STRATEGIC MARKETING – MK4S34
A study analyzing the statement “The best marketing strategies aren’t top down, they’re outside
in, starting with the customers’ needs and wants.” using Amazon as a case study organization.
May 09, 2020
Table of Contents
LIST OF TABLES………………………………………………………………………………………………………………………………………….2
LIST OF FIGURES ………………………………………………………………………………………………………………………………………..3
ABSTRACT…………………………………………………………………………………………………………………………………………………..3
1.0 INTRODUCTION ……………………………………………………………………………………………………………………………….4
2.0 STRATEGIC PLANNING ……………………………………………………………………………………………………………………6
2.1 ORGANIZATIONAL OBJECTIVE……………………………………………………………………………………………… 7
2.2 SWOT ANALYSIS…………………………………………………………………………………………………………………….. 7
2.3 STRATEGIES AND TACTIC……………………………………………………………………………………………………… 7
2.4 STRATEGIC MARKETING PLAN …………………………………………………………………………………………….. 8
2.5 IMPLEMENTATION AND MONITORING (CONTROL)…………………………………………………………….. 8
3.0 AMAZON’S MARKETING STRATEGIC ANALYSIS…………………………………………………………………………..8
3.1 INTERNAL MARKETING STRATEGY……………………………………………………………………………………… 8
3.2 AMAZON’S MARKETING MIX……………………………………………………………………………………………………… 9
3.2.1 Product Mix (Dolnicar, et al., 2018) ………………………………………………………………………………………………………… 10
3.2.2 Place Mix …………………………………………………………………………………………………………………………………………….. 11
3.2.3 Promotion Mix ……………………………………………………………………………………………………………………………………… 11
3.2.4 Price Mix……………………………………………………………………………………………………………………………………………… 11
3.3 AMAZON’S MARKET SEGMENTATION, TARGETING AND POSITIONING STRATEGY……………. 12
4.0 RECOMMENDATION AND CONCLUSION………………………………………………………………………………………13
REFERENCES …………………………………………………………………………………………………………………………………………….14
APPENDIX………………………………………………………………………………………………………………………………………………….16
LIST OF TABLES
Table 1: SWOT Analysis
LIST OF FIGURES
Figure 1: Strategic Planning Steps
Figure 2: How the target segment decision affects marketing mix development
ABSTRACT
The purpose of this study is to critically analyze the statement “The best marketing strategies aren’t top
down, they’re outside in, starting with the customers’ needs and wants.” using Amazon as a case study
organization. The study aims to show whether the voice of the customer drives strategic marketing decisions
in Amazon and would be making reference to relevant academic literature in the process. The analyzes on
Amazon’s marketing strategy identifies web technology as one of the major marketing tools the organization
relies on to gain competitive advantage which is inline with their customer centric approach. The approach
also saw the organization establishment walk-in outlets for client services and customer support. Along with
marketing segmentation and positioning, Amazon also applies the 4Ps of marketing segmentation: product,
place, promotion and price which provide an analysis framework for developing effective marketing tactics
to maximize long-term profits of the organization (Hauser, 2015). This has helped the organization become
the industry leader it is today in spite of the ever-growing competition; the organization remains relevant and
has retained it top position. It can therefore be deduced from this study that strategic marketing decisions are
driven by the voice of the customer in Amazon.
1.0 INTRODUCTION
(Morgan, et al., 2019) defines Marketing strategy as “a theory that lies at the conceptual heart of the field of
strategic marketing and is central to the practice of marketing”. The authors confirmed that it is also within
this theory that most problems that are identified by marketers arise. The main approaches as related to
marketing strategy that organizations employ as confirmed by (Frau & Cabiddu, 2016) are the outside-in
approach, the inside-out approach and the mixed approach. Organizations that use the outside-in approach
shape their marketing strategy according to the external environment dynamics of the organization, this
implies that the organization’s management first focuses on the external environment (e.g. customer’s voice)
and then they come up with marketing strategies to align the internal features of the organization to its
external environment dynamics. Organizations that use the Inside-out approach focus on the internal
organization-specific resources first and uses this to shape their marketing strategies. The mixed approach
is the conversion of both the Outside-in approach and the Inside-out approach, it is a perspective that
combines the advantages of the two aforementioned approaches.
