Overview and breakdown of amazon.com

2. Amazon.com
By
Mahdi Al-own

3. Company overview

4. Amazon’s vision is to be earth’s
most customer centric company;
to build a place where people
can come to find and discover
anything they might want to buy
online. (They list this as their
mission as a combination
mission/vision on their site).

5. 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
• Selection
Strategy
• ‘To ‘Get Big Fast’ by investing aggressively in new
product categories and new businesses, by
spending money on brand awareness and getting
new customers.’

6. 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

7. 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

8. 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

9. Critical points
2007
2002
2001
2000
1998
1995

10. Business Model

11. Value
proposition

12. The 6 C’s
1. Content: Amazon.com has one of the best
content friendly sites on the web
2. 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 communities
4. 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

13. Content

14. Customization

15. Community

16. Convenience

17. Choice

18. Cost reduction

19. 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

20. Market/ Audience

21. Target
1.B2C
2.B2B
3.C2C

22. 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

23. 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

24. 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 leadership
Business week 2007, May

25. Competitive
Environment

26. Barriers to Entry (High Buyers (High threat)
threat) Consumers have
High Competition – Leads high switching and
to resource bargaining power.
restriction/Price War
Suppliers (low/ medium) Substitutes (Low
Possible forward threat) Mail Orders
Integration

27. 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 technology
Everett Rogers, 962 book Diffusion of Innovations

29. 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. Target
Strategic 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

31. Phisical and vertual
world representation
&
Mangment

33. 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

34. Amazon.com’s CEO Jeff Bezos believes in six core
values which purple Amazon to be one of the
world best multifunctional organizations
Customer Bias for
obsession action
Ownership
Frugality
High hiring
bar Innovation

35. 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.)

36. Its about time
Thank you!
No questions please

37. 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 librarian's 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]

38. AIDA - Action Principle
Physical 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

39. Meaning
Language 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

40. Worldwide Sales Mix
Q1 ’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)

41. 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

42. Source: www.amazon.com

43. E-business news , 2009, Pitts

44. Amazon Market Growth
$1.40
$1.35
Sales (in Billions)
$1.30
$1.25
$1.20
$1.15
$1.10
$1.05
$1.00
2001 2003
Date