Amazon Company Case Study Analysis

E-Marketing

E-marketing refers to any marketing or advertising efforts carried out online via websites or other digital means. Because of globalization, corporations can now consider this marketing endeavor as an alternative to traditional tactics, which are often rigid and unsuccessful. Because corporations have expanded into foreign markets, there is a greater demand for a marketing platform that is inclusive yet diverse in order to maximize its reach to consumers on a global scale without losing its intent and value (iarnien and Stankeviiit, 2015, p.735). The emergence of digitalized marketing system is inevitable in this modern age and electronic commerce, and cloud computing companies such as Amazon have radically changed the way businesses are being conducted at the global scale. The diversification of e-commerce corporates is limited and ranges across a broad spectrum of products to meet the demands of the ever-expanding consumer This paper seeks to critically evaluate the concept of e-marketing with Amazon as the primary case study, and identify the opportunities and challenges open in this marketing platform and link fundamental theories into practice.

Background Information on E-Marketing

E-marketing can include paid methods while other efforts are virtually free. However, numerous varieties of e-marketing methods are at any corporations disposal including direct email, text messaging, blogs, WebPages, banners, videos, images, social media, search engines among many other methods. Amazon, for example, incredibly vast e-marketing services across its diversified products platform. Amazon owns a 30% market share in e-commerce in the United States alone thus showing its dominance in an otherwise heavily diversified and competitive market. The success of Amazon’s e-commerce strategy is mind-boggling considering that its rivals have the same tools it is using in the market. However, its dominance can be attributed to the foundation’s culture of innovation.

It is important to understand why e-marketing has become a necessity and competitive edge at this modern age.

Although the same as traditional marketing approaches which enhance brand awareness of a given company and communicate to the target market through relevant products that customers need, e-marketing uses techniques that are unique to a particular medium of the internet. Subsequently, this enhances communication through optimizing channels for reaching customers (Verma and Mehla, 2014, p. 11). Additionally, the need for e-marketing is based as being cheaper and more effective in reaching a broad target market than traditional methods could ever accomplish.

E-Marketing Theoretical Framework

Contingency theory approach is best suited when it comes to understanding e-marketing and its application. The theory takes root from the general systems theory as well as the behavioral theory of the organization. The theory has found footing, especially in marketing strategies since it defends the fact that there are no best-fitted strategies across all situations. In other words, it says that the performance level of any given organization results from co-alignment between strategy and the firm’s internal and external forces (Polat and Akgun, 2015, p. 3). Each approach adopted and the outcomes expected depend on the nature of contingent forces it experiences. However, despite numerous researchers agreeing to this theory, criticism has been raised regarding its limitations relating to the identification of all relevant determinants of performance.

Amazon is a prime example of a robust e-commerce firm which has aligned internal and external forces to complement its business strategy

Amazons internal and external forces are represented in the table below:

Internal Forces

External Forces

Organizational Innovation – management function that seeks to find new solutions for existing and potential problems faced

Market turbulence – degree of change of the clients composition and in its preferences

Organizational beaurecrization – degree to which procedures are formalized, Amazons structures are more organic due to turbulent nature of the market

Environment turbulence – degree to which there is change in the environment, a good example, is increasing products and innovation as well as market regulations

Centralization – degree in which decisions are concentrated at the top level of administration

Technological turbulence – change associated with new product technologies within the same competitive niche

Organizational Improvisation – adaptive interactions through work knowledge

Competitive intensity – competitive force experienced in the market to reduce market unpredictability

Innovative organizational culture – emphasis on creativity, openness, transparency, quick decision making

Learning experience – emphasis on feedback to set goals and objectives

Availability of resources

From the identified internal and external factors identified above, Amazon has developed an impressive e-marketing strategy which acts as a general direction of the company and reflects its response based on the information gathered from the market environment.

E-marketing Strategy through Web Services

The plan proposes the use of electronic methods which has two primary benefits as opposed to traditional marketing methods. First, it enhances efficiency in established marketing functions, and secondly, it transforms other marketing strategies employed by the organization resulting in new business models that add value as well as increase profitability. The primary e-marketing strategy employs the use of website through the use of four main constructs which are web design, web promotion, web price and web CRM all of which are commonly referred as the 4Ws. Amazon’s web services are among the most profitable with regards to e-marketing.

Amazon’s web strategy is brilliant at leveraging the wisdom of the crowd to create one segment. It focuses on each person, their wants needs, and assesses their particular online behavior. The messaging system and emails are unique and answer each person’s needs. The suggestions of a diversified range of products are based on personal history and shopping patterns of the web user. Competition from other high profile web-based organizations such as Google, Facebook, and Netflix has influenced Amazon to use the crowd’s wisdom and browsers to personalize the user experience hence dramatically increasing conversation and acquiring sensitive information. Amazon also has created a huge ton of contents on the main search engines such as Google with 248,000,000 pages stored in Google index. This enhances the probability of users to open an Amazon related product and site with a diversified opportunity to rank for any number of keywords. The web design of Amazon is also very influential and ranked as one of the best despite its lack of white space background. The fact that it is ranked best shows that even though design matters, the effectiveness of the site is also an excellent marketing tool.

E-Marketing Mix

The building blocks of traditional marketing include the 4ps which are product, promotion, place and price. However, the introduction of the internet has influenced a change in the mix towards a more inclusive 2P+2C+3S (personalization, privacy, customer service, community, site, security, and sales promotion).Personalization depicts the need to recognize and identify customers thus to establish relations. The use of cookies and a record of online shopping patterns is one way Amazon is using to understand their consumers and meet their demands. Privatization of sensitive client personal details through agreed policy on access to the company’s site as well as meeting the required legal regulations regarding the collection and usage of personal information is the key aspect under privatization.

