MANAGEMT 7104 Marketing Management | Amazon is an Online Retail
Aim
The purpose of this assignment is to again provide you with an opportunity to apply knowledge, theory, frameworks and tools from the early part of the unit to an analysis of the strategy and strategic practices of a real organisation. In this assignment, you will work to analyse the strategies pursued by the Amazon Australia since its creation. You will evaluate marketing-related strategies and their effectiveness and relate to be real-life experiences and relevant research to look at core marketing theory. The aim is to provide experience of marketing analysis and practice and to determine your ability to relate real marketing strategy to theory and research.
Task
In increasingly competitive markets, consumers have a greater choice over where they buy their goods and services. For an organisation to meet its business objectives, it has to find out what consumers require and then identify the best way in which it can satisfy these needs and wants. Creating a competitive advantage can be difficult. A unique marketing strategy with clear objectives is vital to ensure effective promotional activity.
Your task in this case analysis is to answer two questions by critically analysing Amazon Australia’s market situation. Please do not just describe events, although you should read Amazon Australia’s history to understand the background to your analysis. You should use the principles and concepts that you have learned throughout the unit to answer the following two questions:
- What marketing strategy or strategies has Amazon Australia has adopted since it was created? Answer this question by applying one or more of the theoretical approaches discussed in the course.
- What marketing options can you describe for Amazon Australia if it wishes to remain a successful organisation throughout the next decade? Answer this question based on the circumstances that exist in 2018 and your best forecasts of relevant future industry factors.
These are wide-ranging questions and you should undertake extensive independent research intoAmazon Australia and its industry. You should explore different aspects of these issues and incorporate them into your report. This is a practical assessment of a real company, but you need to show an understanding of theory and research in your evaluation and suggestions.
Answer:
Introduction
Amazon is an online retail giant, headquartered in Seattle, USA. The company has become the market leader in online retail in terms of revenue and capitalization. It started out in 1994 by selling books online. Since then, the company has expanded massively not only within the USA, but also in the international market. It has diversified its business into multiple segments, such as, electronics, video games, audio streaming and downloads, video streaming and downloads, software, apparel, accessories, home and kitchen appliances, gardening, toys and food items (amazon.com.au 2018). Apart from these, Amazon also has its own product line, such as, fire tablets, kindle and various low end products under the brand name of Amazon Basics. Amazon has been operating in Australia for a long time and in 2017, it experienced a massive expansion (Neate 2018). This report gives an overview of Amazon Australia and its marketing strategies. It also undertakes a market analysis of Amazon Australia and focuses on the marketing strategies adopted by the company since its inception. The report also presents an insight on the ways that the depicted strategies would be successful in the years to come.
Background to the company
Amazon was founded by Jeff Bezos in 1994 as an online book selling company. Within two decades, the company has become an e-commerce giant. According to a report in Fortune by Carr (2018), Amazon is the third most valuable country in the world, preceded by only Apple and Alphabet. Like in many other countries, Amazon launched its business in Australia in November 2013 with all types of products it sells at the most reasonable prices. The retail giant has seen immense growth within the past few years due to the widespread usage of smartphone technology and mobile internet, which has made shopping extremely easier and convenient. The huge range of product choice at a reasonable price and speedy delivery are the business secrets of Amazon. The mission of the company includes the features of lowest prices, best selection of products, and utmost convenience to the customers and the vision of the company is based on the aim of achieving a global reach by using customer centric approach with widest selection of products (Gregory 2018). Thus, focus on customers, interest for inventions and operational excellence is the main objective of Amazon.
Marketing analysis
Nature of Amazon Australia’s Marketing Strategy or Strategies since it began
As stated by Baker (2014), effective marketing strategy represents the combination of the 4Ps of marketing mix. Marketing strategies are made to meet the marketing objectives of the company and to provide value to the customers. The 4Ps of marketing mix includes four most important features, that is, product, price, promotion and place. These factors are combined together to create a position of the product in the target market.
- Product refers to the tangible good or intangible service, meant to meet the demand or need of the customers.
- Price is the amount that includes production cost and includes discounts, allowance, credits terms and list price.
- Promotion includes advertising activities, sales promotion, and public and personal selling.
- Place refers to the distribution process, that is, the place of shelving to create a relationship with the customers (Ang and Rusli 2018).
