WHAT IS MARKETING? The activities of a company associated with buying and selling a product or service. It includes advertising, selling and delivering products to people. People who work in marketing departments of companies try to get the attention of target audiences by using slogans, packaging design, celebrity endorsements and general media exposure. The four 'Ps' of marketing are product, place, price and promotion. Many people believe that marketing is just about advertising or sales. However, marketing is everything a company does to acquire customers and maintain a relationship with them. Even the small tasks like writing thank-you letters, playing golf with a prospective client, returning calls promptly and meeting with a past client for coffee can be thought of as marketing. The ultimate goal of marketing is to match a company's products and services to the people who need and want them, thereby ensure profitability
WHAT IS STRATEGY? Strategy is a high level plan to achieve one or more goals under conditions of uncertainty. In the sense of the "art of the general", which included several subsets of o f skills including "tactics", siegecraft, logistics etc, the term came into use in the 6th century C.E. in East Roman terminology, and was translated into Western vernacular languages only in the 18th century. From then until the 20th century, the word "strategy" came to denote "a comprehensive way to try to pursue political ends, including the threat or actual use of force, in a dialectic of wills" in a military conflict, in which both adversaries interact. Strategy is important because the resources available to achieve these goals are usually limited. Strategy generally involves setting goals, determining actions to achieve the goals, and mobilizing resources to execute the actions. A strategy describes how the ends (goals) will be achieved by the means (resources). The senior leadership of an organization is generally tasked with determining strategy. Strategy can be intended or can emerge as a pattern of activity as the organization adapts to its environment or competes. It involves activities such as strategic planning and strategic and strategic thinking
WHAT IS MARKETING STRATEGY? Marketing strategy is the goal of increasing sales and achieving a
sustainable competitive advantage Marketing advantage Marketing strategy includes all basic and long-term activities in the field of marketing that deal with the analysis of the strategic initial situation of a company and the formulation, evaluation and selection of market-oriented strategies and therefore contribute to the goals of the company and its marketing objectives.
TYPES OF MARKETING AFFINITY MARKETING
Also known as Partnership Marketing, Marketing, this technique technique links complementary brands, thereby creating strategic partnerships that benefit both companies. While one adds value to existing customers by generating more income, the other builds new customer relationships. ALLIANCE MARKETING
Here two or more entities come together to pool in their resources to promote and sell a product or service, which will not only benefit their stakeholders, but also have a greater impact on the market. AMBUSH MARKETING
This strategy is used by advertisers to capitalize on and associated themselves with a specific event without the payment of any sponsorship spon sorship fee, thereby bringing down the value of sponsorship. It has subcategories like direct or predatory ambushing or indirect ambushing by association, to name a few. CALL TO ACTION (CTA) MARKETING M ARKETING
CTA is a part of inbound marketing used on websites in the form of a banner, text or graphic, where it is meant to prompt a person to click it and move into the conversion funnel, that is, from searching to navigating an online store to converting to a sale. sa le.
WHAT IS MARKETING STRATEGY? Marketing strategy is the goal of increasing sales and achieving a
sustainable competitive advantage Marketing advantage Marketing strategy includes all basic and long-term activities in the field of marketing that deal with the analysis of the strategic initial situation of a company and the formulation, evaluation and selection of market-oriented strategies and therefore contribute to the goals of the company and its marketing objectives.
TYPES OF MARKETING AFFINITY MARKETING
Also known as Partnership Marketing, Marketing, this technique technique links complementary brands, thereby creating strategic partnerships that benefit both companies. While one adds value to existing customers by generating more income, the other builds new customer relationships. ALLIANCE MARKETING
Here two or more entities come together to pool in their resources to promote and sell a product or service, which will not only benefit their stakeholders, but also have a greater impact on the market. AMBUSH MARKETING
This strategy is used by advertisers to capitalize on and associated themselves with a specific event without the payment of any sponsorship spon sorship fee, thereby bringing down the value of sponsorship. It has subcategories like direct or predatory ambushing or indirect ambushing by association, to name a few. CALL TO ACTION (CTA) MARKETING M ARKETING
CTA is a part of inbound marketing used on websites in the form of a banner, text or graphic, where it is meant to prompt a person to click it and move into the conversion funnel, that is, from searching to navigating an online store to converting to a sale. sa le.
CLOSE RANGE MARKETING (CRM)
Also known as Proximity Proximity Marketing, CRM CRM uses bluetooth technology or Wifi to promote their products and services to their customers at close proximity. CLOUD MARKETING
This refers to the type of marketing that takes place on the internet, where all the marketing resources and assets are transferred online so that the respective parties can develop, modify, utilise and share them. COMMUNITY MARKETING
This technique caters to the needs and requirements of the existing customers, as opposed to using resources to gather new consumers. This promotes loyalty and product satisfaction and also gives rise to word of mouth marketing among the community. CONTENT MARKETING
In this case, content is created and published on o n various platforms to give information about a certain product or service to potential customers and to influence them, without making a direct sales pitch. CROSS-MEDIA MARKETING
As the name suggests, multiple multiple channels like emails, emails, letters, web pages pages etc are used to give information about products and services to customers in the form of cross promotion. DATABASE MARKETING
This utilizes and information from database of customers or potential consumers to create customised communication strategies through any media in order to promote products and services. DIGITAL MARKETING
This strategy uses various digital devices like smartphones, computers, tablets or digital billboards to inform customers and business partners about its products. Internet Marketing is a key element in Digital Marketing.
