INDIVIUAL ASSIGNMENT

TECHNLOLOGY PARK MALAYSIA

BM006-3-3-BCR
BUILDING CUSTOMER RELATIONSHIPS
UC3F2011-IT-BIS

HAND OUT DATE: 17TH MAY 2021

HAND IN DATE: 26TH JULY 2021
ASSIGNMENT TITLE: AMAZON
STUDENT NAME: TAZA KALAMBATA
STUDENT NUMBER: TP042828
LECTURE NAME: DR. DEEPARECHIGI A/P VASHU

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EXECUTIVE SUMMARY
This report provides information on how amazon has built its customer relationship with its
target market and customers. The report is made up of five chapters that all illustrate the ways
amazon has established itself and how it uses its CRM system to its advantage. A competitive
analysis and SWOT analysis are conducted to decision the offensive strategies and defensive
strategies used by amazon to gain competitor advantage. The amazon target market is later
discussed as well as amazon’s relationship marketing innovative strategies used. Later on, the
types of bonds used amazon are explained as well as how amazon is slowly shifting to mass
customization. The researcher goes on to provide a few recommendations on how amazon
can improve and implement its CRM system.

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TABLE OF CONTENTS
EXECUTIVE SUMMARY........................................................................................................2

1.0 INTRODUCTION TO AMAZON.......................................................................................4

1.1 COMPETITOR ANALYSIS.......................................................................................5

1.1.1 SUMMARY OF THE COMPETITIVE ANALYSIS...............................................6

1.2 SWOT ANALYSIS.....................................................................................................7

1.3 OFFENSIVE STRATEGY..........................................................................................8

1.4 DEFENSIVE STRATEGY.......................................................................................10

1.5 AMAZON TARGET MARKET...............................................................................11

2.0 RELATIONSHIP MARKETING INNOVATION FOR AMAZON................................11

2.1 SELF-HELP...................................................................................................................12

2.2 DATA-DRIVEN............................................................................................................12

3.0 TYPES OF BONDS...........................................................................................................13

3.1 FINANCIAL BONDS....................................................................................................13

3.2 SOCIAL BONDS...........................................................................................................14

3.4 CUSTOMIZATION BONDS........................................................................................15

3.5 STRUCTURAL BONDS...............................................................................................16

4.0 SHIFT FROM MASS MARKETING TO MASS CUSTOMIZATION...........................18

5.0 AMAZON CRM RECOMMENDATION AND ETHICAL ISSUES...............................19

5.1 RECOMMENDATION 1..............................................................................................20

5.2 RECOMMENDATION 2..............................................................................................20

5.3 RECOMMENDATION 3..............................................................................................20

REFERENCES.........................................................................................................................21

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1.0 INTRODUCTION TO AMAZON
Amazon is one of the largest technology organizations in the world, founded in 1994 by
Jeffrey P. Bezos in Washington. Jeffery P. Bezos named Amazon after the Amazon River
which is the world's largest, and the letter "A" would help it appear at the top of alphabetical
company lists. In the early stages, Amazon was just a company selling books online by the
use of its website (Amazon.com). Amazon grew to become the internet's most recognized
book-related website and later ventured into dealing in all types of products with the logo
being the company name and a smile like arrow pointing from A to Z, indicating that they
can deliver every product in the alphabet as well as be able to keep customer satisfaction.
Amazon being one of the first companies to sell goods over the internet, it attracted a lot of
customers from buyers, sellers, retailers, content providers and enterprises that are allowed to
sell and buyer products using Amazon.com (Sandeep and Pohutezhini, 2019).

Figure 1: Amazon logo

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1.1 COMPETITOR ANALYSIS

Amazon Alibaba e-Bay

Company was founded Alibaba is China’s Founded in

in 1994 by Jeffery P. biggest online California by Pierre
Bezos in Washington is commerce company Omidyar in the year
a is a multinational that was founded by 1995 is an American
technology company Jack Ma in 1999. multinational e-
Company
focused in e- commerce
Profile
commerce, cloud corporation
Company
computing, digital
Highlights
streaming, and artificial
intelligence.
One stop shop for Network Effect, Huge online
Key everything, next-day good relations marketplace, network
Competitive delivery services, free size, items are sold
Advantage shipping by auction or fixed
price
B2B, B2C, C2C B2B, B2C, C2C B2C, C2C
Target
Market

