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Marketing Strategic Report Amazon

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Question:

Discuss about the Marketing Strategic Report Amazon.
 
 

Answer:

Introduction

Conducting a SWOT analysis helps the organization to analyze its core strengths and weaknesses. The organization can use its strengths to overcome its weaknesses and threats in the industry. The following marketing report will analyze SWOT (Strengths, weaknesses, opportunities and weaknesses) of Amazon.com. It is a leading group in the e-commerce business. To maximize the revenues in the online retail industry, the organization must make sure that it effectively addresses the issues shown in the below SWOT analysis. In this marketing report, a SWOT analysis of Amazon is conducted and recommendations are given for the company to overcome the weaknesses and threats. It briefly discusses the growth of Indian consumer electronic industry. The discussion includes the description about the market, target segment, new product development and services in India and customer value proposition of the organization.

Company Background

Amazon.com is the American multinational company, which was founded in the year 1994. It was established by Jeff Bezos in Seattle, Washington, United States. Amazon is the largest online retailer in across the world by the market capitalization and total sales. It is recorded the revenues of $107,006 million in the financial year 2015. There was a hike of 20.2% from the year 2014 (Pinkerton, 2013). In this year, United States was the largest market for the company with the 65.9% of total revenues. The organization has started its business as an online bookstore, after that it diversified its business in selling other products like; CDs, DVDs, electronics, video games, software, furniture, toys, etc. Amazon.com has distinct online websites for different countries; United States, Ireland, Japan, China, Mexico, Spain, Italy, Canada, Australia, France and United Kingdom (Parante, & Diane 2007). The products and services of the organization include cloud computing, online shopping and content distribution. According to the report of 2016, 230,800 employees are working under the organization (Mordor Intelligence 2016). The major competitors of Amazon.com are Wal-Mart stores, eBay, Alibaba Group, Best Buy, International Business Machines and Netflix Inc.

 

SWOT Table

Strengths

Weaknesses

1.      Cost leadership

2.      Customer centered

3.      Strong brand name

4.      Effective delivery network

5.      Good business relationship with the electronic companies and publishing houses

6.      Huge customer base

7.      It provides personalized user shopping experience

8.      Variety of products offerings

1.      Business model is easily imitable

2.      Limited presence in the market in comparison to its competitors

3.      Less penetration of online shopping and e-commerce

4.      Runs at very low margin

5.      Tax ignorance issue

 

Opportunities

Threats

1.      Improve the measures to reduce the forged sales

2.      Expansion of business in more product lines

3.      Opening physical stores

4.      Global expansion

5.      People are getting more technology friendly

6.      Growth in the demand for cloud computing services

 

 

1.      Internet security threats

2.      Threat of Imitation

3.      Strong competitors

4.      New emerging shopping portals

5.      Local low cost retailers

6.      Foreign exchange fluctuation

Market Description

In India, Consumer electronics market is growing with double growth rate from past few years. There are some reasons behind this, like; affordable pricing, increased awareness about the products, higher income and improvement in the life styles of the population. These are the factors, which are forcing changing the consumer spending pattern (Freeman 2010). It is resulting a strong growth in the consumer electronic market. According to a research report, Indian consumer market has grown at the CAGR of 18 percent in the duration of 2011-2014. The growth in the India’s GDP (Gross Domestic Product) and disposable income of customers is the major reason behind the growth in this market (Mitra, 2015). A research analyzes that there are some major sections of the consumer appliances in India, such as; television, air conditioner, mobile handset, refrigerator market, laptop & personal computer market and gaming supports.  But still, some products like; televisions, air conditioners and refrigerators have thee low saturation in the India.

 


If India will grow in the future at current growth rate, then the household incomes will be twice in next five years (Joshi 2015). It will benefit the industry. Indian consumer electronics market was US$ 14 billion in the year 2015 and has a CAGR of 18 percent in the duration of five years. It is estimated to become 29 billion by the year 2020. Major players in the market are LG, Samsung, Videocon, Dell, Sony, Godrej, Panasonic, Microsoft, Philips etc. These brands have gained a good market share (Jones, Hill, Comfort & Hillier, 2008). The presence of these brands makes the industry in India highly competitive.

Findings

To maintain the highest revenues in the online retail industry, Amazon must make sure that it effectively addresses the aspects, which are shown in the SWOT analysis. This SWOT analysis of the company states to be the requirement to ensure the strong brand reputation (Helms & Nixon 2010). With the great strengths and opportunities, company is facing some issues related to its weaknesses and threats. All the aspects are ranked with the number and written down in order of their importance. An analysis of SWOT is mentioned in the below explanation.

Explanation of SWOT table: Strengths

Amazon is the largest online seller in the world. In the year 2015, the organization generated better revenues from the online business. With this growth rate, Amazon will become the 2nd largest online retailer in the world. The company is working with low cost structure (Vakhariya 2012). This is major strength of the company, that’s why it is ranked at 1. It leads to lower prices, which jointed with the variety of products that result in a comparatively better customer experience. The cost leadership strategy has resulted in the organization in gaining the profits from this action and it assisted the shareholders rise the value from the organization. This is a strongest brand in the online retail industry (Out-Nyarko & Sarbah, 2014). This strength is responsible for the rapid growth of the business. Increasing revenues is enabling the company to make the investment in new ventures and developing new products. Effective delivery network and variety of product offerings is helping it in developing a huge customer base. This fact of SWOT analysis indicates that Amazon has necessary strengths to sustain its market position in e-commerce.

