Queston:
Identify Key Components of Marketing Planning Which You Believe are Least Effectively Conducted by an Organization with Which You Are Familiar, And Explain the Likely Impact on the Organization’s Marketing Performance.
Amazon.com is an American e-commerce and a cloud computing company based out of Seattle. The company was formed in the year 1994-95 and is working under the leadership of Jeff Bezos. The e commerce giant is the largest player in the entire world. The company started off as an online book store, but later diversified the business into the entire shopping space. The company also produces consumer electronics devices like Echo, firefly which are revolutionizing the tech space. In the year 2015, Amazon surpassed Wal-Mart to become the biggest retailer in the world. The company made revenue of $ 135.98 Billion in the year 2016 and is on the verge of becoming one of the most successful companies in the world (Martin, 2017)
It is a known fact that success of a company depends largely how well the company position itself in the minds of the customer. This in turn depends on the marketing strategy and planning of the organization. Companies in the past have not been able formulate the marketing strategies according to what their competitors have been doing, but they have been solely focussing on where their customer is and thus targeting him. This though is not the right way to formulate the strategy and in the longer run the company would have a setback. Thus it is advised, that the strategic planning process needs to do a close competitor analysis, select the target market, do the marketing mix of the company and management of the marketing plan (Hollensen, 2015)
Amazon being world largest e-commerce company understands and focuses on the importance of its marketing mix.
Product: Amazon being an international player connects sellers to the customers via the internet. They provide the platform for selling and purchasing. Although it is really hard to quote the entire product line of Amazon, as it basically sells anything to everything (Cain, 2014). Some products of the company are:
The company sells millions of products on its website.
Place: Place is a very important concept in the marketing mix, Amazon sells almost its entire inventory through the online channel, that is, its website and the application. In the past, it has also opened some service centres in the USA, the employees there are friendly and customer centric. The interface of website and the application is quite enriching and focussed on making the consumer journey smooth (Talpau, 2014)
Promotion: Although amazon does TV, Print, billboard, Radio ads, but its prime targeting is through web advertising. The company effectively manages its online web advertising to extract maximum benefits out of it. Amazon uses millions of publisher’s site to display its ad. It spends heavily on online advertising. The remarketing of Amazon is so sticky, that if a user has seen an amazon product once, the entire web will keep showing him the same product, in order to trigger him to make a purchase (Baker & Saren, 2016)
Price: The pricing strategy of Amazon is competitive keeping in mind its rivals. The company also focuses on improving the service delivery, therefore provide premium services for it. The company is able to keep its price low due to less overheads, still does not compromise on the quality of its employees (Llorens, 2014)
Amazon does its segmentation on the actual purchase behaviour of its audience and not in what his audience shows the interest in. It’s really interesting to see amazon foregoing one strategy to segment its audience and giving weightage to other strategy. At micro level the company targets each consumer individually which allows the company to convert its visitors into long terms and high value driven customers (Eva & Shea, 2014)
Amazon has identified its target market as the middle class and the upper class, predominantly the people who are adept with the basic technology and don’t have time to go outside and shop, it forms the customer target base for Amazon (Aral, 2014)
The company has clearly positioned itself as a reliable e-tailer and a cloud computing player, which can deliver goods quickly with great perfection to even the remote locations. The company is soon launching its drone services to cut out the delivery staff, and rely on the technology.
There lies a direct correlation between the distribution strategies and marketing strategy, if the company knows it has a strong distribution network, the same is promoted in its marketing campaigns and vice versa. Amazon has almost 55 Fulfilment centres, where it stores some of the inventory to distribute to its customers at a quick pace. This also includes the amazing and the reliable packaging of the items, and this does not hamper its delivery speed. Hence, the strategy of building an extensive distribution network helps amazon to serve its customer well, and the same is boldly communicated in its marketing plan.
Amazon is next only to Alibaba in e-commerce players, the company in a span of 13 years have quickly moved up the ladders and is giving strong competition to the Chinese giant. The company is valued at $176 Bn, which is absolutely great seeing the tenure. The company has a repeat customer base of 55%; this says a lot about the way amazon is doing business. Brand equity directly relates with the reputation, hence amazon has a great reputation for itself. It is among Forbes 13 most valued company.
Apple and ITunes are a strong competitor to amazon’s when the products are books, music, magazine and audiobooks. In terms of web services Google is the largest competitor to amazon. Wal-Mart on the other hand is doing a beta testing on same day delivery in 4 cities and is still the 4th largest online retailer, which has the potential of leading the race. In developing countries players like Flipkart, Snap deal are giving tough competition to amazon and are going neck by neck with it. Hence, with the evolution of the technology and the increase in market size, Amazon has to quickly adept to new technological innovation if it wants to maintain its lead in the market.
Over and over, Amazon has maintained that its marketing communication strategy is aimed at the following pillars:
Target market is not focussed on Tier 2 & Tier 3 cities- It is an established thing, that the higher margins lie at Bottom of the pyramid, Amazon though target the customer only in tier 1 cities and some in tier 2, in the developing countries. Though the penetration is good, it has a scope of becoming much better. Players like shop clues are going forward with the concept of flee market which is highly targeted towards the rural market.
Amazon has been facing some issues with its fulfilment centres, and due to which in some of the centres the company is unable to keep a track of its inventory, thus a lot of mismanagement happens. This is something which the company should take seriously, come up with better processes to monitor the inventory flow, because this directly affects the service capability of amazon.
Amazon had spent huge chunk of money on two of its most promised products, Firefly and Kindle, both of them did not pick up in sales. The company lost a great sum of money behind these two products. These products were launched after spending a sizable amount of money dedicated towards its marketing and ad spend, hence hurting the pockets of the company. More than the product failure, it was more of losing the loyal customer base, because now people would think twice or thrice about buying original product from amazon in comparison to the earlier times. Thus it becomes imperative for the research team to do its work effectively before involving the marketing team. The efforts and fruits of marketing are realized only after the product steps into the market.
Putting all the points above, it is clear that the company should not only be customer centric while planning its marketing strategy but should also consider various micro and macro environmental forces. Metrics like BCG, SWOT, and Porter & Pestle analysis should be used before coming up with any marketing strategy
References:
Baker, M.J. and Saren, M. eds., 2016. Marketing theory: a student text. Sage.
Cain, P., 2014. Marketing-mix Modelling Big Data.
Eva, N. and Shea, E., 2014. Marketing comes to reference and user services. Reference & User Services Quarterly, 54(2), p.41.
Hollensen, S., 2015. Marketing management: A relationship approach. Pearson Education.
Llorens, S., 2014. Start-Ups and the Internet: The case of Strutz’Sole Angel®. Journal of Business Cases and Applications, 11, p.1.
Martin III, Q., 2017. Good College, Bad College: Seattle, WA: CreateSpace Independent Publishing, an Amazon Company, 2015. pp. iii+ 173, $3.49 (ebook). ISBN: 978-1511957298.
Rust, R.T. and Huang, M.H., 2014. The service revolution and the transformation of marketing science. Marketing Science, 33(2), pp.206-221.
Sinha, M. and Sheth, J., 2017. Growing the pie in emerging markets: Marketing strategies for increasing the ratio of non-users to users. Journal of Business Research.
Talpau, A., 2014. The marketing mix in the online environment. Bulletin of the Transilvania University of Brasov. Economic Sciences. Series V, 7(2), p.53.
Varey, R.J., 2015. Corporate reputation and the discipline of marketing communication. In Handbook of Communication and Corporate Reputation (p. 104). Wiley Blackwell.
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