DIRECT MARKETING
This is a wide term which refers to the technique where organizations communicate directly WITH the consumer through mail, email, texts, fliers and various promotional materials. DIVERSITY MARKETING
The aim of this strategy is to take into account the different diversities in a culture in terms of beliefs, expectations, tastes and needs and then create a customized marketing plan to target those consumers effectively. EVANGELISM MARKETING
It is similar to word-of-mouth marketing, where a company develops customers who become voluntary advocates of a product and who promote its features and benefits on behalf of the company. FREEBIE MARKETING
Here a particular item is sold at low rates, or is given away free, to boost the sales of another complimentary item or service. FREE SAMPLE MARKETING
Unlike Freebie Marketing, this is not dependent on complimentary marketing, but rather consists of giving away a free sample of the product to influence the consumer to make the purchase. GUERRILLA MARKETING
Unconventional and inexpensive techniques with imagination, big crowds and a surprise element are used for marketing something, a popular example being flash mobs. By keeping in mind the distinctive features of the product, the demographics of the target consumer and their spending power, and the current strategies of existing companies, an effective marketing strategy may be successfully created.
AMAZON.COM HISTORY Jeff Bozos, Amazon.com founder and CEO, dreamed about books. In 1994, he created Amazon.com, Inc., which he labelled as “Earth‟s Biggest Bookstore.” The ecommerce company went online in 1995 and
soon expanded into other media, including DVDs, VHS, CDs, MP3s, and eventually a wide range of other products, including toys, electronics, furniture and apparel. As such, the tagline soon changed to “Earth‟s Largest Selection.” But books were only the beginning of Bozo‟s up-and-
coming enterprise. Amazon.com went public in 1997. In the first shareholder letter, Bozos penned the fundamental foundation for Amazon.com‟s success: “Start with customers and work backwards … Listen to customers, but don‟t just listen to customers – also invent on their behalf … Obsess over customers.” This policy was backed by a startling business philosophy –
Bozos planned on operating at a loss for 4-5 years. It was not until 2001 that Amazon.com posted a net profit at a minuscule one-cent per share. Yet, despite its bizarre business strategy, Amazon.com claimed over 1.4 million customers after only two years of being online. Now, 45 million satisfied customers shop at Amazon.com for everything from books (most popular) to fashion apparel to fine jewellery to Christmas toys. It has one of the most recognized brand names in the world and garners an estimated 50% of its sales from overseas consumers. Surviving the dot-com bust of the late 1990s and early 2000s, Amazon weathered the e-storms and now thrives in the retail marketplace, challenging vending giants like Wal-Mart and Target. Focused on technological innovation and cantered on customer fulfilment, Amazon.com proceeds into the next decade with a profit firmly in one hand, and the capacity to blow it out of the water in the other hand.
AMAZON.COM’S BUSINESS PHILOSOPHY Amazon.com‟s self -proclaimed mission statement is: “We seek to be Earth‟s most customer -centric company for three primary customer sets: consumer customers, seller customers and developer customers.” In a special for the Miami Heral d, journalist Jack Hardy declares: “Customer
obsession; innovation; bias for action; ownership; high hiring bar and frugality. These six core values focus Amazon.com‟s operational strategies.” It is committed to long-term growth based on consumer
satisfaction. One of things that is kind of fascinating about Amazon is everybody, the average person, thinks about Amazon selling books and now music and Kindles and things like that. But one of the things that they have been doing on the side, which I think is actually kind of one of the big hidden stories of Amazon, is Jeff Bozos believes that Amazon should become a public utility. We don‟t have power generators in our backyard, we just plug in to get electricity. We don‟t have to dig our own wells. We have water that comes in. Jeff‟s philosophy is if you want to start a website, if you want to start a
company, if you need storage and bandwidth, he wants Amazon to be a public utility. You just plug-in and all the storage, all the servers, all the bandwidth that you need is right there, basically accessible without you having to then get a rack, and install the equipment, and buy the hardware, and not knowing whether you need 40 machines or five machines. I think that this is actually part of the new world where everything is sorted infinitely stretchable and expandable in real time. The ability now to create a company is so much more efficient because you don‟t have to guess in advance what you‟re going to be able to do with it. Other
companies like EMC that provide huge amounts of storage and analytic software are doing the same thing; they're giving people tools so they don‟t have to build these tools for themselves. A gentleman was telling me recently that there‟s so much demand now for storages that they‟re actually moving - there are actually FedEx'ing
hard drives from San Francisco to New York. It's actually faster to actually move the physical hard drives than is to have the stuff streaming from one side of the country to the other. The other thing is that nobody
throws anything away anymore, like every medical record, every scan, every x-ray, everything that‟s being now digital and stored in the cloud. Juan Enriquez, who wrote one of the essays in my book, was talking about the fact that he thinks that we're on the verge of a big data crisis already. That were running out of room; we‟re running out of bandwidth and space to store all of this. That there has to be another sort of huge leap forward in a way of compressing this data and making it both accessible but also smaller physically in terms of the storage. I think a lot of us read recently about the environmental impact of some of these data centers. They're trying to put data centers in cold environments because they‟re actually generating so much heat now; they‟re using up
so much electricity. So I think all of us tend to think of all this as being free; it‟s the Internet, it‟s free. We're getting to a point where it‟s not to be free anymore, that
we're going to have to find another sort of financial model to benefit from this sort of infinite, infinitely and ever-expanding pool of data and storage.
