Introduction.3
Analysis3
Current Market Features..3
Marketing Summary..3
Competitive Advantage.3
Segmentation, Targeting & Positioning...4
Branding5
Potential Impact on Consumer Behavior..6
Growth Opportunities.7
Conclusion..8
References..9
Amazon Review & Strategy
Analysis
Current Market Factors
Amazon is among a number of firms that emerged quickly during the 1990’s or 2000’s. Among the others that have done the same would include Google, Twitter and Facebook. Twenty years ago, Amazon and these other firms were in their infancy or did not exist. The veritable explosion of social media, mobile computing and internet technology in general has served as a vehicle to help those firms progress from their nascent stages to the billion dollar and publicly traded companies that they are now. Amazon in particular has latched on to the fact that the modern consumer craves the ability to get good deals, to buy products online and get them to their home for reasonable (if not free) shipping rates. The macro economy of retail has very much mimicked what has been seen with movie and television sales. While brick and mortar stores and physical media used to be the norm, that is most definitely on its way out and many DVD or Blu-Ray rental vendors including Blockbuster have either waned greatly in size or they have ceased to exist. Much the same thing has been happening in the retail sector. While Wal-Mart, Target and Best Buy are still in the equation on the national level, the landscape is rather barren beyond that except for regional players beyond that.
Marketing Summary
Competitive Advantage
Much of what is mentioned in the prior section is due to the new standard and norm set by retails like Amazon, Wayfair and a few others (Amazon 2016; Wayfair, 2016). While the brick and mortar stores have tried to play catchup by doing online ordering/pickup and their own sales portals, Amazon got one heck of a head start and they have seized on it greatly. While still in its early stages and while it is unknown how successful they will be, Amazon is now starting to open their own brick and mortar stores. Essentially, while Wal-Mart and others started as brick and mortar and then extended online, Amazon has been doing the inverse. Amazon has an inherent competitive advantage at this time as online sales and ordering as the present and Amazon’s network of completing this is already well in place. By contrast, the brick and mortar stores that have been around since before this shift started to take place are working towards the same but they are far behind Amazon at this time.
As for Amazon remaining competitive going forward, it stands to reason that a formidable competitor (if not more than one) that is online savvy from the get-go will eventually emerge. Wayfair and a few other sites are starting to become strong but Amazon is clearly unmatched at this point. However, they would be foolish to presume that this will remain the case as any new entrant to the market will be able to see and learn the lessons of Amazon and other companies from the last generation or so. Even with that eventuality, Amazon is doing all the right things at this time to gain more of or at least keep their competitive advantage. While spreading themselves too thin would be less than wise, they have not done so as of yet and their failures thus far are minimal.
Segmentation, Targeting & Positioning
As partially noted above, Amazon is not putting all their eggs in one basket. Indeed, they got their start as an online retailer and they did struggle a bit as they were very much ahead of their time. However, they seem to have known what was coming as they are doing quite well now. Beyond that, Amazon has many sister sites and efforts that help to augment their primary site as well as diversify their efforts across the commerce and retail realms. Examples would include online textbook seller AbeBooks, movie database and information site IMDb and their vast library of online video stores (IMDb 2016; AbeBooks, 2016). While there are still ground-based video stores and movie disc kiosks (e.g. Redbox, etc.), streaming is the choice supreme of most people that can afford to use the service. When it comes to the streaming realm, Amazon is certainly not alone in that they compete with other vendors like Vudu (owned by Wal-Mart), Netflix and Hulu. However, Amazon is uniquely positioned in the streaming fray because they offer both renting and buying of streaming videos and they can do this for almost any movie or show that exists. Hulu is mostly (but not entirely) a television show site and Netflix only has the movies and shows that they are licensed to show. Vudu is fairly comparable to Amazon in general terms but the integration with the Amazon website, IMDb and the streaming products that Amazon sells in stores is not remotely matched by Vudu/Wal-Mart (IMDb 2016). One thing that Vudu has on Amazon, though, is that people that own DVD and/or Blu-Ray’s can “convert” their discs to Vudu titles that can then be streamed going forward. At this time, Amazon does not offer this except with some music sales. If someone has the DVD/Blu-Ray of a movie, they cannot convert to streaming or vice versa.
