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Unit 4 Marketing Principles Assignment - Amazon
Diploma in Business (Marketing)
Unit Number and Title
Unit 4 Marketing Principles - Amazon
In this unit 4 Marketing Principles Amazon assignment the basic understanding of the marketing process which includes five steps i.e., to understanding the needs and wants of the customers with the help of the market research, STP process, marketing mix integration, Building the long term relationship with the customers with the help of customer relationship management and lastly to extract value from the customers in the terms of profit .The designing of the customer driven marketing strategy which involves the segmentation of the market i.e., to divide the market in to a smaller group of buyers having similar characteristics, behaviour., targeting the firms’ audience and the positioning of the products/services in the mind of the customers, integrating the marketing programmes which includes the marketing mix and also the extended marketing mix . All these understandings are based on the case study given in the assignment. In the case study Amazon .UK is shown along with the different strategies in order to extend their business. The extension of the business result from different marketing strategies adopted starting from the product portfolio, service extension, international marketing and the partnerships deeds.
(a) There are five possible marketing orientations under which an organisation can design and carry out their marketing strategies, these are; the production concept, the product concept, the selling concept, the marketing concept, and the societal marketing concept.
You are required to discuss the approach that Amazon appears to embrace, you should identify the potential benefits and cost to their approach and offer evidence from your research of the company to support your argument. (1.1)
Out of five marketing strategies, Amazon has applied the marketing concept as per the related case study. Marketing concept is customer oriented approach where profits are earned through customer satisfaction by giving focus to the customer needs and to maintain a long term relationship. Amazon also follows this approach by undertaking certain activities which form the evidence of the marketing concept that are follows: (Ray, 2013)
- The survey of the product is being carried out by Amazon after the purchase takes place. The responses collected will give an insight regarding the product, customers review and the market.
- Suggesting the customers in their homepage based on the recent purchase they have made.
- If any customer makes some preference of any product and keeps that product on the cart in order to make future purchase, Amazon gives reminder to that customer regarding that product on different websites or the personal email ids.
- Even on the meeting CEO of Amazon Jeff Bezos left one chair empty which represents the customer. All the decisions are made with the consideration of the customer preference and likings.(Anders, 2012)
The benefits that can arise while adapting the marketing concept will give maximum return, high customer equity and larger market share. Every consumer will buy anything as per the needs and wants. So by analysing these attributes, the firm can provide superior value in turn they can capture larger profit with larger market share. To get a competitive advantage, this approach is perfect to get the advantage of the brand equity. If any consumer is given priority and importance, obviously they will make their purchase decision on the favour of that particular firm which in turn will enhance the business of that firm. The act of reminding or giving individual importance to the customers of the Amazon is giving positive outcome by attracting a larger mass. The objective of the customer retention can be achieved for Amazon’s approach In case of Amazon, using the digital platforms for marketing activities or the research process frequently include certain cost in order to assess the needs and wants of the customers and to develop the product/services as per the market need. But this cost can be compensated, if the turnover is high. Turnover will be only high if the value provided by the firm is superior, having relevant differentiation along with the effective positioning which will surely convince the consumers to purchase.
Task 2: Be able to use the concepts of segmentation, targeting and positioning (LO 2)
(a) What new product opportunities does the changing family structure provide for consumer companies such as Amazon? Discuss at least 2 ideas. (2.1).
