One strategy that Amazon uses is market segmentation. That is they see one large group (market) and subdivide it into small groups that share the same needs, the same wants or demands. The objective of it is to make a marketing mix that is able to satisfy their customer's demands by matching their expectations. There are four types of market segmentation strategies. First one is behavioral. Second, Demographic. Third, Psychographic and last one, the fourth one, is geographical differences. To target every single client individually, Amazon uses the demographic and psychographic strategies. Most of the targeted clients are workers who are not to buy their needs in person; people who knows how to use technology to get what they want.
Amazon now has a lot of different products and sells almost everything. It goes from books to gardening tools. The company started out first by selling books. They had a success selling books and still do, which is why they launched Kindle, an Ebook reader. They gave their customers the choice of not only having hard copies of the book but also the Ebook version. Then, they added more products gradually by adding phones, tablets and so on.
Amazon have seen companies like theirs fail because the customers did not trust their website. They took action by securing their website and inserted a customer service with friendly employees. They also promoted well their company by using technology. Everyone is mostly on social media now, on the net, they promoted there. They also used television commercials.
To attract more customers, Amazon keep their prices low. However, they have to rise them a bit since their use of staff. Now that they are trying to introduce their way to the Indian Market, they have to stay with the idea of keeping their price low, gain their small base of loyal customers by seeming trustful and great.
Strengths of Amazon:
It has strong background: they succeeded amazingly selling books, and now the store sells even with more products than before and it changed a lot since the last 2 decades in a very positive way. Amazon is more global.
Customer centric: The company's CRM created customer centric processes to record data on their customers and analyze them. Analyze them in a way so they could give good offers based on items related to what they have last bought, seemed interested in. It is what helped the company claim that at least half of their customer's base are customers who buy repeatedly. Making it a bit easier for new customers to come.
Cost leadership: Amazon created several strategic alliances with other companies to upgrade their customer service. Some of those alliance, those who can control costs are the most important. The reason why is because Amazon can lower the inventory replenishment time.
Their delivery network is very efficient. With the good strategic plans they made with their partners, Amazon put in place a deep and well-structured network to increase their accessibility to some locations. On top of that, they have free delivery cost in certain places.
GLOCAL strategy: Amazon is able compete with domestic E-commerce companies by creating more partnerships with supply chain companies. The strategy of “Go global & act local” was what permitted that to happen. E.g. In India, to encourage the people there to go on the net and check out their products they use the “Aur Dikhao” campaign. (“Aur Dikhao” means ‘show me more)'.
Gaining: by attaining several other companies like Zappos.com, woot.com and many other proved to them that it is a very successful and revenue generating step for the E-Commerce giant.
Weaknesses of Amazon:
Shrinking margins: There are losses because Amazons margins are shrinking. It is happening because of their widespread delivery network and prince wars. In India, they had a loss due to it around 2013-2014
Tax avoidance: Company gained bad publicity due to this matter in countries like US and UK. Though, most of its revenue come from those well-established market.
High Debts: In some other nations/countries, the company is struggling to gain profits and affects the overall profitability.
Product flops- There were several selling failures which caused a depression in Amazon's pocket. They tried launching the fire phone in US, and it did not go well. Even Kindle fire did not do as well.
Backward integration: They creativity is still there. They can come up with ideas with its In-house brads which can increase the variety and help them produce more profits (in competitive markets).
Global Expansion: If they succeed to expand themselves in Indian, Asian and other developing economies, Amazon could rise more since the competition in those countries are low.
Gaining: By taking over other E-companies they lower down their competition and can use them to their benefit.
Opening stores: By doing this, Amazon can help the customers to engage with the brand. Gain and increase their loyal customer's base. The customers are more trustful and it can increase their purchases.
Low entry barriers of the industry: It affects the current business more and more. That will result into a tough competition and lots of price wars, and shrinking margins and losses which will question the company.
Government regulations: Not having a clear insight on issues related to FDI (Foreign Direct Investment) can help other companies in their success in developing countries.
Competition: In foreign country like India, the E-commerce retailers like snapdeal and Flipkart are gaining a great part of the market. It makes it hard for Amazon to make profits.
Mission – “To be Earth's most customer-centric company, where customers can find and discover anything they might want to buy online, and endeavours to offer its customers the lowest possible prices,”
Vision- “To leverage technology and the expertise of our invaluable employees to provide our customers with the best shopping experience on the internet”
There were predictions for 2016 that there might be growth issues for Amazon for some reasons. Although they had a very nice stock in 2016, analysis says that the Gross profit growth may slow down due to greater investments in business, that the competition will be a part of it as it will have an effect on their prices, their attempt of entering Indian market, and new products.
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