Some of the ways in which Amazon positions itself are much subtler and harder to spot. However, they are absolutely there for those that pay attention. Indeed, Amazon has a feature on its website that tracks what is looked at and searched for. When looking at a product, similar products are marketed at multiple points along the page. When a user comes back to Amazon later on, tracking cookies that are in the web browser “remember” that shopping by looking at the history. Upon returning to the home page, people will see other products that are similar to what they looked at before. Of course, much the same thing is done for prior purchases. However, it is also done for products that are put on “wish lists” and so forth. Beyond that, if someone is looking at a movie like The Avengers, other movies in that series such as Iron Man, Thor and so forth will be pitched together as a “bundle”. Even with all of this, the sales pitches and suggestions are not obnoxious or aggressive. There are no pop-up adds that annoy the customer and the customer is quite easily able to ignore the marketing if they wish to. However, those that wish to look at and browse similar products can do so quite easily. Even with this subtlety, some people are averse to this tracking (Pagliery 2016)
Branding
When it comes to branding, Amazon is very much adept at that. This is not to say that Amazon has never failed when it comes to a venture. While the release and market penetration of the FireTV streaming boxes and sticks has done very well, the Amazon cellular phones that were marketed for a time were not all that successful at all. However, Amazon has mostly succeeded at every effort they have tried. They have their proverbial tentacles in a lot of things including streaming, sales of just about any product that can be sold online, data warehousing, movie title and information, etc. Another distinct example that can be pointed to is that Roku streaming boxes allow for a lot of applications above and beyond the Amazon service including Netflix, the online applications for television and movie networks (e.g. HBO Go, CBS, etc.) and so forth. Amazon has met that challenge by offering much of the same applications when it comes to their own boxes. While it may be counter-intuitive for them to offer applications from competitors like Netflix and such, doing the opposite would actually probably hurt them. As such, they are able to get their brand out there while also easing the experience and shopping quality for their customers. Another way that Amazon gets its brand out there is that many Blu-Ray players and televisions have the streaming applications of today built-in. While Amazon is not among those in all cases, they are present most of the time alongside with Vudu, Netflix and Hulu. In short, Amazon has extended their reach and brand presence quite greatly but they are not always “in your face” about the name. For example, the IMDb homepage does not make it crystal clear that it is an Amazon nameplate. As of the time of the report, the only two references to Amazon is one section that shows what is “trending” on Amazon Video (their online streaming application) and there is also a little icon at the very bottom that indicates that IMDb is an Amazon company. Other than that, all of the information is dedicated to the move content. Honorable mention goes to the plugs for the different app store options for IMDb, although Amazon is only one of them. Apple and Google Play (Android) are displayed with same emphasis. As far as branding goes, there is integration for Amazon.com as well as the other sites (like IMDb) on all of the major social media sites including Facebook, Twitter and Instagram (IMDb 2016).
Potential Impact on Customer Behavior
When it comes to companies like Amazon, the customer will usually do the nudging and influencing when it comes to behavior. Indeed, the customer will have their wants and preferences and it is generally incumbent upon the companies servicing them to respond. However, this is reactionary methodology and the companies out there like Amazon should do what they can to influence people to move in the “right” direction. Netflix shifting people from physical discs and towards streaming is one example (Steel 2015). Apple discontinuing the iPod Classic and moving people towards streaming is another (Statt, 2015). Amazon, as noted before, did not do terribly well when it first emerged on the scene. For a lot of their early days, they were supported by cash reserves and capital investment rather than profits. However, they presented something that consumers eventually glommed onto and demanded more and more of. This is a perfect example of a company nudging and influencing customer behavior to get in line with a business model that is advantageous to the company. Instead of Amazon having to take the rather long-lasting path of building store after store, Amazon brought the store experience to the Internet and now they are making hand over fist while doing so.
Even with the ostensibly and obvious ability for Amazon to shape the market, they should not ever turn a deaf ear to what the consumers want. For example, if Amazon users insisted time and time again that they should get a streaming copy of a movie or television show they buy if they buy the physical disc, something that Vudu offers for a nominal fee of a few dollars, then Amazon should listen to this. There may be some licensing or other issues involved in getting the logistics of that figured out. However, this is clearly a deficiency that Amazon should work on. This could become complicated through the use of Digital Rights Management (DRM) techniques (Gordon 2016). Also, people could theoretically sell the discs after they get the streaming copy and get most of their money back at the same time. However, there are ways to deal with this such as unique identifiers for discs and not guaranteeing that a streaming copy will be available if one buys the movie used. UltraViolet is touted by many as a solution to this issue but integrating this feature into the Amazon experience and having the movie in question in the Amazon library (rather than a separate one) would be preferable to many (Horiuchi 2016).
