazon.com is most widely used in the United States and everywhere else in the world where there is Internet access. At the moment 29 million people in 160 countries are using the site. Amazon provides its customers with an engaging and a satisfying experience on their site. This ensures that the customers return to their site. It works on building customer loyalty by enabling features like personal customization of the web page for each of its customers. Amazon’s business strategies: Amazon built its competitive edge on three core strategies. These were: 1. Cost Leadership 2. Customer differentiation 3. Focus Under its cost leadership strategy Amazon has stood out by offering rock-bottom prices. It provides good quality products at low prices. Its prices can’t be matched by its competitors. This makes it an obvious choice for customers. Under the second strategy, Amazon offers current and prospective customers differentiation via convenience. It is one of the largest e-stores at the moment. Its product assortment is huge. It capitalizes on its huge product assortment, fast and efficient delivery and efficient services. It has focused on 4 primary areas for its focus strategy. These include the 1. Product focus. 2. Customer focus 3. Technology focus 4. Distribution focus As mentioned before, Amazon has a huge product assortment. Its product assortment has always attracted customers. Technology has always been central to Amazon’s business. It is an e-commerce business, a virtual market place, where every transaction is done online. Amazon’s E-marketing Strategy: Goal and Objectives: In 2008 Amazon’s vision was defined and re-phrased to mark complete focus on customer experience. It said “relently focus on customer experience by offering our customers low prices, convenience and a wide selection of merchandise.” The vision was to offer the Earth’s biggest consortium of products and to be the most customer centric company. This was Amazon’s core marketing message and it communicated its online value proposition both onsite and offsite. (Chaffey) Amazon ensured that it offered lowest prices for most of the popular products that it was offering. However it also included less popular products that commanded high prices in the market. As a result it was able to squeeze margins for itself. Amazon’s primary objective was to be customer friendly and offer convenience to its customer. This was why it started offering free-shipping services soon. Another core objective at Amazon has been the fulfillment of promises and ensuring that customers are well-communicated and well-informed. Amazon did this by including presentations of latest availability information, the expected delivery time, the estimated dates and options for emergency delivery. As a result, the customer centric focus translated to excellence in service. Strategy and Methodology Implementation to target online customers: American Customer Satisfaction Index gave Amazon a score of 88, in 2004. This was the highest score ever in any service industry online or offline. Amazon ensured that its customer satisfaction metrics are met all through. Each of its sites is closely monitored every now and then. It is monitored on service availability grounds such as site availability and download speed. It is monitored on the per minute revenue that the site is generating. It has an alarm system in place which works like a power plant. If the site revenue is falling below $10000 per minute, the alarm goes off. Other than this, there are certain internal performance service level agreements for web-services. In this, T% of the time, different pages must be loaded in a certain X-number of seconds. (Saunders, 2001) As for its marketing, Amazon has always believed in focusing on consumers as their key marketing strategy. The primary aims of its marketing strategy include: 1. Generate more customer traffic to its websites. 2. Create more awareness of its products and services. 3. Promote repeated purchases. 4. Increase their brand equity, brand loyalty and strengthen its brand name. Amazon’s marketing communication has been a result of its core focus on continuously working out ways to improve the customer experience. This in itself creates and word-of-mouth promotion for them. Word-of-mouth promotion is very effective in acquiring new customers. It encourages them to come to their store again and again as well. According to Marcus (2004), Amazon employed personalization by using technology to reach out to its people. There was a niche group of consumer which was very difficult to reach. According to Bezos they were the “hard middle”. Amazon targets them. They believed that there was a top layer of 10 people who could be communicated through phone and then there was another 10 million group of people who would buy the most popular products. However, they were those people who were somewhere between these two extremes that were difficult to target. (Cox, 2003) The search facilities on the search engine and on the Amazon site are entwined in such a way that Amazon connects products with the interests of its consumers. It has also employed various online advertising techniques. These include paid-search marketing, email campaigns, search engine optimization, and interactive ads on its portals. Amazon’s affiliate program has also been very instrumental in driving visitors home. Amazon offers them a wide range of methods that link them to the site. For instance, some affiliates can incorporate straight text links that are directed to a product page. Amazon has also struck corporate advertising arrangement aka contra deals with some of its suppliers. Its Associates program directs customers to their websites. They enable independent websites and make millions of products available to their customers. Commissions are paid in