International marketing –Amazon   w/c- 2163

Table of contents

Introduction

segmentation

company strategy

Micro environment/porter’s model

Amazon pestle analysis

Amazon swot analysis

Finding and recommendations

References

Introduction

Leading online giant Amazon was founded by Jeff Bezos in 1994 at a small portion of his house. In the beginning the company was run completely from his house in Bellevue, Washington.  In the beginning he stated the company with a small capital of $40000 and later he found further investment from Tom Alburg who made the website more customers friendly. In the beginning books and related products is the only distributed worldwide customers by the company. In addition to that he changes the retail website as an online community. New website comes with customer review and recommendation for the new customers in order to market genuine products. As a part of progress in the business strategy on May 1997 the firm went public company. The same time Amazon started its international branches in United Kingdom and Germany with huge success. As a premier in the web base  business which has leveraged technology as a  main source of competitive advantage and reaped the benefits of the economies around the world with less competitive and barriers(AAR2017).

Company strategy

Amazon’s marketing strategy is mainly based on on leveraging technological capabilities for business success and following a cost leadership strategy minimise expenditure and maximises profitability. The key business strategy aimed at offering the maximum value for its customers through offering lowest price in the market. Another key globalized feature of company’s strategy is lowest price in market to their loyal customers wherein they use their web site for the online shopping.

Segmentation

The segmentation mean the bigger market is mainly divided into four different customers categories based on different characteristics. Demographic, behavioral, physiographic and geographic are four different segmentations in the marketing. Demographic segment is bases on age, gender, occupation and socio group of society. Geographic segmentation is refers location, region and country divided as a different sector.Behavioral segmentation is divide market into different loyal status and customers willingness to buy. Physiographic segmentation divide marker according to personality, lifestyle and class of people in a social group. As a global web giants Amazon target market is mainly based on both psychographic and demographic sector of the society. Their main target market strategy is based on purchases behaviour of the consumers not expression or interest. Company’s micro segmentation is mainly targeting each and every individual customer to convert them as loyal customers of the company in the future Bernroider, E (2002).

Micro environment and porter’s model

The micro environment is only analysing the internal factors or behaviour of a particular business which directly or indirectly impacts on business activities of a firm. This is research the firm’s general business climate as it relates to the organization within its industry. These factors are generally controllable by the management Roy, D (2011). This can be deeply analysis through Porter’s five force model.

Amazon’s bargaining power of buyers is really high this is because there are many ways to buy products from various sellers such as Argos or eBay. Amazon’s customer focus strategy provides the firm high customer loyalty which attracts customers by low prices products (Chaffey 2009). Amazon’s customer focus strategy is one of the useful tools to attract more customers and deliver sustainable business growth in the micro environment.

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Amazon bargaining power of suppliers based on a friendly atmosphere between suppliers and firm to set lowest possible price. As a biggest online retailer, firm’s huge whole sale purchasing power helps them to set a lower price strategy for the customers. It is attract more customers for the company and maximise their sales volume. This is another useful strategy of Amazon in the micro environment.

Amazon Pestle analysis

Due to new innovation in the in the IT industry and growth of internet and latest mobile apps are big boost for the company last decade as leader in the web bases retail. Technology and related factors plays vital role in the growth of the company Company’s shift towards emerging economy countries in the Asia is big boost for the sustainable profit. Apart from technology factor and economy factor remaining pestle factors also plays significant role in the company’s business activities.

Political barriers for the electronic business are not same as traditional business. As a leader in the E commerce all over the world they have affected by several political factors as well. Compare Western Europe and North America all other territories have much restriction on internet and it based product usage. When they are moving to countries that they have much restriction on internet and mobile app industry, the risk impacts on their web baseness are very high. This kind of restriction will affect their supply chain and reduce profitability by low sales volume Gillespie, A (2007).

Better economic condition is very vital for any form of business either traditional or E- Commerce. Better market condition is very important for the sustainable growth of the business will result maximise sales and profitability. The same time better economic condition will increase the risk of more competition in the market.

Social and cultural trends factors play major role in the growth of web bases business. In a society people who they use smarter phone and internet base technology will increase internet base business. A society which uses smarter phone and it based app are big boost for company like Amazon who’s business hundred percentages based on inline. So this change in the society is very vital for Amazon to benefit a lot from the changing consumer demographics and shopping trends because which is the main segmentation of the company Gillespie, A (2007).

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Technology factors such as IT and smarter phones are the magical boost for the business like Amazon over last two decades. New IT technology and its related products are very vital for the both traditional and web business. Especially in the web based business technology and innovation are the key successful formulas to boost their sales volume through a reduce cost formula.

Now a day’s environment factors are a big concern among the multinationals. Like other businesses Amazon much focuses on their packaging and waste management procedures. As a responsible global partner Amazon uses environment friendly recyclable materials on their packaging. This is big boost for their business around the community who love their environment.

Legal factors are very important for the business like Amazon who they deal all their business activities through online. Government who they have severe control over internet and mobile industry are negative factors for their business. So this is vital for them to analysis these kind of legal restriction before entering a market. Otherwise it makes major impact on their business activities on countries have restriction for web bases products and business Gillespie, A (2007)

Above mentioned factors play positive and negative impacts on Amazon business activities   to deliver a sustainable growth in the business.

