Amazon target market

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Running Head: Amazon.com Target Market Analysis

Amazon.com Target Market Analysis

Davenport University

BUSN 520

October 9th , 2014

Abstract

Just about every viable business or organization—whether it’s a restaurant franchise, retailer, or health care facility—has a specific target audience or demographic that they wish to corner and cater to. Identifying and acknowledging target audiences is a critical step in marketing stratagem, as it helps in determining the total number of potential buyers or users for that company’s products and services, which in turn directs and shape marketing campaigns and production efforts. It also serves to help establish where the bulk of their time, efforts, and capital should be allocated, which reduces resources wasted on trying to lure individuals who have no need or purpose for the services or goods being offered. Amazon.com, which currently holds the title as the world’s biggest online retailer (Stone, 2013), is no different. In fact, Amazon was built from the ground up by zeroing in on a niche market, and expanding upon that market over time. In this paper, I will discuss Amazon’s primary and secondary target audience and target group, highlighting the importance and unique characteristics of each. I will also offer a brief overview regarding Amazons market position, and how they compare to their major competitors.

Primary and Secondary Target Markets

When Jeff Bezoz, founder and CEO of Amazon Inc. established the company back in 1995, he did so with the intention of gratifying and catering to individuals who possessed a voracious love for literature (Stone, 2013). Intellectuals, scholars, students, and bookworms alike from across America frequently patronized what was (and still is) considered amongst the best online book retailers available, in order to get their syntactic fix. Since that time, however, the organization has changed considerably. As of late, Amazon has broadened its marketing net to encompass individuals of various tastes, hobbies, and lifestyles. Amazon has even branded their selves as the “The Everything Store” to compliment their vast inventory (Stone, 2013). In addition to their enormous selection of books, Amazon offers a wide range of electronics, health products, office supplies, entertainment media, and clothing.

Before I discuss Amazon’s primary and secondary target markets, it would be practical to first define and expound upon the meaning these terms. A company’s primary target market is essentially their main consumer group, and the subset from which the majority of the organization’s patronage and proceeds will come from, as they typically have greater spending emphasis (“Primary Target Market”, 2012). Because of this, these consumers are by and large considered the most important purchasers and the mainstay of the business (“Primary Target Market”, 2012). Secondary target markets, on the other hand, are comprised of a segment currently too small to be a primary market, but are shown to have future potential (“Secondary Target Market”, 2012).

Amazon does not actually target a particular demographic. Rather, Amazon essentially considers anyone adequate in basic internet usage, and old enough to make online purchases to be a part of their target market (Stone, 2013). Consequently though, this inadvertently restricts the target market age range to roughly 18-50 years of age (as one must be 18 in order to legally make an online purchase, and many older folks are not too familiar or comfortable with online shopping. Because it is from this group that Amazon derives most of its revenue (Stone, 2013) it can be concluded that this demographic is Amazon’s primary target audience.

While Amazon is known chiefly for selling products, they are also known for attracting budding entrepreneurs as well. Merchants who wish to sell their wares on the website can do so after paying a nominal fee (Gregoire, 2013). As it stands, independent merchants do not bring in as much revenue as the primary target group, but they are certainly valued by Amazon, as they have the potential to attract new customers to the site by selling items that Amazon may not presently carry (Gregoire, 2013). For these reasons, one can deem this group to be Amazon’s secondary target market.

Amazon’s Target Group

The interface of Amazon’s website speaks volumes of the specific type or group of customers that they targets. Upon entering the website, users are greeted with a simple homepage that displays Amazon’s premier items (e.g., Amazon Kindle, and the Amazon Fire) and a few popular and best-selling items as well. On the top of this page is a large “search” box that shoppers can use to track down a specific item. Amazon’s search engine even allows for additional filtering on the basis of department, price-range, brand name, specs (provided it’s an electronic item) and even average customer rating. For those who have set up an account with Amazon, their browsing experience is a bit more personalized; instead of being bombarded with a bunch of products one may not be interested in, Amazon account holders are met with pages that showcase items reflecting their browsing or purchase history. From this setup, one can infer that Amazon primarily seeks customers who have a general idea of what they want, or are looking for something specific. This inference can be taken a step further to suppose that Amazon seeks to draw in noncompensatory decision rule shoppers—that is, consumers who basically know what it is they want, and do not wish to squander any time browsing items that deviate from what they intend to purchase (“Consumer Psychology”, n.d.). This group is not limited to any particular set physical qualities, and can be comprised of people from all different ethnicities, genders, ages, or ages, creeds. However, since noncompesatory decision-making entails the use discipline and self-control, it can be suggested that noncompensatory shoppers are generally a restrained and responsible lot.

Amazon’s Market Position

Amazon currently enjoys a dominant position in the e-commerce market, raking in about $70 million dollars in revenue last year alone (Stone, 2014). The graph below provides a visual that depicts just how lucrative the online retailer giant has become over the past decade. In 2012, Amazon reported about $60 billion in revenue, while in comparison, the next two online retailer competitors on the list (Staples and Apple) raked in about $9 billion and $8 billion respectively (Han, 2014).

C:\Users\Nate\Desktop\amazon_chart.jpg

In terms of ecommerce market shares, Amazon has enjoyed a hefty slice of that as well, making up 51%. In comparison, the next two largest market shares are held by iTunes and iBooks, at 14% and 10% respectively (“Retailer Market Share”, n.d.).

C:\Users\Nate\Desktop\USMarketShare.png

Conclusion

Amazon has succeed in remaining relevant and exceedingly profitable over the years by broadening its marketing campaign to reach a larger and more diverse demographic of consumers, rather than limiting itself to one niche market. Given the massive success of their marketing blueprint, it is conceivable that in the near future, Amazon will seek to further push their boundaries and strategically fashion their marketing campaign in a way that encompasses an ever larger target audience

References

Han, A. (2014, June 26). Amazon’s ‘Fire’ Phone a Threat to Retailers, but Will it Succeed? Retrieved from http://www.datafox.co/blog/amazons-fire-phone-a-threat-to-retailers-but-will-it-succeed/
Gregoire, J. (2013, October 28) Amazon Selling Fees: How Much Will You Pay to Sell of the Amazon Marketplace? Retrieved from http://www.cpcstrategy.com/blog/2013/10/amazon-selling-fees/
Guillaume, F. (n.d.). Organizational Structure. Retrieved from https://stonybrook.digication.com/fguillaume/Organizational_Structure1

Primary Target Market. (August 21, 2012). Retrieved from http://targetmarketsegmentation.com/target-market/primary-target-market/

Retailer Market Share. (n.d.). Retrieved from http://www.myauthorservices.com/business-of-writing/retailer-market-share/

Secondary Target Markets. (August 21, 2012) http://targetmarketsegmentation.com/target-market/secondary-target-markets/

Stone, B. (2013, October 10). The Secrets of Bezos: How Amazon Became the Everything Store. Retrieved from http://www.businessweek.com/articles/2013-10-10/jeff-bezos-and-the-age-of-amazon-excerpt-from-the-everything-store-by-brad-stone