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Marketing Strategy of Amazon

CHAPTER I Overview was one of the first major companies to sell goods over the Internet and has
become a worldwide established name. is an American e-commerce company
that is based in Washington. It was founded by Jeff Bezos in 1994 and began as an online
bookstore but due to its success, Amazon has diversified into other product lines and
services such as groceries, electronics and Merchant Program (see Appendix 1 for detailed
portfolio). Amazon.coms stock price has fluctuated in recent years from $105 in 1999 to $5
in 2001 (Lauden and Traver, 2000). has developed separate websites for
Canada, UK, Germany, France, China and Japan. vision is to become
(, 2007):
Earths biggest selection and to be Earths most customer centric company
External Analysis
The external environment is referred to as the macro-environment. This includes the
broad environmental factors which will affect organisations at various levels. It is
important to consider the potential impact of the external factors on the individual
organisations (Johnson et al, 2006, P65).
PESTEL Analysis
PESTEL analysis is used to identify how future trends in the political, economical,
social, technological, environmental and legal environments might influence an
Industry and competitor analysis
The analysis on industry and competitor environment is important for organisations, because
it is useful for managers to understand the competitive forces acting on and between the
organisations in the same industry (Johnson et al., 2006, p77).
Porters Five Forces in the E-Retailing Industry
Porters Five Forces analysis is used to assess the attractiveness of different industries, and
therefore, it can help in illustrating the sources of competition in a particular industry
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Marketing Strategy of Amazon

Competitor Analysis
Given the scope of Amazon.coms product range, there are hundreds of websites that competes with. However, for the purpose of economies of scale, many online
retailers are either increasing product line breadth for existing markets, penetrating new
markets with existing products or both. In order to capture the competitiveness of such firms
within the online retail industry, strategic group analysis places emphasis on product line
breadth and geographic markets served (see figure below). From this perspective
remains a top player within the group with over 29 geographic locations and 22 product
categories. boasts of 7 geographic locations and 11 product categories.
Amazon.coms position intensifies the urgency to expand both product line breadth and
market presence in its competition with leader (Pitts and Lei, 2006).
E-Retailing: Strategic Group Analysis




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Global Internet Trends
Internet Usage
Show that the five countries with the highest internet usage are USA, China, Japan,
Germany and India. have a presence in all of these countries except for
India. This indicates a potential opportunity for

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Marketing Strategy of Amazon

Internet retail

Figure 6: Global internet retail sector value, 2002-2006

Source: Datamonitor [Accessed 27.02.08]
The graph above shows that the global Internet retail sector grew by 14.8% in 2006 to reach
a value of $747.6 billion.
Rest of the world 11.5%
United States 22.7%

Asia Pacific 20.7%

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GE Matrix
A GE Matrix has been used to identify the attractiveness and competitive position of the
markets that operates in, using the indictors as identified by Johnson et al
(2006, p320). As previously discussed, all markets are facing similar conditions, however
China and the USA appear the most attractive as they are the largest and most dynamic
markets. China and Canada have the weakest positions within their markets, suggesting that
investment is required for improvement. The other markets have strong positions within the

Internal Analysis
Internal analysis provides a useful method to establish the relationship between
Amazon.coms resources and capabilities (internal strengths), and how this is used to create
value for the customer. The internal analysis can also help to identify the limitations within
Amazon.coms operations (Johnson et al, 2006).

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The Value Chain
The value chain analysis undertaken examines the operational effectiveness of activities that
enable to perform better than its competitors; i.e. the distinctive value chain
activities that are difficult to imitate. Using the framework proposed by Amit and Zott (2001)
this analysis focuses on value creation and transaction cost economies; where configures its value chain activities to create unique value for customers,
reduce its costs of carrying out these activities and reduce the cost of its customers
transactions. The figure below indicates examples of how has created value and
reduced costs in its value chain activities.

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SWOT Analysis
Drawing from the internal and external Analysis, we can summarise Amazon.coms
strengths, weaknesses, opportunities and threats in the following SWOT Analysis. For a
more detailed SWOT see Appendix 4.
Global brand
Focus on research and development
Strategic location
Customer-centric vision
Diverse products
Applied advanced technology
Amazon.coms Merchant Program
Skilled workforce
Strong logistics

Growth in movie downloads
Social networking
Growth of online shopping in China
Beijing Olympics 2008
Expansion through acquisitions
Growing e-commerce sales
Growth in digital media
Increased consumer spending in India

No physical presence
Low profit margins
Low cash flows
Weak performance in China

Dependent on vendors
Strong competition
Patent infringement

Strategic Options
Strategic Option 1: Market Development - Acquire a growing, profitable e-retailing
company in India to take advantage of the growing market.
The PESTEL analysis reveals consumer spending is rising in India (Times Online,
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From the analysis of global internet trends India ranked as the fifth highest in Internet
usage (Internet World Stats, 2007)
Government policy has targeted three million broadband users, therefore increasing
consumers likeliness to shop online (Euromonitor, 2007)
From the strategic groups analysis competitors such as Wal-Mart and Tesco aim to
increase their geographic scope and thus may enter the Indian market (Research and
Markets, 2005). Therefore it is vital for to gain from first mover
advantage to establish its presence
The SWOT (Appendix 4) reveals that one of the strengths of is
the experience and knowledge in successful acquisition and integration such
as and and Brilliance Audio need to borrow to finance the acquisition, which may be
problematic as they are already highly geared at 68%
By acquiring an Indian e-commerce company they will also be acquiring the
local knowledge
Internet users are forecasted to increase 254% from 2006 to 2015, presenting a
growing market and, therefore reducing risk and increasing the potential of high
returns (Euromonitor, 2007).
Shareholders are more favourable towards long- term investments, such as this
strategy therefore there is a higher chance of acceptability (CEO Letter to
Shareholders, 2006 Annual Report, see Appendix 5)
By acquiring a company there is the risk of cultural conflict
Strategic Option 2: Service Development - Providing a greener delivery option.
Consumers will be given the choice of selecting the standard delivery option or the
greener delivery option. The green option means that the items will be delivered in a
biodegradable plastic container. The consumer will be encouraged to return the box after
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use in return for a green point. After collecting a certain amount of points, the consumer
will be sent an e-voucher to be spent at Boxes will be re-used by in future deliveries, which in the long-term will reduce cost of packaging and
ensure less wastage.
This strategy will address the issue of increased environmental awareness,
as highlighted in the PESTLE analysis.
This is an important issue for the e-retailing industry as all products need to
be sent to customers.
This strategy builds on Amazon.coms past efforts to maintain
environmental awareness as highlighted in the Resource Based View
Biodegradable plastic containers, whilst currently available, will require extensive
research by to ensure that all products can be transferred safely to
consumers. has an active research and development department which can
be utilised for this purpose. has highly experienced workers (as shown in
the Value Chain) who should be able to create and manage the new green points system
and e-vouchers.
There is a risk that the consumers will not return the boxes for re-use. The cost-benefit
mentioned above will therefore not be obtained. As society becomes more socially aware,
consumers will want to make a difference through their packaging choice. Governments
may take an interest in the greener initiative and may support in some
capacity. Value creation and the possibility of reduced costs should lead to increased returns
for shareholders.
Strategic Option 3: Product Development This option recommends the addition of
prescriptive contact lenses to Amazon.coms product range.

