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Marketing Strategies of Amazon

Marketing Strategies of Amazon

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Published by Phi Yen

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Published by: Phi Yen on Jun 15, 2011
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Marketing Strategies of Amazon.com
Amazon.com is obsessed with a fervor to serveconsumer and shareholder alike. Since its inception over fifteen years ago, Amazon.com hassteadily grown from a burgeoning ³dot-com´ corporation into a multinational monster, a king inthe domain of internet retail. It targets two goals: the satisfaction of a customer and efficientcorporate growth. Its marketing strategies are near-legendary, and budding business should takea page ± or several chapters ± from Amazon.com¶s proven marketing manual.
Amazon.com History
Jeff Bezos, Amazon.com founder and CEO, dreamed about books. In 1994, he createdAmazon.com, Inc., which he labeled as ³Earth¶s Biggest Bookstore.´ The ecommerce companywent online in 1995 and soon expanded into other media, including DVDs, VHS, CDs, MP3s,and eventually a wide range of other products, including toys, electronics, furniture and apparel.As such, the tagline soon changed to ³Earth¶s Largest Selection.´ But books were only the beginning of Bezo¶s up-and-coming enterprise.Amazon.com went public in 1997. In the first shareholder letter, Bezos penned the fundamentalfoundation for Amazon.com¶s success: ³Start with customers, and work backwards « Listen tocustomers, but don¶t just listen to customers ± also invent on their behalf « Obsess over customers.´ This policy was backed by a startling business philosophy ± Bezos planned onoperating at a loss for 4-5 years. It was not until 2001 that Amazon.com posted a net profit at aminuscule one-cent per share. Yet, despite its bizarre business strategy, Amazon.com claimedover 1.4 million customers after only two years of being online. Now, 45 million satisfied customers shop at Amazon.com for everything from books (most popular) to fashion apparel to fine jewelry to Christmas toys. It has one of the most recognized brand names in the world and garners an estimated 50% of its sales from overseas consumers.Surviving the dot-com bust of the late 1990s and early 2000s, Amazon weathered the e-stormsand now thrives in the retail marketplace, challenging vending giants like Wal-Mart and Target.Focused on technological innovation and centered on customer fulfillment, Amazon.com proceeds into the next decade with a profit firmly in one hand, and the capacity to blow it out of the water in the other hand.
Amazon.com¶s Business Philosophy
Despite its massive growth, Amazon.com remains unremittingly focused on the consumer. Outof 452 company goals in 2009, 360 directly affected customer experience. Amazon.com¶s self- proclaimed mission statement is: ³We seek to be Earth¶s most customer-centric company for 
three primary customer sets: consumer customers, seller customers and developer customers.´ Ina special for the Miami Herald, journalist Jack Hardy declares: ³Customer obsession; innovation; bias for action; ownership; high hiring bar and frugality. These six core values focusAmazon.com¶s operational strategies.´ It is committed to long-term growth based on consumer satisfaction.
Myriads of Marketing Strategies
Amazon.com bases its marketing stratagem on six pillars.1.
It freely proffers products and services.2.
It uses a customer-friendly interface.3.
It scales easily from small to large.4.
It exploits its affiliate¶s products and resources.5.
It uses existing communication systems.6.
It utilizes universal behaviors and mentalities.Much of its marketing is subliminal or indirect ± it does not run $1 million dollar ads duringSuper Bowls nor post flyers in mall marketplaces. Amazon.com relies on wily online ploys,strong partner relations and a constant declaration of quality to market itself to the masses.
Pay Per Click Advertising
