BUSINESS MANAGEMENT BM-201 REPORT ON MARKET STRATEGY OF Under the guidance of Dr. Usha Lenka Assistant Professor DOMS IIT Roorkee. Submitted by: Nitanshu Garg 10111029 B.Tech. II year Deptt. Of Biotechnology H.A.S Shri 10111011 B.Tech. II year Deptt. Of Kishore Biotechnology Sunil Pancholi 10111046 B.Tech. II year Deptt. Of Biotechnology Chirag Jain 10111010 B.Tech. II year Deptt. Of Biotechnology List of contents: 1. Marketing Plan. Marketing strategies. History. Business Philosophy. Myriads of Marketing Strategies. 2. Marketing Structure. Supply Chain. Multi tier inventory model. 3. Position in Market. 4. References. Marketing Plan Marketing Strategies of Amazon.com Amazon.com is obsessed with a fervor to serve consumer and shareholder alike. Since its inception over fifteen years ago, Amazon.com has steadily grown from a burgeoning “dot-com” corporation into a multinational monster, a king in the domain of internet retail. It targets two goals: the satisfaction of a customer and efficient corporate growth. Its marketing strategies are near-legendary, and budding business should take a page – or several chapters – from Amazon.com’s proven marketing manual. Amazon.com History Jeff Bezos, Amazon.com founder and CEO, dreamed about books. In 1994, he created Amazon.com, Inc., which he labeled as “Earth’s Biggest Bookstore.” The ecommerce company went online in 1995 and soon expanded into other media, including DVDs, VHS, CDs, MP3s, and eventually a wide range of other products, including toys, electronics, furniture and apparel. As such, the tagline soon changed to “Earth’s Largest Selection.” But books were only the beginning of Bezo’s up-and-coming enterprise. Amazon.com went public in 1997. In the first shareholder letter, Bezos penned the fundamental foundation for Amazon.com’s success: “Start with customers, and work backwards … Listen to customers, but don’t just listen to customers – also invent on their behalf … Obsess over customers.” This policy was backed by a startling business philosophy – Bezos planned on operating at a loss for 4-5 years. It was not until 2001 that Amazon.com posted a net profit at a minuscule one-cent per share. Yet, despite its bizarre business strategy, Amazon.com claimed over 1.4 million customers after only two years of being online. Now, 45 million satisfied customers shop at Amazon.com for everything from books (most popular) to fashion apparel to fine jewelry to Christmas toys. It has one of the most recognized brand names in the world and garners an estimated 50% of its sales from overseas consumers. Surviving the dot-com bust of the late 1990s and early 2000s, Amazon weathered the e-storms and now thrives in the retail marketplace, challenging vending giants like Wal-Mart and Target. Focused on technological innovation and centered on customer fulfillment, Amazon.com proceeds into the next decade with a profit firmly in one hand, and the capacity to blow it out of the water in the other hand. Amazon.com’s Business Philosophy Despite its massive growth, Amazon.com remains unremittingly focused on the consumer. Out of 452 company goals in 2009, 360 directly affected customer experience. Amazon.com’s self- proclaimed mission statement is: “We seek to be Earth’s most customer-centric company for three primary customer sets: consumer customers, seller customers and developer customers.” In a special for the Miami Herald, journalist Jack Hardy declares: “Customer obsession; innovation; bias for action; ownership; high hiring bar and frugality. These six core values focus Amazon.com’s operational strategies.” It is committed to long-term growth based on consumer satisfaction. Myriads of Marketing Strategies Amazon.com bases its marketing stratagem on six pillars. 1. It freely proffers products and services. 2. It uses a customer-friendly interface. 3. It scales easily from small to large. 4. It exploits its affiliate’s products and resources. 5. It uses existing communication systems. 6. It utilizes universal behaviors and mentalities. Much of its marketing is subliminal or indirect – it does not run $1 million dollar ads during Super Bowls nor post flyers in mall marketplaces. Amazon.com relies on wily online ploys, strong partner relations and a constant declaration of quality to market itself to the masses. Pay Per Click Advertising Independent Pay Per Click (PPC) advertising has been the black sheep of Amazon.com’s marketing campaign. Their first PPC campaign attempt, spawned by their subsidiary company A9, was the mediocre Clickriver, a middling PPC program that kept its head above water but certainly swam no great channels. ProductAds replaced Clickriver in August, 2008. It allows any web merchant to purchase PPC ads on Amazon.com’s website, leading some pundits to sardonically comment about Amazon.com’s possible pursuit of Google’s web browsing crown. Despite its potential interest in Google’s regime, Amazon.com continues to purchase PPC advertisements on Google to direct