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Competitor analysis has identified that and offer this
service, so by choosing this strategy will be able to be competitive.
The US market for eyeglasses and contact lenses has grown by 3.8% since 2003 to
reach a value of US$19.2 billion in 2004 (see Figure 14)
An estimated 60% of the US population requires vision correction. This number is
expected to grow as more consumers spend more time working with computers
(Euromonitor, 2008).
The graph below shows the increase in contact lenses in the geographic regions
where has a presence.
Amazon.coms value activities (as explained in Value Chain Analysis) include successful cooperation and joint ventures with other companies. In the case of contact lenses a partnership
with healthcare professionals is important.
Sales of optometric products will increase customer choice in healthcare goods. The initial
investment for this option will be high, however, long-term profitability reduces the overall
financial risk associated.
Strategic Option 4: Market Penetration in China entered the Chinese e-commerce market in 2004 by taking over
(China IT & Telecom Report, 2007). However, as the GE matrix indicates, is
underperforming and has lost its position as market leader (Dean, The Wall Street Journal,
2006). In order to address this underperformance, the options below attempt to build a
stronger brand image and increase market share.



Market Goal

Extensive marketing through various

Raising awareness and

medium e.g. TV, outdoor, Press and

brand building


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Increase product range and suitability

Increasing market

through introducing the Merchant

share and sales



The PESTLE analysis reveals a high economic growth in China and high
consumer spending

Global internet trends shows that China has the second highest internet usage
in the world

In the GE matrix, China is the most attractive market for

Feasibility has the resources in skills, experience and knowledge to undertake
global operations successfully as demonstrated in the UK, German and Japanese
Market penetration into China will be less capital intensive than entering a new
market has successfully implemented the Merchant Program in the U.S.
Amazon.coms investments in China must be fully harnessed to exploit the market potentials
thus reduces financial risks

The Merchant Program will create value for the Chinese

consumers since it increases the chances of local merchants to sell specialised or local

Penetrating the Chinese market will have long term benefits which increases

shareholder value
Strategic Option 5: Market Development Setting up a sales facility via the social
networking website, Facebook. could develop a presence on Facebook to
boost digital media sales. This would involve teaming up with Facebook to create an
Amazon Application. Digital media such as films, mp3s and e-books would be sold via the
Amazon Application and purchased goods would be accessed through Facebook profiles.
The Amazon Application will allow users to create wish-lists that can be sent to friends
and family. Facebook is a global social networking site which is currently undergoing a
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huge period growth with more than 150,000 new users sign up daily (TIME Online,
2007); with 44% of US consumers using social networking at least once a month in 2008
(Publishers Weekly, 2008 p16).
This strategy will take advantage of the continued growth in social networking websites (as
shown in the PESTEL Analysis). Gain access to large customer base (Facebook has over 30
million active users) that can target This strategy will also help to increase
awareness and boost sales of digital media.

Feasibility already has the technology to sell digital media online. Facebook may not
allow to have a presence on the website.

This strategy should boost sales of digital media which will increase profits, therefore
pleasing the shareholders. Users of Facebook will be able to purchase digital media
whilst they are on the social networking website. This provides a quick and easy service
for the consumer.

Strategic Option 6: Market Development into Scandinavia

Scandinavia is made up of four countries, namely, Denmark, Finland, Norway and Sweden
with a combined population of 25 million (Euromonitor, 2008).
Suitability demonstrates a well functioning routine in outbound, operations
and inbound logistics as highlighted in the Value Chain Analysis earlier in this
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This option will attempt to address the lack of geographical scope in
comparison to its competitors
Exploit the internet and technological infrastructures and skills in Scandinavia
(Copenhagen Capacity, 2008)
Global internet trends (Figure 6) show that Europe has the largest internet retail
spend and a presence in Scandinavia will provide a significant brand presence
in Northern Europe

The four markets can be served by a single distribution centre in the region of Skne as
shown in Figure 16
The four airports, seven harbours and logistic expertise in Skane can be easily
exploited and integrated with the value chain activities of Modern
ICT and IT infrastructures to support services
Strategic Choice/Justification
Our evaluative criteria have identified three viable strategic options; Market Development
in China, Product Development (contact lenses), and Market Development through
Facebook. This report recommends that should focus on improving its
performance in China through market penetration. This can be justified by China being
one of the largest consumer markets in the world and has the potential to grow even
larger. Today 77% of urban Chinese households live on less than 25,000 RMB a year. It is
estimated that by 2025, this percentage will drop to 10% (Farrell, Gersch and Stevenson,
2006). This indicates that it would be wise to improve Amazon.coms performance in
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China now so that it can take advantage of this growth in years to come.
With regards to competition in China, the current market leader, Dangdang.coms 3 year
strategy of selling at the lowest prices (even if it resulted in a loss) was due to end in 2007.
(Infomaticsonline, 2007). Therefore, it is recommended that act now in order
to take advantage of this change of strategy. have already spent millions in gaining access to the Chinese market and so
we recommend that aim to improve performance here before investing
heavily in other foreign markets (China Business Feature, 2008). This justifies why we do
not recommend going to India or Scandinavia at this time.
According to a recent letter to shareholders (see Appendix 5), only invest in
areas which promise a significant return and impact on the overall company. With this in
mind, it is clear that China has the potential to give the largest return and have
a greater impact on the overall business compared to developing contact lens sales and
selling through Facebook.
From the PESTEL analysis constructed for China (See Appendix 6), can
highlight the environmental factors affecting the company performance in China and
identify the most important at the present time and the long term. The main issues affecting
Amazon.coms performance in China have been presented below:

Main problems identified:

1. Dangdang.coms strategy in overtaking as the market leader was
heavily influenced by price war (Sinocast, 2004).
2. lacks cultural awareness of the Chinese population (Dean, The Wall
Street Journal, 2006).
3. Chinas internet regulators have made it difficult for foreigners to participate
fully, giving local Chinese e-retailers an advantage from the offset (Dean, The
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Wall Street Journal, 2006)
Strategic Objectives
Regain the status as the market leader by increasing market share from its current
position of 16% to 24% within the next 2 years. Improve knowledge and cultural
awareness of the Chinese population, implementing services which best suits the
Chinese market. To secure at least ten merchants for the Merchant Program within the
first year
Final Remarks
1. The global-local dilemma theory relates to the extent to which products and services
may be standardised across national boundaries or need to be to be adapted to meet
the requirements of specific national markets (Johnson et al, 2006). This is a key area
which needs to be resolved by before the identified potential advantages
of operating in China can be fully realised; Amazon.coms strategy must be locally
2. lacks cultural awareness of the Chinese population (Dean, The Wall
Street Journal, 2006).
3. Chinas internet regulators have made it difficult for foreigners to participate fully,
giving local Chinese e-retailers an advantage from the offset (Dean, The Wall Street
Journal, 2006)
Strategic Objectives

Regain the status as the market leader by increasing market share from its
current position of 16% to 24% within the next 2 years.

Improve knowledge and cultural awareness of the Chinese population,

implementing services which best suits the Chinese market.

To secure at least ten merchants for the Merchant Program within the first year
Final Remarks

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The global-local dilemma theory relates to the extent to which products and services may be
standardised across national boundaries or need to be to be adapted to meet the requirements
of specific national markets (Johnson et al, 2006). This is a key area which needs to be
resolved by before the identified potential advantages of operating in China can
be fully realised; Amazon.coms strategy must be locally responsive.
3 Configuration
Configuration is a key factor in order to ensure the chosen strategies are
implemented smoothly and maintained (Johnson et al., 2006). Each of the elements
of configuration as illustrated in the diagram below, are discussed in the following
As firms go international, De Wit and Meyer (2005) argue that their strategies must
address two dimensions of the international business context. Should they configure their
structures, resources and processes in order: To adapt to the international diversity
encountered or To overcome the constraints imposed by distinct national systems,
structures or behaviours Considering the current challenges faced by in
China, such as tough market competition and price war with (SinoCast
China IT Watch, 2004), and unsuited banking and payment systems (China Business News
On-Line, 2004), it is important the market penetration strategy exploits internal expertise
in order to adapt to local challenges. Structuring of plays an important role
in the internal co-ordination of functions, responsibilities and lines of reporting so as to
achieve the competitive edge in the Chinese e-retailing market.
By analysing the dimensions of globalisation as argued by De Wit and Meyer (2005), it can
be argued that the notion of worldwide similarity and worldwide integration (p224) do not
provide the right framework for market penetration in China by These
notions purport globalisation as the reduction in variance (i.e. the products consumed by
Chinese consumers are similar to Western consumers) and as the integration of markets
(i.e. tastes and subtle differences of local markets are overshadowed by global
interconnectedness). The argument here is that Amazon.coms structure should reflect the
notion that globalisation is the geographical expansion into local markets with special
needs to be met. Thus the recent difficulties faced by can be better
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encountered by adapting structures to meet local needs of China. Bartlett and Ghoshal
(1989) proposed the integrated network (or Transnational) model to structure organisations
where country subsidiaries have close relationships with international headquarters but also
have strong relationships with other subsidiaries. The advantage of adopting
such a model is to:

Balance the need for global standards and devolved decision making

Balance local independence/responsiveness with global co-ordination

Enable large flow of information, people, resources and best practices

Enable shared strategic decision making between international headquarters and local

The diagram above is adapted from Bartlett and Ghoshal (1998) and illustrates the 4
structural models that emerge between local responsiveness and global co-ordination

In the diagram below, the bottom row refers to the level of local Managing Directors
who have expertise of the Chinese market and consumer tastes. The table shows what
kind of roles, responsibilities and reporting structures will have to support such a
model in a Chinese market penetration strategy.

Stakeholder Management
It is important to assess the expectations of different stakeholders and the extent to which
they are likely to seek influence over Amazon.coms strategies. To do this we have used
stakeholder mapping which will underline how interested each stakeholder group is to
emphasize its expectations on the specific strategy and also whether the stakeholder has
the power to do so (Johnson et al, 2006). The different stakeholders have been summarised
in the table below adapted from Johnson et al (2006):
It is important to have the shareholders full support in market penetration in China. The
Chinese market has the potential to yield long term investments. However, keeping
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shareholders well informed of the possible risks and the possible length of time before
any expectations of financial returns is very important. Such an action may reduce any
future conflicts that may arise, such as cash flow, pay levels and short term losses.
Chinese Government must comply to regulations and restrictions imposed by the Chinese
Government (Dean, The Wall Street Journal, 2006) such as promoting local e-retailers.
Chinese retailers in the Merchant Program
Keeping the Chinese retailers that participate in the Merchant Program satisfied is an
important part of making the penetration in China a success. When introducing the Merchant
Program, it is important that such activities with local retailers should meet the quality
standards of and make sure the brand reputation of is not
Financial Institutions is currently highly geared as shown through the financial analysis. In order to
implement strategies to penetrate into China, substantial investment will be required. If this
finance is not available internally, then external sources may have to be established,
therefore this gives financial institutions power to refuse finances or to impose higher
interest rates.
Customers must benefit from the Merchant Program through an integrated shopping
experience, and the marketing must effectively reach these Chinese customers. Customers
should be informed of all new plans in order to increase acceptance. It is important that attempt to increase their interest through various primary market researches
as this will give an indication of what the customers expectations are.
The strategy to penetrate in China will affect employees as work may be increased or
decreased through the Merchant Programme. It is important that all employees are kept well
informed of any new businesses, products and restructuring of the company. They will
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decrease any resistance to change that may occur. It is important to have the support of the
employees and if they feel neglected in the whole process then they may feel like their input
is not valid. If employees are well informed they may also be more accepting in receiving
lower bonuses due to the investment in the new strategy.
Local community
Although the local community may appear to have little power at the moment, this could
change if negativity and disagreement to strategies increase substantially creating a
stronger local force. should also encourage the local traders involved in the
Merchant Programme keep the local community informed of developments.
As the strategies do not involve any major changes to the distribution of products, this
department can be given minimum effort. The Chinese Postal Service and other private
delivery services are key stakeholders in this regard. Since both businesses complement each
other, little effort is needed. However, the sharing of logistical information for tracking goods
could greatly enhance this relationship.
Monitoring Success
Planning and control will be derived by a top down management approach. Each strategic
objective as identified in section 4.3 will be measured as follows.

