This essay will discuss the brand community issues that are arising as an impact of the emerging prominence of the ecommerce sites of Amazon, Alibaba and so on. As an impact, the big brands are losing control over their base of loyal customers. Other than that, the big brands are also losing their business in the physical stores as an emergence of the ecommerce sites. The ways in which the brand marketing strategy have been implemented by the ecommerce sites and basically the impact of the emergence of the ecommerce enterprises on the major brands would be discussed herein.
In order to highlight the issue that is changing the ways of brand governance in today’s world, the Brand Community Model can be highlighted. The general polity of Brand Governance forbids that there should be a consistency in the presentation of the brands and it also requires that the brands should properly execute their marketing guidelines. The recent business patterns of the global ecommerce business and the emerging giants like Amazon are challenging the adaptive agility of the major retail business brands. As Al?imam et al. (2017), the emergence of the business of the ecommerce brands are showing that the people are now influencing the brands to develop a marketing strategy rather than the brands in turn manipulating their target customers.
In the changed context, another potential marketing theory, namely the Theory of Reasoned Action can be highlighted. This theory reflects that marketing behaviours of the big product brands mainly depend on the attitudes and purchasing behaviour of the customers of a certain demographic base. The decision of an individual customer to engage in a purchasing behaviour depends on the individual expectations out of practising the purchasing trend (Wang, 2012). Here in comes the sway of the business model of the Amazon Inc. company.
Before its market entry, the individual product brands could emphasise a lot of influence on the purchasing behaviour of the customers.
In the physical stores, the customers did not have the access to all the brands and the product specifications including the benefits and the disadvantages of each of the products. That is why they feel that the most feasible products pertain to the most discussed brands that at customers. The shoppers are now picking the items based on the process rather than the brand name. Now they are understanding that they can analyse the other parameters before buying the product. An example can be provided. A person who had the intension of purchasing a shirt of Levi Strauss realises after searching the product on the Amazon application that another product with the same fabric quality and texture exists. However the brand fame of the product is only low. Here the major difference they are observing is that the price of the same shirt pertaining to the other brand is priced at USD $10 to $12 lesser (Borsenberger, 2015). As an outcome they are gradually subsiding their brand loyalty.
As an outcome of this, the product sales in the physical stores is also getting hampered. Customers in the physical retail stores are looking for an alternative product line. In fact, Lu, Zhao and Wang (2010), states that the market performance of Amazon AMZN, +5.28% as well as Wal-Mart Stores Inc. WMT, +0.05%, are now pushing deeper in to the categories of packaged goods also. AS the product brands are observing that they product marketing and brand marketing are not able to entice the customers, they are now forced to move away from their original business models.
As, Hsu Westland and Chiang (2015), states, previously, the companies concentrated 20 to 25% of their operational budget on the marketing activities. Now, instead of attempting to occupy the prime spot in the store shelves, the product brands are emphasising on protecting their bottom line. In assessing the impact of the shift in purchasing trends of the customers, the condition of the customer brands like Nestle and General Mills can be highlighted. These two companies are attempting to sell their US based confectionery business to the local companies. This shows that operating in the American market, the two companies could not afford operating on the bottom line of sales. In this context, the words of the Operating Manager of Nestle can be highlighted:
“We don’t know where the bottom is, but it’s not looking good,”
The case of other important ecommerce sites like Alibaba can also be highlighted. The basic factors that has helped the company to emerge as a global brand is their capacity to think of a global business domain from the start. Founder of Alibaba Jack Ma had already noticed that the internal scope of business expansion in the Chinese territory is very less (Lee & TEO, 2015). There are three global level companies of China namely Huawei, Xiaomi and Haier. However, in spite of the finesse of their product quality, the companies have not been able to emerge in the global market. This is another proof that high brand equity is not the weapon that the companies can use to achieve success outside a selective domain. After the company made an initial public offering of USD $25 billion in New York, there are native Chinese companies that are willing to tie up with Alibaba to spread their business domain.
The primary issues that the major product brands have realised that:
Alibaba have such a big business domain that maximum foreign customers (B2B or B2C) are always purchasing something or other from any of the platforms of the company and as an outcome the market share of the company is always on the rise.
The third leader of global ecommerce business is eBay. The fact that global ecommerce retailers need to be high on the agility index, is evident from the business strategies of eBay in the Australian market. Since the announcement of the market entry of Amazon in the Australian market, the strategic war to develop brand loyalty has started. EBay has launched a major campaign in order to celebrate the major shopping trends of the Australians (Donald, 2014). In doing so, the company have made a subtle publicity of the role of the company in the retail market of Australia. The company has helped 40000 small product brands to capture the Australian market (Huston, 2017). This has caused ample amount of competition within the big product brands of Australia. The following marketing framework can be used to demonstrate the shift in the demand trends of the customers around the globe. The paradigm of the qualities in the retailers or the companies that sells the products that entices customer loyalty are as follows:
The Paradigm of the Customer’s behaviour framework
(Source: Long, 2017)
The 4Ps of Marketing can also be applied in order to make a descriptive analysis of the marketing position of the big brands in the market.