The nature of the marketing strategies of Amazon Australia in terms of the 4Ps of marketing mix is illustrated below.
Product: Amazon is an e-commerce retail giant with a global presence. The company has created an online product market with a diverse range of products, which can be browsed and purchased from the website and mobile app. Then the products get delivered to the customers’ homes directly. It sells products of various local and international manufacturers and along with that Amazon also has its own product lines, such as, Kindle, Fire TV, Fire Tablets, Amazon Drive and Cloud Services, Amazon Wireless, Echo, Amazon Prime, and many more. Under the brand name Amazon Basics, it also offers very low priced but good quality products. Under the retail umbrella, Amazon has all possible products, such as, electronic gadgets, books, accessories and clothing for men, women and kids, home appliances, hardware, software, gardening, toys and baby products, video games, video and audio streaming and downloading. The nature of products is similar in Australia and in other locations.
Price: According to Reimers and Waldfogel (2017), Amazon works on competitive pricing. This is the most crucial strategy of the company to stay ahead in the market. For example, Amazon puts up the product list of new ones as well as the used ones for products like books, electronics, kitchen appliances, furniture etc. with lower price. For faster delivery, it has launched prime services in which people can buy a membership for a minimum price and enjoy free delivery and many other services for free for a year. Since, it does not need to display products in stores, the operating costs are less, which makes competitive pricing possible. It also conducts sales in many times of the year, especially before the celebration seasons, like, christmas, new year etc. The discount price is much lower than the competitive prices, which helps it to earn massive revenue.
Place: As highlighted by Jackson and Ahuja (2016), Amazon has a global presence in the e-commerce industry, with a big brand name for delivering high quality products at a competitive price. However, Amazon did not invest in opening stores and increasing operation costs. Rather, it places the product pictures in the website and mobile app catalogues with every possible details. It also encourages the customers to leave reviews about their purchase to increase the authenticity and credibility of the products. These techniques have been beneficial for the company as well as customers who are more comfortable in online shopping.
Promotion: Amazon has invested in promotional activities in the television and radio channels and print and digital media. In the recent past, the company has been putting up advertisements in the billboards and hoardings for easy spotting. It also gives frequent discount offers which also helps in promotion of the products as well as the brand Amazon itself. Apart from that, it goes for search engine optimization so that the name of the company stays at the top of the search results. Moreover, Amazon applies website advertising techniques for push promotions (Loo and Leung 2018).
Strategic Marketing Options for Amazon Australia moving forward
To achieve success in their business through the next decade in the Australian market, Amazon can adopt the following strategic marketing moves.
Include more local businesses: To increase its market share, Amazon should include more local sellers in their supplier list. As more and more local businesses are sustained with a back up from the e-commerce giant, the more will be the acceptance of it among the customers. Different unknown sellers and ambivalent relationship with the customers often creates a major threat to Amazon (Ireckon.com 2017). The company should also include programs for the local community and businesses under CSR activities to increase about brand awareness and its popularity.
No frills shopping: Amazon should launch no-frills shopping experience for the customers. It should introduce two-day free shipping frequently and multiple times in the year for all the Australian customers, as it did in July 2018 (Masters 2018). This initiative has increased Amazon’s sales significantly during this time. Otherwise, it can also wave off the minimum price criteria for free shipping for all the customers. That would help it to increase the customer base.
Include more luxury brands: Amazon stocks and sells many local and smaller brands at a reasonable price. However, they should also target the luxury goods market in the future. It should start selling the high profile brands of different product categories at the outlet prices, which would not only increase the customer base for the high street brands, but also would increase the popularity of Amazon among the luxury goods customers.
More innovation: As seen from the profile of Amazon, it is a persistent innovator. It keeps on investing in the technologies for innovation and brings out new products and services for improving the customer experience. Currently, it has launched robotic warehouse and drone delivery. The level of innovation done by Amazon possesses major threat for the local businesses.
Adapting content marketing: Amazon can adopt the content marketing technique through blog posts, videos, infographics, photos, and other forms that can attract the customers. For example, if it offers sales on handbags, then it can make videos on those bags with nice catchline, or it can publish blog articles highlighting the features of the bags and also the offers of Amazon. These articles will contain the link to the Amazon website page with that product, so that customers can check the price of the bag immediately. Hence, content strategy is quite impactful. However, for that, Amazon must conduct a market study to have an understanding about the target customers and based on the customer profiles and consumer behaviour pattern, they should develop the contents. It should be made in a manner which would generate the maximum web traffic for the products, leading to maximum sales.