Regain the status as the market leader by increasing

Industry analysis

market share from its current position of 16% to 24%

within the next 2 years.
Improve knowledge and cultural awareness of the

Market Research
Brand position

Chinese population, implementing services which best

suits the Chinese market.
To secure at least ten merchants for the Merchant
Program within the first year

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Critique of strategy
As identified in section 1.1, we have used the Design School model of formulation to
recommend market penetration in China. The Design School model approach is limiting in
the sense that it takes too general an approach to strategy formation (Mintzberg, 1990,
p181). This has benefited us as it has allowed us to formulate a strong and justified strategy
within the confines of the report. However, it has also meant that we have not been able to
take a more profound approach. Therefore we recommend that take into
account the following implementation issues:
Financial currently has a 68% gearing level. This may limit the amount they can spend
on the marketing strategy and the number of merchant traders on the Merchant Program.
The recommended strategy may require to increase its workforce in China
and re-align their HR strategy to accommodate this increase. Conflict may arise when
integrating the two cultures and structure.

Literature Review

Indigo (1997), in his study "Retailing the Internet &Employment, says that Three
models of retailing are emerging in this dynamic marketplace. There are the
exclusively 'bricks-and-mortar' stores on the one side and the exclusively Web-based
retailers on the other. In the middle are a growing number of hybrid companies that do
a combination of both. The Gap, one of the new hybrid versions, manages to blend the
online and offline distribution channels to make the most of the advantages
offered by each. Thus customers can buy clothes online and if they aren't happy
with the purchase, can take them to their nearest Physical store for exchange. The
store is even installing Web lounges in some of their flagship stores for customers to
browse at leisure and place orders. Some traditional retailers opt to acquire stores with
e-commerce expertise, rather than starting from scratch to build their own Web store.
Mergers and acquisitions are part of the dynamism of the retail marketplace at the
moment. Of course, downsizing and layoffs are a consequence of this process as well.
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Most of the big manufacturers, including Nike, have no wish to alienate the retailers,
and have sought to appease them by promising to refrain from selling at discounted
prices (they also wish to maintain the integrity of the particular brand name in
question so won't sell at cheaper prices).

Blake (1998), examined the relationship between people and technology needed to
gain access to the internet mainly through personal computers. The paper also
discussed the public opportunities for places such as access libraries. Stated that
number of people over 75 years of age was projected to be double by middle of next
century. While number of people of age 90 years and over would be tripled. This
makes the older generation a very important consumer in the near future. It also
showed some of the problems older people would face while using the and also
suggested some remedial net measures.

Coulson (1998), in the article "Impact of Internet on Retailing, says that e-commerce
serves as springboard for fundamentally changing the way companies interact with
customers. Customers' satisfaction in e-retailing rests on four key criteria, viz security,
simplicity, the quality if relationship consumer and internet retailer and follow other.
The study revealed that among those having websites, 84% use it, for advertising and
only 38% use it for selling.

Cyber Dialogue study, in 1998 some US $51 billion offline orders were influenced
by the Internet and this influence on consumer in-store spending was equivalent to
seven times the value of purchases paid for online. So, the good news for retailers
with virtual stores, and those contemplating the step, is that consumer spending online
is expected to increase by 80% yearly between now and 2003.

Forrester Research (1998) consumers and businesses will funnel total of $8 billion
through e-commerce sites this year. And in an October 1996 report, they predicted
that by year 2000, more than $546 billion will be spent online--and the organization.

IDE Canada (1998), the bad news for the Canadian retail industry is that more than
60% of online dollars are being spent outside the country, with the U.S. being the
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primary beneficiary. One of the main reasons for this is that only a quarter of top
retailers in Canada are telling online, compared to 50% of U.S retailers, leaving a
gaping void in the market. When Canadian consumers cannot find the product or
service they want on a Canadian web site, they turn to the better selection offered
south of the border, despite the unfavorable currency exchange rate and extra shipping
time involved. It is interesting to note that Amazon. Com is already the third most
popular bookseller in Canada, a testament to the growing popularity of online

International_ Data corporation, (1998), The Internet &

Employment, shows

online shopping growing at exponential rates in America with sales in the last six
months of 1998 increasing by some 200%. In the U.S. consumers purchased US$12. 4
billion worth goods on the Internet in 1998, as compared to US$4.15 billion the year
before. In Canada, e-shopping appears to be catching up, with half a million Canadian
households shopping online in 1998. , . Sales reached $ 690 million, up from $270
million in 1997 a156% increase. Projections of future Internet commerce vary
according to the source, with the IDC Canada estimating sales of $12.8 billion by
2003, some 4.6% of total retail spending in Canada. Organization for Economic
Cooperation and Development (OECD)8 (1998) predicts that, within the next five
years, as much as 15% of retail sales in the worlds industrialized countries will be
conducted over the Internet. According to them online presence offers some less
obvious opportunities for growing business. For example, research indicates than the
Internet is powerful driver of in-store sales, as many customers browse online to
access product information before committing themselves.

Pivec (1998) concluded in his study that the emergence of internet brings changes into
social, cultural and moral experience of people. This applies especially to teenagers
who are attracted to internet much more intensively than any other section of
population. Cyber cafes are fast becoming the favored meeting places and net surfing
the favorite past time. The study also brought out the internet use pattern among the
primary and secondary school students. It also indicates various purposes for which
the younger generation is using the internet.

