Question:
Discuss about the Global Marketing of Amazon.
This report is about the global marketing of Amazon. Amazon is one of the undisputed leaders in the online retail store. Global marketing takes place when managers of marketing department use a global plan to successfully market their goods and services on a worldwide basis. Only 10% manufacturing organization in the U.S. take part in actually exporting their products. There is a huge chance for any U.S. corporation looking to partake in global marketing. (Lombardo, 2017). It is helpful to increase the sale and reach of your product. Global marketing provides the facility to known the product globally. Amazon is US based company. It is an online retail store, where customer gets opportunities to buy the product through Amazon website and can choose from the various products. Amazon will deliver the product (Paliwoda, et. al., 2013).
However, Amazon is not the first company in E-commerce but they have capitalized their resources very well and having the huge satisfying customer base. The report focus on the objectives of the Amazon because mission of the Amazon is to maximize their satisfied customer base and that will help to reach their vision. The report also discusses about the various strategies used by the Amazon to enter into the Australia market. It the last, report focuses on the market entry mode and STP respectively.
Mission Statement
Amazon’s mission statement is as follows: “We strive to offer our customers the lowest possible prices, the best available selection, and the utmost convenience.” The mission statement of the company states that company’s prime objective is to provide customer the best lowest price in comparison to others and company offers the best available selection and at last, the utmost convenience (Babnik, et. al., 2014).
It determines the company direction = business owners utilize this declaration to remind their team members why their business exists because this is what creates the business victorious.
It focuses the company’s future = mission statement gives guidance to the company and plans accordingly to achieve mission, which will be helpful in achieving the vision of the company.
It offers a pattern for decision-making = a clear mission statement gives managers to take decisions accordingly to implement the mission successfully (Babnik, et. al., 2014).
A company plan cannot live without objectives much in the same way as the company itself cannot survive without knowing its purpose or intention. Actions and strategies are dictated by company objectives this makes it very important for the business owner as well as employees to fully recognize and align their work to objectives (Jensen, 2010).
Company must work according to the objectives because this gives the direction to work upon and accordingly strategies will be making.
SMART objective of the Amazon are:
In 2017, Amazon expects to generate profits of nearly $170 billion. Amazon is targeting to capture a 20% share in Australia’s e commerce market, it is planned to generate around $6 billion from this market. 15% gain share of the 15-50 year female segment for apparel and personal care products by 2020. Target to gain eight percent share of the 15- 35 yr male segment for personal care products by 2020. Company’s objective to grab 20% market shares in Australia among total market share of e commerce companies. These targets are having high focused to be achieved to catch high market share in Australia. (Forbes, 2017).
Michael porter’s model of generic strategy helps the Amazon.com for competitive advantage, which helps the company to develop the business in the middle of tough competition in the e commerce. Amazon is doing really well in their existing countries and generating good revenue through online retail store. While the leader in the online retail market, Amazon proves to be extremely competitive in the market against giants like Walmart. Amazon has successfully managed to grow their business and expand their business globally this is all done because of their intensive growth strategies. The growth in the international market shows the business plans of the Amazon and it show that a company, which is based in USA and started their work in USA but now Amazon operates globally and expand their reach globally (Porter, 2011). The reason behind the success of Amazon globally is that they have effectively implemented their intensive growth strategies and a generic competitive strategy that helps them to compete with their competitors and help in sustain in the market.
Now company is entering into the new country Australia. So company again analysis the generic competitive strategies that help them to operate their business in Australia. There are various types generic competitive strategies, company choose one strategy primary and follow the rest strategies partially to be successful and competitive in the market (Porter, 2011).
Cost Leadership
The concept of cost leadership is developed by Michael Porter and utilize in business strategy. It explains a method to set up the competitive advantage. Cost leadership means the lowest cost f operation in the industry. Cost leadership is regularly determined by company size, scale, scope, efficiency and cumulative experience. As company is entering into Australian market so it is important for the company to control their cost because it is new market for the company and company is starting their business there. Therefore, company need to control their cost from starting and work with efficiency helps the company to control the cost and increase in the profit. Efficiency working will help the company to reduce cost because less work means no extra cost and affect on the margins of profits, which will help the company to compete with competitors by lowering the price of the product (Datta, 2010).