SWOT ANALYSIS STRENGHTS
1. America's largest online retailer 2. Robust brand image enhances bargaining power 3. Diversified into product lines other than books to strengthen customer reach 4. Kindle builds strong presence in the eBooks OPPURTUNITIES
1. Acquisitions extend product line and strengthen technical platform 2. Increase in online retail sales in the US WEAKNESSES
1. Free shipping offers would be a challenge in the long run 2. Patent infringement issues erode stakeholder confidence
3. Late in entering emerging markets like China and India THREATS
1. Poor publicity with publishers due to the pricing model 2. Launch of Apple's iPad intensifies competition 3. Foreign exchange fluctuation
MARKETING OBJECTIVES OF AMAZON CORPORATE •
Build Brand equity and grow the company
MARKETING •
Increase market share
•
Enhance brand awareness and top of mind recall
DISTRIBUTION •
Increase the reach internationally and increase the product assortments
PROMOTIONAL •
Communicate brand promises of Amazon
•
Leverage parent brand name for new businesses
PRICING •
To be cheaper than the competitors
CONSUMER INSIGHTS BUILDING TRUST
When Amazon started they found out that their main issue was the doubtfulness inside the customers towards e-commerce and amazon.com. From this insight Amazon came up with the idea of customer reviews. When people see other people‟s review they feel
more confident to do the purchase. INCREASING SALES
Amazon found out from their database that there is a relation between the next purchase and current purchase. Based on this they developed a recommendation module which suggested a set of customized products to the customer . FASTER PROCESS
It was found out that the customers who come to an online shop are there basically because of the ease of shopping . They like the reduced hassle and no-queue process. Based on this insight Amazon developed a process called one-click ordering and patented it. PRIME CUSTOMERS
From the insight that many customers feel that delivery charges are non value adding items and felt looted for paying that Amazon came up with the idea of Amazon prime. For a subscription price the subscriber gets one year free delivery. This also induced brand loyalty. SEO
Soon after Google became a leader in online search Amazon identified that many of the potential customers search in Google for landing into a page for online purchase. Amazon strengthened its search engine optimization (SEO). Amazon has 248,000,000 pages stored in Google's index. Each of these pages has the opportunity to rank for any number of keywords in search engines. ACQUISITIONS
Amazon found out lately that its customers mostly belong to age group of 30-50. So they wanted to get to know more about young customers. Rather than changing the current image they acquired company‟s which
were targeting youth such as Zappos and woot. Also they found that customers to digital camera and books go to specified sites and communities to discuss and search products.
TARGET GROUP DEMOGRAPHIC SEGMENTATION
1. For those who have access to internet 2. When income increases, so does the number of online purchases ( E&Y Study). 3. 41 percent of online shoppers between the ages of 35 and 49. 55 percent male and 49 percent female internet users prefer Amazon.com for online purchases 4. Recently increased focus to younger class (20-30 year old) PSYCHOGRAPHIC SEGMENTATION
1. Focuses on personalization and customer loyalty 2. Keep a modern and dynamic image by renovating site design frequently. 3. Quality customer service department to build long term relationships with customers 4. Helps customers find and recommend things they enjoy, rather than push products GEOGRAPHIC SEGMENTATION
1. Appeals to customers all over the world 2. Sell digital products where their merchandise sales are difficult (e books) 3. US still main revenue generator. 4. Has seven international websites for Japan, China, Canada, UK, Germany, France and US SITUATION SEGMENTATION
1. Most online purchases done for convenience 2. Keeps on adding categories for catching every customer and every situation 3. Sale inducing gold box deals everyday 4. Attractive offers with video on demand
MARKETING STRATEGIES OF AMAZON.COM Our marketing strategy is designed to increase customer traffic to our websites, drive awareness of products and services we offer, promote repeat purchases, develop incremental product and service revenue opportunities, and strengthen and broaden the Amazon.com brand name. We believe our most effective marketing efforts result from our focus on continuously improving the customer experience, which drives word-of-mouth promotion and repeat customer visits. We also deliver personalized Web pages and services and employ a variety of media, business development activities, and promotional methods. We employ various means of advertising, which consist primarily of online advertising, including through our Associates and Syndicated Stores programs, sponsored search, portal advertising, e-mail campaigns, and other initiatives. We also participate in cooperative advertising arrangements with certain of our vendors and other third parties. Our Associates program directs customers to our websites by enabling independent websites to make millions of products available to their audiences with fulfilment performed by us or third parties. We pay commissions to hundreds of thousands of participants in our Associates program when their customer referrals result in product sales. We offer everyday free shipping options worldwide and in the U.S. also offer Amazon Prime, a membership program in which members receive free two-day shipping and discounted overnight shipping. Although marketing expenses do not include the costs of our free shipping or promotional offers, we view such offers as effective marketing tools. Amazon.com is obsessed with a fervour to serve consumer and shareholder alike. Since its inception over fifteen years ago, Amazon.com has steadily grown from a burgeoning “dot-com” corporation into a multinational monster, a king in the domain of internet retail. It targets two goals: the satisfaction of a customer and efficient corporate growth. Its marketing strategies are near-legendary, and budding business should take a page – or several chapters – from Amazon.com‟s proven marketing manual.
Amazon.com bases its marketing stratagem on six pillars. 1. It freely proffers products and services. 2. It uses a customer-friendly interface. 3. It scales easily from small to large. 4. It exploits its affiliate‟s products and resources. 5. It uses existing communication systems. 6. It utilizes universal behaviors and mentalities. Much of its marketing is subliminal or indirect – it does not run $1 million dollar ads during Super Bowls nor post flyers in mall marketplaces. Amazon.com relies on wily online ploys, strong partner relations and a constant declaration of quality to market itself to the masses.