Amazon.com, Inc. is an American based organization that majorly deals in cloud computing and electronic
commerce (e-commerce). The company, which was founded by Jeff Bezos in July 1994 is one of the largest
internet retailers worldwide and an industry leader in e-commerce according to its revenue and market
capitalization. The name of the company at the time of its establishment on the 5th of July 1994 was “Earth’s
biggest bookstore” and was incorporated as “Cadabra Inc.), the name was eventually changed to Amazon by
Jeff Bezos a couple of months later and was quoted publicly in1997. Amazon initially started as an online
marketplace for books but has since expanded its lists of products offered by the company to include
streaming services (videos, mp3), software, jewelry, video games, furniture, food and electronics (Britannica,
2020). According to (Forbes, 2018b), Amazon.com, Inc is the world’s largest retailer with over 300million
people in its customer base. The company’s mission is centered around its customers which literally states
“Our mission is to be Earth’s most customer-centric company. This is what unites Amazonians across teams
and geographies as we are all striving to delight our customers and make their lives easier, one innovative
product, service, and idea at a time” (Amazon, 2020a), this is evidenced in all the company’s policy and also
in the annual letters written by the CEO Jeff Bezos to its shareholders in which he states that the foundation
of the company’s success is the satisfaction of its customers and encouraged the development of customercentric strategies that would promote internal and external marketing (Amazon, 2020b).
To analyze the statement, “The best marketing strategies aren’t top down; they’re outside in starting with
the customers’ needs and wants” using Amazon as the case study, this report paper would evaluate Amazon’s
marketing strategy as it relates to considering the voice of the customers first (Outside-in approach). In order
to carry out this objective analyzes, the report would also consider Amazon’s strategic marketing plan and
implementation, the marketing strategies would also be analyzed with conclusions and recommendations
drawn.
2.0 STRATEGIC PLANNING
Johnson et al. (2009) as cited in (Team FME, n.d.), defines strategy as the direction and scope of an
organization over a long term period which achieves competitive advantage in a changing environment
through its use of resources and competencies. Caves and Ghemawat (1984) as cited in (Ulwick, 1999),
point outs that a key element of strategy is the set of “committed choices” made by management. Michael
Porter defines strategy as the creation of a unique and valuable position, involving a different set of
activities (Porter, 1996). Bruce D. Henderson states that strategy is “a deliberate search for a plan of action
that will develop a business’ competitive advantage and compound it” (Henderson, 1989). Based on the
various definitions, we can therefore deduce that a strategy is simply an executable plan of action or series
of steps that describes how an individual or an organization can achieve a set goal or objective. Strategic
planning is therefore a framework for carrying out strategic thinking, direction and action leading up to the
achievement of a desired results (Below, et al., 1987). These strategic plans are measurable goals to an
organization which guides their decision making and is determine success or failure, hence the importance
of strategic planning cannot be over-emphasized as every organization that wants to remain competitive in
their industry and a going-concern must have some sort of strategic plan to achieve this. According to (Jalal,
2019), Strategic planning allows organizations build strategic positions in the marketplace to ensure future
viability using a process which involves strategic steps as detailed below:
Figure 1: Strategic Planning Steps (Wright, 2020)
Amazon uses a customer-centric strategy that serves all its customer base (buyers, sellers and developers)
which has given the organization a competitive advantage in the marketplace. The company has retained
its top position as industry leader in its economy sector and has successfully walked through all economic
changes over the years in the market still retaining its position and is popularly referred to as “Earth’s Most
Customer-Centric Company” (Collomb, 2018).
2.1 ORGANIZATIONAL OBJECTIVE
The objective of the organization is the first step in the strategic planning process and is very essential as
whatever strategic plan to be made at the end of the day to satisfy customers and all other stakeholders with
the products and services being offered must align with the vision and mission of the organization. The
mission of Amazon which states “Our mission is to be Earth’s most customer-centric company. This is what
unites Amazonians across teams and geographies as we are all striving to delight our customers and make
their lives easier, one innovative product, service, and idea at a time” reflects the focus of customer-centricity
in the organization as shown from its operations (Amazon, 2020a).
2.2 SWOT ANALYSIS
SWOT analysis allows one to take a holistic view of the economic and business environment by looking at
the macroeconomic factors that are outside the organizations’ control and may have an influence or impact
on the future development of the organization (Alanzi, 2018).
