Amazon mkt gstrategy_dashboard

1. Team __________________________________________________________________________________________________________________________________________________ James Corne Winston Tang Zhenhua Yang Feihong Xia 1

2. Index •  Marketing Framework Foundation –  External Analysis •  Industry overview •  Major competitors & substitutes –  Internal Analysis •  Product portfolio •  Business Model •  Marketing Dashboard –  Architecture behind Dashboard •  List of Metric –  Criteria for Metric Selection •  Final List of Metrics •  Metrics 2/20/13 2

3. Company Overview History Founded in 1994 by Jeff Bezo, originally named Cadabra Slogan Amazon…”and you’re done” Overview & Framework Industry Online books, retail, movies, music, groceries, shoes, etc Culture Fast-paced, Entrepreneurial, Innovative, Experimental Marketing 1-Year Sales Growth 39.56%. (2010) Dashboard Growth 1-Year Net Income Growth 27.72% (2010) # of SKU’s Millions. Metrics Global Coverage US & UK primarily Market Share 10-18% Depending on Industry Leverage expertise in online retail and infrastructure to Business Model expand the number of product lines. 3

4. External Analysis Core Competitors (bookstores, online retail, online auction) Overview & Libraries Framework Marketing Market Orientation Dashboard •  Customers want convenience and low price. •  Trust and credibility is important online retailers. •  Shipping is a concern •  Selection Metrics External Environment •  Percent of online shopping (compared to retail) is increasing at 4.9% - 9.2% annually. •  Key External Drivers: Per Capita Income, Internet Connection Source: IBIS 2010’ 4

5. Internal Analysis Strengths Weaknesses •  Supply chain management. •  Limited customer service Overview & •  Wide customer base. •  Delay because of shipping. Framework •  Unlimited geographic reach. •  Additional cost in shipping. •  Wide selections • Lower Fixed Cost than Competitors Marketing Dashboard Opportunities Threats • Increase # of SKU’s and •  Competing products: Google product categories Library & Bookstore, ipad. • Tablet computers. •  Online streaming: Netflix, Metrics • 3rd party supply chain services. YouTube, etc. •  Online library. 5

6. Industry Overview Posi7ve % Growth of Proﬁt/GDP Quality Growth Quan+ty Growth X Internet Publishing & Maturity Broadcas+ng X E-‐Commerce & Online Auc+on Nega7ve Posi7ve Poten+al Time Decline Hidden Waster Nega7ve Gems % Growth of Establishment Source: ISIBWorld 2/20/13 6

7. Market Share Internet Publishing & E-Commerce & On-line Auction Broadcasting Facebook, 5.90% Amazon, 18.60% Apple, 9.20% Ebay, Yahoo, Other, 9.30% 5.30% 48.90% Amazon, 10% Others, 76.10% Google, 16.70% Source: ISIBWorld 2/20/13 7

8. Strength/Weakness: Acquisitions 2/20/13 Source: techcrunch.com 8

10. List of Metrics List of Possible Metrics Overview & •  Purchase Habits • Clickthrough Rate Framework •  Willingness to • Loyalty Recommend • Value curve •  Market Share • Page Views •  Willingness to Search • Average Frequency Marketing •  Channel Margins • Online Traffic Dashboard •  Recency • Return on Sales •  Retention Rate • Repeat Customers •  Customer Lifetime Value • Out of Stock % •  Sales/Promotion Lift • Direct Product Profitability Metrics •  Percent Sales on Deal • Product Category Volume •  Pass-Through • Optimal Price •  Conversion Rate • Cannibalization Rate •  Cost to Serve 10

11. Metric Selection: Criteria & Process Selection based on three main categories: Revenue streams, cost and profitability Overview & Framework Metrics of revenue streams: •  Online traffic •  Conversion rate •  Market share Marketing Metrics of cost: Dashboard •  Cost to serve •  Cannibalization Rate Metrics Metrics of profitability: •  Value curve •  Repeat customers 11

13. Value Curve Definition: Indentify Amazon’s value proposition to the market and key differentiators. Overview & WIIFM: A tool to understand the core competencies of Framework Amazon. How to measure: Indentify the key features of Amazon and the competitors, then rank them on a scale of 10. Marketing Dashboard Performance and 10 target: 8 Strengthen the key differentiators of 6 Amazon and Amazon Metrics 4 differentiate itself Specialty Stores from the competitors 2 Supermarkets through methods like Department Stores ERIE (eliminate, 0 reduce, introduce and enhance) 13

