Product Mix Strategy for Amazon, Google and Facebook - Case Study Example

E-Marketing Product Mix Strategy for Amazon, Google and Facebook Amazon After its inception in 1995, Amazon mainly offered online bookstore services. Later, Amazon penetrated into the cloud-computing sector. The company provided cloud-computing services to manufacturers who needed to utilize Amazon’s online market and an assorted range of corporations (Deighton & Kornfeld, 2013). The web services presented Amazon with a platform to provide an inclusive range of online retail services. Customers can shop online and have the goods shipped to their location through logistics companies contracted by Amazon. Over the years, Amazon expanded on to be a leader in e-retailing. The company offers products in the areas of technology, books, gaming, filmography, music, clothing and equipment. In 2012, Amazon unveiled the Kindle tablet device that was optimized for reading e-books. In early 2014, the firm launched the Amazon Fire TV, an appliance for digital media that also acted as a set-top box. Later on, Amazon widened its product mix by venturing into the smartphone market with their Fire phone devices. Google In 1998, Google was established and immediately ventured into the search engine segment. The market leaders at that period were Yahoo, MSN and AOL. The search engine service was the sole product offered by Google. Owing to the unprecedented success of its search engine, Google began to provide text advertisements to enterprises that needed to target various consumer demographic niches based on what they searched (Deighton & Kornfeld, 2013). The advertising function, AdWords, was priced based on the number of persons who selected an advertisement textbox. Google launched AdSense in 2003 to provide advertisement on other relevant search pages other than exclusively on the Google Search page. In 2004, Google ventured into the webmail sector by launching Gmail, a free web emailing service that also offered advertising. Google increased its IT products base by acquiring online content providers such as Picasa, Froogle, and Blogger. In 2006, the company acquired YouTube, a video sharing web service that also offered online advertisement (Deighton & Kornfeld, 2013). YouTube also offered provided subscriptions to digitals content channels. Further acquisitions of DoubleClick and AdMob helped Google diversify and intensify its online marketing products in the online marketing and mobile marketing sectors. The company developed the Android operating system for mobile devices. Google acquired Japanese phone manufacturing company, Motorola, in 2011 that enabled Google to offer cellular products. Google also offers: Google Play, an online music distribution and storage service; Google TV, a digital media service, Google Wallet, an online payment system; Google+, a social networking site; Google Earth and Google Maps, both navigation services. Facebook Facebook inaugurated its social networking services in 2005. As more people began spending longer periods on the internet, the social media site grew exponentially. Facebook began providing online advertisement alongside its social networking service. Facebook began offering location-based services that enabled users to discover businesses in their location based on their friends’ experiences. The company introduced Facebook Gifts, a service that enabled e-retailing on Facebook. Facebook offered the capability to advertise on popular celebrity and company pages. Facebook later launched an online marketing retargeting service that enabled Facebook to track their users’ online activities in order to target their online advertisements. Evaluation of the product Mix Strategy Amazon has a product mix that focuses on online retailing in an extensive range of product categories. The company has also ventured into consumer electronics with the manufacture of Fire Phone, Kindle and Fire TV in order to expand its product offering. Google’s main revenue source is the search engine service. Google has expanded its product mix by venturing into the mobile phones industry through acquisition of Motorola and creation of Android OS. Google also offers video sharing, email services, online payment, and social media networks. Facebook’s main product is the social networking site. Facebook provides e-commerce products through Facebook Exchange and Facebook Gift. The most effective product mix strategy is manifested in Google. Google offers a deeper and extensive range of products than either Amazon or Facebook. Google also offers more enhanced differentiation among its products (Chaffey, 2009). Apple’s Strategy As a decision maker at the strategic level of Apple, I would recommend increasing investment in the online retailing sector. Apple occupies the enviable position of the most valuable company in the United States. Apple’s main product offering is the iPhone and iPad products, which have easily outsold their competitors. The devices have beat competition from Google and Amazon due to their higher quality and well-organized advertisements. However, Apple’s reach in the online retail sector is curtailed by the momentous growth of Amazon (Chaffey, 2009). Apple provides online retailing through iTunes, which offers music, and video downloads software and application sales and sale of mobile and computing devices such as iPhone, iPad, and iMac. Despite the popularity of Apple’s products such as iTunes and iPad, Amazon continues to have an upper hand through its online retail and the Kindle services. In 2011, Amazon’s online retail sales