Amazon Marketing Mix (Amazon 7Ps of Marketing)
Amazon 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 Element in Amazon Marketing Mix (AMAZON 7Ps of Marketing)
Amazon products can be divided into the following four 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. Due to the abundance of ranges of products it sells, Amazon has gained the moniker The Everything Store. In 2020 third party sellers made a profit of minimum USD 25 billion.[1] There are more than 200 million Paid Prime members.[2]
2. Electronic devices such as Kindle e-readers, Fire tablets, Fire TVs, and Echo. In 2020, customers bought tens of millions of Echo devices, and Echo Dot and Fire TV Stick with Alexa.[3] There are more than 100 million smart home devices connected to Alexa.[4]
3. Media content. An extensive range of products and services, including cloud-based services that can be used to produce content. The e-commerce giant is planning to increase the range and variety of its media content products. According to new CEO Andy Jassy it is still early days for Amazon in the media.[5] The company has reached a deal to acquire US historic movie studio MGM for USD 8,5 billion[6], as a sign of increasing focus on the media business.
4. Amazon Web Services (AWS). This segment offers a wide range of global compute, storage, database, and other service offerings. AWS serves developers and enterprises of all sizes, including start-ups, government agencies, and academic institutions.
The e-commerce giant also completed the acquisition of Whole Foods Market in 2017.
Place Element in Amazon Marketing Mix (AMAZON 7Ps of Marketing)
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.”[7]
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.”[8] To summarise, Amazon has an omnichannel sales strategy and customers access its offerings through its websites, mobile apps, Alexa, and physically visiting Amazon stores.
Price Element in Amazon Marketing Mix (AMAZON 7Ps of Marketing)
Amazon’s business is highly seasonal. The company generates significant part of its revenues in the fourth quarter each year. 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”[9]. Famously, the online retail giant changed the price of Bible more than 100 times during the last few years.[10]
At the same time, the e-commerce giant 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[11]
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. The e-commerce giant earns fixed fees, a percentage of sales, per-unit activity fees, interest, or some combination of these according to its seller programs.
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, Ansoff Matrix 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, ecosystem and addresses issues of corporate social responsibility.
[1] Annual Report (2020) Amazon Inc.
[2] Annual Report (2020) Amazon Inc.
[3] Annual Report (2020) Amazon Inc.
[4] Annual Report (2020) Amazon Inc.
[5] Palmer, A. (2021) “Amazon CEO Andy Jassy: ‘It’s still early days for us in media’, CNBC, Available at: https://www.cnbc.com/2021/09/14/amazon-ceo-andy-jassy-its-still-early-days-for-us-in-media.html
[6] Porter, J. (2021) “Amazon buys MGM for USD8.45 billion” The Verge, Available at: https://www.theverge.com/2021/5/26/22441644/amazon-mgm-acquisition-prime-video-subscription-service-james-bond
[7] 5 Reasons Why Amazon Is Experimenting With Physical Stores (2017) Fortune, Available at: http://fortune.com/2017/04/28/5-reasons-amazon-physical-stores/
[8] 5 Reasons Why Amazon Is Experimenting With Physical Stores (2017) Fortune, Available at: http://fortune.com/2017/04/28/5-reasons-amazon-physical-stores/
[9] 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
[10] 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/
[11] Annual Report (2016) Amazon.com Inc.