2.3 STRATEGIES AND TACTIC
Amazon uses the web technology to advertise its products and services. Along with marketing segmentation
and positioning which are the organization’s competitive strategy, Amazon also applies the 4Ps of marketing
segmentation: product, place, promotion and price which provide an analysis framework for developing
effective marketing tactics to maximize long-term profits of the organization (Hauser, 2015). This has helped
the organization become the industry leader it is today in spite of the ever-growing competition; the
organization remains relevant and has retained it top position.
2.4 STRATEGIC MARKETING PLAN
Marketing as a business concept is subjective to every organization. It is the management process through
which products and services are transitioned from a concept to a customer. This process generally includes:
product identification, determination of demand, determination of pricing, selection of distribution channels
and implementing promotional strategy (Market Business News, 2020). Strategic marketing are tools used
by organization that align the organizations objectives (mission and vision) to the opportunities available
in the market therefore it is highly essential for an organizations business plan to be flexible, to handle any
possible change that may occur. An effective and efficient strategic marketing plan must have projections
of future occurrences which may include changes in demand, pricing, customer preference etc. Amazon’s
entire marketing plan is wholly focused on improving customer experience and this is evidenced in their
personalized products and services which takes the customers preference into consideration e.g. Amazon
Prime.
2.5 IMPLEMENTATION AND MONITORING (CONTROL)
After the strategic plans have been thought through, it is implemented and thereafter controlled so that
adjustments from feedbacks received are made where necessary. Amazon implements its control strategy by
using web technology to monitor and record customer’s behavioral patterns on its platform, it uses predictive
software to analyze the data collected to personalize its products and services to the customer. Hence the
customer would receive updates on product segments he/she is interested in (Amazon, 2019).
3.0 AMAZON’S MARKETING STRATEGIC ANALYSIS
In order to fulfill the paper objective which is to analyze the statement “The best marketing strategies aren’t
top down, they’re outside in, starting with the customers’ needs and wants.” using Amazon as a case study
organization to show whether the voice of the customer drives strategic marketing decisions in the
organization. This would be done by analyzing the internal and external marketing strategies of the
organization to determine how the strategies are influenced by the wants and needs of the customers.
3.1 INTERNAL MARKETING STRATEGY
Internal marketing is one of the main concerns of many organizations especially the ones in the service sector
like Amazon. It involves the promotion of the organization’s products and services in a top-down manner.
The major aim of internal marketing is to ensure that the employees of the organizations understand that the
management of the company cares about their needs and values their opinion, therefore, the successful
application of internal marketing practices would generally increase employee morale resulting in better
performance of the organization (Nikbin, 2010). As it relates to customer needs, it involves the effective
engagement of employees in a marketing process where they aim to satisfy customer preferences.
Amazon has used internal marketing effectively to build its customer centric strategy and this has in turn
improved its performance and given the organization competitive advantage over its peers as customer
satisfaction has increased thereby translating to customer loyalty. According to (Anshari, et al., 2019), while
competitors in Amazon’s industry focused on developing a tightly designed ecosystem of nested applications
and services, the organization focused on developing platforms aimed at improving customer experience
which would increase customer satisfaction. Everything about Amazon from its mission to operations in
personalizing products and services is focused on the satisfaction of their customers. This ideology which is
strongly imbibed in Amazon has also been passed to its employees who have all be trained to understand the
importance of consistently meeting the expectations of their customers which is dynamic and always
changing.
3.2 AMAZON’S MARKETING MIX
The approach used by the company for marketing strategies is the Outside- In strategy. Reiterating the
organization’s mission is to be “earth’s most customer-centric company, where customers can find and
discover anything they might want to buy online, and endeavors to offer its customers the lowest possible
prices”. Amazon who is the world’s largest e-commerce company which they have achieved by combining
specific strategies and tactics to gain an advantage over their competitors in the industry. Using the 4P’s of
market segmentation: product, place, promotion and price which provides an analysis framework for
developing effective marketing tactics to maximize long-term profits of the organization, Amazon has been
able to retain its customers as well as attracting new customers. The 4P’s of market segmentation are
organizational marketing strategies, to meet the organizational objectives, which are to satisfy customer
wants and needs
Figure 2: How the target segment decision affects marketing mix development
3.2.1 Product Mix (Dolnicar, et al., 2018)
Product marketing mix is one of the decisions an organization needs to make when developing the product
dimension of the marketing mix which allows the organization to specify the products according to the
customer needs, this does not always imply designing an entirely new product but rather modifying an
existing one to meet the needs of the customer. Amazon does not only offer an extensive range of products
and services in its online store, it also offers a diverse portfolio of services which includes Amazon Video,
Prime, Fresh, Digital content distribution, Web services, etc. This is line with the company’s mission of being
a customer-centric company and providing its customers with optimum customer satisfaction. The company
also offers different product membership profiles for its customers to cover shipping costs for products
purchased on the retail website.
