Assignment 1 - “The best marketing strategies aren’t top down, they’re outside in, starting PDF

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Module Assessment 1“ The best marketing strategies aren’t top down, they’re outside in, starting with the customers’ needs and wants**.** ”####### 74109844MK4S34 – Strategic Marketing Dr Zaida Rodrigo1Table of Content####### TABLESTable 1: SWOT analysis for Amazon 1. Introduction 1 Methodology 1 Str...

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Module Assessment 1

“The best marketing strategies aren’t top down, they’re outside in, starting with the customers’ needs and wants.”

74109844 MK4S34 – Strategic Marketing Dr Zaida Rodrigo

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USW Student ID: 74109844

Table of Content 1. Introduction 4 1.1 Methodology

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1.2 Structure 5 2. Strategic Planning in Marketing

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2.1 Objective of the organization

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2.2 Marketing Analysis using SWOT 6 - 7 2.3 Strategies and tactics applied 2.4 Strategic marketing plan

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2.5 Monitoring and Implementation

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3. Amazon’s marketing Strategic analysis 3.1 Internal marketing strategy 8 3.2 Amazon’s marketing mix

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3.2.1 Product mix for Amazon

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3.2.2 Place mix for Amazon

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3.2.1 Promotion mix for Amazon 11 -12 3.2.1 Price mix for Amazon

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3.3 Market segmentation, targeting and positioning strategy for Amazon 13 -14 4. Recommendations and conclusion 4.1Recommendations 4.2 Conclusion

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14 -15

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References 16 - 22 Appendix 1 23 - 25

TABLES Table 1: SWOT analysis for Amazon

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ABSTRACT This report aims at analysing critically the statement ‘The best marketing strategies aren’t top down, they’re outside in, starting with the customers’ needs and wants’. The report will use the company Amazon as a case study. It seems logical that performance is maximized when a business produces a creative marketing strategy and achieves marketing strategy implementation effectiveness. Amazon has developed strategies that have enabled it to become the largest e-retailer. In order to understand their customers better, Amazon has implemented customer personalization in its online platform (Kingsnorth, 2016). This has resulted into Amazon understanding their customers better and through it, making it possible for them to adopt the customer centric strategy.

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1. INTRODUCTION Using appropriate marketing strategy is an important element in achieving a successful business. The choice of an effective strategy is dependent on knowledge of alternative marketing strategies. This coupled with an understanding of how the strategies work under various environments and organizational conditions.

Marketing strategy aims at identifying the needs of specific customers and then developing a marketing program that will satisfy them (Ferrell and Hartline, 2011). It deals with building up of brand image in the market and enhancing the sales of the product along with maintaining a long-term relationship with the customers. Marketing strategy was defined as an approach that is resource based by Baker, 2014. Advocates of this view consider that successful firms are the ones with distinctive resources and capabilities. Where a company’s main capabilities are rare, strong, defensible or difficult to copy and they can be closely associated with the main success factors of a target market, then they can form the basis of a workable competitive advantage and profit (Baker, 2014).

Other scholars viewed marketing strategy as a comprehensive plan that is formed to achieve a marketing object of a company (Peterson, 2010). It provides a blueprint for reaching an organization’s marketing objective. Marketing strategy in short forms the building block of a marketing plan. It is formulated after a thorough marketing research. Marketing strategy assists an organization to focus on their scarce resources on the most possible opportunities in order to maximise revenue.

Earlier scholars through Hackley (1999) argued that a highly accomplished person in strategic marketing decision is most likely going to be able to utilize sophisticated and experientially mediated concepts in coping with marketing issues.

Amazon started its operations in July 1995 as an online bookstore. The company went public in May 1997. Amazon launched its musical store in June 1998. Today Amazon is the most prominent internet retailer with a variety of products and services like auctions, click ordering 4

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and shops.

The success of the company has been attributed to Amazon’s business strategy that is customer centric and in so doing, promotes both internal and external marketing (Amazon, 2015). The founder of Amazon, Jeff Bezos (2017) was inspired in delighting customers as a result the company invested in focusing on customers. In this paper, we will analyse the statement “The best marketing strategies aren’t top down; they’re outside in starting with the customers’ needs and wants” based on Amazon as a case study. Amazon’s marketing strategy, which is focused on customers, makes it an outside –in approach.

1.1 Methodology The paper uses past literature which has been obtained online using the following: google scholar, books and websites.

1.2 Structure The paper analyzes the customer focussed marketing approach taken by Amazon. This is presented in four parts. The first part introduces the paper followed by a discussion on strategic planning. An analysis of Amazon’s marketing strategy has been done in the third part of the paper. The last part contains the recommendations and conclusions.

2.0 STRATEGIC PLANNING Simerson (2011) defined strategic planning as an act of creating a strategic plan. The resultant strategic plan provides specific yet comprehensive information on the organization’s current situation and circumstances and where the organization hopes to be or what it hopes to become overtime. The central purpose of this process is to ensure that the course and direction is well thought out, sound, and appropriate. In addition, the process provides reassurance that the limited resources of the enterprise (time and capital) are sharply focused in support of that course and direction.

