E-Marketing Analysis for Amazon - Essay Example

E-MARKETING ANALYSIS FOR AMAZON Introduction The tide of globalization has reduced the world to a village market. The invention of the internet has been one of the factors that have fuelled the wave of globalization. Most companies have also moved fast to embrace the widespread use of the internet. In the recent past, the internet has become one of the leading medium of conducting business transactions. This has promoted the emergence of e-commerce and e-business. This is the face of business in the 21st century which has turned out to be more personalized and customer oriented than the old marketing. E-marketing promotes more personal contact between the seller and the buyer. E-marketing is a part of e-commerce which involves electronic medium which his sued to achieve marketing objectives. It is set of a strategic level which uses traditional marketing and businesses strategies. As was highlighted earlier, many companies have responded to the new marketing styles. This paper will look in details how Amazon.com has responded to the concept of e-marketing and which approaches it is using to achieve this. (Hanson 2000, 17) Amazon.com is arguably one of the leading online book stores in the world. It is based in the US and has grown in the recent past to become the leading online book store. It conducts its business online which may be one of the factors that have fuelled its growth with the increased use of the internet. The company has invested heavily on new technology which is aimed at ensuring that it taps the current technology in delivery of books and other article online. But it seems to have taken the strategy half-heartedly due to the market response and const benefit analysis that it has taken. (Tapscott 2000, p. 137) Amazon’s market entry strategy The company has used a slow market entry strategy with a reservation of some kind but which seems to be based on the market environment and comparative competence in the use of digital sales concept over the current sales strategy where the company does physical delivery of its goods. Although it seems to the direction that all business is taking, Amazon has taken some cautions in the way it is approaching the issue with careful considerations of conditions that exist in the market. Amazon actually does more of market advertisement over the interment than the physical sales of the books. This is because on their website, the company only provides the buyer with a book cover or paperback of the book. The customers are then supposed to place their orders online which the actual delivery is done through shipping and posting. Although it can be considered to be the same as old business model, this model by Amazon is somehow successful since there is access of their site by many customers. The success of the company lies on the strength of its stock having a book store with more than 4000 book titles. With such a huge book store, the company has been able to take a niche in the book market. (Rowley 2001, P. 128) Amazon.com has also moved an inch higher and ensured that it install the new technology in the market. In 2006, the company jumped to a venture and spent about $201 million on a range of new technologies in order to keep its services better. In this venture it hoped to create an online money transfer in which it would compete with existing eBay’s Paypal. This is not the only venture that the company has taken in the recent past to ensure that it keep up with the requirements of e-marketing process. In 2005, the company acquired the Paris based Mobipocket and in 2006, it acquired an Unbox movie-download service. These are some of the steps that the company has taken to ensure that it offers a wider range of services and diversified products to its customers. Apparently Amazon has done much to sell books, movies and music online in a digital form. It was hoped that the company would make these services available after acquiring Mobipocket which sells books online in digital form. Customers just download the books from the internet. Amazon has cited the economies of scale as the leading factor why the company has not been able to offer the same kind of services as offered by its own subsidiary Mobipocket. (Negroponte 2005, p. 43) Following market analysis of the whole issue, it seems Amazon has taken is as a short terms marketing strategy. Instead it has projected on along term market strategy which will be achieved through unveiling of its own book device the Kindel. Amazon has also cited that Unboc will be offering NBC TV shows through the network that it has pulled from Apple’s iTunes. The company has taken the decision even with the knowledge that digital sale shall remain low. Having revolutionized e-marketing, the company is fully aware of the need to focus on long term growth which eventually yields. This approach by the company seems in line with some restrictions that are currently being experienced in the industry. Although it is easier to download and sell music online compared to sending CDs and books through physical delivery, the current restrictions on where ad how the consumers can use them limits the viability of the business. This restriction limits the market since the holders of the rights can easily shake down the sellers. (Niall 2000, p. 23) The concept here does not lie on the economies of scale and the cost of the process but rather of the viability of the business. It is clear that Amazon does not want to gamble with the market and enter into a business that will fail soon or later due to restriction. It considers that it can still make enough money by shipping books and CDs. However the company seems to have felt the pinch of competition that it is facing from other companies like Sony Corp’s online book store which has been selling books in digital forms online. To this it is hoped that the company may venture the market and offers its product at a low price than Sony Corp. having already acquired the Mobipocket with more than 40000 titles and with the launch of the Kindle, Amazon may rise to become the biggest digital seller of books. This would mean that Amazon would have a price competitive edge as compared to its main competitor. (Chung and Turban 2000, p. 45) But still Amazon believes that these new offerings will not change its profit equation to a large extent. This is one of the reasons why this has been seen as long term