Amazon swot analysis

This Amazon SWOT analysis reveals how the largest online retailer used its competitive advantages to become the dominant player in the retail industry.

The SWOT of Amazon is analysing the competitive advantages of world biggest web base retailer. This is providing the details about all the key strengths, weaknesses, opportunities and threats that affect the company the most business activities in the long term Grundy, T (2006)

When we discuss about Amazon’s strength in online business, the following three leadership qualities such as market, cost and efficient charismatic leaderships are very vital. As leader in the online market with cost efficiency approach, company deliver much efficiency in the customer relationship to catch new markets. These are the key strength and success in the online business to deliver sustainable growth in the global market.

The same time company due to factors such as seasonal business, low margin and lack of focus on specific product or service (too many sellers) reduces profitability and sales volume becoming weakness in the marketing process. Due to latest technology and innovation strategy on the weaker area reduce these weaker factors Roy, D (2011).

When we analyse the opportunity factors of the company, the latest segmentation such as online business and more focus on own brand such as product call Fire products  are new opportunities for the company in the retail market. Apart from these, more local sites around the world and several cooperation strategies   with online companies such as eBay and ALIBABA, increasing company’s sales volume and profitability. These are new latest opportunity in the global marketing to play pioneer role in the web bases retailing.

Due to restriction on internet and mobile technology in several countries is a big blow for the company’s entry strategy. Online security is a massive threats factor for this kind of segmentation. Low profit margin and complicated entry procedures (several countries) are big threats for the company, to play a leading role in the online retailing (AAR2017).

These are weakness, streanth, opputunity and threats of Amazon to consider, when they plan and implement their strategy to become a leading multinational in the web bases business.

Finding and recommendations

As a leader in the global online trade, company has all the resources and wealth to continue and develop its online dominance in the modern world. At the moment company has a little portion of business in developing and some emerging countries. This is vital for the company to extent their business in those countries this is because the change of life styles of peoples due to globalization. Due to technology and innovation such as internet and various mobile apps bring countries together and reducing barriers between territories. Company like Amazon, they has invest and develop their business model with help of t technology to boost bigger market opportunity on those countries. Their successful business strategies such as technology and innovation are big boost for the company to extent their businesses on those new markets with the low cost strategy. This strategy also helping company to offer customers low price  product and service with the help of technology and its developments on those countries. The bigger disadvantages for the company to extent their online trade on those countries are legal systems and control over internet and mobile app usage.  In most of the developing countries government have direct control over internet and online use. This is biggest challenge for company to deal those markets according to those countries legal system (AS2017). To address those issues and close competition, company must have strategy to develop its brick and mortar stores. This is very vital for them to play a leading role and brand popularity in the multinational trade. On line security is another weakness in this types of segmentation.Thie s is very vital for the company to implement tight security procedure in order to avoid online fraud and keep customers information safe. When they have proper strategy to protect customer’s privacy it increases company’s reputation on web bases trade. These are some measurement they need to adopt to become one of the pioneer in the on line trade (AAR2017).

Conclusion

Amazon has adopts several strategies like blue ocean strategy approach in order to survive this competitive world. This low switching costs models and approach on online trade help them to offer low cost product service to their customers worldwide. This is necessary for them to using technology to expand their business infrascture. Amazon’s another approach call considers consumer buying hierarchy lead them to develop low cost products and service through technology and innovation. These types of approach help their customers, before making decision to buy go through various process regarding product and service’s price quality and reliability. These types of approach create a customer bases model and confident to deliver better low cost product and service for the customer around the world. One of the positive aspects for Amazon online trade is high cost brand development for new entries; help them to merge with world leading brand to become online trade leader. This mechanism and approach make them as a   one and only global realiable search engine for products and service. This is the successful story of Amazon especially in the web bases customers sectors Leigh, & Pershing (2006).

References

Amazon Annual Report 2017

Amazon Strategic Analysis2017

Amazon Statistics2017

Bernroider, E. (2002). Factors in SWOT Analysis Applied to Micro, Small-to-Medium, and Large Software Enterprises: an Austrian Study. European management journal, 20(5), 562-573.

Grundy, T. (2006). Rethinking and reinventing Michael Porter’s five forces model. Strategic Change, 15(5), 213-229.

Gillespie, A. (2007). PESTEL analysis of the macro-environment. Foundations of Economics, Oxford University Press, USA.

.Jackson, S. E., Joshi, A., & Erhardt, N. L. (2003). Recent research on team and organizational diversity: SWOT analysis and implications. Journal of management, 29(6), 801-830.

https://www.bloomberg.com/news/articles/2017-01-24/amazon-said-to-settle-eu-antitrust-probe-over-e-books-clauses

Leigh, D., & Pershing, A. J. (2006). SWOT analysis. The Handbook of Human Performance Technology, 1089-1108.

Roy, D. (2011). Strategic Foresight and Porter’s Five Forces. GRIN Verlag.