Strategic Marketing - Amazon as case study PDF

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74110909_ R1905D8550560 University of South Wales

Faculty of Business and Society

Strategic Marketing– MK4S34-V2-18949

Module Assessment 1

Comson Laureta Efese R1905D8550560 Despo Georgieu 11/09/2020

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74110909_ R1905D8550560 Table of Contents Title page………………………………………………………………………………

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List of figures …………………………………………………………………………

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Chapter One: Introduction…………………………………………………………..

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Chapter Two: An Overview of Amazon……………………………………………..

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Amazon objectives and business model ……………………………………….. Amazon Business Culture………………………………………………………. Customer-Centric Approach.…………………………………….………………

Chapter Three: Strategic Planning …………………………………………………. 

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Strategic Marketing ……………………………………………………………… 9-10

Chapter Four: Amazon Customer Focused Strategic Analysis……………………… 11     

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Amazon Mission and Vision ……………………………………………………. Leadership……………………………………………………………………….. Amazon Segmentation, targeting, and Positioning Strategy…………………….. Distribution Strategy of Amazon………………………………………………... Amazon Customer-Centric Marketing Mix: 4P's Analysis …………………….. Product Mix Strategy……………………………………………………. Place Mix Strategy………………………………………………………. Price Mix Strategy……………………………………………………….. Promotion Mix Strategy…………………………………………………. Pulling it all together: SWOT Analysis………………………………………….

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Chapter Five: Conclusion and Recommendation ……………..……………………..

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References ………………………………………………………………………………

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74110909_ R1905D8550560 List of Figures Figure 1: Revenue per unique user for tech companies………………………………

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Figure 2: Jeff Bezos famous virtual cycle napkin sketch……………………………

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Figure 3: Cameron and Quinn Framework of culture types ………………………….

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Figure 4: Evaluation of product-centric and customer-centric approaches………….

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Figure 5: Strategic planning process…………………………………………………..

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Figure 6: Amazon 14 leadership principles ……………………………………………

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Figure 7: Amazon Consumer Segmentation …………………………………………..

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Figure 8: Amazon Distribution Strategy……………………………………………….

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Figure 9: Amazon 4P’s Marketing Strategy……………………………………………

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Figure 10: SWOT Analysis of Amazon…………………………………………………

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74110909_ R1905D8550560 Chapter One Introduction here are many definitions of strategic marketing. Drucker (1973) as mention by Mongay (2006) has defined strategic marketing as analyzing the environment, competitive markets, market opportunities, marketing threats, and selecting market target strategies. Bradley (1991) as mentioned by Mongay (2006) has define strategic marketing as how to decide marketing strategy based on predefined objectives, target market segments, policies, and positioning. Jain (2000) as mentioned by Mongay (2006) has define strategic marketing as the process of aligning and adjusting company's portfolio to achieve company's targets Over 50 years ago, Drucker (1954) wrote in his book, ‘The Practice of Management’, “that the customer figures out what a business is, what it produces, and whether it will flourish”. The business model of most organizations comprises customer-focus, value proposition, and processes that convey predominant customer value and most importantly generate profits (Slywotzky, 1996). The days of identifying with customers by walking into a store to buy a product or service are far gone. Trading online has evolved in previous years, and with an excess of 500 million websites adequately offering products and services, the resistance among rival organizations is remarkable. Horn et al. (2017) stated that Contending in the twenty-first century without an online presence is just unimaginable because the Internet has offered businesses new and effective methods of conveying incentives to clients and accomplishing maintainable upper hand. “The best marketing strategies aren’t top-down; they’re outside in, starting with the customers’ needs and wants.” Taking this term in setting to Amazon, it is driven by the customer's voice. Amazon is an example of an organization that utilizes the outside-in marketing approach as they follow a procedure, which centers on customer-centricity. Regardless, Companies like Amazon have had colossal market improvement and achievement over the Internet. So much that, Amazon is one of the greatest books and retail sites in America, it is also maybe the greatest website in the world. Amazon has kept up the advantage through significant product expansion, using and utilizing innovative strategies to oust competitors like eBay and Overstock.com, and stay ahead in the market of web shopping by being client-driven.

