Marketing refers to an ongoing communications exchange between a business and its customers in the way of educating, informing and building a relationship over time with them. This process helps the company to gain customers’ trust and be in a better position to meet the needs of the customers at a profit. For any business to survive in the market for a very long time, it is supposed to form a strong relationship with its existing and potential customers, and this can only be achieved through marketing itself and also the products and services it deals with.
Amazon is an American e-commerce and cloud computing company. It is the world largest Internet retailer as measured by market capitalization and revenue and the second largest in terms of total sales after Alibaba Group of China. Amazon sells its products directly to its customers through its website while Alibaba, on the other hand, connects suppliers and customers by a providing its website as the platform (Bhasin, 2017).
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Amazon’s Segmentation, Targeting, and Positioning
Just like other huge e-commerce companies, Amazon uses a mix of psychographic, demographic, and behavioral segmentation. Even though many companies segment on what people may have expressed interest in, Amazon segmentation is based on what they actually did, that is, the actual purchase behavior. With this formula, they are able to target each customer individually by advising and showcasing other products that he or she may be interested in based on the product(s) that he or she had bought from their website. Using this strategy, the company is able to convert visitors or a one-time person into long-term and high-value customers. Amazon usually targets the middle-class and the upper-class people who have basic experience in technology who prefer shopping online or those who don’t have time to go and shop in a physical outlet. It has also successfully positioned itself as an entity where one can purchase anything and have it delivered at any location even the most remote ones. Unlike Amazon, Alibaba strategies are little different. It uses general segmentations which target all kinds of people and uses pricing positioning, marketing mix, and usage-based strategies to position itself on the market (Wei et al,2014).
Amazon Marketing Distribution Channels
There two main marketing distribution channels; direct and indirect channels. Earlier, Amazon only used direct channels, but it also started using the indirect one with the increase in the range of the products that it was dealing with. Direct marketing channel is where the consumer the supplier without using intermediaries where the vice versa is true for indirect marketing channel (Miles, 2014). Amazon sells its products directly to the consumers and delivers these products themselves, therefore, their decisions cannot be affected by other players such as carriers who may change the delivery time of the goods to the consumers. Recently, Amazon allowed sellers to use their website to sell their assets in order to expand products and services they offer which introduced the indirect marketing channel for the company.
On the other hand, Alibaba uses indirect marketing distribution channel. This because their main role is to provide a platform where customers and suppliers engage. Therefore, almost all sales decisions are made by the agreement between the seller and the buyer and Alibaba just act as an intermediary. Alibaba only makes sure that the seller does not go beyond the stipulated price of a product.
Amazon’s Advertising and Sales Promotion
Amazon uses its search engines as a drive for advertising goods and services as well as promoting sales. It arranges its website in a way that anyone who visits the website will able to easily locate the product that he or she is searching for. It also advertises other products that are related to the product that the customer has chosen. For example, if a customer buys a certain dress, the website is developed in a way that it will promote other products such as shoes or handbags types that may match with that dress. This mostly results to the customer buying one or a few more goods that have been promoted increasing the company’s sales.
It also offers sales promotion through giving out discounts and gifts. These promotion discounts and gifts are often awarded to prime members royal customers or to a customer who has bought goods that reach a certain amount of money (Bhasin, 2017). The main purpose of these promotions is to encourage customers to buy more goods or sign up to become members of the prime. Amazon also offers it search engine to other business to advertise their products through ads. These businesses pay a specific fee for these ads which when clicked on will lead the person to their page where they can view the products or services they are offering.
On the other hand, Alibaba runs things differently because it is more of a platform for other business to showcase their products rather than itself. Therefore, companies that have signed a contract with Alibaba pay a certain fee for their products and services to be displayed on its websites. Alibaba also arranges for annual promotion days where discounts and gifts are awarded to customers. These promotions are used as a marketing tool to bring people’s attention to the products that are offered by Alibaba.
Amazon Use of Social Media Marketing
Since Amazon is an e-commerce company, one of its main essential tools in marketing is the use of social media. To start with, it has established a review platform where customers send their reviews about a product they bought on Amazon and rate it. This platform is also used by potential customers who go through the review of any certain product to decide whether to buy it or not. They also use Facebook and Twitter to showcase their products and also to answer any queries raised about them where they reply as fast as they can. They also use Instagram to showcase different varieties of product that they offer. They also attach links either to the products they are advertising or on their social media pages that will direct a person to their website (Bhasin, 2017). Alibaba also being an e-commerce company uses social media in the same way as Amazon although each tries the best to attract customers as much as they can.
Future Anticipation
Amazon anticipates to continuing with its expansion internationally. Its main focus is on how to penetrate the Asian market which is not yet clouded by e-commerce companies as it is the case with Europe and North America. It plans on getting into partnership with the local suppliers of these regions to increase its range of products. Alibaba has the same idea of expanding internationally but in a different way. It plans to partner with local suppliers to increase its pool market share and also to partner with local rivals. For example, in India, Alibaba is planning to partner with Flipkart and Snapdeal so that they can have a competitive advantage and edge out their greatest rival, Amazon (Wei et al,2014). Alibaba is also planning to restrict or cancel suppliers that produce fake or substandard goods from using its services.
Amazon SWOT Analysis
The analysis has concluded that Amazon gets its strength because of the following characteristics; they have a strong background and deep pockets, they are customer-centric, cost leadership, efficient delivery network, GLOCAL strategy, and acquisitions of companies such as Zappo.com. It has noted weaknesses of the Amazon which include; shrinking margins, tax avoidance issue, high debt, and product flops. It shows that that the company can use opportunities like; backward integration, global expansion, acquisitions, and opening physical stores outside U.S. Amazon also faces threats such as; low entry barrier of the industry, government regulations, and local competition in the regions it has expanded to (Bhasin, 2017). Amazon is supposed to use its stated strength to the opportunities that have been presented to it. It should also make sure it takes care of the weaknesses that have been spotted in its operations. It should also spare some time and strategize on how it will overcome the threats ahead of it.
Conclusion
Marketing is an essential tool for any business. Any business survival and growth are based on the marketing strategies that it formulates. Some of the most important strategies include; developing a strong relationship with customers which will last for a very long time, and also making sure that customers are aware of most of the products that your company deals with. As we have seen, Amazon has been able to develop numerous marketing strategies that have helped it remain at the helm of e-commerce industry also putting it in a position to expand to other regions of the globe.
References
Bhasin, H. (2017). The Marketing strategy of Amazon .
Miles, J. (2014). Instagram power: Build your brand and reach more customers with the power of pictures . New York, NY: McGraw-Hill Education.
Wei, Y. S., Samiee, S., & Lee, R. P. (2014). The influence of organic organizational cultures, market responsiveness, and product strategy on firm performance in an emerging market. Journal of the Academy of Marketing Science , 42 (1), 49-70.