Market
Offering the widest Free membership, Establishing an
Information
range of products, internet promotion, insurmountable
Using a customer- freebies, customer base,
friendly interface, Concentration on
Marketing
scaling easily from local and
Strategy
small to large, international trade,
Manipulating affiliate Constantly enhancing
products and resources and evolving site
functionality and
features

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 Retail goods, Amazon E-commerce and Mobile Phone and
Prime, Amazon Echo, retail service, Cloud Accessories,

Product Consumer electronics, computing and Health and Beauty,

and Digital content, artificial intelligence Home and Garden,
Services Amazon Studios technology, FinTech Computers and
Amazon Games and online payment, Tablets, Fashion,
Studios, Groceries, Internet services, Crafts,3rd party
Amazon Drive, AliHealth, AliSports market place, PayPal
Amazon Web Services,
Retail stores, Amazon
Home Services,
Amazon Cash/Top Up

Distribution Web-site, Mobile app, Web-site, mobile Web-site, mobile app

Channel Physical stores, app, Taobao, Tmall
Amazon devices.

Table 1: Competitive Analysis Table

1.1.1 SUMMARY OF THE COMPETITIVE ANALYSIS
Some of amazon’s competitors in the e-commerce market are Alibaba and e-Bay. Above is a
competitive analysis between amazon, Alibaba and e-Bay. The competitive analysis is
divided into three main divisions, company highlights is where the history and journey are
discussed. Market information is where the company’s target market and marketing strategy
is explained. Lastly product information is where the researcher highlights the company’s
products and service as well distribution. According to the table it is safe to state the amazon
is the leading competitor among all the three e-commerce giants

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1.2 SWOT ANALYSIS

S W O T
STRENGTHS WEAKNESSES OPPORTUNITIES THREATS

 Strong brand  Few physical  Expand into  Government

name stores physical stores regulations
 Brand  Easily imitable  Improve  Cybercrime
valuation business model technological  Exploitative
 Customer  Product Flops measures and labor
oriented and Failures administrative  Aggressive
 Differentiation  Tax Avoidance policies competitors
and Innovation Controversy  Acquisitions of  Imitation
 Cost  workplace more e-  Fake Products
Leadership conditions commerce  Economic
 Largest  Declining companies Depression
Merchandise consumer safety  Self-Driving  Fake reviews
Selection  Overdependence Technology
 Large number on distributors
of third-party  Employees
sellers Strike
 Market Leader
 Superior
logistics and
distribution
systems
 Large number
of acquisitions

Table 2: Amazon SWOT analysis

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1.3 OFFENSIVE STRATEGY
An offensive strategy is a method used to gain market share from competitors and strengthen
their own competitive position. This strategy includes tangible and intangible attacks as well
as expanding into new markets to avoid existing competitors (Heriyati, Heruwasto and
Wahyuni, 2013). They are different types of offensive strategies used by companies but
Amazon main two types are the flank attack and the bypass attack. Below is a diagram
showing how amazon implements these strategies.

OFFENSIVE STRATEGY

TYPES OF OFFENSIVE AMAZON OFFENSIVE

STRATEGIES STRATEGIES
Flank Attack: This is when a  Amazon prime
company attacks the blind and  Everyday low price
weak spots of its competitors to  Amazon Echo
gain a market leadership status  Large number of
(Shaw, 2021). acquisitions
Bypass Attack: This is when a
company uses its innovative
ways to attack its competition by
introducing a unique product and
then establishes a new market
segment (Trivikram, 2016).