 

Weaknesses

The weaknesses of Amazon.com develop the challenges, which limit its online retail business. Amazon is implementing a business model, which can be copied by other competitors easily. For example, other organizations can also establish online portal. If the firms will be fully established in the online retail industry, then it would be difficult for Amazon.com to compete in the market (Mishra & Kotkar, 2015). The market presence of the company is limited. It edges its ability to attract more customers to any specific product line, which are more sellable in physical stores. As it delivers the products with no shipping cost, so it is in danger of low margins and therefore, it is not able to boost on the costs. Furthermore, Amazon.com has involved in the negative publicity due to avoiding the taxes in United States and United Kingdom. On the basis of this side of SWOT analysis, Amazon must maintain the competitive advantage to overcome its weaknesses (Vijaylaxmi & Srinivasa 2015).

Opportunities

From the above table, it can be analyzed that Amazon has the opportunity to enter in the developing markets. This action should establish the presence of company before other online retailers move. The organization also has the opportunity to open physical stores to enhance the competitiveness against its other competitors, like; Wal-Mart (Das 2015). Furthermore, the company is facing the issues of forged or counterfeit sales, which is against the expectations of customers. This situation creates an opportunity for the company to enhance its technology and policies to consider the counterfeit sales. The demand of cloud computing services is increasing significantly. So, Amazon is expanding its web services in the past years. In 2015, it launched Amazon Machine Learning (Greenspan 2017). With these, Amazon also has the opportunities to come up with its own brands in diversified product lines. Thus, this SWOT analysis shows that Amazon has better growth opportunities in the future.

Threats

Amazon is facing several significant threats in the online retail industry. There are some external strategic factors, which reduce the business performance. The major threat is the threat of online security. Cybercrime challenges every online retailer. The company must keep some measures to face the attacks of cybercrime (Warner, 2010). For example, it must strengthen its network security. The Amazon.com is facing the major issue of imitation. The emergence of this threat can affect and reduce its market share. Furthermore, an intense competition is a threat against the Amazon.com. Its major competitors; like Wal-Mart, Target, Flipkart, eBay etc. are making efforts to improve their online presence in the retail industry. Fluctuation in the foreign exchange is also a threat for this company because it generates a considerable amount of its revenues from international processes (Agarwal, Grassl & Pahl 2012). If there is high exposure in the foreign currency, then the company will be highly penetrating to the fluctuations in the foreign exchange. Thus, this analysis shows that it needs to fortify its competitiveness and marketing and promotional efforts.

 

Recommendations

The above discussion shows that Amzaon.com has the required strengths to operate its online business effectively. However, the company is facing some issues and concerns. So, it is recommended that Amazon must increase its presence in the developing countries like; India. It must expand its business in the Indian Consumer market. It will provide major opportunities for growth on the basis of economic development in the country. It must expand the variety of product in the country to fight against the issue of intense competition. The company must introduce a new service for retaining and creating a huge customer base from India.

Target Market

For the Amazon.com, the target market must be the internet users, who rely on the online shopping and other transactions from the upper and middle class of population. This service of Amazon.com is suitable for the people, who are very choosy and want to buy any product at any cost.

New Product Description

Although Amazon.com is already a well-established organization in Indian online retail industry, but company wants to expand its business with new product development in India. Looking at competitive environment, the company must come up with an attractive product, which can increase its customer base (Abraham 2012). Amazon.com is launching an online auction hosting software in India. Online auction is the auction over the internet. It can be in different formats. There are some existing competitors, like; Alibaba.com and eBay, who are providing this service. The concept of online auction will increase the range of goods and services, which can be purchased and sold using different auction techniques. This will be a beneficial service for the company in the current web-environment. This product will offer new advantages to the customers, like; utilization of computerized bids through electronic forms and it will provide a search engine to find the products and items and users can search the items by categories.

Marketing Mix

Amazon.com uses marketing mix as a powerful tool to appeal the customers to its services. For the development of new product, the company will reach to the target customers. As it is an online business organization, so it will use official e-commerce websites for reaching the customers. The websites are like; Audible.com, Amazon.com and various other subsidiaries of Amazon (Ferguson 2017). It should target to encourage its customers to visit its websites and to purchase the products under online auctions. The company is using the value based pricing strategy in India. This includes the prices on the basis of product value. It also considers the perception of Indian consumers. Thus, the company will create the marketing mix, which is updated in relation to current trends in market (Mishra 2015).

Consumer Value Proposition

The customer value proposition of the company must be that this is the trusted and reliable brand, which provides the opportunities of online shopping and e-commerce. The company’s value proposition is that “through online auction hosting software, the organization will provide a variety of products with assured quality at bargained prices (Kipley & Jewe, 2014). For example, company’s bid $1 policy allows the lucky customer the capacity to purchase any item, which is being auctioned for only $1. It can offer more value to the customer. Irrespective of the closing price of auction, once the bid is closed without the reserve price, then the final bidder will get that product.