Customer services are an essential support function, especially in transactional situations. Additionally, it should be treated as a long-term on-going process through which consumers are valued and their choices highly regarded by the company. Amazon has 117,300 employees to service more than 240 million customers worldwide. The Internet has raised the concept of the community being introduced as an effective e-marketing mix. Encouraging interaction between an organization such as Amazon and the community, therefore, becomes fundamental since it impacts all aspects of e-marketing functions. With the whole aspect of e-marketing done on the internet, the site acts as the place of transaction and interaction. Therefore, conventionality is essential to allow access to as many clients as possible through phones, tablets, and computers. Also, availability in different places makes the site an enabling tool in e-marketing. Security and sales promotion carry out the last aspects of e-marketing with the former safeguarding the interaction between consumers and company and the former helping the company meet its targets and goals efficiently.

E-Marketing Challenges

Although web-based companies continue to emerge on a daily basis and extending the reach and capacity of cyberspace, new challenges continue to rise as well which are unique to the industry including:

Marketing Integration

Marketing efforts under e-marketing utilize the use of varied and diverse channels ranging from emails, web advertising and both online and offline drives. This diversification creates a challenge through the management of each drive as a different work aspect. This limits and hinders the ability of the institution to integrate all marketing strategies to serve as one concrete and measurable goal (Leeflang et al., 2014, p. 9). Amazon has numerous products and services which make it even harder to integrate a concrete marketing goal.

Security and Privacy

Web companies operate on a fundamental principle of gathering sensitive information through its sites as well as when carrying transactional services such as online payment through credit cards. Ensuring the safety of such confidential information is upheld as a hard task. In Amazon, for example, a hacker incident in 2011 compromised over 100 million user accounts through a coordinated attack on the company’s play station product network. Additionally, other technical problems also rise when e-commerce is involved. Integrating the internet with E-commerce software with some existing applications and databases is impossible.

Impersonal Service

Businesses operating under the e-commerce banner rely solely on electronic methods such as website postings and emails to answer any inquiries from the customer. There is a minimal human relation between consumer and the business front which influences trust issues and might be perceived as too impersonal or out of touch by customers. Addressing this issue requires Amazon to campaign and develop web services that are efficient in providing quality customer services such as feedback platforms, shopping guides and other relevant procedural methods of using the site. Call handling services and online ordering strategies employed by Amazon minimize these effects and consumers have been impressed with such services since they give answers and influence a culture of caring and putting the customer first.

Improving Brand Awareness

Brand awareness for internet-based businesses is at a risk of being shut off by the users. Unlike other conventional advertising methods which use prints, television, and radio thus repeatedly reinforcing the campaign message, e-commerce requires one to visit the site on their will. Additionally, there are numerous competing brands such as Alibaba which also look to have a strong market influence in the same niche.

Opportunities

The opportunities that are available for E-commerce are as vast as the innovative brains behind any given organization. The global reach of E-commerce is extensively huge with eight out of ten Americans shopping online which adds up to nearly 79% of the population. When one considers the global reach it is clear that Amazon and other E-commerce business still have room to explore new markets with considerably small investments.

Traditional marketing initiatives are expensive and hard to plan strategically as opposed to e-marketing strategies. Cost efficiency is an important aspect of any business firm. The concept of internet marketing allows a company to reach a particular target market at a much lower cost which leverages other departments of the enterprise to thrive. Additionally, e-marketing is a 24-hr marketing drive that is not hindered by geographical distance or time zones (Mahajan, 2015, p. 50). Its influence is far reaching, and consumers have the flexibility to shop at any time in any parts of the world. Personalization through information gathered by the customers’ details and shopping patterns allows companies such as Amazon target specific customers with intended products that they would appreciate and need. The more refined a company’s customer profile is, the more efficient the marketing drive becomes. It is also crucial to identify that the rural population across the globe covers about 70% which is a considerable enormous potential for growth for Amazon and other E-commerce businesses.

Despite the identified challenges and opportunities for growth, E-commerce enterprises need to ensure that cyber security is well tackled and minimized. Sensitive information regarding customers’ personal information is the basis for the success of internet-based firms. The same information also poses the highest risk possible for such companies since it is the basis under which the values of the company including customer service, trust, and loyalty thrive on. Safety from cyber security hence needs to come first and above all things if companies such as Amazon wish to continue thriving in the industry.

Conclusion

The policies behind E-commerce business strategies and marketing drives are useful so far in the 21st century. Companies have identified numerous elements of e-commerce to optimize profit and consumer satisfaction. Jobs have been created; innovation keeps on progressing, and new markets continue to emerge. Amazon is a prime example of how traditional marketing initiatives have radically changed into internet based models which have been influential in all aspect of business innovation. However, despite e-marketing efforts and achievements, research still points that a lot more can be achieved.

References

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Verma, D. and Mehla, H. (2014). A Study on E-Commerce – Conceptual Framework & Future Potential in India. International Journal of Engineering, Applied and Management Sciences Paradigms, [online] 13(1). Available at: http://www.ijeam.com/Published%20Paper/Volume%2013/Issue%2001/IJES%2002/IJEAMMarch2014_10_13_Deepa_Harita.pdf [Accessed 24 Mar. 2017].