Management field has experienced some growing opposition. The major opposition is against 5

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strategy not being strategic at all. To be precise, it does not produce strategic thinking, which is what an organization requires. Management expert Henry Mintzberg has led a critique on strategic planning; his argument is that strategic planning is oxymoron. He observed that planning involves analysing whilst strategy is a synthesis and as a result, the former cannot produce the latter. He further argued that planning gets one a plan and not a strategy (Mintzberg, 1994).

Despite a growing opposition against strategic planning. It remains one of the biggest tool for the success of the company. The only challenge is making sure that everyone in the organization buy’s in into the vision.

2.1 ORGANIZATIONAL OBJECTIVE Plans, strategies and policies cannot be formulated unless the objectives have been clearly identified and defined. Identification and defining of organization’s objectives is one of the basic functions of management. This forms part of the first step in planning process. Managerial functions are based on organization objectives. Formulation of plans, strategies and policies is driven by identification and defining organization’s objectives (Agarwal, 2007). Amazon’s mission states that “Our mission is to be Earth's most customer-centric company. This is what unites Amazonians across teams and geographies as we are all striving to delight our customers and make their lives easier, one innovative product, service, and idea at a time”. This speaks of the company’s approach it has of focus of being customercentricity as evidenced from its operations (Amazon, 2020a).

2.2 SWOT ANALYSIS A SWOT analysis is a tool that helps to evaluate Strengths, Weaknesses, Opportunities and Threats (SWOT) involved in a business. SWOT analysis helps in gaining insights into the past and thinking of possible solutions to existing or potential problems (University of Minnesota, 2009). A SWOT analysis for Amazon has been included under appendix 1.

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SWOT analysis has been criticized for being more of an academic exercise as it allow companies to produce a list with no serious issues (Ferrell and Hartline, 2007). It is therefore important to always remember that SWOT analysis on its own is not inherently productive or unproductive. It is rather, the way it is used that will determine whether it produces benefits to the company or not.

2.3 STRATEGIES AND TACTIC The strength of Amazon is because of using web technology in advertising its services and products. In addition the organization has marketing segmentation and positioning as part of its competitive strategy. In market segmentation, the company uses the 4P’s: product, place, promotion and price. This enables the company to boost customer satisfaction and in so doing improving on customer loyalty (Dibb and Simkin, 2009). As a result of this, the company has continued to dominate despite the ever-growing competition within the industry.

2.4 STRATEGIC MARKETING PLAN Strategic Marketing Plan consists of a broad outline of specifications of what should be done to accomplish specific marketing objectives during a specified future period. Strategic marketing plan is part of the overall long –term strategy of the organization. In addition, it contains strategies to beat competitors, and to effectively manage salesforce (Soundaian, 2012). The marketing plan for Amazon focuses on improving customer’s experience. Amazon has been able to achieve this through offering products and services that are personalized which considers preferences of customers e.g. Amazon Prime.

2.5 MONITORING AND IMPLEMENTATION For any strategy to be successful, it is important that the total marketing process is managed. This is by, implication, means that decisions made must be implemented, monitored and evaluated and corrective action taken if need be. Amazon implements its control strategy through the use of web technology in monitoring and recording behavioral patterns of customer’s on its platform. The company utilizes predictive software in anayzing the data collected in order to personalize its products and services to their customers because of this, 7

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the company is able to send updates to customers based on the products that they are interested with (Amazon,2019).

3.0 AMAZON’S MARKETING STRATEGIC ANALYSIS Using internal and external marketing strategies, this paper will analyze how Amazon has been able to use these marketing strategies to be the best in the industry. The success of Amazon has been attributed to the organization being customer centric. The analysis will be done in line with the statement “The best marketing strategies aren’t top down, they’re outside in, starting with the customers’ needs and wants.”

3.1 INTERNAL MARKETING STRATEGY Various scholars have defined internal marketing strategy differently. Critics of internal marketing as a concept have criticized it as being more of a human resource management rather than a marketing concept. Winston and Cahill (2012) stated that an internal marketing strategy should create an internal environment, which supports customer –consciousness and sales-mindedness.

Internal marketing is one of the most important concepts in most organizations especially those in web based industry like Amazon. The concept involves promoting services and products using top down approach. This is achieved through making employees understand that they are valued and as a result, the success of the concept increases staff morale, which in turn results in better performance of the company (Nikbin, 2010).

Amazon has applied internal marketing strategy in building its customer centric strategy and this has resulted into improved performance. The company has been able to gain competitive advantage over other companies. The increase in customer satisfaction has translated into customer loyalty. Anshari et al (2019) whilst other players in the Amazon industry concentrated on developing ecosystem of nested applications and services, Amazon’s focus was on creating platforms that were aimed at improving customer experience hence making customers satisfied. Amazon has incorporated customer satisfaction in everything that they 8

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are doing from their mission statement to their operations (Barchiesi and La Bella, 2014). The company has translated the customer centric strategy to its employees through trainings that are aimed at teaching them why it is important to be meeting the expectation of the customers (Amazon, 202b).

