Amazon marketing strategy can be examined through the lens of the marketing mix model, encompassing the 4Ps (Product, Price, Place, Promotion). These strategic approaches, based on Amazon’s application of the marketing mix, help in succeed in the market. Let’s take a deeper look into Amazon’s Marketing Strategy & Mix to decode its product, pricing, promotional, and distribution tactics.

What Is a Marketing Mix?

A marketing mix is a set of controllable factors or components that businesses use to communicate effectively about their products or services. In 1948, James Culliton, a marketing professor at Harvard University, presented this notion to the business community as a concoction of diverse ingredients. Over the subsequent years, Neil Borden, a colleague of Culliton, further polished this concept, describing the “marketing mix” as the combination of forces that dictate the blending of marketing elements. Leveraging this framework, companies can establish their marketing goals and strategize effectively to connect with their target audience using the most resonant messages.

What Are the 4 P’s of Marketing?

In his seminal 1960 work, “Basic Marketing: A Managerial Approach,” E. Jerome McCarthy crystallized the idea of the “marketing mix” by introducing the renowned “four P’s”: product, place (referring to distribution channels and institutions), promotion, and price.

Now, let’s dive further into the fundamental four P’s of marketing: 

Place:

Amazon’s journey began as a pioneering online bookstore, fundamentally altering the retail landscape. Let’s start our exploration with “Place.” Jeff Bezos, captivated by the fascinating internet in the early 1990s, saw an opportunity to sell products online, bypassing the overheads of brick-and-mortar stores, enabling better price competitiveness. Selecting books as the initial offering, he provided online customers the unique convenience of searching for any desired book by simply inputting its ISBN number on Amazon.com.

In the early stages, the lack of physical storefronts presented Amazon with a notable challenge. Relying on postal service for delivery meant customers had to patiently wait a day or two for their orders. However, the flip side offered unparalleled ease: the ability to choose from over 100 million products on Amazon.com and have them delivered to one’s doorstep the very next day without ever stepping out. This swift delivery became feasible due to their state-of-the-art distribution centers. In the UK alone, Amazon boasts eight fulfillment hubs that are meticulously positioned to cater to the entire nation. So, whether you’re in bustling Oxford Street or the remote John O’Groats, the consistency in service remains the same.

Price:

By exclusively operating online, Amazon closely ties the concept of Place to Price, eliminating the overheads like rent and high staffing costs that come with a physical storefront. Bezos’ unwavering commitment to efficiency and prioritizing the end cost to consumers ensures that Amazon often operates at a near-zero profit. Instead of pocketing these profits, they are reinvested into the company to amplify its scale, subsequently driving down costs. This cycle often termed the “flywheel effect,” has been instrumental for Amazon, especially in its formative years, allowing it to offer unmatched prices and prompting a shift in consumer behavior from high-street shopping.

In addition, Amazon acknowledges that it sells certain items below its acquisition cost. For instance, it’s not rare for a new book with a recommended retail price of £10.99, which Amazon procures for £6.99, to be listed online for just £5.99. Such aggressive pricing makes Amazon the preferred choice, especially when its price is nearly half that of other retailers at launch. With its streamlined cost structure, Amazon can afford these margin sacrifices, reinforcing its image as the most affordable retailer, a feat challenging for many competitors. 

Product:

Amazon quickly broadened its offerings beyond just books. By the turn of the millennium, its catalog included CDs, toys, videos, and more, leading Bezos to coin that Amazon is where one can purchase “‘Anything’ with a capital ‘A.'” This sentiment resonates with the vast range of products available on the platform today. In 2013, the average UK resident spent £70 on Amazon, which constituted over half of all online retail sales in the country.

Yet, Amazon wasn’t content with merely selling products. They perceived an opportunity to evolve into a marketplace. With the vast user base, why not allow users to trade amongst themselves and earn a commission on each transaction? This vision bore fruit, with 40% of Amazon’s global sales now stemming from third-party vendors. However, Amazon’s potential might very well be in concocting its proprietary products and services. This ambition was evident with the debut of the Kindle in 2007, aiming to redefine the book industry. More recently, they launched Amazon Prime, a TV and film streaming venture set to rival Netflix. A unique edge for Amazon could be bundling other services for Prime members, like free delivery, setting it apart once the quality of its content matches its competitors.