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Dutta (1999), In the India FMCG business margins are as low as 10%. Hence eretailing in such areas might not catch on." According to A Literature Survey about
current issues in B2B commerce, The more efficient sales channel enables that the
customer can configure his own products, for example PC: s (Brown et al. 1999) .
This leads to many benefits. Selling is cheaper, because the need of sales personnel
decreases and the remaining persons can concentrate on such tasks that cant be
performed online. The customer generates orders and fewer mistakes take place.
Therefore customization need to take place as close to the customer as possible. One
solution is to do the customizing in the warehouse just before shipping. In PC industry
the customizing of, say, a new employee's PC may take place at the customers office
building, where there is a special configuration room. The final user gets a readily
configured PC with user data on his desk, and the delivery time is counted in hours.

Kai Kristensen and Hans Jorn JuhI (1999), in the article entitled,
Supermarket Customer Satisfaction- the Impact of Type and Ownership analyzed the
effect of the type and the ownership of the supermarket on customer satisfaction.
Concerning the type distinguish had been made between hypermarkets, standard
markets and discount markets with limited assortment. Regarding ownership
distinguish had been made between private and cooperative ownership. The analysis
was based upon app. 2300 interviews conducted in May! June 1999. The results
pointed out that the type of the supermarket had a significant effect on all exogenous
elements of the ECSI model (image, product and service), while the effect of
ownership was limited to image. It was found that product quality was lower in
discount supermarkets; on the other hand service was better in the standard
supermarket. In this study, the cooperative obtained a much lower score on image
than the private owned company in the hypermarket and to some degree in the
discount market. As consequence of these differences in image a significant
differences was found in customer satisfaction and loyalty in private stores and stores
owned by a cooperative. It was found that the private owned company achieved
higher success with the slogans stressing the store name and value for money in
satisfying its customers.

Dutta, KSA Consultants (2000) while answering to the question. Is shopping on the
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net really catching on in India? He says the Indian scenario is quite different from
west. With malls and departmental stores just springing up in India now, Indians are
just beginning to get a taste of things to come. Internet shopping is one such taste
which the Indians have begun to acquire. There are hurdles also, however. One, a
need for a critical mass this is vital for any successful project. In e-commerce Growth
will come not from well-designed websites or web marketing but from deeper
penetration of the internet. That is why a case has been made out increasing
broadband Internet for connections which are faster than the dial- up connections.
One estimate India a mere 20 lakh is that has Internet users, mostly concentrated in
the metros. Web analysts feel that in many areas of retailing and commerce, internet is
unlikely to garner a sizable slice of the market. And this could be very much true in
future especially in businesses where, margins are thin.

Study conducted by Indian Market Research Bureau (2000) studied awareness

levels and. Acceptance of internet especially in commercial transactions over the net
among, the average Indian households. The study showed that small portion of
Personal computers owners (26%) and non personal computer owners (15%) are
aware of e-commerce. Perception about the net is rich with it being identified as
source of information, communication, learning, and entertainment. Relatively few
amongst both the segments feel it to be a source of purchasing products and services.
The study further revealed that a high proportion of both PC owner (62%) and non-PC
owner (75%) said they would not like to buy over the net. The main reasons cited
were no surety of quality and delivery. Most of the respondents were ignorant of the
methods of buying and selling in a digital environment.

John B.Clark and Hojong Hwang (2000) in the article entitled, International
comparative Analysis of Customer Satisfaction with Discount Stores stressed on the
importance of international comparative study on customer satisfaction for the
multinational firms which entered or intend to enter in global retail market as well as
domestic firms which are already doing business in the market, to assess performance
and mapping retail strategy. They conducted a study to compare customer satisfaction
between 404 American discount stores and 414 Korean discount stores, with the
variables- helpfulness of sales person, friendliness, number of salespeople, politeness,
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store layout, ease in finding things, cleanliness, assortment of department, quality
level, merchandise selection, fashionableness, willing to exchange, fairness of
adjustment, credit and charge account, value for money, price level, special sales,
advertising, location, other store customers. According to the results of two multiple
regression analysis, the determinants variable to predict total customer satisfaction
were almost same in both countries. The main motivation to visit discount store
channel laid on the low price and convenience of location as the meaning of discount
stores implied. Service factor was relatively less important than merchandise factor.
Customers were mainly affected by merchandise value and location and
advertisement factor. It was suggested that a greater insight into these factors would
help retailers in developing appropriate marketing strategy.

According to consultants KSA, (2000), easier and faster shopping are the reasons for
shopping on the Net. In answering to the question how, he further adds, when you go
to a brick-and-mortar who could offer you 10, 000 items in his store. Chances are
there that he might be 10% out of stock. On the other hand, the internet offers millions
of products with no chance of an out of stock situation. And comfortably obtained
information is another advantage that shopping on the net offers. On the internet,
production information is just a few clicks away, all accessed in the comfort of home.
In other words we can say that, shopping on the internet for, say 15 minutes could
save a two hour trip to the mall. Consumers prefer to save this time so that they can
devote more time for their professional and domestic priorities

Sharma (2000) presents the estimates and forecasts of internet/intranet market in

India in the light of changing regulatory environment. Internet usage by Indian users
is also discussed. The study revealed that average Indian user shows a heavy reliance
on the search engines, particularly Yahoo. Com (89%). The study also showed that
Indian consumers were reluctant to buy over the net. The main fear being the misuse
of the credit card and no surety of the quality of the product. There was seen a marked
ignorance about modes of payment in a digital environment.

Viraj Sayan (2000), Pains and Pleasures of e-retailing, says Retailing is coming of
age in India. We have not seen large retailers in India until now. E-tailing offers
tremendous advantages and transfers these advantages to the consumer. He says if
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Marketing Strategy of Amazon

financial services and travel services were to be included, the e-tail market would be a
huge one. Various forecasts by research agencies estimate that the e-tail market is
$180 million large in South and South East Asia. As far as INDIA is concerned, the etail market should be anywhere near $10 million. KG: The greatest growth in e-tailing
will come from class B and class C Indian towns. My gut feeling is that 10 per cent of
the Indian population would buy at least once on the Net by 2001'. The internet is
going to spread like wildfire in our rural and semi-urban areas. One estimate is that
there would be as much as four million Internet connections by 2001. KV: The e-tail
market should be anywhere close to Rs 75 to Rs 100 crore. However, the rate of
growth will be substantially higher. This is because when PC-penetration increases,
the rate of growth will accelerate. During the next five years, the e-tail market will
increase ten times every year. Mahesh prashantin "E-tailing THE Future, says ETailing is emerging as an attractive alternative to the traditional brick-and-mortar
retailing. Chances are there they will co-exist profitably. Even as loose ends of
retailing plans are being tied up, e-tailing has begun catching the attention of many
entrepreneurs. As the new sensation unfolds, it should be understood that retailing is
serious business. Due to popularity of the Internet, e-tailing is assuming greater
significance. It also examined that a number of products and services are on e- tail
offer and novel plans are being worked out by many e-tailors. Consider
for instance. One estimate by consultants KSA Technopak (2000), says that the
organized retailing sector should be as large as Rs 5,000 crore and e-tailing in India
should be just about Rs 12 crore.

