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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 H.A.S Shri Kishore Sunil Pancholi Chirag Jain 10111029 10111011 10111046 10111010 B.Tech. II year B.Tech. II year B.Tech. II year B.Tech. II year Deptt. Of Biotechnology Deptt. Of Biotechnology Deptt. Of Biotechnology 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.coms 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 Earths 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 Earths Largest Selection. But books were only the beginning of Bezos up-and-coming enterprise. Amazon.com went public in 1997. In the first shareholder letter, Bezos penned the fundamental foundation for Amazon.coms success: Start with customers, and work backwards Listen to customers, but dont 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.coms 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.coms self proclaimed mission statement is: We seek to be Earths 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.coms 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 affiliates 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.coms 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.coms website, leading some pundits to sardonically comment about Amazon.coms possible pursuit of Googles web browsing crown. Despite its potential interest in Googles 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 Googles search listing results, and pays a fee for each visitor to Amazon.com who clicks on their sponsored link. This is typical of Amazon.coms marketing strategy. No big banners, loud colors, or pristine men casually conversing about Amazon .com on Americas tube just a demure advertisement on a web page which, incidentally, may wordlessly lead thousands to Amazon.com

Continual Website Improvement


In todays 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 customers online experie nce. Rob Enderle, head analyst at Enderle Group, states that Amazon.com has always been very aggressive about analyzing its websites traffic to a high degree and making modifications based on what they see. This constant pursuit of perfection lead to Jakob Nielsons prestigious ranking of Amazon.coms 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 McClanans 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.coms successes. It boasts the highest sells of any online retailer during the holidays, especially during Black Friday. Amazon.coms strategy is simple: since customers shop online, online is where they will be found.

Streamlined Ordering Process


Easy ordering is Amazon.coms 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.coms Toys & Games tab and products. As a result of litigation, however, this partnership ended in 2006. The simplicity that pervades Amazon.coms 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 businesss online presence. For instance, Amazon.coms ecommerce Fulfillment By Amazon (FBA) program allows merchants to direct inventory to Amazons fulfillment centers, and after products are purchased, Amazon.com will shoulder of the burden of packing and shipping the merchants product. This frees the merchant from a complex ordering process while allowing them control over their inventory. Amazon.coms Fulfillment Web Service (FWS) adds to FBAs program. FWS lets retailers embed FBA capabilities straight into their own sites, vastly enhancing their business capabilities. With such services, why wouldnt an independent merchant want to partner with Amazon.com?

Affiliate Marketing
Keeping in line with their fourth marketing pillar, Amazon.com sponsors a wildly successful program called Affiliate Marketing. Using Amazon Web Services (AWS) XML service, Associates (independent retailers) and third-party sellers agree to place links on their websites to Amazon.com or to specific Amazon.com products. If the third-party Associates list their own products on Amazon.com, they may create links to those products as well. Associates receive a fee for each visitor to Amazon.com that is directed through their links, and receive extra commissions if the visitor buys a product. However, at the beginning of 2009, Amazon.com decided to terminate PPC referral commissions to its North American Associates for paid search traffic. In an email sent to all Associates, Amazon.com said, After careful review of how we are

investing our advertising resources, we have made the decision to no longer pay referral fees *that+ send users . through keyword bidding and paid search. Time will tell how the North America Associates program reacts to this change, but with AWS, it is unlikely that Amazon.com will lose many of its Associates. To offset this change, ion August 19, 2006, Amazon.com released aStore, which enables Associates to embed a subset of Amazon products within, or linked from, another site. How successful is this program? Nearly one million Associates have joined with Amazon.com, and approximately 40% of its sales result from its Affiliate Marketing program. At the conclusion of 2007, Amazon.com reported over 1.3 million sellers through Amazon.coms World Wide Web sites. It continues to expand its Affiliate program.

The Customers Opinions


Amazon.com does more than pay sycophantic lip service to its customers. Each product is available for consumer reviews, and customers may rate products on a hierarchical scale of 1-5 stars. Amazon.com members may also comment on other members reviews. Some bemoan Amazon.coms consolidation of different versions of a product (e.g. DVD, VHS, BlueRay of a video) into a single product available for commentary. However, this simplifies commentary and use accessibility, a preeminent concern for Amazon.com.