Promotion:

Being an early bird in the e-commerce sector, Amazon enjoyed and initially depended on the significant buzz generated through word-of-mouth. The realization of Bezos’ vision of offering “‘Anything’ with a capital ‘A'” positioned the brand strongly in consumers’ minds, especially with the accompanying perception of unbeatable prices. Events like “Black Friday,” an American tradition of slashing prices for a single day, have been cleverly adapted by Amazon, offering hourly discounts on different products.

On top of these strategies, Amazon has ramped up its formal promotional efforts in recent years. Notably, in 2015, Amazon’s traditional advertising expenditure surpassed even that of tech giant Apple. Strategic moves, such as recruiting the renowned Top Gear trio – Richard Hammond, Jeremy Clarkson, and James May for Amazon Prime, showcase the company’s intent to bolster its presence in sectors beyond its primary domain and sustain brand growth.

The 7 P’s of Marketing

In recent times, academics have broadened the traditional marketing mix model to encompass the seven P’s. This expanded concept adds people, processes, and physical evidence alongside the foundational four P’s. The introduction of the seven P’s aims to equip businesses with a more comprehensive framework, tailoring their marketing strategies to both products and services more effectively.

People:

Amazon highly values its employees. Regardless of their position or department, all staff receive benefits that make Amazon an attractive employer. These perks range from health and financial benefits to assistance programs, vacation time, and equity plans. With approximately 230,800 employees worldwide working tirelessly to provide the best customer experience, it’s no surprise that Amazon, as the top-visited retail website with 1.27 billion visits annually, invests significantly in the training and development of its workforce.

Process:

Amazon stands at the forefront of e-commerce and web services, backed by robust process-driven operations. As highlighted before, Amazon has strategically segmented its warehouses and fulfillment centers for optimal efficiency. The company leverages cutting-edge technology not just in its daily operations but also in advertising, such as updating customers about their package locations. Its partnership with platforms like Twitter enables users to add products to their cart from tweets. Central to its business strategy is effective customer relationship and information management. Additionally, Amazon Robotics plays a vital role in warehouse inventory management.

Physical Evidence:

Amazon’s primary interface with the world is its website. Being an online retailer, its website and user-friendly apps stand as its service points, constructed with impeccable design. Amazon boasts expansive warehouses and fulfillment centers in every country, making it one of the largest global companies. The company’s logo, featuring an arrow from A to Z, symbolizes that everything can be found on Amazon, and this iconic design is prominently displayed on its packages. Amazon also publishes annual financial reports, offering investors and the public insights about its current standing and future ambitions. This encapsulates the essence of Amazon marketing strategy.

Final Thoughts

For many companies, there’s a standout ‘P’ in their Marketing Mix that serves as their unique selling point, driving profitability. For instance, without its distinct branding (Promotion), Evian is merely another bottle of water. Similarly, Sky, as a sports broadcaster, is largely defined by its coverage of the Premier League (Product). But when it comes to Amazon, pinning down its standout ‘P’ or ‘Ps’ can be intriguing.

In its early years, Price was undoubtedly a linchpin, as Amazon’s selling point was its ability to offer prices lower than traditional retailers, challenging the conventional in-store shopping habits. As time progressed, although competitive pricing remains instrumental to Amazon’s appeal, its success has streamlined distribution to the extent that it’s often more convenient for customers to order from Amazon than venturing out to shop.

Moreover, with Amazon’s increasing focus on its proprietary products and services, the significance of the Product component in its marketing strategy can’t be underestimated. This evolution underscores the resilience and potential longevity of Amazon’s competitive edge. At their pace, future generations might believe that the company grew so big that a rainforest was named in its honor.

Since Amazon operates predominantly in the service sector, it’s essential to consider the complete 7Ps of its marketing mix.