Unlocking Amazon Positioning Strategy: Insights And Strategies

Market Segmentation of Amazon

Question:

Using two examples with which you are familiar, one being a service company and the other a retail Company explain why and how the Companies have developed their STP (segmenting, targeting & positioning) strategies.

Amazon.com, Inc offers a wide range of services and products through its website to four customer sets: sellers, consumers, content creators and enterprises.  The products include the content and merchandise sold by the third party vendors with focus on price, selection and convenience. The Company operates in three wide segments: international, North America and Amazon Web Services (Forbes.com 2017). 

Make My Trip is the leading online travel agency in India which empowers the traveler with comprehensive choice and provides instant booking services. This company provides wide range of services and dedicated customer service along with modern technology. The company holds almost 255 of the market share in online booking services. It has varied retail stores across different cities in India (makemytrip.com 2017). This paper will focus on the segmentation, targeting and positioning of Amazon.com and Make My Trip.

Segmentation helps in the promotion of efficient utilization of the firm’s resources. The marketing activities require a huge sum of money and if the companies do not understand the needs and intentions of the customers, they may end up in huge losses. Segmentation is done on the basis of behavioral, geographical, demographic and psychographic characteristics. Targeting also helps the company to channel the activities and resources to the varied market segments which provides better opportunities. Positioning helps the company to stand apart from the other companies in order to sustain in the market. Positioning helps in the addition of value to the products and services of the company (Laudon and Traver 2013).

Segmentation of Amazon.com

Market Segmentation entails the division of customers with unique characteristics into different groups. Segmentation helps Amazon to understand the varied characteristics of its customers. Moreover, by grouping the customers on the basis of their similarity in the reactions towards varied marketing factors, customer loyalty and market efficiency can be increased. Segmentation also helps to improve the return on investment (Hollensen 2015). The four basic market segmentation of Amazon is discussed in details below

Demographic Segmentation

The customers of Amazon are economically and socially better off and have access to varied latest technologies. They mainly target the youth population of the country. The middle and the upper class families who have access to the internet are the targeted customers of Amazon. Amazon targets the youth and the middle age customers who are interested in buying electronic products. Amazon operates in almost 10 countries which has no brick and mortar retail centers (Liu et al. 2015).

Geographic Segmentation

Geographic Segmentation

Amazon has 60% of its sales in North America. The other important markets of Amazon includes Germany (10%), Japan (11%) and UK(8%) according to 2015 report. Amazon also captured the market in Italy, Mexico, Australia, Spain and Netherland. The app of Amazon serves the customers of 200 countries. The net sales of Amazon according to varied geographic segment are shown in the below figure:

Fig- Net Sales of Amazon according to Geographic segment

Source-www.barefigure.es

Psychographic Segmentation

Amazon targets the customers who prefer to buy the products online in an affordable price. The middle class and the upper class working customers prefer to choose Amazon. Amazon targets the traditional, conservative and the modern society. It sells products which are preferred by both the sections of the society.

Behavioral Segmentation

Amazon targets the internet savvy customers who prefer online shopping. They also give huge discounts to attract these customers.  The customers who want to try new products or services are the targeted customers of the company. Amazon targets the easy going, ambitious and determined customers. The customers who are aware of the quality are the major customers of Amazon (Klauss 2013).

Targeted market of Amazon.com

The customers who prefer online shopping are the targeted customer base of Amazon. The customers must also have access to financial tools such as credit cards, debit cards, PayPal. The items offered in sale by Amazon suggest that they target the customers of all age group, young and old. The online site is designed in such a way so that it becomes easier even for a person who does not possess proper computer knowledge. It does not aim at a specific target group because it offers products for all the people from varied walks of life and choice. The Prime program of Amazon attracted the young customers rather than the old and the survey depicts that younger and wealthier customers are using their website for purchasing varied range of products such as apparels. The prime customers are increasing the sale of Amazon (fortune.com 2017).

Positioning of Amazon.com

Positioning is important for every business venture because transparent and advantageous position in the mind of the customers leads the business towards success. Advertisement is a very useful aspect and Amazon is developing various advertisements to win the hearts of the customers especially towards electronic products.  Amazon has also selected the right distribution channel which is an important aspect through which the company can get a valuable position in the market. Amazon also offers good quality product at affordable and cheap price (cnbc.com 2017). The positioning strategy is shown in the diagram below:

Targeting of Amazon

Fig- Positioning Map of Amazon.com

Source-Author’s Creation

Segmentation of Make My Trip

Make My trip is the market leader in the online booking of hotels, air tickets and other packages which accounts for nearly 48% of the total revenue. Segmentation of the customers based on their spending ability is important for this company. It is also important to identify the behavior of the tourist as well as the choice so that it becomes easier for the company to sustain and compete in the market.