It is very difficult to satisfy the all the customers with one market offer as the buyers are numerous, widely scattered as per the geographic locations and has a difference in the specific needs and wants. Segmentation is a way to divide the market in to a smaller group of buyers having similar characteristics, behaviour. (Kotler, 2010). Same goes for the Amazon. From the online book seller, Amazon extends its product line to several categories in order to cater all the customers with several products. The below chart will give the product details along with the year. (Quinn, 2015)
Starts its with online book retailer
Acquired the bookpages.co.uk and then forms Amazon.UK
CDs and DVDs
Toys and electronics items
Market place was launched where A to Z was indicated in order to sell everything
Partnership with Borders.com
Launched cloud computing platform
Premium membership package in US after that in UK
Amazon Fresh was launched in order to deliver the foods available in online
Launches the games
Kindle Fire, the tablet of Amazon was launched
Acquired Kiva which is a robotics company
Market capitalisation in excess of $245billion
(b) When you register as a new customer with Amazon, you are not asked any demographic or lifestyle questions. Amazon doesn't profile consumers by attitudes or psychographics or profiles of how they think. So, how does Amazon identify its market segments? Offer at least 2 ideas. (2.2)
Segmentation is based on several parameters. Every organisation will like to go for the segmentation strategy in order to provide superior value to the customers. Same goes for Amazon. Amazon also designs its segmentation strategy based on certain aspects which is likely different than others. As per the question is concerned, that without being asked certain demographic, lifestyle or psychographic questions to the customers, how Amazon identifies its market segment.
Well, Amazon’s segmentation is based on actual purchase behaviour. It is not based on the customers who have expressed certain interest, rather Amazon focus on the present activity that the concerned customer actually did. The segmentation strategy for Amazon is framed on the behaviour of the customer’s spending whether in present or past. The availability or the choices provided by Amazon considers the reality rather than any kind of predictions. (MacLeod, 2006) Amazon focused more on the individual needs and wants. Suppose any customer purchased certain things based on that purchase, recommendations are given for the items which are needed along with that purchased one. The behavioural segmentation plays an important role for Amazon. They used to promote several offers or deals to the customers which is being conveyed to the personal email ids based on the purchase patterns i.e., the amount of spending they have done in some previous purchase. From the segmentation strategy of Amazon it is clear that Amazon wants to give focus to every individual with realistic practice rather than any assumptions.
(c) Amazon has recently launched its first ever Smartphone; the Amazon Fire. Identify and explain an appropriate targeting strategy for this product launch. (2.3)
The market of the smart phone is dominated by the brands like Apple or Samsung or Microsoft along with other companies. But the targeting strategy for Amazon by launching its smart phone Amazon Fire is something different. Amazon implies for shopping experience and it is an online retailer so the targeting strategy they have adopted that customers of the Amazon will like to go for this smart phone having one unique feature that is the three dimensional effect on the graphics named as Firely, which allows the shoppers of the brick and the mortars stores to identify easily and then to buy through online preferably from Amazon. The Amazon app is already installed in the Fire phone in order to convince the buyer to prefer Amazon for their shopping destination. (Managalindan, 2014). Amazon wants to target the customer who wants a smart phone with a lower range specially the young people, students, and other individuals who have a deep interest in shopping. The applications of that phone can give direct access to the customers with the Amazon account where they can easily linked with the book stores, music store, movie store etc.
Targeting is one of the important aspects of designing a customer oriented strategy. Identification of the target audience is very much essential to provide the value to the customers. Amazon also adopts the concerned targeting strategy in order to promote the Fire smart phone product while creating a relevant differentiation with the other existing brands in the market.
(d) Buying behaviour differs greatly dependent on the product; explain how consumers’ purchase of the Amazon Fire smart phone might differ to that of a tube of toothpaste. (2.4)
Consumer buying behaviour is highly influenced with the nature of the product. In taking the example of purchasing the Amazon Fire phone with that of a tube of toothpaste is being shown in the following chart: (Chand, 2015)
Complex Buying Behaviour
Here, the consumers are highly involved with their purchase as the product is expensive, risky, infrequent purchase which requires buyers to search for the information, screening of the alternatives and then purchase considerations comes. In this case the buyer has to go through with some process which starts with the establishment of the beliefs regarding the product, after that an attitude with a thoughtful choice for the purchase. In this behaviour, Amazon Fire phone can be putted due to its nature that matches with the complex buying behaviour.
Dissonance-reducing Buying behaviour
Here also the product is expensive, infrequently purchase and requires certain consideration before the purchase. But after the purchase, the consumers want to see the favourable hearings of that particular product he/she has purchased which justifies his/her purchase decision. The buyer of the Amazon Fire phone can also posses this buying behaviour.