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74110909_ R1905D8550560 This report aims to critically analyze Amazon’s marketing strategy pertinent to how it puts customer’s needs first. The methodology is based on academic research using literature from journals, books, websites, etc. The report is organized into five major chapters. While the principal chapter presents the whole work, methods, and structures, the second chapter gives an overview of the Case Study Amazon. The third chapter discusses strategic planning, strategic marketing plan, and implementation procedures. A distinct examination of Amazon's customer-driven marketing strategies will be discussed in the fourth part, then conclusions and recommendations are drawn in the last chapter.

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Chapter Two An Overview of Amazon Amazon is an American electronic trade organization that specializes in the sales of products and services online (John, 2017). As demonstrated by Dave (2018), the company has used web advancement to its advantage to become the bleeding edge monster among competitors producing tons of deals through better web promotions and online trade measures. It is viewed as one of the colossal four innovative companies, close to Google, Apple, and Facebook. Established by Jeff Bezos in Bellevue, Washington, on July 5, 1994, the organization is driven by significant vision, with the improvement of structures for inventive work (Fadikar, 2010). With a staff strength of more than 647,000, 310 million records, and an income of $280.6 billion in 2019 (Economy 2018), Amazon is one of the biggest retailers in the world, and as of late outperforming Walmart, Ikea, e-straight, Alibaba as it presently sits on the 28th position of the "Forbes Global 2000 rundown" as the biggest open organization worldwide, in terms of market growth, benefits, income and resources (Debster, 2019). A few reporters are starting to consider Amazon as the Walmart of the Internet (Francisco, 2011; Stone, 2009). The organization is guided by its main governance rule of "customer fixation" which continually hits on the way that the organization is focused beginning first with clients then at that point, working vivaciously to keep the trust of clients (Amazon, 2019). According to Jeff Bezos, Amazon's mission is to intrigue its consumers with extraordinary products and services and be obsessive about customers.

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Fig 1: Revenue per unique user for Tech Companies (Dave, 2018) Amazon's Objectives and Business Model In a letter to investors, Amazon stated the three rules that direct the organization: customer fixation instead of competitor focus, energy for innovation, and promise to operational greatness. Selling products at lower costs was Amazon's key goal from inception. In both their online and

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74110909_ R1905D8550560 physical stores, the attention is on choice, cost, and convenience. (Modi et al., 2000).

Fig 2: Jeff Bezos Famous Virtual Cycle Napkin Sketch (Innovation tactics, 2018).

Amazon – Business Culture “Culture can be either an important facilitator of performance or a major impediment” (Desphande and Webster, 1993). To identify the organizational culture of Amazon, this report will adapt Cameron & Quinn’s (2015) Framework of Competing Values as shown in figure 3 below:

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Fig 3: Cameron and Quinn’s’ Four frameworks of culture types (Quinn, 2015). Based on figure 3 above, Amazon falls into the Market Culture quadrant. Amazon’s culture is based on a customer-centric approach, therefore, the horizontal axis points toward external environments. Amazon believes that if it doesn't listen to customers, it will fail. Customer-Centric Approach During the 1990s there was a broad examination of the requirement for client centricity Shah et al. (2006). There were thoughts to show the particular factors that are related to clients, for instance, consumer loyalty (Oliver 1999), excellent customer care delivery to customers (Parasuraman and Grewal, 2000), and exceptional delivery to clients (Boulding et al., 1993). Shah et al. (2006) suggested that focusing on the necessities of clients rather than products will prompt a more prominent business execution. As indicated by Desphande et al. (1993), a customer-driven organization is focused on placing the necessities of clients first and for an organization to be client inclined, there ought to be a culture of understanding the customers need to adequately plan products to suit the customers (Strong and Harris, 2004). According to one business leader of an organization, customercentricity is stated in annual reports, but how many organizations practice it? (Sawhney and Brobst, 2002). As such, customer-centricity is by all accounts simple to demonstrate yet a very hard concept to abide by especially in big organizations (Hart, 1999). 6