Diagram 1: Amazon’s offensive Strategy

Amazon over the years has expanded and become a company not to reckon with due to its
creative offense ways of breaking into new markets. Amazon uses an offensive strategy
called flank attack to gain a market leadership position over its competitors, one way it used
the flank attack to its advantage was by the introduction of Amazon prime in 2007.The
introduction of Amazon prime meant the company would offer its loyal customers with a
package of services which included a free 2 day shipping with flexible delivery options for
about a million products, a substantial percentage of free streaming movies and television
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shows as well as Amazon fresh a free grocery delivery service (Cushing, 2021). Another way
Amazon uses the flank attack is by everyday Low rates on products, Amazon has gained
market leadership with this because it provides its customers with unlimited selection of
products and convenience effects it has on its customers (Mohammed, 2018). Amazon also
uses a bypass attack strategy, it does this by introducing new products and ways of carrying
out business. One of its major innovative branch offs was the introduction of Amazon Echo
that was created with the goal of providing the public with a new voice recognition-based
personal assistant as well as a remote music player or speaker that is controlled by an
integrated intelligent personal assistant that goes by the name of Alexa (Jackson and
Orebaugh, 2018). Amazon also has large number of successful acquisitions which has
motivated them to establish new market segments such as Amazon fresh, Amazon pharmacy
and a slew of others have resulted in substantial income and profit for Amazon (Shieber and
Lunden, 2020). All these establishments carried out by amazon shows that it is making its
presence known in different types of business sectors.
1.4 DEFENSIVE STRATEGY
A defensive strategy is a marketing technique used to support a company retain its important
customers and keep them help to avoid them from being stolen by their competitors. This
strategy helps a company keep a competitive advantage and sufficient recognition. By doing
this the company is able to protect its brand, grow expectations and be profitable. Amazon
uses a number of defensive strategies namely flank, position, and mobile. Below is a diagram
showing how amazon has implemented these strategies into their company

DEFENSIVE STRATEGY

TYPES OF DEFENSIVE STRATEGIES AMAZON DEFENSIVE STRATEGIES

Position Defense: This is trying to maintain the  Convenience
company’s current market position by investing  Customer friendly 30-day return policy
in the company (Lapaas, 2020).  Warehousing and distribution system
Mobile Defense: This is making continuous  Expanding physical stores
modifications to your business so that
competitors find it hard to compete with you
Diagram 2: Shows amazon’s
(Bekoglu and Ergen, 2016).
defensive strategies
Flanking Defense: This is defending the
company’s market share by expanding into new 9
markets (Bekoglu and Ergen, 2016).
Amazon has structured its strategies in such a way that they all support and strengthen each
other, allowing the company to gain competitive advantage. Its defensive strategy is
motivated by always trying to keep its customers happy. It uses a position defense strategy to
keep its market position and customers it does this by promoting convenience. Amazon
highly invests in delivering its products by prioritizing time, availability, self-service, search,
and even knowledge making the life of its customers easier (Morris, n.d.). Amazon also uses
mobile defense to stay ahead of its competitors but introducing new and innovate ways of
doing things. For example, amazon introduced a customer friendly 30-day return policy
which made it easy for customers to be able to return goods that they not happy with. It has
also developed new warehousing and distribution systems for example it plans to use drones
to deliver products from the warehouse to its customers (Vincent and Gartenberg, 2019).
Lastly, amazon uses flanking defense to sort out its weaknesses so that they no loops for
competitors for example amazon top competitors are well invested in physical stores, amazon
ventured into opening more physical stores and amazon pick up stores (McKinnon, 2021).

1.5 AMAZON TARGET MARKET

Amazon had made its mark and built an empire with a large customer base. Amazon has
always been strategic in the way they target their audience they use a marketing strategy
called differentiated. This is a strategy where a company markets its product or services in a
way that distinguishes it from its competitors drawing the attention of more and more
customers (Chege, 2018). With a customer’s base well built on both seller and buyers,
Amazon’s success has been contributed by its flexible CRM system that stands for customer
relationship, this is a software in-charge of managing and integrating the company business
communications and information. Amazon has used this CRM system to its advantage by
targeting its customers because the CRM provide a user-friendly website, smooth
communication operations and a staggering amount of data storage used to provide a precise
and seamless purchasing experience for its customers (Service, n.d.).With the customers base
Amazon has its always looking to pull a more and more customers as it keeps growing,
Amazon’s new target audience is teenagers, it is a demographic segmentation that Amazon
believes are not burdened by a mortgage or household expenses and are the easiest for they
are tech-savvy consumers. Amazon plans to offer these teenagers a new service by providing
them with their own login to shop without any parental control (Picchi, 2017).

