Amazon Marketing Strategy - Research Paper Example

RUNNING HEADER: Marketing Plan for Amazon.com Marketing Plan for Amazon.com BY YOU YOUR SCHOOL INFO HERE HERE Marketing Plan for Amazon.com 3.0 Marketing Strategy Amazon.com has significantly diversified from its traditional founding as a bookstore. The company now has such a wide variety of competitors in many different industries, both in saturated markets and those with only a handful of major sellers. The business model now includes music services, cloud computing services, video game sales, electronics, food, household items, furniture and even jewelry sales. Competitors today include Google, Microsoft, Barnes and Noble, and even notable names such as Walmart.com. Since it is quite difficult to define the specific industry in which Amazon.com operates, the organization requires a holistic marketing strategy associated with the Amazon name rather than attempting the laborious and costly activity of differentiating each and every market in which the company maintains a presence. Therefore, the company should be focusing on building a brand personality for the company as a whole, making a variety of markets gain favorable impressions of the company and not the products or industries in which the business operates. The marketing strategy is to ensure that disparate consumer segments build a perception of brand preference for Amazon.com over its plethora of different competitors. Brand preference is defined as the level to which consumer segments prefer a company or brand after weighing equality related to product availability and pricing structures (Boone & Kurtz, 2007). It is the extent to which consumers would rather make purchases with one company over other competitive offerings in an established market. Advertising is a powerful influence in creating brand preference (Jedidi, Mela & Gupta, 1999). Price is also a substantial persuasion that impacts the level of demand that companies can expect which is an indicator of brand preference (Draganska & Jain, 2006). Amazon.com, as a company that has been in operation since 1994, has already established brand recognition and brand awareness with millions of consumers which is justified by attained revenues of $61.09 billion in 2012 (Amazon, 2013). However, if the company can establish brand preference, it will open many new market opportunities and increase market share for this company that is still in the growth stage. Companies that have managed to establish brand preference experience higher revenue growth and can even allow organizations to charge higher prices since consumers believe in the quality and integrity of the brand (Chaudhuri & Holbrook, 2001). To accomplish this goal of establishing more significant brand preference, the business will be focusing more labor and expenditures on the promotional function. The company will be pursuing more television advertising, which is a higher-cost activity, but will give the brand an opportunity to create a solid personality based on sophistication and excitement which, according to Aaker (1996) is necessary to build consumer interest. The company will be adopting similar strategies to that of Apple, Inc. which is a company that utilizes movement marketing as a means of gaining consumer interest in the brand and making them believe that the company is top quality over that of competing electronics companies. Apple is successful at building important emotional and psychological connections with consumers by ceasing the process of telling customers what products the business produces, but what the business actually believes in (Goodson, 2011). Apple has a variety of internal experts that are constantly present on social media via the Internet to blog and interact with consumers in order to develop these important relationship connections. Apple maintains a brand personality that promotes imagination, a power-to-the-consumer mentality, passion and fulfilling buyer dreams; referred to as a humanistic personality that makes consumers feel a genuine and heartfelt emotional connection between brand and buyer (Robinson, 2009). Currently, Amazon.com is more focused on promoting the company’s vastness of product supply and availability and the efficiencies that have been gleaned through years of distribution development, warehousing, staffing and cooperation with major postal carriers throughout the world. This builds a positioned perception of quality, but fails to create important socio-psychological connections between buyer and the brand. The strategy is for Amazon.com to focus on aspects of customer relationship management (CRM) to build a high preference and belief about Amazon’s top notch service quality. Through blogging and constant updating of Facebook pages online, the company will appear to have more of an interest in enhancing the lifestyles of consumers and showing the values and beliefs of Amazon.com. A variety of contests and sweepstakes, with ample television and online promotion, will build incentive for consumers to visit social media sites related to Amazon and explore the many different products and services that the company actually provides. 3.1 Mission Amazon’s current mission is “to be earths most customer centric company; to build a place where people can come to find and discover anything they might want to buy online.” (Farfan, 2014, p.2). However, this is insufficient for ensuring that the Amazon brand gains preference as many competitors have similar mission objectives and value propositions. To simply state that Amazon.com is customer-centric and maintains a diverse product line cannot establish the necessary emotional and psychological attachments to the brand necessary to achieve brand preference. A more well-developed mission statement for achieving brand preference would be: “To understand customer needs and build relationships with important buyers in the process. Amazon.com strives to improve lifestyles of customers and become the foremost leader in top quality service and low pricing”. 