Increased affiliate marketing: This refers to a performance based marketing technique, in which a business rewards one or more affiliates for each customer it brings through their own marketing technique (Dwivedi, Rana and Alryalat 2017). This type of marketing is highly dependent on the ability of the customers to track down the source of the products promoted. Amazon should provide their specific URL for advertising the products. The affiliates, such as, a blogger creates a link to that URL while writing about an article about that particular product. If the customers click on the link while reading the article, they would be redirected to Amazon’s page of that product. Thus, through affiliate tracking software, the sales of the blogger and Amazon, both increase. Hence, as stated by Edelman and Brandi (2015), affiliate network refers to the readymade network of the marketers looking for affiliate schemes, which are mutually beneficial.
Conclusion
It can be concluded that Amazon has successfully developed a distinctive business model for delivering good quality products at a competitive price along with focusing on the best customer shopping experience. Over the past two decades, Amazon has adopted many innovative techniques to increase its global market share. In Australia also, Amazon has been successful since its inception in 2013. Within few years, Amazon has become a household name due to its marketing and business strategies, as it has emerged as a revolutionary cost leader. It has control over its distribution channels that helps to reduce its inventory supply cost. However, in the near future, it should further invest in innovative technology, inclusion of luxury brands, affiliate networking, content marketing and including more local businesses in their product lines to increase their customer base in Australia.
References
amazon.com.au 2018. [online] Available at: https://www.amazon.com.au/ [Accessed 16 Sep. 2018].
Ang, C. and Rusli, H., 2018. The Impact of Marketing Mix 4Ps and Consumer Behavior toward Purchase Decision of Adidas Products. iBuss Management, 6(2).
Baker, M.J., 2014. Marketing strategy and management. Macmillan International Higher Education.
Carr, F., 2018. Amazon Is Now More Valuable Than Microsoft and Only 2 Other Companies Are Worth More. [online] Fortune. Available at: https://fortune.com/2018/02/15/amazon-microsoft-third-most-valuable-company/ [Accessed 18 Sep. 2018].
Dwivedi, Y.K., Rana, N.P. and Alryalat, M.A.A., 2017. Affiliate marketing: An overview and analysis of emerging literature. The Marketing Review, 17(1), pp.33-50.
Edelman, B. and Brandi, W., 2015. Risk, information, and incentives in online affiliate marketing. Journal of Marketing Research, 52(1), pp.1-12.
Gregory, L., 2018. Amazon.com Inc.’s Mission Statement & Vision Statement. [online] Panmore Institute. Available at: https://panmore.com/amazon-com-inc-vision-statement-mission-statement-analysis [Accessed 18 Sep. 2018].
Ireckon.com, 2017. What is the Amazon Australia threat and what to do about it? - Ireckon. [online] Ireckon. Available at: https://www.ireckon.com/customer-experience/amazon-australia-threat/ [Accessed 18 Sep. 2018].
Jackson, G. and Ahuja, V., 2016. Dawn of the digital age and the evolution of the marketing mix. Journal of Direct, Data and Digital Marketing Practice, 17(3), pp.170-186.
Loo, P.T. and Leung, R., 2018. A service failure framework of hotels in Taiwan: Adaptation of 7Ps marketing mix elements. Journal of Vacation Marketing, 24(1), pp.79-100.
Masters, K., 2018. Amazon's Slow Burn In Australia Is Still On Pace To Heat Up. [online] Forbes.com. Available at: https://www.forbes.com/sites/kirimasters/2018/08/07/amazons-slow-burn-in-australia-is-still-on-pace-to-heat-up/#68b49adc67d0 [Accessed 18 Sep. 2018].
Neate, S., 2018. Amazon Australia: Everything you need to know [online] finder.com.au. Available at: https://www.finder.com.au/amazon-australia [Accessed 18 Sep. 2018].
Reimers, I. and Waldfogel, J., 2017. Throwing the books at them: Amazon's puzzling long run pricing strategy. Southern Economic Journal, 83(4), pp.869-885.