1. PAY PER CLICK ADVERTISING Independent Pay Per Click (PPC) advertising has been the black sheep of Amazon.com‟s marketing campaign. Their first PPC campaign
attempt, spawned by their subsidiary company A9, was the mediocre Clickriver, a middling PPC program that kept its head above water but certainly swam no great channels. ProductAds replaced Clickriver in August, 2008. It allows any web merchant to purchase PPC ads on Amazon.com‟s website, leading some pundits to sardonically comment about Amazon.com‟s possible pursuit of Google‟s web browsing crown. Despite its potential interest in Google‟s regime, Amazon.com continues
to purchase PPC advertisements on Google to direct browsing customers to their websites. It buys space on the left side of Google‟s
search listing results, and pays a fee for each visitor to Amazon.com who clicks on their sponsored link. This is typical of Amazon.com‟s
marketing strategy. No big banners, loud colors, or pristine men casually conversing about Amazon.com on America‟s tube – just a demure advertisement on a web page which, incidentally, may wordlessly lead thousands to Amazon.com
Initially Amazon.com used Clickriver as a pay per click strategy. This was replaced by ProductAds in 2008. The program works by allowing web merchants to buy PPC advertisements on the website of Amazon. Aside from this, the company also buys PPC ads from Google, in order to drive potential visitors to their websites. It‟s a simple strategy but
clearly an effective one in garnering prospective customers. 2. CONTINUAL WEBSITE IMPROVEMENT In today‟s stop-and-go internet traffic, an engaging, simple and easy-to-
use website is a necessity. Amazon.com expends millions of dollars and hundreds of man-hours to identify problems, develop solutions, and further enhance the customer‟s online experience. Rob Ender le, head analyst at Enderle Group, states that “Amazon.com has always been very aggressive about analyzing its website‟s traffic to a high degree and making modifications based on what they see.” This constant pursuit of perfection lead to Jakob Nielson‟s prestigious ranking of Amazon.com‟s
website usability. In a 2001 study of 20 ecommerce sites, Amazon.com scored 65% higher than the average of the other nineteen sites‟
usability. It has a class-leading 99.9% mobile device availability, and uploads several seconds faster than some of its competition. In one test, Amazon.com uploaded in 2.4 seconds, while Target took nearly seven to finish. A navigable website has consistently topped the priority charts of Amazon.com Occasionally, management skirts customer relations and engages in under-the-table investigations. Following several lawsuits from aggrieved loyal customers, who were charged several dollars more for the same item than newcomers, Amazon.com apologized for their underhanded differential pricing and discontinued the project. However, Amazon.com continues to noiselessly experiment on their website, garnering new information and augmenting their already popular website. Amazon.com develops and improves their website continuously, spending plenty of time and resources in analyzing user behavior and addressing their concerns. For this reason, many find it user-friendly, simple, and engaging. Based on a study conducted in 2001, Amazon.com topped a list of 20 e-commerce websites in terms of accessibility, speed, and usability.
3. OFFLINE ADVERTISING Martin McClanan, CEO of upscale gift cataloger Red Envelope, notes that TV and billboard ads are roughly 10 times less effective when compared to direct or online marketing when concerning customer acquisition costs. Amazon.com has observed McClanan‟s advice by
reducing their offline marketing, especially during the holidays. In 1999, Amazon.com spent a gargantuan $80 million in offline advertisements during the fourth quarter. A year later, during the same time span, the company splurged only fifty million. Later years brought even more drastic cuts. According to Competitive Media Reporting, Amazon.com frittered $36 million in offline advertising in 2008, but through August of 2009, the corporation had spent a meager $9.4 million. However, such cuts have not negated Amazon.com‟s successes. It boasts the highest
sells of any online retailer during the holidays, especially during Black Friday. Amazon.com‟s strategy is simple: since customers shop online, online is where they will be found.
4. STREAMLINED ORDERING PROCESS Easy ordering is Amazon.com‟s Holy Grail. It eagerly develops
technology to allow customers to better navigate and explore their online retail mall. Jacob Lepley, in his “Amazon Marketing Strategy: Report One,” notes that, “When you visit amazon.com … you can use [it] to find
just about any item on the market at an extremely low price. Amazon.com has made it very simple for customers to purchase items with a simple click of the mouse … When you have everything you need, you make just one payment and your orders are processed.” This simple
system is the same whether a customer purchases directly from amazon.com or from one of the Associates.
5. PARTNERSHIPS & WEB SERVICES Amazon.com has shook hands and signed contracts with quite a few partners. Not only does it operate many of its own websites, including A9 and CDNOW, but it hosts and manages retail web sites for an array of other retailers, including Target, Sears Canada, Bebe Stores, Timex Corporation and Marks & Spencer. It previously hosted Borders bookstores websites, but that relationship ceased in 2008. For several years, Amazon.com partnered with ToysRUs. Typing “ToysRUs toys” and similar query terms would also list Amazon.com‟s Toys & Games
tab and products. As a result of litigation, however, this partnership ended in 2006.