Company aim is to minimize the operational cost as much they can because high operational cost can reduce the profit margin and it affects the expenses side. To minimize operational cost, company objective is to use superior computing and networking equipments that helps in increasing the operational efficiency. Company knows the nature of e-commerce and they know they will earn profit from process mechanization that usually used in purchase processing, setting up and other operational procedures. These advantages allow Amazon to minimize their cost and increase their operational efficiency in the online retail (Porter, 2011).
Differentiation strategy = this strategy is used by the business to make a unique product or services which consumer will find better than others will. The strategy is used to differentiate the product or service of your company from the competitors (Boehe, et. al., 2010).
Focus Strategy = Developing, marketing, and selling the products to niche market, by focusing on the particular customer segment, particular product line for that segment or a targeted geographical area. The objective of the focus strategy is to become the market leader in a particular customer segment by providing them high quality product or services (Porter, et. al., 2010)
Amazon is planning to enter into the Australian market. It is very important for the company to decide the correct entry mode in the market because correct entry mode will affect your business positively and helps in reducing the cost too. However, if company choose wrong way to enter into the market it will affect the business negatively that will influence the revenue and increase the expenses for the company. To enter into a new market will incur a lot of money for the money so it is very important for the company to take the right decisions over it (Laufs, et. al., 2014).
There are various market entry modes, which are as follows:
Joint Ventures = a joint venture means where two or more than two parties come together and uses their resources to achieve a specific work. The work can be classified into two categories it can be new project or other business activity. In joint venture, both the parties are agreed to share all profit and losses. (Deitz, et. al., 2010)
In this case Amazon can joint venture with establish firm of Australia who has strong customer base and having a good indentify in Australia.
Advantages:
Disadvantages:
Licensing = It means Amazon authorize the any firm of Australia to use their name and start the business of online retail using the name of Amazon over a period and the profits will be shared by both the firms which they decide in the contract.
Advantages:
Disadvantages:
Greenfield operation = Greenfield corporation means where a company decides to manufacture their own plant in the foreign or other country where they want to start their business by using their own capital. (Womack, et. al., 2010)
Advantages:
Disadvantages:
For market entry mode Greenfield operation will be best for the Amazon to entry in the Australia market. This entry mode will be beneficial for the Amazon because in this mode there is no interference of others. They have the full right in taking decisions and company can implement the strategies of their choice. The only disadvantage of this entry mode is lot of money required to set up all the required things but that will affect positively in near future. Amazon can plant their own warehouse and store the purchased items and afterwards will deliver according to the order of the customers (Brouthers, 2013).
This entry mode will be more beneficial for the company because Australia is big market and company is looking to grab that market. Somewhere this mode involves lot of money at the initial stage in developing whole set up like offices, warehouses, supply chain management etc. but this mode also gives the benefit of commanding the whole project, no interference of others. Like in other mode decisions making becomes complicated. Establishing own business unit will lead to high profits in long run (Brouthers, 2013).
Segmentation
Segmentation is the first process in the STP. Amazon can start with segmentation process by selecting the base for segmentation. The criterion for segmentation for Amazon is that they are focusing on every age group from newly born baby to old age. We also focus on lowest prices for the products offered. As the work of Amazon is, depend on technology, so age might be an outstanding segmentation aspect. This is because the young people are more technology friendly while compare to old age people then company should select the segment descriptor (Strauss, 2016).
While selecting the market segments Amazon must considers several factors. One of the major considerations that Amazon looks into is that the market segments fits into the company objectives. Objective is not a term but it defines an organization overall and their responsibility towards society and decisions of the company must be in line with objective of the company. Another aspect that company needs to consider the size of the segment. The size of the segment will classify the profitability of the segment. It is important for Amazon to take considerations on the several competitors available under the segment (Strauss, 2016). Company does business with websites it owns applications and some stores, from where orders can be placed. It helps the company to target the customer more effectively and due to 24×7 availability of the products results to increased customer base and company portfolio.
Last but not the least in the process is Positioning. It is important for the company to understand the market and the way the competitor’s brands are positioned. Understanding the market means company should discover the both intangible and tangible advantages, which customers are looking for. The Amazon wishes to recognize characteristic of its goods that the consumers consider as essential. After understanding, the market Amazon should design their product and communication approaches (Strauss, 2016).