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2.0 RELATIONSHIP MARKETING INNOVATION FOR
AMAZON
Relationship marketing is a marketing strategy that aims to increase consumer loyalty,
communication and long-term involvement. Its goal is to build deep relationships with
customers by offering them with data that is tailored to their specific values and wants, as
well as encouraging open conversation (Olenski, 2013). With the growth of e-commerce, a
lot of companies have resulted into applying these strategies innovatively into their websites.
Customer retention is one of the most crucial aspects in relationship marketing. Instead of
aiming to keep existing customers, most organizations concentrate their efforts on obtaining
new ones to replace those that depart. This behavior can be described by a term called leaking
bucket that states that when a business is constantly losing clients, in order for the company
to preserve market share, they must acquire an equal amount of new customers to keep the
bucket full or slow the leak (Falla, 2019). Amazon being considered to be the leader of e-
commerce, has attained and attracted new customers because of its innovative relationship
marketing strategies keeping its bucket always full. When it comes to large corporations,
most customers are exposed to bad customer relationship management, but this is not the case
with Amazon, the reason for this is because amazon has introduced a lot of innovative
features to better customer relationship and stay a step ahead of its competitors (Web
Research Report on Relationship Marketing for amazon.com - O2I, n.d.). Below are few
examples of amazon’s innovative relationship marketing strategies.
2.1 SELF-HELP
This is a feature amazon has added to their page where a customer is able to access all the
help, they need in one simplified screen. Here they are able to review orders, communicate
with customer service, read FAQs, manage account as well as search for topics if the answer
to your query is not visible. Amazon's broad variety of self-help choices makes it simple to
obtain answers on one's own and helps customers save a lot of time by not having to wait for
responses from assistance. Below is a screenshot showing self-help page.

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 Figure 2: Amazon’s self-help page
2.2 DATA-DRIVEN
Almost all of Amazon's customer-facing interactions are powered by the power of big data
collected from the customers activities. This collected data is used in many ways, one way
this is implemented is when the call center is contacted by customers, the call center
personnel use the information you provide to help you feel more confident and at ease. The
most important way amazon uses this data is the more customers visits the site and signs up
for their newsletters, the better personalized recommendations they will receive. Below is an
example of a personalized based on the customers last search history.

Figure 3: Amazon’s customers personalized shopping suggestions

3.0 TYPES OF BONDS

Customer retention techniques are divided into four types of bonds namely financial bonds,
social bonds, Customization bonds and Structural bonds.

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3.1 FINANCIAL BONDS
Financial bond is linking customers mainly through financial incentives. For example, lower
pricing for customers who have been with the company for a long period or lower costs for
larger volume purchases to retain customers (Idushmita, n.d.). Amazon utilizes financial
bonds to create and maintain close relationships with its customers by providing numerous
financial incentives. Some these financial bonds used by amazon percentage off, free
shipping, buy one get one, link coupons, clip coupons, todays deal, gift cards etc. Below are
few screenshots showing amazon’s financial bonds.

Figure 4: shows amazon’s today’s deal page, where customers can find all the products that
are on promotion on that day

Figure 5: Shows amazon’s gift cards page, where customers can collect gift cards.

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3.2 SOCIAL BONDS
The social bond is the level of personal interaction that is shared by the vendor and the buyer.
Social bonds influence customer loyalty more than the product or service itself. Amazon
utilizes social bonding to build a personal relationship with customers and encourage them to
become loyal to the brand. It has done this through having a massive flow of real-time
customer interacting data in order to construct adaptable personalized customer journeys that
give engaging and delightful experience and information at every point of the customers
lifetime (Lima and Fernandes, 2015), For example, amazon offer its customers to leave
reviews about the product purchased when received it also uses the customers name to point
out certain features like deliver to Taza. Below are screenshots showing the few social bonds
used by amazon.

Figure 6: Customer review

Figure 7: Customer’s name to interact circled in red

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3.4 CUSTOMIZATION BONDS
Customization bonds is where a company customizes the service to the needs of the customer
aimed to promote customer loyalty (Idushmita, n.d.). Amazon is known for its excellent
customer relationship approach to business. The company considers its customers in all major
decisions. Amazon uses its CRM system to utilize the customization bonds. This can be
noticed by the way amazon is always customizing the customers dashboard or home page
based on their data, customer search history, last purchase etc. Below is a screenshot showing
how amazon has customized a customer’s home page.