strategy to position the company well in e-marketing business. The company still believes that there is not profit competence that a company can receive by digitizing it books and music as compared to physical delivery. The whole concept profit from digital music can come when the whole market embrace the concept. As it is currently, there are no harmonized price relations between digital music and the CDs. It has been noted that studio have been keeping whole sale price for digital downloads with an aim of protecting DVDs which contribute a large parts of their movie sales. This creates a situation in which it is only the holders of the rights who can make a huge profit from the sale of music and movies online in a digital form. (Ianni 2003, p. 115) It is perhaps this indifference in the profit margin that is making Amazon to be reluctant in implementing the issue of downloads. Although the whole process appears simple than the physical sales they are doing currently, it may at the end prove to be difficult. It is this uncertainty in the market that is making the company first decide to re-establish its marketing strategy and process before entering into the deal. Otherwise there is no need of starting the process which will end up benefiting the right holders. This argument can be supported by the fact that a company like Apple sells million of songs in digital form without handling a single CD but end up with minuscule margins compared to others. The company may be taking it slow but analyst believes that within a period of three years, digital products will make bottom line sale for the company. This is in line with the future developments that are expected to take place in the market. One of such development which could enable the company to venture into the concept is the lifting of software locks by the music labels which is currently limiting what songs can play on what devices. The company has ensure that it does not enter into the concept which will end up limiting the number of customers who can buy from it due to the technology that they can access. The company has shown that it wants to sell music with a wide appeal and which does not have restriction on consumers. This has been in order to overcome the current limitation in its technology where its digital movies and books remains chocked with restriction. This is one of reasons why the company has not made any impact on the digital sales. Fore example, the books which are sold in digitized forms by it subsidiary Mobipocket cannot be played by a Sony Reader, movies and TV shows from its Unbox cannot play on the popular iPod although they play of most of the TiVo machine and other portable devices. (Lindar 2002, p.46) From the above analysis of the company it is clear that the company still holds some strength in the market. Having acquired Mobipocket, Amazon just needs to expand the service and make it compatible with the current technology. This means it has to ensure that it comes with a means in which it books are compatible with all devices that can read them. The importance of the company venturing in the modern upcoming technology cannot be dispensed with. The company is well established in the market. This means that it has wide range of customer having revolution internet shopping earlier that other companies. The point is that embracing the digital sale technology will move to enhance the position of the company in the market more than it will diminish its sales prospects. However there is need for the company to concentrate more on investing in modern technology. This will ensure that it is well positioned to compete effectively white other players in the industry. Therefore as has been the bulk with other previous marketing strategies, e-marketing pegs it success on communication and distribution. The two factors have been the leading the development of e-marketing but at the same time they have posed a challenge to many company which have succeeded in entering the global market. Although there is easy access to a wide range of consumers in terms of communication and advertisement, the bulk lies with the distribution channel. Amazon has resulted to physical distribution due to the difficulties that can be experienced from the distribution. A breakthrough in distribution is considered as cornerstone to the development of e-marketing process. Let us look closely on the way in which we can design an e-marketing model for Amazon.com to help launch its new campaign. (Berger 1999, p. 123) E-marketing process model An efficient e-marketing model does not only involve communication with the buyers but it takes into consideration other aspects like the distribution, and transformation of the organization and its cooperation to an e-business organization in all aspects. In the early days of its application, many organizations came up with theories of disintermediation as the new drives to the new economy and which were later adopted in the distribution. But there have been weakness which has been identified in these theories in that they don’t take into account the need to new industries whose function are to act as information index or port. This leads to a brake up in the process which leads to inefficient marketing. This has called for repositioning of the distribution channel in the business. This means that any new e-marketing process must go beyond the traditional 4Ps of marketing and give distribution an upper hand in the process. For Amazon, the subject of change is in the distribution channel. The company has done extremely well in communication and has been able to take an inch in the market. The company must come up with a clearly defined distribution process to replace the current physical delivery of books and movies. This means that the plan should take in factors which will reduce physical intermediaries in the process and replace them with electronic intermediaries. E-marketing should adopt distribution mechanism based on communication channel which should facilitate distribution and delineate from the use of direct zero-level or one-level distribution channel. (Peppers and Rogers 2000, p. 98) Amazon should embrace a model which takes into consideration more than 4Ps of market. This will ensure that it reaches more customers and in return produces more satisfying results. It should take a model that utilizes some 7Cs which are all fundamental in internet marketing. This means that