browsing customers to their websites. It buys space on the left side of Google’s search listing results, and pays a fee for each visitor to Amazon.com who clicks on their sponsored link. This is typical of Amazon.com’s marketing strategy. No big banners, loud colors, or pristine men casually conversing about Amazon.com on America’s tube – just a demure advertisement on a web page which, incidentally, may wordlessly lead thousands to Amazon.com Continual Website Improvement In today’s stop-and-go internet traffic, an engaging, simple and easy-to-use website is a necessity. Amazon.com expends millions of dollars and hundreds of man-hours to identify problems, develop solutions, and further enhance the customer’s online experience. Rob Enderle, head analyst at Enderle Group, states that “Amazon.com has always been very aggressive about analyzing its website’s traffic to a high degree and making modifications based on what they see.” This constant pursuit of perfection lead to Jakob Nielson’s prestigious ranking of Amazon.com’s website usability. In a 2001 study of 20 ecommerce sites, Amazon.com scored 65% higher than the average of the other nineteen sites’ usability. It has a class-leading 99.9% mobile device availability, and uploads several seconds faster than some of its competition. In one test, Amazon.com uploaded in 2.4 seconds, while Target took nearly seven to finish. A navigable website has consistently topped the priority charts of Amazon.com Occasionally, management skirts customer relations and engages in under-the-table investigations. Following several lawsuits from aggrieved loyal customers, who were charged several dollars more for the same item than newcomers, Amazon.com apologized for their underhanded differential pricing and discontinued the project. However, Amazon.com continues to noiselessly experiment on their website, garnering new information and augmenting their already popular website. Offline Advertising Martin McClanan, CEO of upscale gift cataloger Red Envelope, notes that TV and billboard ads are roughly 10 times less effective when compared to direct or online marketing when concerning customer acquisition costs. Amazon.com has observed McClanan’s advice by reducing their offline marketing, especially during the holidays. In 1999, Amazon.com spent a gargantuan $80 million in offline advertisements during the fourth quarter. A year later, during the same time span, the company splurged only fifty million. Later years brought even more drastic cuts. According to Competitive Media Reporting, Amazon.com frittered $36 million in offline advertising in 2008, but through August of 2009, the corporation had spent a meager $9.4 million. However, such cuts have not negated Amazon.com’s successes. It boasts the highest sells of any online retailer during the holidays, especially during Black Friday. Amazon.com’s strategy is simple: since customers shop online, online is where they will be found. Streamlined Ordering Process Easy ordering is Amazon.com’s Holy Grail. It eagerly develops technology to allow customers to better navigate and explore their online retail mall. Jacob Lepley, in his “Amazon Marketing Strategy: Report One,” notes that, “When you visit amazon.com … you can use *it+ to find just about any item on the market at an extremely low price. Amazon.com has made it very simple for customers to purchase items with a simple click of the mouse … When you have everything you need, you make just one payment and your orders are processed.” This simple system is the same whether a customer purchases directly from amazon.com or from one of the Associates. Partnerships & Web Services Amazon.com has shook hands and signed contracts with quite a few partners. Not only does it operate many of its own websites, including A9 and CDNOW, but it hosts and manages retail web sites for an array of other retailers, including Target, Sears Canada, Bebe Stores, Timex Corporation and Marks & Spencer. It previously hosted Borders bookstores websites, but that relationship ceased in 2008. For several years, Amazon.com partnered with ToysRUs. Typing “ToysRUs toys” and similar query terms would also list Amazon.com’s Toys & Games tab and products. As a result of litigation, however, this partnership ended in 2006. The simplicity that pervades Amazon.com’s customer checkout extends to its partner relations and services, of which there is no shortage. Amazon.com hosts no less than twelve types of web services, including ecommerce, database, payment and billing, web traffic, and computing. These web services – many of which are free – create a reliable, scalable, and inexpensive computing platform which can revolutionize a small business’s online presence. For instance, Amazon.com’s ecommerce Fulfillment By Amazon (FBA) program allows merchants to direct inventory to Amazon’s fulfillment centers, and after products are purchased, Amazon.com will shoulder of the burden of packing and shipping the merchant’s product.