14. Conversion Rate Definition: The ratio of visitors who convert website visits into purchasing goods from Amazon. Overview & Framework WIIFM: It’s a measure the site's functionality, usability and profitability. How to measure: The total number of visitors over a period, the total transactions made during that period Marketing Dashboard Performance and target: Current rate is 9.6% which Conversion rate is below some competitors 15.00% like EBay (11.5%) 10.00% Metrics Increase conversion rate 5.00% by effective marketing 0.00% efforts, like on-target advertisement based on purchase history Source:http://www.clickz.com/clickz/column/1718099/the-average-conversion-rate-is-it-myth 14

15. Cost to serve Definition: A tool to calculate the cost to serve a customer account, based on the actual business activities and overhead costs incurred Overview & Framework WIIFM: A measure to understand the profitability of customer accounts and show how customer demands differently and has a different cost profile How to measure: Examines the relative cost to deliver Marketing products and services, inventory level and corresponding Dashboard costs for different customer accounts Performance and target: Reduce the cost to Metrics serve by identifying the most profitable customers and unprofitable customers. Then provide different service to them. Source:http://www.clickz.com/clickz/column/1718099/the-average-conversion-rate-is-it-myth 15

16. Market Share Definition: sales compared to the total sales of the market Overview & WIIFM: The market share projection can help us to define our Framework competitive position for each product lines and where there are the most threats in the future How to measure: divide sales by the total market sales Marketing 100% Dashboard 90% 90% Performance and 80% target: 70% 72% Invest in eBook 60% eBook innovation and 50% 50% 50% Metrics promotion to defend 40% 45% 41% 35% Total 37% Print sales against 30% 31% 33% 28% 30% 26.50% 28% 25% 26% 23.50% 25% competitors such as 20% 20% 22% 20.50% 19% 17.50% 22% Google and Apple 10% 0% 2008 2009 2010 2011 2012 2013 2014 2015 16

17. Online Traffic Definition: number of online page views each day Overview & Framework WIIFM: Higher traffic leads to more brand awareness and more purchases, vital for online retailers How to measure: the number can be acquired from online Marketing traffic monitoring sites such as Alexa Dashboard Amazon’s Regional Traffic Performance and target: Ranks Amazon enjoys huge popularity Country Rank in developed economies, but United States 5 Metrics not yet in emerging economies. United Kingdom 23 Keep the global market India 45 expansion effort and adjust China 201 business strategies to penetrate different markets 17

18. Cannibalization Rate Definition: The percentage of New Product Unit Volume that are sales that would have gone to the Old Product Overview & Framework WIIFM: key measure to find out if the sales of Kindle books are incremental or cannibalizing print sales How to measure: the difference between estimated sales of Marketing old product without the new product and the sales with new Dashboard product Performance and target: 2010 7.30% The sales of physical books 135% Metrics are steady after the launch Print ebook of eBooks. Cannibalization is 2009 7.50% 85% not a big concern 0% 50% 100% 150% 18

19. Repeat Customer Orders Definition: Percentage of repeat purchase in one year Overview & Framework WIIFM: Key measure of customer loyalty . High repeat customers orders means less customer acquisition cost and steady revenue string. How to measure: find how many customers ordered at least Marketing twice annually Dashboard Performance and target: 72% 74% Amazon does well in customer Metrics retention. Keep up the product quality and service level in order 2009 2010 processing. Repeat Customer Orders 19

20. We, James Corne, Winston Tang, Zhenhua Yang, Feihong Xia, the Smeal College of Business Community, aspire to the highest ethical standards and will hold each other accountable to them. We will not engage in any action that is improper or that creates the appearance of impropriety in our academic lives, and we intend to hold this standard in our future careers. 20

21. Overview & Framework The next slides are “back-‐up slides” created in advance to prepare for Marketing Dashboard quesOons that may be asked. Metrics 21

22. Value Curve 10 9 Overview & Framework 8 7 6 Marketing 5 Dashboard 4 Amazon 3 Specialty Stores 2 Supermarkets Metrics Department Stores 1 0 Convenience Quality Low Price Trust Variety 22

23. Marketing Analytics: Page Views Overview & Framework Marketing Dashboard Metrics 23 Source: www.alexa.com

24. Marketing Analytics: Reach and Recency Overview & Framework Marketing Dashboard Metrics 24 Source: www.alexa.com

25. Market / Audience Demographics Overview & Framework Marketing Dashboard Global Reach Metrics 25 Source: www.alexa.com

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