Habitual Buying behaviour
Here the customers used to purchase the product without seeking any information or other considerations. The product is relatively cheap and frequently purchase which makes the habit of the consumer to purchase only that particular product. In this case, The toothpaste can be the example where the buyer possesses this buying behaviour.
Variety seeking Buying behaviour
Here the consumer has a lower brand loyalty. They want to switch to other brand very often.
(e) Explain how Amazon has determined the Amazon Fire product’s position in their target markets. (2.5)
Positioning is the placing of the product in the mind of the consumers relative with the competitor’s offerings. In the context of the Amazon Fire phone, the positioning strategy is something different than the other smart phone brands. Amazon is the giant in online retailing so they are offering a product named as Amazon Fire Phone which enhances the shopping experience of the consumers more effectively.
The positioning strategy by the Amazon Fire phone is based on certain aspects which are as follows: (Avnet, 2014)
- Emphasis is given on the e-commerce rather than the aspects such as connectivity or communications. The positioning of the smart phone by Amazon based on the technology which is built with the system of ecommerce which help the customers to go with shopping with Amazon.
- A sizable screen that is not too much big or too small which makes easier to carry.
- Cloud based technology is given focus in order to increase the consumption habit of the media which differentiate with the Google Cloud and the icloud services
- High quality camera with 13 megapixels claiming to be the best than Apple I Phone 5S and Samsung.
- 3D visual effect
- Most importantly, Firefly which allows the users to identify some objects in the real world and after that prompting of that particular item to the user to buy it from Amazon
- Amazon’s in built shopping applications help the user to find any product on their web portals very quickly through image scanning.
Task 3: Understand the individual elements of the extended marketing mix (LO 3)
(a) Product – How are products developed to sustain competitive advantage (3.1)
As a part of a marketing team of Amazon, I have been assigned a task to develop a product which can sustain competitive advantage. To develop a product, it is necessary to understand the importance of the product. Product is something which can be tangible or intangible that is offered to the market in order to meet the market demand. For Amazon, the product will be something that can give superior value to the consumers in order to satisfy them as well as to retain them for long term. There are certain considerations which are needed to be followed in order for the sake of competitive advantage: (Learnmarketing, 2016)
- Development of the product should be done after assessing the needs and wants of the consumer which can match their requirements.
- Product design should be done by taking considerations into the facts such as the latest technology, taste and preference, likings, certain age groups etc of the consumers.
- Product features leads to the benefits and the attributes that must meet the needs of the consumers. The product can be viewed on three categories:
- Core product: For Amazon it will be the online retail store
- Actual Product: It includes the features, packaging, benefits etc.
- Augmented Product: It includes the after sales service, warranty, refund, return policy of Amazon.
- Quality of the product must be standard in order to attract new customers and to retain the existing customers.
- Designing the Product market as per the target audience which constitutes the prospective customers of that particular product.
- Product positioning is needed to place the product on the mind of the consumers is to have a clear distinct place relative to the competitors offerings.
(b) Place – Explain how distribution is arranged to provide customer convenience (3.2)
Place signifies the distribution process. The reach and availability of the product can be possible through distribution process. In the context of Amazon the distribution is the very important consideration as it is an online retailing company where the delivery of the product on time to the customers is highly required. If Amazon wants to distribute their product by developing their logistic chain then Hub and spoke principle will definitely help to manage the reach and availability of Amazon. (Webstrategist, 2010)
Over this model, the products which the customer has ordered from Amazon will first come to the Central warehouse or the mother hub from the manufacturer’s house after that the product will be sent to the local warehouses or the local distribution centres for the sake of delivery to that customer in the particular geographic area. The delivery vehicles should be adequate in numbers so that the delivery process should not hamper. The setting of the central warehouse should be in the middle of any geographic area which will be surrounded by the local warehouses.
(c) Price – Explain how prices are set to reflect the organisation’s objectives and market conditions (3.3)
Price is the only marketing mix which helps to extract the revenue in the form of price charged to the customers. The basic objectives of pricing strategy are as follows:
- Skimming: It is the strategy to set higher price of the product in order to penetrate in the market by displaying the image or brand value in front of the customers.