3.2 Marketing Objective The main marketing objective is for Amazon.com to have the highest market share over all other online retailers. This, of course, is accomplished by establishing brand preference (which leads to long-term brand equity) with the millions of different consumers that already trust in the quality, pricing and expedience of the Amazon brand. Brand preference will also allow the company to obtain new market segment interest, opening the doors for the company to further diversify its business model and expand product line availability. To successfully achieve this goal, Amazon.com must outperform the long-standing low-price strategies of Walmart.com and inspire consumers to perceive that Amazon.com is a thrilling brand that stimulates consumer senses and better services needs based on both quality and pricing. Therefore, the company must position the business against these two conceptions in order to gain the attention of many disparate market segments with differing lifestyles, tastes, preferences and needs for consumption. 3.3 Financial Objectives. The objective is to build higher revenues through the establishment of brand preference. It is the intention of Amazon.com to improve sales volumes by $8 billion in 2014 through more effective promotion of the brand, re-development of pricing structures through volume purchasing and negotiation power through the global supply chain, and further diversifying product availability and product lines in a variety of categories. This is a realistic objective of improving the company’s revenue stream by 13 percent by December 2014. It is also through establishment of increased revenues that the organization will experience higher common stock value by influencing important shareholder investors and reducing debt load associated with a variety of investments. As of January 29, 2014, Amazon.com common stock is valued at $384.20 per share (Yahoo! Finance, 2014). However, this is down from $407.05 achieved on January 21, 2014 which reduces that company’s ability to procure necessary capital for expansion, growth and improvement of the business model. It is the objective, therefore, for Amazon.com to achieve a stock value of $480 by the end of fiscal year 2014. An additional $8 billion in sales improvements would allow the company to pay off a variety of financing debts that would inspire shareholders to have more confidence in the company and its long-term viability as an investment opportunity. 3.4 Target Markets Segmentation of markets should occur psychographically, with various content online and television geared toward the different lifestyles and social characteristics of consumers. With such a broad presence in so many different industries, it would be impossible to identify and target specific segments (as this is costly and laborious). Instead, the business should create television commercials geared toward elements of known markets such as those who consume luxury products for conspicuous social consumption, those who want thrill and recreation, those with limited resources but maintaining aspirational social characteristics related to peer networks, and other lifestyle characteristics with specific, known distinctions. This will make Amazon.com appealing to mass markets without over-burdening the organization to develop specific segmentation strategies and targeting strategies. To increase revenues by $8 billion, it will be necessary to make the Amazon brand appealing and exciting to many, many different market segments all across the world and domestically. There is no singular target market that is more viable since the company carries such a huge variety of different products ranging from electronics to perishables that have attractiveness and potential demand by many different, diverse markets throughout the globe. Amazon.com can be preferred by many different demographics, lifestyle characteristics, ages, genders and personality profiles and the company can position the business to exploit these opportunities. References Aaker, D.A. (1996). Measuring Brand Equity across Products and Markets, California Management Review, 38(Spring), pp.102-120. Amazon. (2013). Form 10-K: Annual Report Pursuant to Section 13 and 15(d) – Amazon.com Inc. Retrieved January 26, 2014 from http://pdf.secdatabase.com/1562/0001193125-13- 028520.pdf Boone, L. & Kurtz, D. (2007). Contemporary Marketing (12th ed.). Boston: Thompson South- Western. Chaudhuri, A. & Holbrook, M.B. (2001). The Chain of Effects from Brand Trust and Brand Affect to Brand Performance: The role of Brand Loyalty, Journal of Marketing, 65(2), pp.81-92. Draganska, M. & Jain, D.C. (2006). Consumer Preference and Product-Line Pricing Strategies: An Empirical Analysis, Marketing Science, 25(2), p.164. Farfan, B. (2014). Amazon.com Mission Statement – Centered around the Amazon.com Internet Customer. Retrieved January 25, 2014 from http://retailindustry.about.com/od/retailbestpractices/ig/Company-Mission- Statements/Amazon-com-Mission-Statement.htm Goodson, S. (2011). Is Brand Loyalty the Core to Apple’s Success?, Forbes. Retrieved January 27, 2014 from http://www.forbes.com/sites/marketshare/2011/11/27/is-brand- loyalty-the-core-to-apples-success-2/ Jedidi, K., Mela, C.F. & Gupta, S. (1999). Managing Advertising and Promotion for Long-Run Profitability, Marketing Science, 18(1), pp.1-22. Robinson, P. (2009). Apple’s Marketing Strategy, Marketing Minds. Retrieved January 26, 2014 from http://www.marketingminds.com.au/branding/apple_branding_strategy.html Yahoo! Finance. (2014). Amazon.com Inc., Retrieved January 29, 2014 from http://finance.yahoo.com/q;_ylt=AiHpkcB6y2hFNKeGEBJ4mz2iuYdG;_ylu=X3oDMT BxdGVyNzJxBHNlYwNVSCAzIERlc2t0b3AgU2VhcmNoIDEx;_ylg=X3oDMTBsdWs yY2FpBGxhbmcDZW4tVVMEcHQDMgR0ZXN0Aw-- ;_ylv=3;_ylc=X1MDMjE0MjQ3ODk0OARfcgMyBGZyA3VoM19maW5hbmNlX3dlYl 9ncwRmcjIDc2EtZ3AEZ3ByaWQDBG5fZ3BzAzEwBG9yaWdpbgNmaW5hbmNlLnlha G9vLmNvbQRwb3MDMQRwcXN0cgMEcXVlcnkDQU1aTiwEc2FjAzEEc2FvAzE- ?p=http%3A%2F%2Ffinance.yahoo.com%2Fq%3Fs%3DAMZN%26ql%3D0&type=2bu tton&fr=uh3_finance_web_gs&uhb=uhb2&s=AMZN Read More