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Published by: mannu.abhimanyu3098 on May 01, 2009
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com: Marketing Management Case Study
Question 1 Customers get the benefit of being able to choose from over 2.5 million books. They are able to search the database by title, subject matter, name of author, or keyword. In addition to this, the searches are supplemented with excerpts of the books from readers, reviewers or even the author. Customers have the facility of viewing bestsellers, books that have won awards, and other recognized titles separately. They have the option of being informed of any new book releases from their favorite authors, or subjects through email. Amazon.com also holds contests for the amusement of customers. Perhaps the most attractive part is the discounts – up to 40% discounts are being offered by Amazon.com off the retail price. Moreover, the customer receives his copy on his doorstep which is convenient even if he has to pay the delivery charge. Amazon.com has the benefit of needing to keep a minimum inventory by acting only as the intermediate party in the sales process. It has the dot com advantage of being able to serve a large number of consumers without geographical limitations, and without the hassles of maintaining a distribution network. Due to the large sales that this model produces, the company is able to buy books directly from the manufacturers, therefore eliminating the distributors’ margins from their cost Question 2 The marketing strategy of Amazon can be summarized as follows: • Product: There is a humongous database of books available to customers; this is one of the pulling forces of Amazon.com. Customers who are unable to find a particular title in individual bookshops may end up using Amazon.com. Price: The prices are up to 40% cheaper than retail stores. Place: Availability is impeccable with global reach. Promotions: Amazon.com has unique contests for its users to induce them to spend more time at Amazon.com. Further Amazon had tieups with AOL,Excite and Yahoo .

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Amazon’s main positioning stance is to be seen as one of the top three brands in the book business. It has tried to make itself a destination for internet surfers by making the site friendly and easy to use. It has also aimed to come off as a reliable and trustworthy by encrypting transactions on the website, as well as offering $50 for any unauthorized charges that a credit card company may fail to waive. Amazon has also made tie-ups with several firms like Excite to be its exclusive bookseller, Yahoo! for placing banner ads, and AOL for gaining access to its 8.5 million subscribers. All this is an attempt to bring more visibility to the internet users. Problems: • The company has huge marketing and sales expenses that are bringing it harsh losses.

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It is finding it an expensive and challenging task to re-package and re-ship the books to customers. Amazon.com is about to receive stiff competition from big retail chains like Barnes & Noble who are entering the online market. Although Amazon is having a good strategy in the virtual world but it is not applying the integrated marketing approach which could have multiplied new customers.

Question 3 Our suggestions to Amazon.com: • • • Since the marketing expenses are high, Amazon.com can implement some self-liquidating promotions to grab the attention of potential customers. The competition from retail chains can be brought under control if Amazon decides to buy its books from the manufacturers. Amazon naturally has a early mover advantage but to prevent cut throat competition with Barnes and Noble in the coming years, a tieup with them would be beneficial as it would delay the monopoly of Amazon and bring in more funds to strengthen the market share.

How Amazon.com can get more customers: • In order to triple sales (or maybe even grow exponentially), a quick and relatively cheap method can be by implementing a referral scheme, where each user is asked to bring in 5 or 10 other members in exchange for discount coupons. Such a promotion would definitely help excite prospective buyers because their contact with Amazon.com will be through word-of-mouth advertisement from a trusted friend. The newly referred members should also be given a discount on their first purchase, in order to induce them to start buying.

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Question 4 • Ethical problems may be due to privacy of customers’ data held by Amazon. The company should enforce a privacy policy to convince the users. Other possible issues could be :Email marketing, if Amazon decides to take it up. The US government already has in place some laws regarding the regulation of unsolicited emails. This can be taken care of by only using referrals as a means of getting into peoples’ mailboxes. Also any person who doesn’t wish to be contacted should be taken off the Amazon mailing list and further prevented from being referred.

Submitted by: Abhimanyu Kr. Singh Jayaram Haridas Ajay Sahu Amal Mohan Amit Mohan Anjan Mohapatra Ankur Sachdeva Rajiv Gandhi Institute Of Petroleum Technology-MBA 2010 (01) (02) (03) (04) (06) (07) (08)

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