Figure 8: Amazon recommendations customized to customers preferences circled in red

3.5 STRUCTURAL BONDS
This is highest level of bonds and the most difficult to imitate. This involves all the other
three bonds the customers and the firm. Structural bonds are formed by supplying consumers
with value-added services that are typically designed right in the customer's service design
system. A structural bond is usually formed by supplying customers with customized services
that are technology-based, run on an appropriate infrastructure, and increase their
productivity (Idushmita, n.d.). In amazon, an amazon prime member is more valuable than a
nonmember, structural bonds are largely experienced by prime members. Better share of
wallet, deeper loyalty, less switching, and greater top-of-mind awareness are just a few of the
key benefits. Below are screenshots of some structural bond used by amazon:

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 Figure 9: Amazon music benefit for prime members.

Figure 10: Delivery options available for prime customers

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4.0 SHIFT FROM MASS MARKETING TO MASS
CUSTOMIZATION
Mass marketing is a generic marketing strategy in which a company ignores specialist
marketing and market segmentation in order to appeal to the whole market with a single
strategy or offer. The marketing must be focused on a set of products that are common to
most customers in the target audience for an effective mass marketing campaign. Usually it
focusses on social media, television / radio, newspapers, magazines and email marketing
which is a traditional style of marketing. As much as mass marketing strategy can be very
effective for a company’s new product, compared to mass customization which is a
marketing technique that involves supplying personalized goods and services to match the
needs of individual customer, mass marketing is considered to be ineffective. This because
mass marketing has serious disadvantages significant downsides, including as costly
advertising expenditures and product development costs, harsh rivalry, and ignoring clients'
specific need while mass customization is having numerous advantages such as mainly
targeted customers that are loyal, less competition and higher profit margins (Shaw, 2018).
Amazon commonly know for mass products is slowing shifting to mass customization
because the benefits to company will be huge. This shift amazon will be able to have control
over some unique types of personalized goods, as well as a better understanding of how
customer preferences impact product design, both internally and externally. Amazon made
this shift when it introduced amazon custom which is a store on amazon.com that allows
customers to personalize their products by adding text, photos, logos or from a list of options
you provide (Redaktion, 2016). Below are screenshots of a few amazons’ customization
options.

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 Figure 11: Amazon customer page to allow customers to personalize products.

Figure 12: Customization options

5.0 AMAZON CRM RECOMMENDATION AND ETHICAL

ISSUES
CRM stands for "Customer Relationship Management," and it refers to any business
strategies, tactics, tools, and technology for attracting, maintaining, and obtaining customers.
This technology ensures that every part of the customer experience is successful and
effective, resulting in increased gross profit. The software collects client information from a
variety of sources. A CRM is used to records of total purchases, personal information, and
even purchasing habits that help build a relationship with customers (What is CRM, n.d.).

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Majority of amazon’s success has come from the company’s intelligent use of its in house
developed CRM system that collects customer data at the point of purchase and uses that to
customize the customer’s online experience. Even though amazon has a good CRM system,
the system has few weaknesses and the is always room from improvement.
5.1 RECOMMENDATION 1
Amazon being an e-commerce platform that felicitates third-party sellers, means the CRM
system comes with some serious limitations. One major limitation with amazon is that there
is no official certification process in place at amazon for seller, meaning anyone can claim to
be an amazon seller exposing its customers to cybercrimes. Amazon can fix by introducing a
system where third-party sellers provide amazon with certain information that will certify
them to trusted sellers, ensuring the safety of its customers.
5.2 RECOMMENDATION 2
A company like amazon where customers' expectations have shifted on many levels as a
result of the company's reputation for offering them what they want, when they want it, and
how they want it. Even when it comes to bills and statements, customers today expect
companies to interact with them in a way that is personal and relevant to them. This shows us
that amazon’s CRM system is almost perfect meaning it always collecting data from its
customers, putting it high risk for security breach which it has experienced in the past. The
company be able to protect its customers data and personal information by ensuring the
security measures are tighten by using encryption protocols and software’s.
5.3 RECOMMENDATION 3
As much as amazon CRM system interacts perfectly with its customer and reduces the need
of human support, nothing is more aggravating than needing assistance and being unable to
reach a live person. Amazon can provide its customers with live human support by either a
phone call or a live chat for instant help or response. Customer often complain about
company’s not being able to solve their queries on time, with recommendation amazon will
be able to assist its customers instantly.

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