were $48 billion as compared to Apple’s $15.8 billion (Deighton & Kornfeld, 2013). This is a clear manifestation that Apple is not yet the dominant force in the online retailing business. Therefore, in order for Apple to become a truly dominant force in the online retail industry, it must invest more in online retailing. Apple can expand the range of products offered on its online retailing platforms such as iTunes. By increasing its product offering, Apple will increase the amount of online retail traffic that comes its way. Another strategy is to acquire or collaborate with smaller online retailers within the US. This strategy would enable the company to offer services that are more diverse and to increase its market share in the sector. The current online retailing services from Apple should be upgraded and improved in order to compete with the Amazon’s services. Apple should invest in the creation of more user-friendly software products and mobile applications that will enhance the e-commerce capabilities of the company. Unlike Google and Amazon, Apple does not possess any payment system capability (Deighton & Kornfeld, 2013). Apple should create a payment system that is optimized for mobile devices to reduce the dominance of the two companies in online payments and consequently increase its online retail revenues. The company should also strive to offer a more satisfying online shopping experience for its customers by website upgrades and prices that are more competitive. With changing market trends, online retailing is set to grow steadily over the years (Chaffey, 2009). With more investment and e-commerce capabilities, Apple will be in a position to become a dominant entity in online retailing. Online retailing would also help Apple expand its revenue base beyond the principal sale of computing devices and digital music. Another strategy that Apple can implement is the introduction of a service that will provide consumer-to-consumer selling capabilities. Consumer-to-consumer services will complement Apple’s established business-to-consumer services thus enabling the company to curve a larger share of the retail business. Advertising Market: Google vs. Facebook The company that is anticipated to have the upper hand in the advertising segment is Google. Despite Facebook’s progress over the years, the company has been unable able to match the advertising capabilities of Google. Advertising plays a vital role in both Google and Facebook as the main revenue stream. Facebook enables users to ‘like’ various company or celebrity pages. Facebook then offers investors the opportunity to advertise in these pages (Deighton & Kornfeld, 2013). The pricing for online advertising in the Facebook pages is hinged on the figures of user ‘likes’ a page retains. Another strategy that the company has applied is the online targeting advertising, which is supported by Facebook Exchange (Deighton & Kornfeld, 2013). The service enables Facebook to track a user’s online movements outside of the main social media site. This enables Facebook to show more individual customer-focused online advertisements. A challenge to the Facebook advertisement strategy is that most of their users access the site through mobile devices, which are hostile to mobile advertising. Therefore, the rapid growth of Facebook users has not translated to a proportionate increase in advertising revenue for the company (May, 2013). Facebook is the most popular social networking site, beating out its rival’s Google+. Google’s strategies in the advertising segment have been more productive and effective that Facebook’s approaches. Google introduced online advertisement through Ad Wordsto complement act as a revenue stream because their search engine provided zero revenue. Google displayed the adverts on the search-results webpage. Another strategy that Google implemented was to sell advertisements to companies that targeted specific words in user search queries. Through AdSense, Google gained the ability to advertise not only on the search results-website but on other related websites. Google based on key words in the user’s search request selected the websites. This advertising strategy has helped Google to maintain its dominance over Facebook. Facebook’s advertising approach dictates that Facebook can only advertise on its social media website (Chaffey, 2009). On the other hand, Google rakes in revenue through advertisements on YouTube, Google+, Picasa, and Gmail. Google has more unique visitors to the site every month than Facebook. As evaluated in 2012, the number of unique US visitors to Google was around 173 million while Facebook had slightly lesser figures at 153 million (Deighton & Kornfeld, 2013). These numbers show that Google is in a position to achieve a competitive edge over Facebook in advertising (May, 2013). Another strategy that Google has implemented is the capacity to offer tailored search results for companies that advertise with the firm. In conclusion, Google has implemented strategies that are more effective over the last ten years and its dominance over Facebook in the advertising market is projected to continue. References Chaffey, D. (2009). E-Business and E-Commerce Management: Strategy, Implementation and Practice. Harlow: Prentice Hall. Deighton, J., & Kornfeld, L. (2013). Amazon, Apple, Facebook, and Google. Cambridge, MA: Harvard Business School. May, K. (2013). Google versus Facebook - From an Advertising Persepective. Tnooz. Retrieved from http://www.tnooz.com/article/google-versus-facebook-from-an-advertising-perspective-infographic/ Read More