Amazon is actively using the penetration marketing strategy to maintain its leadership position in retail sales. The purpose of this strategy is to convince as many customers as possible to purchase the company’s products. Different approaches can be used, such as lowering prices or increasing customer awareness of the products. However, this strategy has advantages and disadvantages in today’s highly competitive market.
The main advantage is increasing the company’s profitability in the long run. This strategy helps to increase the market share in current markets and expand the company’s activities into new ones (Walker & Mullins, 2014). The Amazon example demonstrates that this approach allows the company to reach a large audience and increase the company’s sales and profitability. However, the strategy has some business disadvantages caused by customer behavior and growing competition.
One of the key disadvantages is reduced customer loyalty and the emergence of other retailers on the market that can compete with Amazon. Due to the large number of sellers on the market, the buyer can choose the one whose service or prices suit him more. Chaffey (2022) claims that in 2021, Amazon’s customer satisfaction rating dropped to 78, and stock values have fallen significantly. Amazon is gradually losing its leadership position in retail sales, so a review of its marketing strategy is necessary.
There are several ways to increase customer loyalty and gain a competitive advantage in the market. That includes improving service quality, lowering prices, and spending more on advertising than competitors (Walker & Mullins, 2014). Moreover, Amazon is already using all these methods, but other retailers like Walmart and Tesco use the same strategies. Under such conditions, Amazon is unlikely to gain a competitive advantage. With declining customer satisfaction as a central challenge, Amazon needs to rethink its customer experience strategy, possibly making it more personalized.
Thus, the penetration marketing strategy for Amazon was a successful campaign that contributed to the company becoming a leader in retail sales. However, this strategy needs to be revised to bring the company a competitive advantage in today’s highly competitive environment and with customers’ growing needs. Amazon heavily invests in advertising and software development, lowering prices for customers, and establishing new partnerships. However, due to the decline in customer satisfaction, the company needs to rethink its customer interaction approach.
References
Chaffey, D. (2022). Amazon.com marketing strategy 2022: E-commerce retail giant business case study. Smart Insights. Web.
Walker, O., & Mullins, J. (2014). Marketing Strategy: A Decision-Focused Approach. (8th ed.). New York, NY: McGraw