the marketing strategy should be cantered on consumer experiences. This means that the company will adopt marketing approach that is from consumer’s point of view. This will also ensure that the strategy will pay attention to all the aspects of brand interaction with the consumer in terms of the design, services in the market, sales and fulfilment process and after-sales services to the consumers. (Kotler and Armstrong 1998, p. 145) However the model should ensure that the whole cycle takes place instantaneously online, from advertising to delivering of the goods. First this will increase the sale of the company in many ways even without attributing the increasing to the number of impulse buying that will be triggered by the procedure. The procedure should be as simple as possible which means the search tools should be standardized. The process should also promote interactiveness of the company with the buyer in a way that they can enquire price and if possible negotiate for the price. Departing from the Porters 4Ps of brick and mortar marketing, the 7 Cs should encompass the following strategies. First the strategy must emphasize on contracting the buyers. This means it has to communicate core promise of distinct value of product to appeal to the customer. At the same time the content that appears on the website of the company should carry full details of the products on sale. The content should serve as the advertiser of the digital products for the company. The construction of the website and the production should be appealing to the consumers. This means that there must be features constructed within the website that are more appealing to the consumers and which will give them lasting experience to encourage them to visit it more. Design feature such as one-click ordering and downloading can be effective in satisfying the consumers. (Wreden 1999, p. 78) The marketing strategy should also promote a feeling of community between the company and the consumers. This means that the search engine should have features like site-to-user and user-to-user provisions like chat rooms which enhances more personal experience for customers. The strategy should be more concentrative. This means that it should take into consideration online behavioural profiling. This means it should concentrate on the special characteristics based on records of their past buying and strive to fulfil characteristic of each market segment. The strategy also needs to be convergence which means that it will have to use different interactive searches in order to reach more customers. Lastly the strategy should keep to the guidelines of the tradition marketing commerce. This means the aim of the process should be offer goods and service to the customers. (Tony 2000, p. 54) The marketing process can integrate merchant model where all transactions are made over the internet especially the click and mortar model or Virtual merchant which ensures all business transactions are completed over the internet. The process model should also integrate the advertising model like the Portal Model which allows the consumers to access as more information that they need about the product in one search engine. The process should take into consideration the above requirement of a proper marketing strategy. It should be led by customer satisfaction. The strength of the marketing model will definitely relay on the customer orientation. This means it has to come up with strategies to adapt to the changing political and legal environment, the economic situation of the people, the social demand, the advance in technology and the environment demands. This can be achieved by ensuring that the company puts in plan a flexible marketing plan which can easily respond to the changing environment. (Dan 2001, p. 146) The marketing process must ensure that the current website is utilized maximally. There are a number of ways the company can use optimizing the use of the current website. First the navigation tools should be standardized to ensure that many people can understand it. This will make it easy to use. Second it has to enhance the homepage layout to ensure that it provides as much information as the customer needs. Third website browsers must be enhanced to ensure the customers get the information that they need with at the least time possible. In the website there must be enough information for the customer to understand all what they have to understand about the products that the company is offering. In this regard it should ensure that there is maximum search engine optimization. This will ensure that customers can access as much information as they need about a product using one search engine. Lastly the issue of costing the products in the site and the presence of outdated contents should also be addressed. This will ensure that the company’s website remains relevant to the consumers. (Fleming1998, p. 123) The overall aim should be to satisfy the customers by offering quality products and service. Hence customer response should be taken into consideration in the process. The marketing strategy should ensure that it takes into consideration customer’s response. In summary the e-marketing process for the company should be as follows; a. Be customer oriented in that it should be as personalized and user friendly as possible. b. Make use of the available technology in the market with a focus on compatibility of their products with the future technology. c. Ensure all transactions are carried out in the website of the company which is customized such that it can be used by all. The website should have all information that the customer needs and be easy to browse through. d. The strategy should be compatible with the legal, political and market environment and be able to position itself according the environment. e. It should be designed to allow the customers to give their feedback to ensure that the future services are offered according to their proposition. Conclusion It is clear that if the company has to enter the digital market, it must design a market approach plan that ensures that it takes into consideration the limitation that are limiting its current practicability. It has to become more customers oriented and responsive to the environment in terms of legal requirements and technology. Reference: Berger, D 1999, Direct Marketing, Prentice Hall, New Jersey. 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