- Penetration: It is the strategy that enables to set lower price of the product in order to make entry in the market and to increase the market share
Certain steps must be considered in order to set the price of Amazon are as follows:
- Market analysis including the segmentation, targeting and the positioning which will help to develop the marketing strategy
- Product, Place and promotion have to be defined as a part of the marketing mix decision.
- Estimation of the demand by measuring the quantity demanded of the product with the price.
- Calculation of the cost including both fixed and the variable
- Evaluation of the environmental factors including government policy, competitors movement, supply demand etc
- Determination of the pricing strategy keeping in mind of the pricing objectives
(d) Promotion – Illustrate how promotional activity is integrated to achieve marketing objectives (3.4)
Promotion is also one of the important marketing mixes which help the product or the service of the organisation for creating the awareness as well as to generate the positive customer responses. There are different elements under the promotion mix which are as follows: (Smallbusiness, 2016)
- Advertisement: It is a non personal communication of the company’s offering with the help of the media in different forms such as television, Internet, newspaper etc. The basic objectives of the advertisement is toPersuading the target audienceReminding the target audienceInforming the target audience
- Sales Promotion: It is a short term incentive in order to boost the sales of the organisations. Now a day customers are more deal oriented, intense competition with the close competitors encourage this personal selling. Sales promotion should be planned efficiently because it steals the sales of the period after the sales promotion.
- Internet Marketing: Internet marketing uses the digitalise platforms in order to create awareness of the product by the organisations. Social media platforms can help to create the awareness for the Amazon. Search Engine Optimisation should be done effectively in order to maximise the internet user’s proportion in visiting the Amazon’s website Social SEO can help Amazon to compete in the crowded market in the existence of intense competition
- Direct marketing: Amazon’s approach is customer centric. So, direct marketing can help the Amazon to address the individual customers with the help of the internet through mails, popup, recommendations etc.
- Personal Selling: Personal selling is directly approach to the customers by personally visiting them. This element is not applicable in case of Amazon.
(e) The "Seven Ps" is a marketing model that adds to the aforementioned four Ps, including "physical evidence", "people", and "process": It is used when the relevant product is a service. Identify a relevant product that is a service for Amazon and explain how an understanding of the further 3 P’s is essential to marketing strategy. (3.5)
In the context of Amazon, the extended marketing mix consists of three elements: (Hubpages, 2013)
- People: People are the workforce of the Amazon who used to implement the policies and the strategies of the organisation. Productivity of the people has a greater influence on the target achievement or the business objective. Suppose, a customer has ordered a window AC. So the people of the Amazon have to deliver that particular product to that customer on time. The packaging, delivery and the service of that window ac are the responsibilities that the workforce needs to fulfil in order to satisfy the customer and to make a long term relation with him/her.
- Physical evidence: It symbolises the brand name, trademark, symbols, dress code, and office premises in order to make the existence of the brand. In case of Amazon, the packaging of the product with the staff that has the impression of the company name Amazon or the corporate office of the Amazon.UK which is located in the 60 Holborn Viaduct, London gives the physical evidence so that the customer can feel the existence of the company
- Process: The process is the system by which the strategies or the policies are implemented. Suppose a customer has ordered a window AC from Amazon. First of all the pickup process is done in which that ac is taken from the manufacturer’s house after that it is sent to the mother hub of Amazon and then to the local warehouse to make the delivery to that customer. The inbound and the outbound process is being followed. Task 4: Be able to use the marketing mix in different contexts. (LO 4)
(a) Using the 7 P’s, create a table to demonstrate the similarities and differences of the marketing mix at Amazon and Argos. (4.1)
The similarities and the differences of Amazon and Argos based on the 7 P’s of marketing are as follows: (Argos, 2015) and (Amazon, 2016)
The product categories shows some similarities between Argos and Amazon which are as follows:
The pricing for the mobile phone from Apple is almost same. If i considered Apple 5s 16GB Grey colour.
The place implies the distribution centres. Both the company have their online presence in order to give convenient shopping in the terms of delivery, same day delivery options,
Both the companies used to undertake the social media as well as the internet marketing promotion tools. For example both are having the Facebook pages, where the updates are given on their latest offers.