3.2 AMAZON’S MARKETING MIX Amazon has worked hard to understand its customers through various strategies. In doing so, the company has been able to increase their sales through personalized recommendations. The company uses the 4Ps marketing mix, which includes product, place, promotion and price. Kotler (2003) defined marketing mix as a set of tools that management uses to influence sales and the traditional formulation is called the 4Ps.

Amazon is able to reach out to customers using place and price. Being the leader in ecommerce the company faces stiff competition, which could potentially affect the bottom line of the company’s income statement (Foss and Saebi, 2017). In order to mitigate this risk the company has to always make sure that it remains alert to what is happening in the industry. To achieve this the company has to always have the right marketing mix.

The 4Ps marketing mix (Barker and Angelopulo, 2005) 9

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3.2.1 Product Mix Strategy of Amazon The strategy focuses on various product lines offered by the company to its customers. Companies that do apply marketing mix strategies consider things like quality, variety features, design, packaging, services and brand name (Barker and Angelopulo, 2005). Amazon being a company that employees marketing strategy mix it has a wide range of products and services. The company is also expanding on its products and services through diversification of products (Brad et al, 2020).

The products and services offered by Amazon online store include Amazon video, fresh, prime, web services including distribution of digital content (Jelassi, 2020). This mixture of product and service is in line with Amazon’s vision of being highly consumer centric as product diversification might lead to customer satisfaction in case the organization may have many choices in line with their needs and expectations of their targeted consumers (Shimizu, 2012).

Product diversification results into customer satisfaction (Piercy, 2016). One of the greatest improvement by Amazon has been attributed to product expansion strategy. Amazon provides product membership that encompasses shipping costs for the customer’s that purchase through their website (Amazon, 2020e).

Other retailers are hosted on Amazon in order to post as well as sell their offers using their online platform and this might have a negative impact on the brand image and value. This can be as result of poor quality products being offered by their partners. To mitigate this risk, Amazon recommends quality check before product listing (Bloomberg News, 2019). As a result of this, in order to attain new as well as retaining existing market shares, the strategic marketing mix adopted by Amazon has resulted into increased efficiencies as new offers are added to the platform of the company (Rollecke et al, 2018). This is in line with the efforts being made by the company to continuously expand their product line based on its customer centric marketing approach.

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3.2.2 Place Strategy of Amazon Place was defined by Kotler and Armstrong (2006) as a set of interdependent organizations which is involved in the process of making products available for customers. The key question that requires answering includes: whether the product would be available for purchase offline or online, should a manufacturer sell to the end user directly or as a wholesaler or retailer or both (Dolnicar, et al., 2018).

This emphasizes the organization focus on customer centricity. In order to reach out to different kinds of customers, Amazon has physical bookshops, which caters for those that can or are not comfortable buying online (Redman, 2019). This stresses on the focus the company has on its customers.

3.2.3 Promotion Strategy of Amazon One of the early scholars, Borden (1984) defined promotion as advertising, personal selling, public relations and direct marketing. Duncan (2005) argued that a promotion is one of the key to the market exchange process that resonates with the present and potential stakeholders, and general public. In short, every organization should take a role of a communicator and promoter. Hakansson (2005) explained that promotion has to do with how an organization is able to find an optimal mixture of marketing communication tools that would be able to help them to get the message of their products and brand to the customer.

Amazon engages other distinct website owners to display and advertise on their behalf in association with their e-commerce websites. This is done in order to achieve increased revenue on its sales (Venkatesan, 2017). As a result of this, Amazon is able to reach out to all its targeted customers and in addition to this, the company also offers special discounts or offers for achieving high sales. Amazon through its initiative called Amazon Smile, the company offers a fraction of its sales to charitable organizations and in so doing enhancing its brand image and creating a positive perception to customers (Chen 2018).

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The above strategies employed by the company, helps the organization to attract as well as addressing the wants and desires of customers, which in turn promotes gradually the company’s sales. In addition, the strategy employed by the company enables it to communicate effectively to their targeted customers in a way that encourages them to visit and purchase their online offering.

3.2.4 Price Strategy of Amazon Internal marketing strategy is based on coming up with product price levels in such a way that it attracts targeted customers (Venkatesan et al, 2018). Amazon implements strategies like allowances, discounts and credit payments in order to continue trending as a customer centric organization. In addition, the company also engages a combination of the following pricing strategies: price segmentation, market based pricing and value based pricing. The strategy aims at evaluating prices set by competitors in order to achieve affordable prices for targeted customers (Loeb, 2014).

Conversely, the company fixes different prices for a particular product. Verhoef et al. (2017) gave an example where the company’s price for a similar product in UK was different to USA. This is in line with price adjustment based on market conditions and value based pricing. The marketing mix followed by Amazon in this case represents a flexible price adjustment to the market prices, which enables the company to attract more targeted customers.

However, with the recent pandemic (COVID 19), the company has been able to remove 530,000 offers from the marketplace for coronavirus-based price gouging and suspended more than 2,500 seller accounts in its U.S. marketplace for violating its price-gouging policies (Amazon, 2020d) . This has enhanced customer’s trust in the company and attracted more customers as they are assured of correct pricing.

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3.3 AMAZON’S MARKET SEGM...