The simplicity that pervades Amazon.com‟s customer checkout extends
to its partner relations and services, of which there is no shortage. Amazon.com hosts no less than twelve types of web services, including ecommerce, database, payment and billing, web traffic, and computing. These web services – many of which are free – create a reliable, scalable, and inexpensive computing platform which can revolutionize a small business‟s online presence. For instance, Amazon.com‟s
ecommerce Fulfillment By Amazon (FBA) program allows merchants to direct inventory to Amazon‟s fulfilment centers, and after products are purchased, Amazon.com will shoulder of the burden of packing and shipping the merchant‟s product. This frees the merchant from a
complex ordering process while allowing them control over their inventory.
6. AFFILIATE MARKETING Keeping in line with their fourth marketing pillar, Amazon.com sponsors a wildly successful program called Affiliate Marketing. Using Amazon Web Services (AWS) XML service, Associates (independent retailers) and third-party sellers agree to place links on their websites to Amazon.com or to specific Amazon.com products. If the third-party Associates list their own products on Amazon.com, they may create links to those products as well. Associates receive a fee for each visitor to Amazon.com that is directed through their links, and receive extra commissions if the visitor buys a product. However, at the beginning of 2009, Amazon.com decided to terminate PPC referral commissions to its North American Associates for paid search traffic. In an email sent to all Associates, Amazon.com said, “After careful review of how we are investing our advertising resources, we have made the decision to no longer pay referral fees [that] send users …. through keyword bidding and paid search.” Time will tell how the North America Associates
program reacts to this change, but with AWS, it is unlikely that Amazon.com will lose many of its Associates. To offset this change, ion August 19, 2006, Amazon.com released aStore, which enables Associates to embed a subset of Amazon products within, or linked from, another site. How successful is this program? Nearly one million Associates have joined with Amazon.com, and approximately 40% of its sales result from its Affiliate Marketing program. At the conclusion of 2007, Amazon.com reported over 1.3 million sellers through Amazon.com‟s World Wide Web sites. It continues to expand its Affiliate program.
One of the most successful programs of Amazon.com is affiliate marketing. Through this program, third-party sellers and independent retailers or associates are invited to place links on their sites that direct visitors to Amazon.com or Amazon.com websites. For every visitor that an associate leads to Amazon.com, they are paid a specific fee. If the visitor decides to purchase a product, the associate also receives an extra commission. This strategy is so successful that by the end of 2007, a total of 1.3 million sellers have joined up with the site.
7.
THE CUSTOMER’S OPINIONS
Amazon.com does more than pay sycophantic lip service to its customers. Each product is available for consumer reviews, and customers may rate products on a hierarchical scale of 1-5 stars. Amazon.com members may also comment on other member‟s reviews. Some bemoan Amazon.com‟s consolidation of different versions of a
product (e.g. DVD, VHS, BlueRay of a video) into a single product available for commentary. However, this simplifies commentary and use accessibility, a preeminent concern for Amazon.com.
8. EMAIL MARKETING For such a money-conscious company as Amazon.com, the lure of free and accessible e-mail is one delectable temptation that is too potent to resist. Amazon.com engages in permission marketing, where customers give the company permission to send them e-mails detailing product promotions. Seth Godin, Online Marketers, writes that “By talking to only volunteers, Permission Marketing guarantees that consumers pay more attention to the marketing message.” This strategy has acquired
Amazon.com an obsequious following. Melvin Ram, a satisfied Amazon.com customer, writes on webdesigncompany.net that “Looking at the e-mails I‟ve received from Amazon over the last two years, I did
not find a single e-mail that was irrelevant to me. Every single one seemed like it was hand-picked for me based on my previous purchases.”
Email marketing is another technique employed by Amazon.com. Through their permission marketing program, customers allow the company to send them messages about product promotions. This has proven to be an effective approach, since customers are sent messages that are relevant to them. Based on their previous purchases, Amazon.com serves them up with material that they may find interesting.
9. CUSTOMER SERVICE Jeff Bozos would argue that customer service is not an addition to a corporate goal – it is the corporate goal. He calls Amazon.com, “The most consumer-centric company.” In a lecture to Massachusetts Institute of Technology students, Bozos “Tells of technological advances that have not only enabled customers to find products, (and now at 28 million items), enabled products to find customers [italics original].” Amazon.com focuses on the customer experience. It wants customers to quickly access their hearts desire and obtain it without hassle. It has spent billions enhancing and developing its website interface and customer relations. There are numerous methods that Amazon.com uses to assist the customer. All customers may send e-mails to Amazon.com requesting clarification about purchasing or other information. Nor are all responses automated. Amazon.com engages many employees simply to respond to customer issues by phone and e-mail. These are but the first few pages of Amazon.com‟s extensive marketing
manual. By refusing to compromise with mediocrity, Amazon.com has revolutionized ecommerce. Millions of customers, who are reading their books, donning their jewelry, or vacuuming their floor, are a living testament to Amazon.com‟s success. Are you one of them?
10.
THE POWER OF PAGE SPEED
Page speed has been a large focus for Amazon.com. The time it takes for a webpage to load can have a large impact on user experience and sales. After analyzing the ratio of sales to website performance, Amazon discovered that for every 100ms of page load time there was a 1% decrease in sales. So how fast does your website need to be? Many usability experts propose that the ideal page load time is 2 seconds or less. You can easily test the page load time of your own website by using free tools such as WebPageTest.org
11.