hundreds of thousands of participants in their Associates program. In this program customer referrals lead to product sales. Other than that, as mentioned before, free shipping options available to consumer’s world over have worked wonders for Amazon. They recently launched an Amazon.com Prime in the US. Under this program, members get free two-day shipping and discounted over night shipping. Thus through these effective and dynamic marketing tools, Amazon has been successful in turning itself into the biggest brand name in the virtual market space. TASK – 2 Marketing PLan My e-business company would be a virtual market space that would focus on clothes, books, electronic items, cutlery, gifts, decorations etc. I intend to turn into a huge product assortment of non-perishable goods. There will be no bricks and mortars. It will be a virtual market space, where the center of all objectives would be customer satisfaction. It’s name would be “Joi De vivre”. The idea is to provide the convenience of online availability of any non-perishable good, a consumer can think of in one large consortium on the web. The Business 2 Consumer ecommerce model would be used. Competitors: The competition in e-commerce is very intense. My competitors would exist in various areas. They would be of the following types: 1. Physical World Retailer, the publishers, vendors, distributors and manufacturers of the products. They already command brand awareness, have developed their sales volumes and customer bases over the years. 2. Online E-commerce Sites: Amazon and Macy’s would be my biggest competitors. Their web presence is huge and they command significant brand loyalty. 3 .Indirect competitors: these could include media companies, retailers, web search engines etc 4. Companies that offer e-commerce services. These services could include website development, third party fulfillment and customer services. E-Marketing Strategy: The targeted segmented for my e-business would include people from all age groups, educated, working upper middle to high-class. They will be targeted and attracted to our “one shop, one answer” brand proposition. The idea is to give them a complete shopping experience as they sit and browse through the web. Objectives: The objectives of e-marketing strategy would be: 1. To ensure customer satisfaction 2. To generate more traffic for the website. 3. To increase market share and brand equity. In order to reach out to consumers in the most cost effective ways, the following methodologies would be implemented: 1. The use of social media advertising. 2. Associate programs 3. Affiliate programs 4. Search Engine Optimization The face of social networking has changed dramatically over the course of last few years. Today social networking sites are used more than ever before. These include the likes of Twitter, My space and Face book. People now invest more time in their activities on Face book then they could on Google and consult twitter for real time news and recommendations. The social networks have become the hub of their online existence. Thus, these social media tools will be capitalized upon, to market the e-business effectively. Associate programs will help generate a positive word of mouth for the company and give birth to new consumers while affiliate programs will keep the vendors and third party suppliers intact. Real time profiling, collaborative profiling and outgoing email will help me customize my business according to customer needs and wants. Real time profiling and collaborative profiling will begin by constant observation of where customers come from, what are their referral sources, what shoppers arrive from what banners, what keywords were searched for and if they came from search engines. This will help generate enough information and the site can be segmented and customized accordingly. Wherever they go once they are on the site would be recorded. If they go to high end items, then they’d be marketed differently compared to discounted items. Hopefully, the customers would come again after their first visit. With every visit of theirs, their behavior would be analyzed and customization on the site would follow accordingly (Chaffey, 2003) Outgoing emails would be used to keep the customers informed about new launches, product offerings and latest developments. This will keep them attracted to the site and ensure that they keep visiting it. For Product distribution, in the beginning, a central warehouse would be in place from where all deliveries will be monitored and dealt with. Shipping charges would apply and once the brand has established itself free shipping will be offered. A Just in Time delivery system will be kept in place to cut down on inventory build up or stock out costs. Initially the business would kick-start from U.S but later on it would be expanded to include South America, Europe and Asia as well. As for performance metrics, effectiveness of marketing strategy would be regularly monitored. This would be monitored using customer satisfaction surveys, sales generated, and the individual impact of every marketing initiative. Future marketing launches would be worked out accordingly. Works Cited Chaffey. (2003). Internet Marketing: Strategy, Implementation and Practice. New York: Prentice Hall. Chaffey, D. (n.d.). Amazon.com: A case study. Retrieved 23 Oct, 2010, from Davey Chaffey.com: Your Guide to Digital Business: http://www.davechaffey.com/E-commerce-Internet-marketing-case-studies/Amazon-case-study Cox, B. (2003). Internet Marketing. NJ: Upper Saddle River. Saunders. (2001). Business The Amazon.com. UK: Capstone Publishing Limited. Demographics: Demographics Influence Online Spending. (2001). CyberAtlas. Retrieved 11 May 2001 from http://cyberatlas.internet.com/big_picture/demographics/article/0,,5901_344751,00.html. Read More