Amazon

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Overview and breakdown of amazon.com

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Amazon

  1. 1. Amazon.com ByMahdi Al-own
  2. 2. Company overview
  3. 3. Amazon’s vision is to be earth’smost customer centric company; to build a place where people can come to find and discoveranything they might want to buy online. (They list this as their mission as a combination mission/vision on their site).
  4. 4. Objective• ‘Not to discount a small number of products for a limited period of time, but to offer low prices everyday and apply them broadly across our entire product range.’Core Value Proposition• Price• Convenience• SelectionStrategy• ‘To ‘Get Big Fast’ by investing aggressively in new product categories and new businesses, by spending money on brand awareness and getting new customers.’
  5. 5. Timeline• 1994 – Amazon.com established by Bezos• 1995 – Expand product line• 1999 – Amazon invest into internet companies• 2000 – Dot-Com crisis• 2003 – Amazon become successful in partnership and cross selling in very high way that they start running other retailers web-sites• 2007 – Kindle
  6. 6. Key Players• Jeff Benzo – Founder of Amazon.com• Amazon.com – Global internet e- commerce retailers• Competitors (eBay) – Competing Global internet e-commerce retailer, and auctioning• Customers – Local online consumers
  7. 7. Main Issues• Political – Challenges from Government policies and competitors towards expanding in the market• Competition – eBay in rapid growth making competition more challenges• Management – Market fluctuations demands flexible management strategies• Financial – Dot-com crises left Amazon rethink it’s financial position• Marketing – Cut back in promotional advertisement in marketing
  8. 8. Critical points 2007 2002 2001 2000 19981995
  9. 9. Business Model
  10. 10. Valueproposition
  11. 11. The 6 C’s1. Content: Amazon.com has one of the best content friendly sites on the web2. Customization: “One-click” Amazon.com has developed specialized approaches that enables them to make a more personalized approach CRM (customer relationship management)3. Community: Amazon Communities have evolved just as the business has, Amazon offers several thousand communities4. Convenience: Amazon.com has been a front- runner in offering its customers almost every product at their fingertips.5. Choice: Amazon partially developed the availability of choice online by offering its customers all the tools to choose between products based on reviews, and product trials.6. Cost reduction: Amazon offer some of the
  12. 12. Content
  13. 13. Customization
  14. 14. Community
  15. 15. Convenience
  16. 16. Choice
  17. 17. Cost reduction
  18. 18. Amazon.com E-Service dimensions• Efficiency = High• Fulfillment = High• Reliability = High• Privacy = Low/ Med• Responsiveness= Low• Compensation = Low Service marketing integrated customer focus across the firm
  19. 19. Market/ Audience
  20. 20. Target1.B2C2.B2B3.C2C
  21. 21. Amazons Approach Segmenting-Targeting-Positioning (STP-Model) • Three steps to target group oriented marketing Market segmentation Target market determination Positioning Determination of Development of assesment Development of a lasting 1 segmentation variables/ segmentation of Market guidelines for the determination of attractiveness. Finally the competition position and determination of tasks and selection and concentration on performance program for Development of one or more segments. selected target segments. 2 resulted segment profile Estimation of 3 attractiveness of each Segment 4 Selection of target segments Zoning of market in clear defined target groups / Customer Development of groups with own products and marketing-mix. 5 possible positioning concepts Selection and 6 Communication of positioning concept Time
  22. 22. Revenue Model and streams• Investment: Amazon invest heavily on key partners in order to reduce costs• Amazon Web Services: Cloud program for online storage• Amazon Prime: Memberships for discounts and trials• Amazon Publishing: On demand publishing• Subscribe & Save: Subscriptions for discounts on daily deals• AmazonBasics: Product development (Cd’s, Cables, Software)• CPM, CPC, Sponsorship, Affiliate programs, transaction fee revenue• E-mail marketing
  23. 23. Cost Leadership • Amazons sustainable competitiveness is low cost in differentiation through 8 methods Economies of scale Economies of scope Experience effects Economies of learning Product design Process design Residual effects Capacity utilization Input-Costs the operational effectiveness Cost leadershipBusiness week 2007, May
  24. 24. CompetitiveEnvironment
  25. 25. Barriers to Entry (High Buyers (High threat)threat) Consumers haveHigh Competition – Leads high switching andto resource bargaining power.restriction/Price WarSuppliers (low/ medium) Substitutes (Low Possible forward threat) Mail Orders Integration
  26. 26. S-Curve Concept - Life Cycle • Representation of the life cycle of technology in the course of time Basic technology Pace setting technology time development phase growth maturity age phases Life cycle of a technology Given the current state of the market it is imperative to foresee the future and potential threats of new technologyEverett Rogers, 962 book Diffusion of Innovations
