Amazon Ansoff Matrix

Amazon Ansoff Matrix is a marketing planning model that helps the e-commerce and cloud computing company to determine its product and market strategy. Ansoff Matrix illustrates four different strategy options available for businesses. These are market penetration, product development, market development and diversification.

Amazon Ansoff Matrix

Amazon Ansoff Matrix

Within the scope of Ansoff Matrix, Amazon uses all four growth strategies in an integrated manner:

 

1. Market penetration. Market penetration refers to selling existing products to existing markets. Amazon uses market penetration strategy aggressively. Sophisticated user experience features in general and Recommendations feature on e-retailer’s website in particular play an important role in the application of market penetration strategy. Specifically, the e-commerce giant focuses on user experience personalization thanks to efficient application of data science and machine learning with positive implications on the volume of sales of existing products to existing markets.

 

2. Product development. This involves developing new products to sell to existing markets. Product development is one of the core strategies used by Amazon. Started by Jeff Bezos selling only physical books online in 1997, today Amazon sells anything that can be sold online. The largest internet retailer in the world by revenue sells more than 500 million products, including products sold by third parties on Amazon platform. Top product categories include clothing, shoes, jewellery, home and kitchen appliances, books, electronic devices, sports and outdoor items and others.

 

3. Market development. Market development strategy is associated with finding new markets for existing products. Amazon is engaged in market development in a systematic manner. Started only in the US, Amazon currently has country-specific sites in 13 countries, including Canada, the United Kingdom, China and India. Moreover, Prime Free Same Day and Prime Free One Day services are available in more than 8000 cities and towns. Prime Now service is available in more than 50 cities in 9 countries.[1]

 

4. Diversification. Diversification involves developing new products to sell to new markets and this is considered to be the riskiest strategy. Amazon uses diversification to a certain extent. As a result of diversification strategy Amazon currently operates in media, hardware, advertising and other business segments.

Amazon Inc. Report 2018 contains a full analysis of Amazon Ansoff Matrix. 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, business strategy, organizational structure and organizational culture. The report also comprises discussions of Amazon marketing strategy, ecosystem and addresses issues of corporate social responsibility.

[1] Annual Report (2017) Amazon Inc.

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