This new product of Amazon.com will offer the customers pleasure of winning the item, which may not be there in the future. The company will offer some short-term live auctions also. The new product of the company fits with its SWOT analysis (Bauer 2012). The company has a major opportunity to expand its business with new product line. This will assist the organization in increase its profitability. The company is developing a strategy profile by considering its SWOT. It is implementing SO strategic profile, in which it will use its strengths to increase opportunities. A good brand image will help the organization in expand its business India and other countries. Maintaining good business relationships can assist it in opening physical stores and expanding in other product categories. It will be fit to the new product of the organization.

Conclusion

Thus, the study includes the various aspects of SWOT analysis of Amazon.com. The company is launching a new product in India, i.e. Online Auction Software. This is new concept for Indian customers, so Amazon can attract them. It is implementing some effective strategies to attract more and more customers towards its product. The company must focus on the profitability more than volumes. It is implementing SO profile for using its strengths to maximize its opportunities. The marketing report indicates that Amazon.com is doing well globally. Launching new product in India will assist it in generating more revenues in Indian online retail industry market.

 

References

Abraham, S.C, 2012, Strategic Planning: A Practical Guide for Competitive Success, Emerald Group Publishing.

Agarwal, R., Grassl, W.  & Pahl, J, 2012, SWOT: introducing a new strategic planning tool. Journal of Business Strategy, 33 (2), pp. 12.

Bauer, C, 2012, An integrated decision model for strategic evaluation of the viability of new technologies. GRIN Verlag.

Das, K.K, 2015, Growth of E-commerce in India. International Journal of Core Engineering & Management, Vol. 2, Iss. 4, pp. 25-33.

Freeman, R.E. 2010, Strategic Management: A Stakeholder Approach, Cambridge University Press.

Ferguson, E, 2017, Amazon.com Inc.’s Marketing Mix (4Ps) Analysis, Viewed on 20 February 2017, from https://panmore.com/amazon-com-inc-marketing-mix-4ps-analysis>

Greenspan, R, 2017, Amazon.com Inc. SWOT Analysis & Recommendations, Viewed on 20, February 2017, https://panmore.com/amazon-com-inc-swot-analysis-recommendations

Helms, M.M., & Nixon, J, 2010, Exploring SWOT analysis where are we now? A review of Academic Research from the last decade. Journal of Strategy and Management. 3 (3), pp. 215-251.

Jones, P, Hill, C, Comfort, D & Hillier, D. 2008, Marketing and Sustainability, Marketing Intelligence and Planning, Vol.26, No.2, pp.123-130.

Joshi, P.A, 2015, Indian Electronics Industry -A Persuasive Growth Engine Behind The Soaring Economy Of India, International Journal of Electrical, Electronics and Data Communication, Issue 1, pp. 1-5.

Kipley, D. & Jewe, R, 2014, Effective Strategic Management: From Analysis to Implementation. Cognnella.

Mishra, S.V. & Kotkar, S.N, 2015, A Study on Current Status of E-Commerce in India: A Comparative Analysis of Flipkart and Amazon, Journal of Advance Research, Vol. 3, Iss. 2, pp. 133-137.

Mishra, A, 2015, Understanding the 4Ps of Marketing: A case study of Amazon India, International Research Journal of Marketing and Economics, Vol. 2, Issue 4, 48-65.

Mitra, S, 2015, Consumer electronics industry to hit $20.6 bn by 2020: EY, Viewed on 25 July, 2015, < https://www.livemint.com/Consumer/lZanz69Lu3mxh36H7bcDCL/Indian-consumer-electronics-industry-to-touch-206-bn-by-20.html>

Mordor Intelligence, 2016, Consumer Electronics Industry in India- Analysis of Growth, Trends and Forecast (2015-2020). Retrieved from https://www.mordorintelligence.com/industry-reports/analysis-of-consumer-electronics-industry-in-india.

Out-Nyarko, D. & Sarbah, A, 2014, An Overview of the Design School of Strategic Management (Strategy Formulation as a Process of Conception), Open Journal of Business and Management, 2, 231-249.

Parante, & Diane H, 2007, Best Practices for Online Procurement Auctions. IGI Global Publishers.

Pinkerton, M, 2013, International analysis: Amazon marketplace makes debut in India, Viewed on 14 June, 2013, <https://www.retail-week.com/topics/international/international-analysis-amazon-marketplace-makes-debut-in-india/5049895.article>

Vakhariya, S, 2012, Grey Marketing in Indian Electronic Goods Industry: Counter Strategy. ELK Asia Pacific Journal of Marketing and Retail Management, vol. 3, Iss.1.

Vijaylaxmi, S. & Srinivasa Rao, T, 2015, Consumer Buying Behaviour for Electronic Products A Study of select items, International Journal of Research and Computational Technology, Vol.7 Issue.2.

Warner, A.G., 2010, Strategic Analysis and Choice: A Structural Approach, Business Express Book.

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