Both the companies have their registered offices, online web portals, packaging which is inscribed with the company’s logo, stores are there.
The process more less same. The delivery can be made within one day which is resulted with extra money same for both the company. The return policies consisting of 30 days is same for both
The delivery boys for the Amazon or Argos, store people for the Argos are there in order to provide superior value in the terms of service which implies the same strategies more or less.
The product categories of Amazon are much more than that of Argos. The online book stores, car and motorbike equipments, business products, industrial products are available on Amazon
The pricing for Amazon is somewhat cheaper than that of Argos.
Amazon is an online retailing company. Their business is based on purely in online. But Argos have physical stores around 750 in different locations in UK
The major difference is Argos have got 750 physical stores throughout UK from where the products are purchased
The people who are there in Argos store are much more skilled and have to trained as they have to face the customers directly in their stores which is not there in case of Amazon.
The process is also got some differences. The delivery options are much more in Argos which includes the Saturday delivery, Royal mail delivery which is not available on Amazon.
(b) Decide on a product that both Amazon and Argos could target to a business market, and discuss what the differences in marketing products and services might be to businesses rather than consumers (4.2)
The product that both Amazon and Argos can target to the business market can be the desktops and laptops for different organisations that use these items for their operational activities.
In case of business market, segmenting the business market is required on following aspects:
- Type of Business Activity: The business activities of the organisations must be considered in ordered to identify the target audience.
- Geographical locations: The locations of the organisation should be taken in to consideration for the sake of delivery purpose.
- Size of the Business buyers: The size of the business buyers can be measured from the turnover, profitability, annual report. Big organisations will definitely give more order from the view point of quantity.
- Purchase pattern: The business buyers are more systematic than the consumers. Less price, optimum quality, reach and availability factors are having greater importance.
Target audience will the organisations that use desktops, laptops for their business operations
After the targeting, Amazon and Argos have to designed the Positioning:
- Positioning by features: The product is the desktops and laptops which are used by the organisations in order to carry their daily operational activities.
- Positioning by benefits: Benefits are generally the problem solution or the needs. The delivery process by the Amazon or Argos, the differential rate as the quantity is bulk in nature, then other promotional offers in order to get maximum orders.
- Positioning according with competitor’s movement: Competitors in the sense are the suppliers of the desktops or laptops. The service by the Amazon or the Argos should be best as per the quality, standard, delivery and flexible rate structure.
(c) What could Argos learn from Amazon’s experience as an international marketer? (4.3)
International marketing is the flow of goods and services in the overseas market. Amazon has successfully applies the international marketing strategies in order to enhance their business activities across the globe. Argos has to follow certain aspects in order to flourish their business as an international marketer:
- Understanding the needs and wants, taste and preference, market potential, market demand, trends, existence of the competitors of different countries is very much needed and required. The market research, intelligence and the information can help in these grounds.
- The cultural factors needed to be understood in order to tap the overseas market. Cultural differences are one of the influential parameters.
- The different regulations including the trade barriers, government policies, tax structure have to be evaluated before entering in to the international market.
- The current position of the Argos has to be analysed in order to make investments in the overseas market.
- The return from the investments need to be evaluated
In the given Unit 4 Marketing Principles Assignment - Amazon we can conclude that Amazon has applied several marketing strategies. The extension of the business of Amazon result from different marketing strategies adopted starting from the product portfolio, service extension, international marketing and the partnerships deeds. basic understanding of the marketing process which includes several steps i.e., to understanding the needs and wants of the customers with the help of the market research, Segmentation, targeting, positioning process, marketing mix integration, building the long term relationship with the customers with the help of customer relationship management and lastly to extract value from the customers in the terms of profit. The designing of the customer driven marketing strategy which involves the segmentation of the market i.e., to divide the market in to a smaller group of buyers having similar characteristics, behaviour., targeting the firms’ audience and the positioning of the products/services in the mind of the customers, integrating the marketing programmes which includes the marketing mix and also the extended marketing mix.
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