Table 1: Showing segmentation, targeting and positioning Source Dudovskiy, 2017.
|
Type of segmentation |
Segmentation criteria |
Amazon target customer segment |
|
Geographic |
||
|
Urban |
Yes |
|
|
Demographic |
Rural |
Yes |
|
Age |
All age group |
|
|
Behavioural |
Gender |
Both ( Male and Female) |
|
Occupation |
Professionals, Employees, Students |
|
|
Personality |
Easy going, ambitious and determined |
|
|
Degree of loyalty |
Hard core loyal, Switchers, Soft core loyal |
|
|
Benefits sought |
Widest range of products, competitive prices, convenience of online purchase |
|
|
Psychographic |
Social class |
All social class (lower, middle, working and upper class) |
|
Lifestyle |
Resigned, Mainstreamer, Aspirer, Explorer |
|
|
Reformer |
Conclusion
The report will be helpful in understanding the importance of international marketing. As company is entering into new country and in a different market, this report will help in understanding the importance of mission statement that will help the company in talking decision accordingly to achieve their objectives. In the next stage, cost leadership strategy will be recommended to the company while starting business in Australia. Then the entry mode in the market is explained where company should follow the Greenfield corporation mode because it gives the fully command facility on the project. At last, segmentation targeting and positioning of the company is explained through the table format.
References:
Babnik, K., Breznik, K., Dermol, V., and Trunk Širca, N. (2014). The mission statement: organisational culture perspective. Industrial Management & Data Systems, 114(4), 612-627.
Boehe, D. M., and Cruz, L. B. (2010). Corporate social responsibility, product differentiation strategy and export performance. Journal of Business ethics, 91(2), 325-346.
Brouthers, K. D. (2013). A retrospective on: Institutional, cultural and transaction cost influences on entry mode choice and performance. Journal of International Business Studies, 44(1), 14-22.
Chaffey, D. (2015). Digital business and E-commerce management. UK: Pearson Education.
Czinkota, M. R., and Ronkainen, I. A. (2013). International marketing. USA: Cengage Learning.
Datta, Y. (2010). A critique of Porter’s cost leadership and differentiation strategies. Chinese Business Review, 9(4), 37.
Deitz, G. D., Tokman, M., Richey, R. G., and Morgan, R. M. (2010). Joint venture stability and cooperation: Direct, indirect and contingent effects of resource complementarity and trust. Industrial Marketing Management, 39(5), 862-873.
Dudovskiy, J. (2017) Amazon Segmentation, Targeting and Positioning: Widest Range of Target Customer Segment [Online]. Retrieved from: https://research-methodology.net/amazon-segmentation-targeting-positioning-widest-range-target-customer-segment/
Hollensen, S. (2015). Marketing management: A relationship approach. UK: Pearson Education.
Ingenhoff, D., and Fuhrer, T. (2010). Positioning and differentiation by using brand personality attributes: Do mission and vision statements contribute to building a unique corporate identity?. Corporate Communications: An International Journal, 15(1), 83-101.
Jensen, M. C. (2010). Value maximization, stakeholder theory, and the corporate objective function. Journal of applied corporate finance, 22(1), 32-42.
Kleiner, M. M., and Krueger, A. B. (2010). The prevalence and effects of occupational licensing. British Journal of Industrial Relations, 48(4), 676-687.
Laufs, K., and Schwens, C. (2014). Foreign market entry mode choice of small and medium-sized enterprises: A systematic review and future research agenda. International Business Review, 23(6), 1109-1126.
Lombardo, J. (2017). International Marketing: The Importance of Global Marketing Strategy [Online] Retrieved from: https://study.com/academy/lesson/international-marketing-the-importance-of-global-marketing-strategy.html
Needle, D. (2010). Business in context: An introduction to business and its environment. USA: Cengage Learning.
Paliwoda, S., and Thomas, M. (2013). International marketing. UK: Routledge.
Porter, J., Wu, W., and Partridge, J. (2010). Focus of attention and verbal instructions: Strategies of elite track and field coaches and athletes. Sport Science Review, 19(3-4), 77-89.
Porter, M. E. (2011). Competitive advantage of nations: creating and sustaining superior performance. USA: Simon and Schuster.
Strauss, J. (2016). E-marketing. UK: Routledge.
Womack, J. P., and Jones, D. T. (2010). Lean thinking: banish waste and create wealth in your corporation. USA: Simon and Schuster.
Forbes, (2017). Here is Why Amazon Is Expanding In Australia. [Online]. Retrieved from: https://www.forbes.com/sites/greatspeculations/2017/05/09/heres-why-amazon-is-expanding-in-australia/#433f981a1043
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