PERSONALIZE THE SHOPPING EXPERIENCE
One thing that Amazon does very well is personalizing the shopping experience to each user. Going to Amazon‟s homepage you‟ll see different sections such as “Related to Items You‟ve Viewed,” “Inspired by Your Shopping Trends,” Recommendations for You in..,” etc. Amazon
knows that the more relevant the product is to the user the more likely users will purchase. Online retailers can learn from Amazon and personalize the shopping experience as much as possible. This may be easier said than done but many common ecommerce platforms offer 3rd party addons to provide similar functionality. An easier alternative involves showing users recently viewed products. While it might not be as fancy as Amazon‟s elaborate personalization strategy, it‟s a simple
way to personalize the shopping experience while improving the average order value.
12.
MAKE SEARCHING A BREEZE
The search bar can have a significant impact on the user experience, especially for larger online retailers with many products. The faster a user can find their desired product the more likely it is that the user will purchase. Amazon makes searching a breeze by automatically suggesting popular products and categories. Other ecommerce websites can use this tactic to drive users straight to the product pages and improve conversion rates.
13.
USERS NEED REVIEWS
Users rely on product reviews to make informed decisions before purchasing an item. Amazon does an amazing job of providing and visualizing customer reviews to help potential buyers become customers. Clearly displaying product reviews can significantly improve the conversion rate of a product page. Amazon also leverages email to solicit reviews from customers. This trick can help other online retailers build social proof for products and boost sales.
14.
RECOMMEND SIMILAR PRODUCTS
Focusing on average order value is often one of the easiest yet overlooked ways to improve sales. Amazon does a great job of influencing users to purchase more than just one product. Bundling products together or including a related products section is an easy way for online retailers to improve their average order value. The addition of these sections can also have a SEO benefit by creating internal links and sending “link juice” to other product pages on the website. Amazon even takes this strategy a step further by suggesting similar products during the checkout process. 15.
TEST, TEST, TEST
Test everything. The success of Amazon can largely be contributed to the company‟s culture to always test new ideas. Amazon‟s CEO Jeff Bozos once said “If you double the number of experiments you do per year you‟re going to double your inventiveness.” Adopting a culture that allows for continuous testing can have a high payoff in the long run. So what types of tests does Amazon conduct? Product prices, marketing channels, calls to action, colors, navigation, button styles, messaging, shipping rates, etc. If you can think of it, chances are they‟ve already tested it.
16.
CREATE TONS OF CONTENT
Amazon has 248,000,000 pages stored in Google's index. Each of these 248,000,000 pages has the opportunity to rank for any number of keywords in search engines. Now that's quite a bit of on-page SEO juice!
17.
EXPERIMENTATION AND TESTING AT AMAZON
The „Culture of Metrics‟ also led to a test-driven approach to improving
results at Amazon. Matt Round, speaking at E-metrics 2004 when he was director of personalisation at Amazon describes the philosophy as „Data Trumps Intuitions‟. He explained how Amazon used to have a lot
of arguments about which content and promotion should go on the all important home page or category pages. He described how every category VP wanted top-center and how the Friday meetings about placements for next week were getting „too long, too loud, and lacked performance data‟. But today „automation replaces intuitions‟ and real-time experimentation
tests are always run to answer these questions since actual consumer behaviour is the best way to decide upon tactics. Marcus (2004) also notes that Amazon has a culture of experiments of which A/B tests are key components. Examples where A/B tests are used include new home page design, moving features around the page, different algorithms for recommendations, changing search relevance rankings. These involve testing a new treatment against a previous control for a limited time of a few days or a week. The system will randomly show one or more treatments to visitors and measure a range of parameters such as units sold and revenue by category (and total), session time, session length, etc. The new features will usually be launched if the desired metrics are statistically significantly better. Statistical tests are a challenge though as distributions are not normal (they have a large mass at zero for example of no purchase) There are other challenges since multiple A/B tests are running every day and A/B tests may overlap and so conflict. There are also longer-term effects where some features are „cool‟ for the first two weeks and the opposite
effect where changing navigation may degrade performance temporarily. Amazon also finds that as its users evolve in their online experience the way they act online has changed. This means that Amazon has to constantly test and evolve its features.
18.
AMAZON.COM TECHNOLOGY
It follows that the Amazon technology infrastructure must readily support this culture of experimentation and this can be difficult to achieved with standardised content management. Amazon has achieved its competitive advantage through developing its technology internally and with a significant investment in this which may not be available to other organisations without the right focus on the online channels. As Amazon explains in SEC (2005) „using primarily our own proprietary
technologies, as well as technology licensed from third parties, we have implemented numerous features and functionality that simplify and improve the customer shopping experience, enable third parties to sell on our platform, and facilitate our fulfilment and customer service operations. Our current strategy is to focus our development efforts on continuous innovation by creating and enhancing the specialized, proprietary software that is unique to our business, and to license or acquire commercially-developed technology for other applications where available and appropriate. We continually invest in several areas of technology, including our seller platform; A9.com, our wholly-owned subsidiary focused on search technology on www.A9.com and other Amazon sites; web services; and digital initiatives.‟ Round (2004) describes the technology approach as „distributed development and deployment‟. Pages such as the home page have a number of content „pods‟ or „slots‟ which call web services for features.
This makes it relatively easy to change the content in these pods and even change the location of the pods on-screen. Amazon uses a flowable or fluid page design unlike many sites which enables it to make the most of real-estate on-screen. Technology also supports more standard e-retail facilities. SEC (2005) states: „We use a set of applications for accepting and validating customer orders, placing and tracking orders with suppliers, managing and assigning inventory to customer orders, and ensuring proper shipment of products to customers. Our transaction-processing systems handle millions of items, a number of different status inquiries, multiple shipping addresses, gift-wrapping requests, and multiple shipment methods. These systems allow the customer to choose whether to receive single or several shipments based on availability and to track the progress of each order. These applications also manage the process of accepting, authorizing, and charging customer credit cards.‟
19.