3.2.2 Place Mix
The key decision relating to the place dimension of the marketing mix is how to distribute the product to the
customers. This includes answering questions such as: should the product be made available for purchase
online or offline only or both; should the manufacturer sell directly to customers; or should a wholesaler or a
retailer or both be used (Dolnicar, et al., 2018). To satisfy its customers, Amazon also has physical bookshops
for customers who prefer to evaluate the products before buying them, this is in order to meet the needs of the
particular set of customers despite being an e-commerce website. This emphasizes the organization focus on
customer centricity
3.2.3 Promotion Mix
Typical promotion decisions that need to be made when designing a marketing mix include: developing an
advertising message that will resonate with the target market, and identifying the most effective way of
communicating this message. Other tools in the promotion category of the marketing mix include public
relations, personal selling, and sponsorship. Amazon uses direct marketing and prioritizes advertising, in
addition to public relations and sales promotion. The organization accomplishes this by cooperating with its
affiliates and partners so that their products are advertised on its online platform with links to their website
and they earn income from the sales of their products and services. Amazon uses this strategy in different
ways as aforementioned to ensure optimum customer satisfaction which increases customer loyalty in its
existing customers and also to attract new customers to its client base which would increase the sales of the
company. Amazon uses the promotional strategy mix to send information to its customers about its products
offerings which in turn convinces the customers to visit their platform to purchase products (Amazon, 2020a).
3.2.4 Price Mix
Typical decisions an organization needs to make when developing the price dimension of the marketing mix
include setting the price for a product, and deciding on discounts to be offered, it also includes the use of
tactics like allowance, payment in installments, credit terms and discounts. This strategy is used by Amazon
to attract customers to its platform by offering them attractive and competitive prices, the organization
combines several pricing strategies such as price discrimination, market-oriented pricing and value-based
pricing. Amazon mainly uses the market-oriented pricing strategy which involves the bench marking their
product price to be affordable to the industry price (pricing set by competitorsin the same industry) (Dolnicar,
et al., 2018).
This price mix strategy gives Amazon the flexibility to adjust their price accordingly inline with market
trends and allows the organization to reach a vast number of customers and grow their customer base.
3.3 AMAZON’S MARKET SEGMENTATION, TARGETING AND POSITIONING STRATEGY
Amazon’s segmentation, targeting and positioning strategies involves a set of activities that are aimed at
determining specific groups of people as customers as well as developing products and services that are
attractive to the customers.
Market Segmentation involves dividing customer base or population into groups according to certain
characteristics which the customers share together. This can be accomplished through several variables. They
include demography, geography, behaviour, and psychographic characteristics. Geographical properties define a
segment using location. This is based on the assumption that customers who live in the same region share similar
wants and needs and that they may be different from customers living in a different area. Demographic properties
define a segment of customer using basic demographic factors such as age, ethnicity, nationality, occupation, marital
status etc. Behavioural properties define a segment based on customer behaviour and organizations use this property
to offer product offerings to customers using their behavioural pattern. Psychographic properties define a segment
based on the personality of customers – their habits, values, attitudes, interests and lifestyle. Amazon has successfully
perfected their market segmentation strategy of retaining their existing customers as well as acquiring new ones as
evidenced in their customer base growth over the years to become the largest e-commerce organization in the world
(Dolnicar, et al., 2018).
Market targeting involves choosing these groups of people identified as a result of segmentation to sell
similar products and services to. This strategy is developed on the assumption that customers should be presented
with products and services that are relevant to their needs or wants; otherwise, they will not buy it. Amazon has
been known for market targeting, and their use of this marketing strategy has been aimed at the purchasing
behaviour of individual customers, this has helped Amazon convert visitors to its website into existing customers.
Amazon has been able to effectively transition customers who may have stumbled on their site looking for offers to
buying customers through offers such as giving our discount. This has resulted in the large customer base of the
organization to include buyers, sellers, distributors, content creators etc.