Email Marketing
For such a money-conscious company as Amazon.com, the lure of free and accessible e-mail is one delectable temptation that is too potent to resist. Amazon.com engages in permission marketing, where customers give the company permission to send them e-mails detailing product promotions. Seth Godin, Online Marketers, writes that By talking to only volunteers, Permission Marketing guarantees that consumers pay more attention to the marketing message. This strategy has acquired Amazon.com an obsequious following. Melvin Ram, a satisfied Amazon.com customer, writes on webdesigncompany.net that Looking at the e-mails Ive received from Amazon over the last two years, I did not find a single e -mail that was irrelevant to me. Every single one seemed like it was hand-picked for me based on my previous purchases.

Customer Service
Jeff Bezos would argue that customer service is not an addition to a corporate goal it is the corporate goal. He calls Amazon.com, The most consumer-centric company. In a lecture to Massachusetts Institute of Technology students, Bezos Tells of technological advances that have not only enabled customers to find products, (and now at 28 million items), enabled products to find customers *italics original+. Amazon.com focuses on the customer experience. It wants customers to quickly access their hearts desire and obtain it without hassle. It has spent billions enhancing and developing its website interface and customer relations. There are numerous methods that Amazon.com uses to assist the customer. All customers may send e-mails to Amazon.com requesting clarification about purchasing or other information. Nor are all responses automated. Amazon.com engages many employees simply to respond to customer issues by phone and e-mail. These are but the first few pages of Amazon.coms extensive marketing manual. By refusing to compromise with mediocrity, Amazon.com has revolutionized ecommerce. Millions of customers, who are reading their books, donning their jewelry, or vacuuming their floor, are a living testament to Amazon.coms success. Are you one of them?

Marketing Structure
Things they sell:
Books Movie, Music and Games Digital Download Kindle Computer And Office Electronics Home and garden Grocery, Health and beauty Toys, kids and baby Clothing, Shoes and jewelry Sports and outdoors Tools, Auto and industrial

Supply chain of amazon.com

Multi-Tier Inventory Model

Position in the Market


Amazon's (AMZN) recent reports of quarterly earnings were greeted widely as an indication that the company can't generate sufficient margins with Kindle devices and content. That interpretation has been reasonably straightforward, with strong echoes of sentiments that characterized critics' views of Amazon during its early pre-profitability years in the late 1990s and into the 21st century.

"Despite rapid growth in Kindle hardware and content sales," so this thinking goes, "the combination of competition and Amazon's penchant for pursuing loss-leader strategies to capture market share have forced Kindle-associated margins so low that, as the Kindle portion of Amazon's overall business grows, it will lead inevitably to erosion of profits." Due in part to this interpretation, Amazon's share price, which closed Thursday within 3 percent of its all-time trading high, dipped dramatically in after-hours trading that day and has gained back only a fraction of those losses since. But the low-margins interpretation misses another, much more dramatic story. The big story is that in just three years Amazon has positioned itself to triple its overall share of the U.S. book business for all formats. Before the end of 2012, Amazon could own more than half of the U.S. book business across all formats. How stunning a development would that be? Prior to the launch of the Kindle in 2007, Amazon was widely considered to account, at most, for somewhere around 15 percent of all U.S. book sales in all formats by all retailers. Amazon has not reached 50 per cent yet, and is still far from that range where all titles are concerned. But one of the most reliable crystal balls for determining future bookselling trends is to examine and parse developments as they play out with individual bestsellers in the overall book marketplace, when numbers are available.

Last week both Amazon and one of its most consistent publishing business critics, paid subscription site Publishers' Marketplace, shined their respective spotlights on sale trends that have been playing out with a single bestselling novel, Emma Donoghue's Room. The hardcover, discounted by Amazon to $14.41 (20 percent higher than the Kindle edition), is #43 in the main Amazon store. It is #13 among far fewer available bestsellers listed in the Apple (AAPL) iBooks store, and #35 on the Barnes & Noble (BKS) Nook. Importantly for these discussions, the book has also been on the IndieBound bestseller list for independent brick-and-mortar booksellers for the past 20 weeks, and currently stands at #4.) Helpfully, it turns out that we know a lot about Room sales, thanks to Amazon and Publisher's Marketplace. Russ Grandinetti, Amazon's vice-president for Kindle Content,told a Digital Book World conference last week that, for Room, "total Kindle sales are equal to 85 percent of Nielsen BookScan's print sales number." Publisher's Marketplace then performed some very helpful extrapolations and further calculations arriving here: If the BookScan number is 80 percent of the print sales total, then Kindle sales here would 68 percent of all print. More importantly, though, to calculate what percentage of the book's total sale was on Kindle, you need to add Kindle + BookScan + that other 20 percent together and look at Kindle as a percentage of that sum. So it's 68 over 168, meaning that Kindle sales were 40 percent of the total sale in all formats for Room. But it doesn't end there. Grandinetti and other Amazon spokespersons said repeatedly last week that Kindle editions were currently outselling Amazon sales of their hardcover counterparts by a 3-to-1 margin, which means that Amazon hardcovers equal about 25 per cent of combined sales for these titles. Even if hardcover sales of Room fell short of this and constituted only 20 percent of Amazon's combined, this would mean that total Amazon sales of Room constitutes about 50 percent of the title's total sales in all formats. It's just one title, but what we've been seeing quite often with Amazon and the Kindle over the past few years is that what happens first with one title happens subsequently with more titles and then, ultimately, with most titles. It was a big deal in 2009 when Kindle sales of The Lost Symbol outstripped Amazon's hardcover sales right from the drop, and a little over a year later Amazon announced that all Kindle editions were outselling hardcover units for the same titles, across the board. But there are other forces at play, and I'm not just talking about the fact that Room is one of the strongest sellers over the past five months for indie booksellers. Back on January 5 when USA Today reported that 19 of the top 50 titles on its bestseller list had sold more ebook than print copies for the previous week, publishing industry insiders blamed Santa Claus and downplayed the significance.