  27. 27. Marketing and Operations Objectives and Indicators Strategy Implementation (Marketing • Strategic and operational objectives Mix) Financial objectives • Product and pricing policy Market-and customer-related objectives • Communication and distribution policy 3. Strategy 1. Analysis 4. Mix 5. Control 2. TargetStrategic Analysis Strategy Selection and Combination Success Control (progress and results)• Market and environment • Competitive strategies • Effectiveness of marketing tools analysis • Portfolio strategies • Performance of the people involved• Customer and competitor • Positioning strategies • Profitability of the chosen analysis • Innovation strategies products, markets and (customer success estimation) Principles of Marketing (Kotler) Chapter 18 - Marketing in the Digital Age
  28. 28. Phisical and vertualworld representation & Mangment
  29. 29. Management• In order to maintain control and focus Amazon should decentralize control and develop more of a horizontal structure• The numerous customer care units amplify the fact that consumers (buyers) are a main concern therefore Amazon should focus its strategies towards the consumers by investing in advertising and offering a variety of new products/services
  30. 30. Amazon.com’s CEO Jeff Bezos believes in six corevalues which purple Amazon to be one of theworld best multifunctional organizations Customer Bias for obsession action Ownership Frugality High hiring bar Innovation
  31. 31. Recommendations• Amazon should create partnerships with search engine providers and invest in R&D.• Amazon should form a merger with eBay and move its head office to countries with less sever legal regulation.• Amazon should open up its own brick and mortar stores involved in online ordering for non-savvy Internet and technology users.• Amazon should invest in PR marketing and it should form B2B alliances with brick and mortar stores.• Critical Assessment of Recommendations• (Identifying the strengths and weaknesses of each recommendation in order to make a justifiable decision.)
  32. 32. Its about time Thank you!No questions please
  33. 33. Works Referenced• Amazon.com• Principals of marketing, Philip Kotler• Cult branding, 2008 , Levitt• 12manage: Management Communities, 2008., Five Competitive Forces., [Online]. Available at:http://www.12manage.com/methods_porter_five_forces.html [Accessed 02 Jan 2008]• Bange. V. (2007), “ONLINE SECURITY: Legal issues,” New Media Age, London, Jan 11, pg. 10• Bartlett, C.A., and Ghoshal, S. (1989) Managing across borders: The Transnational Solution,• New York: Harvard Business School Press.• Cavanaugh, T, 2007, Amazon.com as the librarians assistant for book analysis; Multimedia &• Internet@Schools, Pg. 24(4) Vol. 14 No. 1; 1st January 2007 [Accessed on 23rd Jan 08• from• http://www.lexisnexis.com/uk/nexis/results/docview/docview.do?risb=21_T2899864407• &format=GNBFI&sort=BOOLEAN&startDocNo=1&resultsUrlKey=29_T2899864410&cisb=• 22_T2899864409&treeMax=true&treeWidth=0&csi=140610&docNo=4]• Computing 2007 ‘Online sales top £3bn’• http://www.computing.co.uk/computing/news/2171169/online-sales-top-3bn• EMarketer Online, Ten Key Online Predictions for 2008• http://www.marketingcharts.com/direct/ten-key-online-predictions-for-2008-2924/• [accessed 15.02.08]• Farrell, D., Gersch UA., Stephenson, E., (2006) “The Value of China’s Emerging Middle Class”,• The McKinsey Quarterly.• Howells, Jan, 1998 "Walmart lawsuit against Amazon.com could be a blow for ecommerce".• Global Newswire, Oct 19 1998 [accessed: 23 Jan 2008]• Internet World Stats, 2007. INTERNET USAGE STATISTICS, [Online]. Available at:• http://www.internetworldstats.com/stats.htm (Accessed 29 Dec 2007)• Management & Computer Security. Bradford: 1998. Vol. 6, Iss. 3; pg. 128• Laseter, T., Houston, P., Wrigth, JL., Park, JY. (2000), “Amazon your industry: Extracting value• from the value chain." Strategy+Business, Issue 20, September 2000 [Accessed: 23 Jan• 2008 http://www.strategy-business.com/press/16635507/10479]
  34. 34. AIDA - Action PrinciplePhysical reaction Action(economical) The customer buys the product The desire for the product Desire is awakened (demand)Psychological reaction(pre- economical) The customer is interested in Interest the product Attention of the customer Attention for the product is excited
  35. 35. MeaningLanguage History Symbols Sensorics Style Tell stories Protagonists Sensorial experience Rhetoric Show episodes Figures Stimulation of senses Wording Places of action Only the interaction of these four Codes makes the brand communication sustainably successful
  36. 36. Worldwide Sales MixQ1 ’04 – Net Sales $5,710 MM Q4 ’09– Net Sales $24,509 MM 2% 3% z 22% 45% 76% 52% Source: www.amazon.com WW Media (Books, Music, Movies, Video Games and Consoles, Software and Digital Downloads) WW Electronics & Other General Merchendise (EGM) WW Other (Marketing and Promotional Activities, Amazon Web Services, Amazon Enterprise Solutions, & Co-branded Credit Cards)
  37. 37. International Sales MM$10,000 $8,938 $9,000 $8,000 $7,000 $6,740 $6,000 • 2008 International sales 47% of WW sales, up from $5,000 45% in 2007 $4,000 • Shipments to over 200 $3,074 $3,000 countries $2,000 $1,000 $0 2004 2005 2006 2007 2008 Source: www.amazon.com
  38. 38. Source: www.amazon.com
  39. 39. E-business news , 2009, Pitts
  40. 40. Amazon Market Growth $1.40 $1.35Sales (in Billions) $1.30 $1.25 $1.20 $1.15 $1.10 $1.05 $1.00 2001 2003 Date

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