Market Positioning is the selection of the marketing mix to be used by the organization in that would be
most suitable for the target customer segment (Dudovskiy, 2020). The strategic positioning of every
organization is the core of their marketing strategy. The concept of strategic positioning aids an organization
in understanding how they are perceived by their customers (customer strengths) and how they compare to
their competition (competitions’ positioning) (Hauser, 2015). Once a company has clearly defined its goals
and objectives, the type of business in which it wants to be involved and how the business will be managed,
strategic positioning is the next step (Harper, 2017). Amazon chose the positioning of its products based on
price since the targeted customers can otherwise go for offline retailers. To further distinguish its product
from other competitors, Amazon set up e-commerce websites that are specific for different countries with
24-hour customer service, free shipping, and then the integration of local payment options in different
countries (Czinkota & Ronkainen, 2013).
4.0 RECOMMENDATION AND CONCLUSION
Amazon has been able to grow their platform to become the world’s largest e-commerce business in the
world, the organization has been able to accomplish through the implementation of marketing strategies
that aim to achieve the organizations objectives. The organization has tailored all its marketing strategies
towards meeting the needs of their customers. In the words of Jeff Bezos, the founder of Amazon, “our
customers are loyal to us right up until the second somebody offers them a better service” (CNBC, 2018),
the statement is clearly one that Amazon believes in and the organization is successfully using the Outsidein approach in developing its marketing strategies which involves using the voice of the customer to drive
strategic marketing decisions in Amazon.
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APPENDIX
An analysis of Amazon’s external marketing strategy using the SWOT analysis
Strengths • Amazon has fully taken advantage of web technology to personalize its
services to customers as well as using the 4Ps analysis framework of marketing
segmentation: product, place, promotion and price to develop effective
marketing tactics to maximize long-term profits of the organization as well as to
improve its brand perception and customer loyalty.
• Amazon is an industry leader and a global giant and has dominated the ecommerce industry by presenting competitive prices to its customers.
• The company has a strong forecast team as they have successfully
increased their portfolio from the sales of just books to a widely diversified
portfolio which includes products and services such as streaming services
(videos, mp3), software, jewelry, video games, furniture, food and electronics.
• Acquisition of other companies like IMBD.com, jungle.com, etc. has also
contributed to Amazon’s success.
• The Organization has also partnered with a number of affiliate companies
over the years which has helped them build a very robust distribution network
making their products and services more accessible to customers in a vast number
of locations. This has also enabled the organization to offer free delivery services
to its customers which has improved customer loyalty.
Weaknesses • Amazon majorly depends on its affiliates / distributor network to deliver a
bulk of its products/services to customers due to its partnership with them, and
this may cause a delay which in turn has adverse effects on customer satisfaction.
• The company’s brand may be adversely affected if products purchased
from retailers who host their products or services on its sites do not meet up to
customers satisfaction. Hence the company has to incur cost in other to verify
every seller to be hosted on its platform in order to prevent reputational risk.
• As anything that has to do with technology in this global age, security has
to be considered in order for ensure that there is no breach in the customer’s
information or data hence the Organization has to ensure that there are no security
gaps in its processes.
• Seasonality of the business
Opportunities • The phenomenal increase in internet users is an opportunity for a company
like Amazon to continue to dominate.
• Expansion opportunities – There are a number of new opportunities for
expansion to Amazon, an example is India, where Amazon has not succeeded in
dominating yet.
• Acquisition is a strategy that the company also uses to decrease the
competition and expand its growth, an example is the organization acquisition of
IMBD.com and jungle.com.
Threats • Threat of new players: the competition is increasing for Amazon, with the
influx of new players into the e-commerce business as well as offline companies
digitizing their products and services. Other major players in the market like
Walmart and Alibaba are also striving to grow their market share in the industry.
All this and more may close the margin for Amazon in the long run if they do
not remain competitive in order to stay relevant and retain their leading position.
• Cyber security: Amazon is prone to cyber-attacks from hackers, phishers
and scammers.
• The company can suffer from Patent infringement and other lawsuits
• There are countries who have restrictions on foreign direct investment
(FDI), OECD countries such as Iceland, Slovak Republic, Slovenia etc. and this
may reduce customers as well as limiting the expansion plans of Amazon
(OECD, 2020).
• Loss of market share after Jeff Bezos
Table 1: Swot Analysis (Dudovskiy, 2020), (Amazon, 2020b)