"What's most interesting is what happens next week or over the next month. About 3 million to 5 million e-readers were activated last week. Will the people who got them keep downloading e-books, and at what rate?" asked Publisher's Marketplace founder Michael Cader. Bowker's Kelly Gallagher, too often a cheerleader for the status quo in publishing, was quoted saying that the surge in e-book sales "is not a sustainable trend."Right. Well, that was January 5. Now it's February 2, and that trend, far from declining, has actually become stronger. On USA Today's most recent bestseller list, for the week ended January 23, the number of titles with greater ebook sales than print sales had grown from the 18-19 range for the first three weeks after Christmas to 23 of the top 50. There is a wide range of factors that are likely to push the velocity of change even faster for ebook sales specifically and Amazon's share of the overall bookselling market in general, but the fact that brick and mortar bookstores are closing at a faster rate than ever, from local indies to chains, is bound to contribute to a snowballing effect. The imminent bankruptcy of the Borders (BGP) chain is this week's headline, but it's just the headline. And despite the recent fuss about the new partnership for ebook sales between Google (GOOG) and the American Booksellers Association, it is inevitable that as ebook sales rise, brick-and-mortar stores will decline and publishers will gradually lessen their investment both in the bookstore-based physical distribution network and in print editions. Finally, there's Amazon's not-so-secret weapon for building retail market share for its Kindle and print content sales: Direct publishing, Amazon exclusives, and indie authors. Recent developments in this area deserve a post all their own, but for now we'll just note that 36 of the top 100 bestselling ebooks in the Kindle Store are published either by indie, direct-to-Kindle authors or by Amazon publishing subsidiary programs such as Amazon Encore, Amazon Crossing, or Kindle Singles. The vast majority of these titles are either not listed or not selling at any appreciable level on any other retail venue, and they are not yet included on any bestseller lists other than Amazon's own, although their sales would in many cases justify such inclusion. But the sales are there, the profits are there, and once again Amazon has positioned itself to dominate the market share for this, the fastest growing sector of the fastest growing sector in bookselling. Whatever the rate of change, and whatever the velocity of change, most of the other players in the book business and many of Amazon's market analysts and investors may be missing the point as to exactly where this change leads. AMZN is not a day-traders' stock, but for investors who take a long view it may have just moved into a new and very positive category. If Amazon has decided to accept single-digit margins during this Kindle "investment phase," and the result is that the company has set itself up to own a 50 per cent market share of the entire U.S. book business by the end of 2012, there will be no shortage of happy investors -- and devastated competitors -- at that point in the relatively near future.

References:

Amazon History. Wikipedia Amazon.com Web Services Amazon.com 2009 letter to shareholders Earths Most Customer Centric Company: Differentiating with Technology. Enos, Lori. Report: Amazon Tops November Net Sales. Hardy, Jack G. Jeff Bezos Amazon.com Built by Its Success in Valuing Trust. Miami Herald. Hitt, Michael A., R. Duane Ireland, Robert E. Hoskisson. Strategic Management: Competitiveness and Globalization. Holden, Greg. Starting an Online Business for Dummies. Monash, Curt. Amazon.com Rigorous Analytics in Support Usability. Nielson, Jakob. Amazon: No Longer the Role Model for E-Commerce Design. Olsen, Stefani. Dot-coms Paring Down Ad Spending Ahead Of Holidays. Ram, Melvin. Be Relevant! Amazon.com v. Borders.com Marketing Strategy. Wal-Mart v. Amazon: Holiday Showdown.