Amazon Marketing Mix (Amazon 7Ps of Marketing)

Amazon Marketing Mix Amazon 7Ps of MarketingAmazon marketing mix (Amazon 7Ps of marketing) comprises elements of the marketing mix that consists of product, place, price, promotion, process, people and physical evidence.

 

 

 

Product. Amazon products can be divided into the following three categories:

1. Amazon websites that enable hundreds of millions of products to be sold by Amazon and by third parties across dozens of product categories

2. Electronic devices such as Kindle e-readers, Fire tablets, Fire TVs, and Echo

3. Media content

 

Place. Traditionally, Amazon didn’t have physical stores and the company relied on online sales channel due to e-commerce nature of its business operations. Starting from 2015, the online retail giant has been concentrating in physical retail “during which time it’s opened half-dozen bookstores that double as gadget emporia, a score of campus bookstores that don’t sell books and a convenience store without cashiers.”[1]

Moreover, Amazon also has an alternative store format that operates in a cost-effective manner. “Students order textbooks and dorm furnishings online and come to these stores to pick them up. The centralized pickup location reduces shipping expenses. The company is also testing a grocery pickup service at two locations in Seattle. Once it launches, Prime members will be able to order groceries online and visit one of these stores for pickup, skipping the aisles.”[2]

 

Price.  Amazon’s business is highly seasonal. The company generated 33%, 33%, and 32% its annual revenue during the fourth quarter of 2014, 2015, and 2016 respectively. This pattern of revenue generation has certain implications on Amazon pricing strategy. Amazon pricing strategy can be generally described as cost leadership; nevertheless, the largest internet retailer in the world also applies alternative pricing strategies in certain segments.

Cost leadership is placed at the core of Amazon pricing strategy. Analysts note that “Amazon’s strategy is to frequently lower prices until they beat competitors–for all products”[3]. Famously, the online retail giant changed the price of Bible more than 100 times during the last five years.[4]

At the same time, Amazon uses premium pricing for its products and services, where the company possesses solid market share and competitive advantage. For example, publishers with Kindle Direct Publishing are offered 70% royalty option and make their books available in the Kindle Store[5]

Additional range of pricing strategies used by Amazon sparingly include penetration pricing, price skimming, psychological pricing, product line pricing, promotional pricing and geographical pricing strategies.

Amazon.com Inc. Report contains a full analysis of Amazon marketing mix (Amazon 7Ps of marketing) and Amazon marketing strategy in general. The report illustrates the application of the major analytical strategic frameworks in business studies such as SWOT, PESTEL, Porter’s Five Forces, Value Chain analysis and McKinsey 7S Model on Amazon. Moreover, the report contains analyses of Amazon leadership, organizational structure and organizational culture. The report also comprises discussions of Amazon business strategy and addresses issues of corporate social responsibility.

Amazon.com Inc. Report

[1] 5 Reasons Why Amazon Is Experimenting With Physical Stores (2017) Fortune, Available at: http://fortune.com/2017/04/28/5-reasons-amazon-physical-stores/

[2] 5 Reasons Why Amazon Is Experimenting With Physical Stores (2017) Fortune, Available at: http://fortune.com/2017/04/28/5-reasons-amazon-physical-stores/

[3] Shpanya, A. (2016) “Three ways to optimize for Amazon’s pricing strategy” Econsultancy, Available at: https://www.econsultancy.com/blog/67666-three-ways-to-optimize-for-amazon-s-pricing-strategy

[4] Murphy, M. (2015) “Amazon changed the price of the Bible over 100 times in five years” Quartz, Available at: https://qz.com/327835/amazon-dynamic-pricing-changed-the-price-of-the-bible-over-100-times-in-five-years/

[5] Annual Report (2016) Amazon.com Inc.