K Vaitheeswaranvice president (marketing) of the Bangalore-based Fabmart that the

growth potential for both retailing and e-tailing is tremendous in India. He also
explains the difference in conducting business through retailing and e-retailing. A
retailer is restricted to particular location, retailing is location-driven. But, an e-tailer
can go global. Being local in nature, a brick and mortar retailer has to identify a good
location for his goods and wait for customers. On the other hand, an e-tailor has to
virtually attract a customer to his site and offer him exemplary services. He also
explains the benefits of starting an e-retailer shop over a retailer shop. According to
Ghose and Vaitheeswaran price reduction and the convenience in purchasing are
among the reasons of making any purchase through internet.

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Vaitbeeswaran (2000), in article Pains & Pleasure of e-tailing says that both
retailing and e-tailing will continue to co-exist for quite sometime to come. We dont
see e-tailing as complete alternative to physical shopping. Clearly, both co-exist. What
will happen is this: people buying on the Net will start increasing slowly. Quickly
after some time, there would be an exponential jump with people realizing that this
medium definitely offers significant convenience. For need- based products, the Net is
becoming a very convenient way of buying. We strongly believe e-tailing will expand
the market in the case of impulse-based products such as books and music. The Net
offers consumers an opportunity to buy irrespective of where they are. This will
clearly expand the market.

Krishna, Aradhna and Harlam (2001), in the article entitled, The manufacturerretailer-consumer triad: Differing perceptions regarding price promotion explored that
the effectiveness of any promotional strategy depends, in part, on how accurately
channel members predict consumers perceptions of their promotional activity. In this
article they examined manufacturers and retailers beliefs about consumers (and
each others) perceptions of sales promotions and assess the accuracy of these
predictions. They found that retailers and manufacturers might hold similar but
inaccurate views of consumers industrial knowledge. Manufacturers and retailers
consistently underestimated the level of consumers knowledge. Specifically, for
consumer attribution about the financing of and sources of promotions, channel
members overestimated consumers reliance upon simple, causal attribution cues such
as the location of the promotion. For knowledge of store and generic brands,
manufacturers and retailers were inaccurate in predicting consumers beliefs. The
similarity of supplier and retailer knowledge bodes well for channel efficiency, yet
limitation in their understanding of consumer knowledge about promotions might lead
to weakness in channel marketing strategies. It was suggested that to improve the
effectiveness of promotional strategies, channel members should try to gather accurate
data about consumer industrial knowledge.

Binta Abubakar and Val CIulow (2002) explained, in the article entitled, Customer
Satisfaction with Supermarket Retail Shopping that for supermarket retailers wanting
to build relationship with their customers, being able to track their level of satisfaction
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Marketing Strategy of Amazon

with key elements of the supermarket environment is extremely important. They
conducted a study to investigate the customer rating of importance of several
attributes associated with supermarket shopping. Analysis was based on data,
collected from 800 customers and by using exploratory factor analysis. Findings
revealed that since retail format had become very standardized, corporate reputation
was rated high and might be a source of sustainable competitive advantage.
Accessibility, quality of service especially the friendliness and efficiency of checkout
personnel was considered important. It was found that large self service retail chains
could not ignore the importance placed by customers on the attribute of service

Wilson and Alan (2002), in the article entitled, Attitudes towards customer
satisfaction measurement in the retail sector highlighted that customer satisfaction
measurement had seen a dramatic growth over the past few years. Many service
companies spend as much as half of their research budget on the measurement of
satisfaction. However, there had been criticism in a number of the marketing and
management press. Following criticism of customer satisfaction measurement in the
literature, this article investigated the corporate attitudes towards customer
satisfaction measurement. The findings based on a survey undertaken with marketing
managers in 86 large (more then 25 outlets) UK retail and retail service organizations,
indicated that retail and retail service organization were generally aware of the need to
support customer satisfaction measurement with a matrix of other measures. No single
elements could provide managers with clear indication of overall performance and
report on critical areas of service delivery. The findings demonstrated the variety of
performance indicators including mystery shopping scores, staff surveys, operational
measurers, and sales data and so on, were used by the organization to measure the

Kerrie Bridson and Melissa Hickman (2003), in the article entitled, Loyalty
Program Attributes and Their Influence on Retail Customer Satisfaction stressed that
in an increasing competitive environment retailers are continually striving to find
ways in which to attract and retain customers. As such, loyalty programs have
proliferated in the retail market. They introduced two dimensions of loyalty program
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attributed -hard attributes and soft attributes. Hard attributes were constituted by
tangible elements- gifts vouchers and free items. By contrast, soft attributes were
perceived to give consumers a sense of recognition and include such things as
personalized communication, a preferential treatment. The results of multiple
regression demonstrated that emphasis on hard and soft attribution enhanced customer
satisfaction with retailers merchandise, trading format, customer service and
customer communication. Additionally, hard attribution had a more significant
influence than soft attribution on satisfaction with all elements of the retail offer
excluding merchandise. This study provided support for the inclusion of both hard
and soft attributes in loyalty programs as they differ in their association with store

Faye S. Mcintyre and Daniel F. Lynch (2003) in the article entitled, An

Exploratory Examination of Gender Bias and Customer Satisfaction in the Retail
Sector suggested that inequities in customer treatment could affect attitudes towards
the selling firm and overall satisfaction, leading to loss of customer base and lower
profitability. According to them a greater understanding of gender bias and some of its
underlying causes in the salesperson/customer relationship could lead to an increase
in the efficiency and productivity (and therefore, profitability) of daily retail
operations. Based on ANOVA test, findings of this study confirmed that significant
difference in the determinants of customer satisfaction exist between male and female
buyers. Wait time and salespersons product knowledge were both significant
determinants of customer satisfaction for women, but were not significant for men. It
was suggested that understanding of these differences enabled the retailer in
developing the marketing strategies to satisfy both male and female customers.