74110909_ R1905D8550560 Amazon's vision is "to be the world's most customer-driven organization", upheld by their initiative standards, of which the most significant is “Customer Obsession” (Shah et al., 2006). Amazon's prosperity is driven by numerous things like harnessing the power of the web since inception during the 1990s, trying different things with various ideas (like their 4-star bookshop in Seattle or Amazon Go), or in any event, engaging independent companies. Bezos affirms that his mystery to being number one is the over the top spotlight on the customer rather than the competitor. According to Bezos, being Customer-Centric includes asking clients what they need, and sifting through how their needs would be delivered to them, and then deliver it to them. Amazon focused on this view with growth consistently shown year after year. The second significance of customer-driven for Amazon is an innovation for the customers. As shown by Amazon, innovation implies looking for what the customers don't know they need and creating innovations around the ideas then deliver to consumers. The third meaning is the personalization thought of the web. To suit this third significance of client centricity, Amazon revived its store by pushing a 'your store service'. This decoded their vision into this present reality. (Nelson and Scott, 2001). Even though this broad view tends to various explicit issues concerning the benefit of being customer-centric, the all-encompassing aggregate understanding from this views recommends that the genuine embodiment of client-centricity does not lie in how to sell products rather on motivating the client and, simultaneously, making an incentive for the company; in other words, customer-centricity is about double value creation (Boulding et al., 2005).

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74110909_ R1905D8550560 Fig 4: Evaluation of product-centric and customer-centric approaches.

Chapter Three Strategic Planning Business is like any battlefield, if you want to win the war, you have to know who you are up against (Chaneta, 2015). The possibility of strategic planning started during the 1950s and 1960s and savored the experience of favor in the corporate world up until the 1980s when it reasonably became

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74110909_ R1905D8550560 undesirable. Strategic planning is a word with various ramifications and all of them are critical and significant to the people who are blamed for setting strategy for their organizations, associations, or affiliations. Bryson (2000) clarified strategic planning along these lines, ‘strategic planning isn't just the utilization of valuation procedures used in decision making, it is likewise a cycle intended to energize analytic thinking. Wallace (2006) argued that strategic planning isn't just used to eliminate risks since it helps the initiative of a business, it deals with the dangers the business must take. Kotler and Armstrong, (2013) maintain it's the demonstration of building up a strategic fit between an organization's objectives and abilities in its changing marketing opportunities. Johnson et al. (2008) believed that despite developing the business condition that the fundamental alternate courses of action ought to be conveyed to meet customer's desires. Andrews (1980), a long haul Harvard educator and editor of the Harvard Business Review portrayed strategic planning as making decisions such as financial decisions and culture of the organization to suit the needs of customers, employees, and investors. As per Pikuonec (2010), the strategic planning measure incorporates the following steps; mission, objectives, SWOT examination, Strategy, structure and management control, and data information systems.

Fig 5: Strategic Planning process (Pikuoec, 2010). To knock out various competitors in the general market, Amazon has made and achieved a remarkable business method that is client-driven. From the key perspective, the company has had the decision to conform to various normal changes and ascend in the commercial market