DATA DRIVEN AUTOMATION
„Data is king at Amazon‟. He gave many examples of data driven
automation including customer channel preferences; managing the way content is displayed to different user types such as new releases and top-sellers, merchandising and recommendation (showing related products and promotions) and also advertising through paid search (automatic ad generation and bidding). The automated search advertising and bidding system for paid search has had a big impact at Amazon. Sponsored links initially done by humans, but this was unsustainable due to range of products at Amazon. The automated programme generates keywords, writes ad creative, determines best landing page, manages bids, measure conversion rates, profit per converted visitor and updates bids. Again the problem of volume is there, Matt Round described how the book „How to Make Love Like a Porn Star‟ by Jenna Jameson received tens of
thousands of clicks from pornography-related searches, but few actually purchased the book. So the update cycle must be quick to avoid large losses. There is also an automated email measurement and optimization system. The campaign calendar used to be manually managed with relatively weak measurement and it was costly to schedule and use. A new system:
Automatically optimizes content to improve customer experience Avoids sending an e-mail campaign that has low clickthrough or high unsubscribe rate Includes inbox management (avoid sending multiple emails/week) Has growing library of automated email programs covering new releases and recommendations
But there are challenges if promotions are too successful if inventory isn‟t available.
20.
AMAZON PARTNERSHIP STRATEGY
As Amazon grew, its share price growth enabled partnership or acquisition with a range of companies in different sectors. Marcus (2004) describes how Amazon partnered with Drugstore.com (pharmacy), Living.com (furniture), Pets.com (pet supplies), Wineshopper.com (wines), HomeGrocer.com (groceries), Sothebys.com (auctions) and Kozmo.com (urban home delivery). In most cases, Amazon purchased an equity stake in these partners, so that it would share in their prosperity. It also charged them fees for placements on the Amazon site to promote and drive traffic to their sites. Similarly, Amazon charged publishers for prime-position to promote books on its site which caused an initial hue-and-cry, but this abated when it was realised that paying for prominent placements was widespread in traditional booksellers and supermarkets. Many of these new online companies failed in 1999 and 2000, but Amazon had covered the potential for growth and was not pulled down by these partners, even though for some such as Pets.com it had an investment of 50%. Analysts sometimes refer to „Amazoning a sector‟ meaning that one
company becomes dominant in an online sector such as book retail such that it becomes very difficult for others to achieve market share. In addition to developing, communicating and delivering a very strong proposition, Amazon has been able to consolidate its strength in different sectors through its partnership arrangements and through using technology to facilitate product promotion and distribution via these partnerships. The Amazon retail platform enables other retailers to sell products online using the Amazon user interface and infrastructure through their „Syndicated Stores‟ programme.
For example, in the UK, Waterstones (www.waterstones.co.uk) is one of the largest traditional bookstores. It found competition with online so expensive and challenging, that eventually it entered a partnership arrangement where Amazon markets and distributes its books online in return for a commission online. Similarly, in the US, Borders a large book retailer uses the Amazon merchant platform for distributing its products. Toy retailer Toys R‟ Us have a similar arrangement. Such partnerships
help Amazon extends its reach into the customer-base of other suppliers, and of course, customers who buy in one category such as books can be encouraged to purchase into other areas such as clothing or electronics.
21.
AMAZON MARKETING COMMUNICATIONS
Amazon state that the aims of their communications strategy are (unsurprisingly) to: 1. 2. 3. 4. 5.
Increase customer traffic to our websites Create awareness of our products and services Promote repeat purchases Develop incremental product and service revenue opportunities Strengthen and broaden the Amazon.com brand name.
Amazon also believe that their most effective marketing communications are a consequence of their focus on continuously improving the customer experience. This then creates word-of-mouth promotion which is effective in acquiring new customers and may also encourage repeat customer visits. Amazon used the personalisation enabled through technology to reach out to a difficult to reach market which Bozos originally called „the hard middle‟. Bezos‟s view was that it was easy to reach 10 people (you
called them on the phone) or the ten million people who bought the most popular products (you placed a superbowl ad), but more difficult to reach those in between. The search facilities in the search engine and on the Amazon site, together with its product recommendation features meant that Amazon could connect its products with the interests of these people. Online advertising techniques include paid search marketing, interactive ads on portals, e-mail campaigns and search engine optimisation. These are automated as far as possible as described earlier in the case study. As previously mentioned, the affiliate programme is also important in driving visitors to Amazon and Amazon offers a wide range of methods of linking to its site to help improve conversion. Amazon also use cooperative advertising arrangements, better known as „contra-deals‟ with some vendors and other third parties. For example, a print advertisement in 2005 for a particular product such as a wireless router with a free wireless laptop card promotion will feature a specific Amazon URL in the ad. In product fulfilment packs, Amazon may include a leaflet for a non-competing online company such as Figleaves.com (lingerie) or Expedia (travel). In return, Amazon leaflets may be included in customer communications from the partner brands.
22.
USE THE CROWD TO CREATE "SEGMENTS OF ONE"
Amazon and many of these sites are brilliant at leveraging the wisdom of the crowd to create "segments of 1," or segmentation that is so granular it focuses on each individual person and their specific online behavior, wants, and needs. The pages I view and emails I get from Amazon are unique to me. They offer suggestions for books, movies, and other products I might like based on my personal purchase history and shopping patterns. Like Netflix, Google, Facebook, YouTube, and so many other high trafficked sites, Amazon uses the wisdom of the crowd to personalize the user experience and dramatically increase conversion .