Deneen (2005) author remarked that customized retailing has evolved beyond
breaking a retailers store base into a few store types and suggested that the retailers
must find ways to appeal to specific market segments. Their product mix must be
relevant to the local climate and culture besides pricing. The retailers are shifting from
mass marketing to target specific groups of consumers and becoming innovative

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Gester (2005)author highlighted new culture of retailing coming up in India as

decade ago vast majority of retail comprised of small family run shops. The bulk of
consumer expenditures used to be on necessities like food and clothing and foreign
investment was not welcomed in the retail sector. The author gives a new picture of
retailing in India which is changing at an unfathomable pace especially from the point
of view of customers and retailers.

Gladwell( 2005) concluded that even though retailers seems to know more than ever
about how shoppers behave, even though their efforts at intelligence gathering have
rarely seemed more intrusive and more formidable, the retail business remain in crisis.
The reason is that shoppers are a moving target. They become more and more
complicated, and the retailers need top know more and more about them supply to
keep pace.

Huang & Feng (2005), In Taiwan, the e-commerce with the logistics system of
convenience stores has a new retail delivery model: On-line shopping in an
electronic store and pick-up goods in a convenience store. The major purpose of this
study is to examine what kind of improved services strategies can capture more
market share and customer loyalty for the convenience stores. The results indicate that
the short-term promotion strategies do significantly affect the consumers choice
behavior on the pick-up point; however this is weak in the long term because of
customer loyalty.

Shroff ( 2005) remarked that few successful international ideas of modern retailing
have failed in India and the issues in failure are store location, traffic and parking,
mall width, customer facilities, convenience and innovation, clustering, landscape ,
lighting , exterior design, special features, investment and returns. The author also
remarked that there are some challenges on front for India such as local traditions,
FDI constraints, Strict govt policies, whether protection, family entertainment, land
constraints, etc besides some of significant opportunities: Increase in spending power,
more people in the age group of 15-25, emergence of middle class, and willingness to
enjoy international brand merchandise.

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Singh & Chowdhary (2005) concluded in their study that customer retention is the
bottom line of corporate profitability and value in retail sector. As per the study it
makes more business sense in investing in building loyalty rather than trying to woo
new patterns. The study stressed more on the maintaining loyal base of customers in
retailing. The study also suggested that it is necessary to first understand what
shoppers are looking for, what motivate them to make purchases, and what drive them
to shop at particular store besides understanding the types of shoppers who visit stores
frequently and what they represent in terms of your overall sales volume.

Singh & Dutta (2005) remarked that the retailer must follow one point strategydifferentiate or die and that level of differentiation can be achieved through strong
relationship building with the customers and making them feel familiar , comfortable
and beneficial. They further added that a service is another factor which adds value to
the retailing. It never means good or great services it is actually better than one could
ever imagine. They also pointed out that small retailer might have only one or two
retail outlets as compared to large retailer having many stores, but small retailer must
think hard about why a customer should visit their retail store. Remember that biggest
retailer in the world was once a small with one store ac cross the street from the larger
retailers in the market.

Singh ( 2005) have quoted ten secrets to successful mall operations listed as
Planning, branding, marketing, promotion, leasing, maintenance, security, hospitality,
and report keeping. It was also mentioned in the article that global retail giants have
learnt to deal with cultural and political obstacles but India has to have India specific
way to come up with high standards retailing. It was also discussed India can not
follow Wal Mart and Tesco business pattern as the applicability of such models in
Indian environment is little difficult.

Subhashini Kaul (2005), in the article entitled, Measuring Retail Service

Quality Examining Applicability of International Research Perspectives in India
explained that consumers satisfied with the stores service quality are most likely to
remain loyal. Service quality is being increasingly perceived as a tool to increase
value for the consumer; as a means of positioning in a competitive environment, to
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ensure consumer satisfaction, retention and patronage. Despite its strategic
importance, Indian retailers do not have an appropriate instrument to measure service
quality. This study examined the Retail Service Quality Scale (RSQS) developed in
the U.S. for applicability to Indian retail. This scale had been found appropriated in a
variety of settings across different countries such as South Africa and Singapore
and across a variety of store types such as supermarkets, department stores and hyper
stores. The data collected from 144 adult shoppers at large format apparel stores in the
city of Bangalore indicated that the RSQS could be used to assess overall service
quality levels and for tracking overall improvements over a period of time. However,
the different dimensions of service quality were not clearly identifiable. This limited
the diagnostic application of the RSQS. Consequently, retailers might found the
RSQS a poor instrument to help them identify strategic areas requiring focus to
improve overall service levels. Investment in further research to modify the RSQS for
application in India was recommended.

Taneja (2005) concluded that there is rapid series of change in the Retail environment
and the Indian consumer is caught in the wind of change. With the evolvement of
middle class and the retail sector, the needs of modern consumer have changed and
the consumers are exposed to new kind of shopping experience and services. The
paper has introduced a few success parameters in positioning, product, image and
marketing and CRM. The parameters includes patience, compromise, adaptability,
International product portfolio, International Image, customer intimacy, sense of
belonging ness to name a few.

Cadenat & Amine ( 2006) in their study concluded that customers perceptions of the
assortment range stems from the combination of few indicators, mainly number of
stock keeping units proposed and availability of favorite brands. They also concluded
that consumers overall evaluation of retail store depends largely on perceived choice
with in the product categories where they are highly sensitive to the assortment range.

D'Andrea & Ring et al (2006) in their study concluded that rather than emphasizing
their limited income, emerging consumers as a group represent a sizable market for
consumer products. But they should not be addressed as a single group: peculiarities
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among them underline the need for further segmentation, as in higher income
segments. Their needs should be better defined as basic instead of just simple, and
they do not just go for the lowest prices or second brands, as they have marked
preferences that characterize them. This also reflects in their shopping habits, which
partly explains the resilience of the traditional/small format retailers.

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Area of Study







which is nowhere

behind. A PLACE full of crowd with mostly SINDHI COMMUNITY and other communities
too. A PLACE where doing business is in the BLOOD of people living here.

being called as BUSINESS HUB, divided in five camps , nearby

ambernath and kalyan.