Growth Opportunities
As far as growth opportunities go, Amazon has really seized upon many of the major things that they could. Further, many of the other options that exist are really not worth the trouble and/or are not the wave of the future. For example, Amazon could make a venture into the fray with Redbox, Netflix and their physical disc service and regional video stores and do disc rentals. Indeed, there are a lot of people that either prefer to do it that way or cannot afford a streaming box, the needed internet service and the per month fees (if any) that exist on top of that. As such, Amazon should probably let that lie unless they already have the network and resources in place. However, two things that they absolutely could do would include. One thing that Amazon could (and maybe should) get into are television sets or even Blu-Ray/4k players. Roku has started that venture and seems to be doing fine with it so far. Just as with other devices, Amazon should not choke out competitors like Netflix and such from their devices as it might rub consumers the wrong way. Another thing that Amazon could do is allow for physical download of purchased movies, especially if they are in digital format. They have allowed this to a limited degree in the past but the resolution has been poor and the usability of the files has been limited (Purdy 2016). The author of this report suggests this because Plex and other applications that stream MP4 and other video formats are already prevalent even with the laws and such that supposedly restrict this process (Plex 2016). If Amazon was able to provide this sort of service in a DRM-friendly yet easy way, it would help Amazon a lot.
Conclusion
In the end, Amazon is clearly on the right path. However, they should be careful not to make the portability and usability of their movies and other products more difficult than it needs to be. Making things more intricate and complex than they currently are might be needed but the current structure may already manifest the best balance. As for the online sales realm, Amazon is well-positioned in that people are literally using Best Buy and other stores to shop and they later purchase online. Amazon can seize on that by partnering with those retailers and getting a cut of the sales.
References
Abebooks, (2016). AbeBooks - Used Books, Rare Books, New Books & Textbooks. [online] Abebooks.com. Available at: http://www.abebooks.com/ [Accessed 31 Jul. 2016].
Amazon, (2016). Amazon.com: Online Shopping for Electronics, Apparel, Computers, Books, DVDs & more. [online] Amazon.com. Available at: http://www.amazon.com [Accessed 31 Jul. 2016].
Gordon, W. (2016). [online] Lifehacker.com. Available at: http://lifehacker.com/can-i-get-drm-free-movies-and-tv-shows-without-pirating-477555875 [Accessed 31 Jul. 2016].
Horiuchi, V. (2016). Oh My Tech!: Figuring out the mess that is Ultraviolet movies. [online] The Salt Lake Tribune. Available at: http://archive.sltrib.com/story.php?ref=/sltrib/money/57168000-79/ultraviolet-movies-movie-service.html.csp [Accessed 31 Jul. 2016].
IMDb, (2016). IMDb - Movies, TV and Celebrities. [online] IMDb. Available at: http://IMDb.com [Accessed 31 Jul. 2016].
Pagliery, J. (2016). "Super cookies" track you, even in privacy mode. [online] CNNMoney. Available at: http://money.cnn.com/2015/01/09/technology/security/super-cookies/ [Accessed 31 Jul. 2016].
Plex, (2016). Plex. [online] Plex. Available at: https://www.plex.tv/ [Accessed 31 Jul. 2016].
Purdy, K. (2016). Does It Make Sense to Buy Movies and Music from Amazon. [online] Lifehacker.com. Available at: http://lifehacker.com/5930881/does-it-make-sense-to-buy-movies-and-music-from-amazon [Accessed 31 Jul. 2016].
Statt, N. (2014). Apple says a silent goodbye to iPod classic. [online] CNET. Available at: http://www.cnet.com/news/apple-says-goodbye-to-the-ipod-classic/ [Accessed 31 Jul. 2016].
Steel, E. (2015). Netflix Refines Its DVD Business, Even as Streaming Unit Booms. [online] Nytimes.com. Available at: http://www.nytimes.com/2015/07/27/business/while-its-streaming-service-booms-netflix-streamlines-old-business.html [Accessed 31 Jul. 2016].
Wayfair, (2016). Wayfair.com - Online Home Store for Furniture, Decor, Outdoors & More | Wayfair. [online] Wayfair.com. Available at: http://Wayfair.com [Accessed 31 Jul. 2016].