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74110909_ R1905D8550560 (Krystal, 2013). Stockport (2010) contended that Amazon's client-driven business system empowers it to offer extraordinary things to its clients and vendors. Strategic Marketing Generally, Strategic marketing is foreseen to prompt the improvement of value products and services that fulfill the buyers' needs. Kotler (2010) says strategic marketing is the social cycle by which people get what they need and want by trading items and incentives with others. Drucker (1954) as mentioned by Mongay (2006) has characterized strategic marketing as investigating the environment, business sectors, market openings, and choosing market target procedures. Bradley (1991) as referenced by Mongay (2006) has characterized strategic marketing as how to choose a promoting technique dependent on predefined goals, target market portions, and positioning. Marketing strategies can be a top-down and outside-in approach. The top-down approach builds up its marketing methodologies by looking at the entire market and the advertisements are planned to pull in a massive number of people. The history of the best firms and brands begins with a method organized from an outside-in context. With this strategy, management ventures outside the organization and looks first to the market. What do clients need? How and for what reason are clients advancing? Would we be able to never really mind their issues and meet their rising needs? (George and Moorman, 2011). Ozeritskaya (2015) argued that with its focus on the external world, organizations using the outside-in approach are less mindful of their limitations as the first the keyword is needs, not product. Day (1994) stated that an outside-in approach enables businesses to achieve competitive advantage by anticipating market requirements ahead of the competitors thus establishing lasting relationships with customers and other stakeholders. Amazon's marketing strategy, which centers on customer services to offer modified products to its customers, reflects a sincere case of an outside-in Strategy. Dudovsky (2020) opined that Amazon marketing strategy plan relies on the following four pillars:

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Offering the widest range of products.

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Using a customer-friendly interface.

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Scaling easily from small to large.

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Exploiting affiliate products and resources.

Chapter Four Amazon Customer-Centric Strategic Marketing Analysis The presumption underlying this report is that “the best marketing strategies aren’t top-down, they’re outside in, starting with the customers’ needs and wants”. This section will take a gander at methods in which the needs of customers impact the strategic marketing frameworks at Amazon, tackling the statement above. Amazon Mission and Vision

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74110909_ R1905D8550560 The mission statement is significant in imparting the overall system of an organization as it provides information about the strategies, qualities, objectives, and serious influence of the organization (David 1989). Amazon's vision is direct, yet difficult to accomplish: "To be Earth's most client-driven organization where individuals can discover and find anything they need to purchase on the web" (Annual Report, 2013). Since the inception of Amazon, Bezos has focused on this technique. He has adhered to this procedure well that he reminds everyone in letters to shareholders in the yearly reports. According to Farfan (2019), Amazon Web Services is one zone where the company is at present more successful than the total of its rivals and gives no sign of throwing in the towel or advancing toward immersion. Regardless of how this regularly shows how the company's vision is driving it towards progress, the utilization of its web services is yet to be upgraded because excellent client profiling is yet to be achieved. (Farfan, 2019). Leadership Focus on Customer Centricity Sustainable management is key in guaranteeing client centricity and contentment (Donavon and Samler, 1994). Webster (1988) argued that convincing customers and cuddling them are especially the obligations of top management. This view is confirmed by Field (2008) adding that leaders need to make everyone understand what’s at stake and enable all employees to address customers’ needs proactively ensuring that the organizations systematically recognize and reward customer-focused behavior. Since 1995, Amazon has expanded dangerously fast, because of Bezos' unconventional leadership style. The Organizations yearly report (Annual report, 2013) equally confirms that the organization's extraordinary staff and Bezos' idealistic administration has contributed extremely to Amazon's prosperity. Hargrave (2014) confirmed that Jeff Bezos is the company's most important resource because of his drawn-out vision and predictable expansion strategy. Regardless of whether you are an individual patron or the manager of a team, you are an Amazon head. These are the initiative standards and each Amazonian is guided by these standards (Collomb, 2018). Jeff Bezos's leadership style includes cuddling his 310 million customers, not his 647,000 employees. This

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74110909_ R1905D8550560 view seems reasonable because each business is a going concern. His customer obsession puts Amazon at the top of all customer surveys. Bezos' intense expertise and comprehension of consumer purchasing habits have prompted his formation of a breakthrough business model and, at the same time keeping up his organization's position as a consumer loyalty pioneer. Despite the way that Amazon's top heads are important and all-around obliged, there are pieces of evidence suggesting that warehouse staff are disappointed with the serious work conditions. Most of the frustrating work conditions are job insecurity, working overtime, and inability to make up for periods spent beyond working hours for the organization (Youthful, 2013). This, hence, transforms into...