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
9. 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
9
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
12. 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
12
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