Ulhasnagar, which is once a military camp area for Sindhi refugees migrated from
Pakistan, is now heavily populated with this community people. The city is also known as
Sindhunagarand it is very famous from economic aspect. Ulhasnagar is a very good business

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Marketing Strategy of Amazon

centre not only in Thane district, but also in Maharashtra State. It is a city located on the coast
of West India, which is nearly 60 kilometers northeast of the city of Mumbai.
Birla temple, furniture market, gajanand market, jeans market, Century rayon factory, shiv
mandiretc are the important places in Ulhasnagar.
Brief description:
Ulhasnagar-1 (W): It is also known as Ulhasnagar camp-1 and it is located on the west side
of railway stations. The main center here is a market with famous landmarks like Goal
maindan where many people visit from nearby areas like kalyan, ambernath, badalpur,
dombivili, thane, titvalaetc for shopping.
Ulhasnagar-2 (W): The other name of this place is Ulhasnagar Camp-2. It is a market with
popular landmarks like Gajanand market and it is famous for clothing, electrical and
electronics etc. Nehru Chowk is the main centre here.
Ulhasnagar-3 (W): it has another name as Ulhasnagar Camp-3. It is mainly a market and it is
located on the west side of railway stations. The famous landmarks here are furniture bazaar,
RKT College, Sapna theatre, Ashok-Anil Multiplex etc. it is mainly a furniture and
electronics market.
Ulhasnagar 5 (E): This locality, which is also known as Ulhasnagar Camp-5, is located on
the eastern side of railway stations and it is mainly a residential area. You can see several jean
making small scale industries here. JhulelalMandir, Swami Sarvanand School, Swami
ShantiprakashChowk, Nethaji Garden, etc are the famous landmarks here. This locality is
heavily populated with Sindhi community people.
Originally, known as Kalyan Military transit camp (or Kalyan Camp), Ulhasnagar was set
up especially to accommodate 6,000 soldiers and 30,000 others during World War
II.Sindhis, in particular, began life anew in the new land.The area was converted into a
township in 1949, and named Ulhasnagar by the then Governor-general of India, C.
Rajagopalachari(literally 'city of joy'; ulhas= joy; nagar= city). On August 8, 1949 the first
and last Governor-General of India, C. Rajagopalachari, laid the foundation stone.
As said earlier, ULHANAGAR is a place which is nowhere left behind because each and
everything is available here, as it is good in providing services like EDUCATION,

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The city has colleges and an industrial-training institute like institute of technology, Holy
family Convent High School, New English (at camp no.5), SSTCollege of Arts and
Commerce etc. Smt. ChandibaiHimatmalMansukhanicollege and R. K. Talreja are two major

Ulhasnagar, one of the busiest business centers in Maharashtra, has several jewellery
showrooms. Some of the popular jewellery showrooms in the city are listed here.
We can watch the gradual development of Ulhasnagar to a shopping hub and business centre
from a military camp area in the pre-independence era only with wonder. Sindhis, who
migrated to this land from Pakistan, has significant role in the growth of Ulhasnagar in the
business field. Even though they came to the city with minimal resources, now most of the
small and big shops in Ulhasnagar are under owned by them. It is nothing else but their hard
work and talent that made them able to develop this city to a mini-Japan during the last five


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Marketing Strategy of Amazon

Ulhasnagar, which is the most popular industrial and commercial township of Thane district,
is famous for shops of wedding costumes, jeans and other readymade garments. Sindhi
people, who live other parts of India such as Gujarat, Goa and Madhya Pradesh, visit
Ulhasnagar to do their wedding purchase. There are many shops, which are exclusively aimed
for wedding costumes The city is also famous for jeans manufacturing. Jeans and ready made
garments manufactures at Ulhasnagar 5 are sold in all markets of the country. Many popular
jeans brand have factories in Ulhasnagar.
The most busy commercial and shopping center here are Ulhasnagar 2 & 3. Tourist
Attractions in Ulhasnagar:

There are several tourist attractions in Ulhasnagar including beautiful locations, religious
places and historical monuments etc. Some of the famous temples in Ulhasnagar including
Chaliho Sahib, Birla Mandir, haji Malang, Jhulelal Temple, Saint SatramDham and
Swami Shanti Prakash Temple etc.
Ulhasnagar City Census:

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Marketing Strategy of Amazon

Ulhasnagar City












Children (0-6)




Average Literacy (%)




Ulhasnagar and asset allocation: But each and every person who is earning by way of
business in the form of profits or by doing jobs in the form of salary is having some sort of
stress about their earnings as FUTURE IS NOWHERE SAFE.
As it is rightly said by ABRAHM LINCOLN about the future that the best thing about
future is that it comes only one day at the time. And that day can be the day of your utmost
requirements- can be in the form of liquidity. Any thing can happen in future. Now a days
people are almost aware about the unforeseen things happening in future. So many people
have started thinking about future and have started investing in different areas, to control or
minimize risk associated with future.
Many people invest in stock, bonds, equities, banks, mutual funds, gold diversify risk. I
just want to know that how many people in Ulhasnagar are aware about their future and how
they are diversifying risk.
People not only invest in different kind of securities to save their future, which is about to
come. But the main reason to invest in different avenues is to get maximum rewards in terms
of profit.
As by investing in different avenues there is less risk, because if the poor performance of
anyone avenue will not affect much, because the profit is about to come from other
investments too.
If we look at the history of Ulhasnagar, where approximately twelve to fifteen years back,
people here were only business oriented and most of the population of woman were living at
homes as housewives. But slowly and gradually everything got change and the process of
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Marketing Strategy of Amazon

change is still ongoing. Simply everything is getting modernized. The narrow thinking of
people is getting broadened, girls, woman are also indulged in doing jobs along with
managing their household work.
As everything is getting modernized, but beside this people of Ulhasnagar never forget their
culture , here every festival is celebrated with great joy. As Ulhasnagar is a business hub, but
along with this, it is a culture-oriented place.
Coming towards asset allocation of Ulhasnagar people - If we take business oriented people
as investors, the main reason of their investment in different kind of securities is to get
maximum rewards in terms of profit.
On the other hand, if we consider salaried people as investors, the main reason of their
investment in different kind of securities is to overcome the risk associated with future and to
a certain extent profit earnings too.
From the above study on area, it could be understood that people of Ulhasnagar lives a luxury
life, of course not all, but most of them. There consumption pattern and buying behaviour
towards various brands of products is much different as compared to other customers because
of their standard of living. People of the town are very easily attracted towards the brands
which are endorsed by the celebrities. Considering the lifestyles and choices of people and
their preference, pesent study seems to fit with the town of Ulhasnagar.

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