|
TARGET AUDIENCE |
PRODUCT |
PRICE |
PLACE |
PROMOTION |
|
Primary |
Tangible product, service, or desired behavior. How will you ‘position’ or modify it to make it more appealing to the target audience? |
‘Costs’ associated with the product, service, or behavior. What will you do to lower exit costs and reward/reinforce the new behavior? |
Where the audience performs the desired behavior. How will you make this place more appealing or accessible? |
Outline key messages and communication channels as part of a CREATIVE BRIEF before you develop CREATIVE CONCEPTS. |
|
The Customers of different demography |
Packaged goods |
Highly Variable and suits customers of all standards |
The Online Market place |
The boost of promotions through discount carnivals and other events like the event organised by eBay in Australia |
|
The customers of the Foreign markets |
Utility products and products of high brand value |
Comparatively less by 15 to 20% than physical retail market |
The online applications like Amazon, eBay and Alibaba |
Offering a product range of more than 480 million products in USA alone (by Amazon) and almost similar in the other markets also |
|
Secondary |
||||
|
The customers who are loyal purchasers of the physical retail stores |
Similar products as that of the physical stores along with a lot of variation of prices in the same product line |
Price is almost similar in this case |
The online applications like Amazon, eBay and Alibaba |
Offers products at prices much lower than the brands that are available in the physical stores |
|
Customers of other ecommerce stores |
Larger number of brands |
Price is almost similar in this case |
The online applications like Amazon, eBay and Alibaba |
Widest Products range |
The Marketing Mix (4 P’S) Stragtegic Planning Tool
(Source: Manning, 2018)
Conclusion
The companies like Amazon have emerged as the most accepted retail market in major markets like America and Europe. The customers are enticed by the innumerable number of choice against a single product line that is available in the market. The brand loyalty of customers against the big brands have also reduced due to the emergence of the ecommerce sites. Even established brands in the domestic markets are seeking resort of the ecommerce giants for capturing the business market. Besides that, the amount of product diversification and customer segmentation that have been established in the global market by these companies have forced many big product companies to operate in bottom line also.
Reference List
Al?imam, A., Santacroce, R., Roman?Urrestarazu, A., Chilcott, R., Bersani, G., Martinotti, G., & Corazza, O. (2017). Captagon: use and trade in the Middle East. Human Psychopharmacology: Clinical and Experimental, 32(3), e2548. Retrieved on 27th November 2018. Retrieved from https://onlinelibrary.wiley.com/doi/pdf/10.1002/hup.2548
Borsenberger, C. (2015). The concentration phenomenon in e-commerce. In Postal and delivery innovation in the digital economy (pp. 31-41). Springer, Cham. Retrieved on 27th November 2018. Retrieved from https://link.springer.com/chapter/10.1007/978-3-319-12874-0_3
Donald, A, (2014). Branding Lessons from China’s Alibaba. (Online). Retrieved on 27th November 2018. Retrieved from https://adage.com/article/global-news/alibaba-teach-chinese-brands/295115/
Hsu, C. L., Westland, J. C., & Chiang, C. H. (2015). Electronic Commerce Research in seven maps. Electronic Commerce Research, 15(2), 147-158. Retrieved on 27th November 2018. Retrieved from https://link.springer.com/article/10.1007/s10660-015-9181-8
Huston, C, (2017). Amazon is taking away the power of brand names, throwing another industry into turmoil. Market Watch. (Online).Retrieved on 27th November 2018. Retrieved from https://www.marketwatch.com/story/amazon-is-taking-away-the-power-of-brand-names-throwing-another-industry-into-turmoil-2017-07-10
Lee, D. K. C., & TEO, G. S. Z. J. (2015). Emergence of FinTech and the LASIC principles. Journal of Financial Perspectives, 3(3), 1. Retrieved on 27th November 2018. Retrieved from https://ink.library.smu.edu.sg/cgi/viewcontent.cgi?article=6071&context=lkcsb_research
Long, D, (2017). eBay Australia launches major brand campaign as it readies for Amazon arrival. thedrum.com. (Online). Retrieved on 27th November 2018. Retrieved from https://www.thedrum.com/news/2017/09/04/ebay-australia-launches-major-brand-campaign-it-readies-amazon-arrival
Lu, Y., Zhao, L., & Wang, B. (2010). From virtual community members to C2C e-commerce buyers: Trust in virtual communities and its effect on consumers’ purchase intention. Electronic Commerce Research and Applications, 9(4), 346-360. Retrieved on 27th November 2018. Retrieved from https://www.sciencedirect.com/science/article/pii/S1567422309000404
Manning, B, (2018). Amazon.com’s Integrated Marketing Communications. Medium.com. Retrieved on 27th November 2018. Retrieved from https://medium.com/@michaelangelo_q/amazon-coms-integrated-marketing-communications-901a6a2a77ef
Wang, X. (2012). Foreign direct investment and innovation in China’s e-commerce sector. Journal of Asian Economics, 23(3), 288-301. Retrieved on 27th November 2018. Retrieved from https://www.sciencedirect.com/science/article/pii/S1049007810001065
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