Independent Pay Per Click (PPC) advertising has been the black sheep of Amazon.com¶smarketing campaign. Their first PPC campaign attempt, spawned by their subsidiary companyA9, was the mediocre Clickriver, a middling PPC program that kept its head above water butcertainly swam no great channels. ProductAds replaced Clickriver in August, 2008. It allows anyweb merchant to purchase PPC ads on Amazon.com¶s website, leading some pundits tosardonically comment about Amazon.com¶s possible pursuit of Google¶s web browsing crown.Despite its potential interest in Google¶s regime, Amazon.com continues to purchase PPCadvertisements on Google to direct browsing customers to their websites. It buys space on theleft side of Google¶s search listing results, and pays a fee for each visitor to Amazon.com whoclicks on their sponsored link. This is typical of Amazon.com¶s marketing strategy. No big banners, loud colors, or pristine men casually conversing about Amazon.com on America¶s tube ± just a demure advertisement on a web page which, incidentally, may wordlessly lead thousandsto Amazon.com
Continual Website Improvement
In today¶s stop-and-go internet traffic, an engaging, simple and easy-to-use website is anecessity. Amazon.com expends millions of dollars and hundreds of man-hours to identify problems, develop solutions, and further enhance the customer¶s online experience. Rob Enderle,head analyst at Enderle Group, states that ³Amazon.com has always been very aggressive aboutanalyzing its website¶s traffic to a high degree and making modifications based on what theysee.´ This constant pursuit of perfection lead to Jakob Nielson¶s prestigious ranking of 
Amazon.com¶s website usability. In a 2001 study of 20 ecommerce sites, Amazon.com scored65% higher than the average of the other nineteen sites¶ usability. It has a class-leading 99.9%mobile device availability, and uploads several seconds faster than some of its competition. Inone test, Amazon.com uploaded in 2.4 seconds, while Target took nearly seven to finish. Anavigable website has consistently topped the priority charts of Amazon.comOccasionally, management skirts customer relations and engages in under-the-tableinvestigations. Following several lawsuits from aggrieved loyal customers, who were chargedseveral dollars more for the same item than newcomers, Amazon.com apologized for their underhanded differential pricing and discontinued the project. However, Amazon.com continuesto noiselessly experiment on their website, garnering new information and augmenting their already popular website.
ffline Advertising
Martin McClanan, CEO of upscale gift cataloger Red Envelope, notes that TV and billboard adsare roughly 10 times less effective when compared to direct or online marketing whenconcerning customer acquisition costs. Amazon.com has observed McClanan¶s advice byreducing their offline marketing, especially during the holidays. In 1999, Amazon.com spent agargantuan $80 million in offline advertisements during the fourth quarter. A year later, duringthe same time span, the company splurged only fifty million. Later years brought even moredrastic cuts. According to Competitive Media Reporting, Amazon.com frittered $36 million inoffline advertising in 2008, but through August of 2009, the corporation had spent a meager $9.4million. However, such cuts have not negated Amazon.com¶s successes. It boasts the highestsells of any online retailer during the holidays, especially during Black Friday. Amazon.com¶sstrategy is simple: since customers shop online, online is where they will be found.
rdering Process
Easy ordering is Amazon.com¶s Holy Grail. It eagerly develops technology to allow customersto better navigate and explore their online retail mall. Jacob Lepley, in his ³Amazon MarketingStrategy: Report One,´ notes that, ³When you visit amazon.com « you can use [it] to find justabout any item on the market at an extremely low price. Amazon.com has made it very simplefor customers to purchase items with a simple click of the mouse « When you have everythingyou need, you make just one payment and your orders are processed.´ This simple system is thesame whether a customer purchases directly from amazon.com or from one of the Associates.
Partnerships & Web Services
Amazon.com has shook hands and signed contracts with quite a few partners. Not only does itoperate many of its own websites, including A9 and CDNOW, but it hosts and manages retailweb sites for an array of other retailers, including Target, Sears Canada, Bebe Stores, TimexCorporation and Marks & Spencer. It previously hosted Borders bookstores websites, but thatrelationship ceased in 2008. For several years, Amazon.com partnered with ToysRUs. Typing³ToysRUs toys´ and similar query terms would also list Amazon.com¶s Toys & Games tab and products. As a result of litigation, however, this partnership ended in 2006.

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