Demographic Segmentation

online booking site. The hotel packages are offered on huge discounts which attracts the customers. The company is earning 70% of the revenue from the hotel packages. The customers who preferred to travel by air were the potential customers but with the passage of time, it is trying to expand in the non-air market by 2018.

Geographic segmentation

The travel and tourism industry is highly fragmented and deeply penetrated. The slow penetration of internet in India has affected the business of the company. It is trying to expand in the major cities of India and is setting up stores in varied locations.

sychographic Segmentation

The leisure travelers, business executives, international travelers and customers who prefer to spend their vacations in ship crews are the potential customers of the company. The company targets the conservative and the traditional customers and offers attractive discounts and holiday packages. The company is a trying to expand in other fields such as arranging wild life camps and mountain sports (business standard.com 2017).

Behavioral segmentation

People who prefer to book their air tickets or hotels online are the targeted customers of Make My Trip. The luxurious travelers and quality conscious people prefer to book tickets through this company. Moreover, the customers can book the tickets at affordable price compared to the other competitors in the market (Ho et al. 2017).

Targeted market of Make My Trip

The customers who prefer online booking of hotels and ticket are the targeted customers of the company. The targeted customers are both the domestic and international visitors. The international visitors help to bring foreign exchange which benefits the company as well the country. The customers who opt for hotel packages are the major customer segment of the company. In 2015-16, the company has earned $336.1 million and 50% of its revenue was from hotel packages and the other from the sale of air tickets. The increasing use of app of the company will also boost up the sales. The customers who use the debit card, credit cards or EMI facilities are the targeted customers of the company (economic times.com 2017).

Positioning of Amazon

Positioning of Make My Trip

Make My Trip positions itself as the pioneer in online travel and provides memorable holiday packages for the travelers. It is trying to be travel partner which can motivate and inspire the people to travel. It is trying to fulfill the travel ambition of the customer and setting up attractive taglines such as “Dil to roaming hain”. It is also trying to capture the hotel packages and collaborating with the luxury hotels to make the holidays of its customers memorable. The positioning map of Make My trip is shown in the diagram below:

Fig: Positioning map of Make My Trip

Source-Author’s Creation

Conclusion

Thus, it can be said that the segmentation, targeting and positioning is important for any company to capture the market. Segmentation of Make My trip and Amazon will help to select the correct customer base and align the services and products according to their needs. Targeting helped the company to create a strategic marketing plan for the customers. Positioning helps to create new customers and boost up the existing customers in the market.

Reference List

barefigur.es 2017. Net sales structure: Geographic segments. [online] Available at: https://barefigur.es/companies/amazon/geographic-segments/ [Accessed 1 Aug. 2017].

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cnbc.com 2017. Next stop for Amazon is ‘most valuable company on the planet. [online] Available at: https://www.cnbc.com/2017/07/24/amazon-to-be-most-valuable-company-on-the-planet-analyst-predicts.html [Accessed 1 Aug. 2017].

economictimes.indiatimes.com 2017. Hotels, packages segment to be major growth driver: MakeMyTrip. [online] Available at: https://economictimes.indiatimes.com/small-biz/startups/hotels-packages-segment-to-be-major-growth-driver-makemytrip/articleshow/53138357.cms [Accessed 1 Aug. 2017].

forbes.com 2017. Amazon.com. [online] Available at: https://www.forbes.com/companies/amazon/ [Accessed 1 Aug. 2017].

fortune.com 2017. Amazon Prime Is Gaining Steam, Posing an Even Bigger Threat to Walmart, Target. [online] Available at: https://fortune.com/2015/12/03/amazon-prime-walmart-target/ [Accessed 1 Aug. 2017]

Ho, C., Mulley, C., Tsai, C.H., Ison, S. and Wiblin, S., 2017. Area-wide travel plans—targeting strategies for greater participation in green travel initiatives: a case study of Rouse Hill Town Centre, NSW Australia. Transportation, 44(2), pp.325-352.

Hollensen, S., 2015. Marketing management: A relationship approach. London:Pearson Education.

Klaus, P., 2013. The case of Amazon. com: towards a conceptual framework of online customer service experience (OCSE) using the emerging consensus technique (ECT). Journal of Services Marketing, 27(6), pp.443-457.

Laudon, K.C. and Traver, C.G., 2013. E-commerce. London:Pearson Education.

Liu, Y., Li, H., Peng, G., Lv, B. and Zhang, C., 2015. Online purchaser segmentation and promotion strategy selection: evidence from Chinese E-commerce market. Annals of Operations Research, 233(1), pp.263-279.

makemytrip.com 2017. about makemytrip. [online] Available at: https://www.makemytrip.com/about-us/company_profile.php [Accessed 1 Aug. 2017].