23.
MARKETING TAKEAWAY
Stop obsessing about web design and instead focus on making your website effective. Rather than spending your time and money on making your site look pretty, spend it on optimizing your website pages, creating remarkable content that attracts visitors, and optimizing your site and landing pages for lead generation. Your site can be the prettiest website in the world, but if it doesn't generate leads and customers for your business, what's the point? The more pages you have on your website, the more pages your site can be indexed for in search engines. More pages also means more opportunities for your prospects to find you in search engines and more chances to rank for your business' top keywords. The best way to create tons of website pages is by blogging. Start a business blog, publish frequently, and make sure each post is search engine optimized for your best keywords. The more optimized content you have, the better your chances will be of getting found online.
24.
WHITE SPACE IS OVER-RATED
To be honest, it looks like someone threw up their Halloween candy all over Amazon's web pages, but it doesn't seem to matter. In fact, really none of Compete's top 10 sites are particularly Apple-esque in design, which many web designers seem to idolize. Most of them have near zero white space and are chock full of stuff. That said, if they are the top 10 most visited websites, it just goes to show that web design isn't the most important thing. Rather, being effective is what wins
25.
E-COMMERCE STRATEGY
Amazon employs a multi-level e-commerce strategy. Amazon started off by focusing on Business-to-Consumer relationships between itself and its customers, and Business-to-Business relationships between itself and its suppliers but it then moved to incorporate Customer-to-Business transactions as it realized the value of customer reviews as part of the product descriptions. It now also facilitates customer to customer with the provision of the Amazon marketplace which act as an intermediary to facilitate consumer to consumer transactions. The company lets almost anyone sell almost anything using its platform. In addition to affiliate program that lets anybody post Amazon links and earn a commission on click through sales, there is now a program which let those affiliates build entire websites based on Amazon‟s platform.
26.
PRICING STRTEGY
That strategy is changing as the company expands into the vast grocery and consumer packaged goods market through its AmazonFresh business. Now the priority is convenience rather than the lowest prices, an approach that could limit how much of this market Amazon can grab from grocery store operators like Safeway and Kroger and other rivals including Wal-Mart Stores, FreshDirect and the start-up Instacart. AmazonFresh, which delivers groceries and related items the same day or the next day, started as a test in Amazon's home town of Seattle several years ago. The service expanded to Los Angeles earlier this year and launched in San Francisco Wednesday. If those cities perform
well, the company may expand to many other urban areas and even outside the U.S.
27.
AMAZON'S KINDLE STRATEGY
Amazon's strategy was simple -- it wanted to make money when people used its products, not when they bought them. Amazon typically prices its Kindle e-readers and Kindle Fire tablets at or slightly below cost. By tightly integrating the devices with Amazon's online store, Amazon hopes to make money by selling lots of e-books, music, movies, and other stuff to Kindle and Kindle Fire users over time. However, until recently, the strategy looked like a bust. While Amazon's e-readers and tablets were popular, the company's media sales growth was lackluster. More recently, though, Amazon's media sales growth has picked up again in North America. This suggests that the Kindle strategy is finally succeeding.
28.
DISTRIBUTION STRATEGY
Amazon understood that sustainable massive growth can be obtained only through developing distribution network. They poached 2 of WalMart's critical employees. O O
Richard Dalzell as its Chief Information Officer Jimmy Wright as its Chief Logistics Officer
With the help of Richard and Jimmy Amazon started its process of developing a world class distribution network and circumvent other distributors They massively used IT for developing their supply chain and logistics. This was copied after seeing the success of Wal-mart. In 2000 70% of Amazon‟s software development concerned about distribution centers. As a part of completely controlling its distribution, Amazon Fresh implemented its own delivery network Started in-sourcing the value chain to have more control over distribution Ex. Acquired book surge (now createspace) which was a print on demand company. This helped Amazon to reduce their dependence on suppliers and also inventory level. Now entered digital distribution through kindle, Amazon mp3, instavideo etc. This means every book/song is available in 60 seconds.
29.
CUSTOMER RETENSION STRATEGY
Total Customer accounts in millions
200 137 94 20
Apple
Amazon
Paypal
NetFlix
Kindle became another reason for customers to come back to Amazon. A customer base of 137 millions makes it impossible for any seller to neglect Amazon and they joins in which in turn increases customer base due to large collection of items Amazon made it difficult for customers to switch platforms for reading their e-book through their proprietary format Plays with various offers in Amazon instant video, the video on demand service. Personalized pages tracking past purchase behavior and using modern algorithms to give recommendations. Also the look and feel of the page keeps on changing to give a modern outlook Annual subscription saving schemes for loyal customers
30.
CUSTOMER CARE STRATEGY
“If you make customers unhappy on the Internet, they can each tell 6,000 friends”Jeff Bezos (CEO Amazon). Amazon‟s customer service was ranked No 1 in 2009 and 2011 by American Customer Satisfaction Index Following a bottom-up approach, every decision at Amazon is
driven by the customer's needs. Every employee, even the CEO, spends two days every two years on the service desk to answer calls and help customers Amazon introduced many of the current ubiquitous best-practices to e-commerce industry. Below are a list of innovations bought by them Amazon introduced many of the current ubiquitous best-practices to e-commerce industry. Below are a list of innovations bought by them
