The Overall Task
In increasingly competitive markets, consumers have a greater choice over where they buy their goods and services. For an organisation to meet its business objectives, it has to find out what consumers require and then identify the best way in which it can satisfy these needs and wants. Creating a competitive advantage can be difficult. A unique marketing strategy with clear objectives is vital to ensure effective promotional activity.
Your task in this case analysis is to answer two questions by critically analysing Amazon Australia’s market situation. Please do not just describe events, although you should read Amazon Australia’s history to understand the background to your analysis. You should use the principles and concepts that you have learned throughout the unit to answer the following two questions:
These are wide-ranging questions and you should undertake extensive independent research into Amazon Australia and its industry. You should explore different aspects of these issues and incorporate them into your report. This is a practical assessment of a real company, but you need to show an understanding of theory and research in your evaluation and suggestions.
This report brings out relevant discussion on the emergence of Amazon in Australia and its marketing strategies. Retail industry of Australia is refreshing itself for the arrival of Amazon. The company has no longer left any retailer in local retail market of Australia without threat of competition. The company has adopted customer-obsessed marketing strategy to attract the Australia’s potential customers. To fulfil the needs of the customers, Amazon`s Australia`s manager planned to undertake efficient distribution system in Australia. The company decided to invest and develop new marketing strategies to improve the customer experience.
Amazon is among the 500 e-commerce company headquartered in Washington, US. Amazon was founded by Jeff Bezos in 1994 which stated its retail business as an online retail bookstore. Then after, looking at the demand of customers, it started diversifying its retail business through DVDs, video, electronics, clothing, software, apparel, furniture, food, jewellery, and games. Soon after the establishment, the company stated operating its separate retail in US, UK, Ireland, France, Spain, Germany, Netherlands, Brazil, Australia, India, and Mexico. In 2016, it expanded and launched its outlets in different versions such as Turkish, Polish, and Dutch. Just after the five years of opening of Amazon retail online store, the owner “Jeff Bezos” was honoured as “Person of the Year.” He was recognised with this honour because of the company’s success in online shopping (Babones 2018, pp. 1-3).
The first and prior objective of Amazon is to focus on superior customer satisfaction. Currently, the market has extensive range of products with more than 400 million products available on Amazon. One interesting thing about the marketing analysis is that it is based on actual purchasing behaviour of customers rather than focusing on particular lifestyle. Every customer come across different home page, which is designed especially for him or her because Amazon understands that how the particular customer has spent his/her money during the previous purchase. The reason behind the success of the company is customer-centric worldview and emphasis on efficiency. Another marketing style is receiving the feedback of the customers (Ritala, Golnam & Wegmann 2014, pp. 236-249).
Amazon enables the customers to see the review tactics for each product individually. Whereas, many other online retail outlets send personal emails to ask for the review. Amazon has tightly lipped its Australian marketplace strategy, which allows other local businesses of Australia to sell through websites. Manu local retailers use the local platform to sell the products but do not provide specifics. Amazon`s entry is pressuring the local online operations such as Kogan and ebay. Moreover, Amazon`s entry in Australia has not left even the traditional retailers such as JB Hi-Fi, David Jones, Harvey Norman and Myer. The chairman of Australian competition said that the arrival of amazon would benefit the customers but the local and incumbent retailers would start losing their place in the market (Segarra et al. 2016, pp. 39-68).
Strategic marketing is the marketing, which aims at differentiating and creating value for the potential customers as efficiently as possible. It focuses on the current strength and competitive advantage, which it can achieved in future. The nature of marketing strategy is approaching the potential customers through digital marketing. Making and formulating customer obsessed marketing strategies can be executed only through whole team effort. To approach the potential customers, the company has to constantly learn about the customer preferences and innovate accordingly (Chernev 2018, pp. 26-40).
Many customer-obsessed companies eliminate the risk by testing the prototypes and identifying the faults during the development cycle. It uses it efficiency across the customer communication through a framework named as RACE marketing plan. R stands for reach, which means that the initial business growth of Amazon is based on search engine optimisation and Adwords targeting billions of keywords on the amazon`s application (Ireckon, 2018). A stands for act, which creates simple experiences through learning and testing. C stands for convert, which is used for the personalisation of relevant recommendation by the customers as well as the IT department of the company. Moreover, many other companies has started imitating the same clear checkout process that is followed by Amazon. E in RACE marketing plan stands for engage which clearly focuses on customer experiences. The company is known for its outperformance over other online retailers because of it is quite obsessed about its customer buying behaviour (D’Souza 2015, pp. 25-34).
Australia is becoming the fastest growing marketplace especially for Amazon. The marketplace pulse, which analyses and tracks the performance of e-commerce marketplaces have surveyed that Australia is the fastest growing marketplace for Amazon after India. Last year, Australians had spent $1.95 billion per month on online retail shopping websites. The market size of Australia have enlarged online and is 7.3% as compared to local and brick businesses, which lead majority of retail business of Australia. International retailers such as Alibaba and Amazon have been eagerly trying to enter the Australian market because retail sector has always remained a potential sector in Australia (Coyne 2017). E-commerce giant “Amazon” undertakes demographic and psychological segmentation to decide the marketing strategy.
Amazon has challenged traditional marketing approach “AWI.” This traditional marketing of the Merino wool (fine and soft wool) is under review because Amazon has entered and challenged the retail market of Australia. This brought risk for the existing mortar and brick retailers of Australia. Traditional marketing approach undertaken by Amazon has challenged Australian Wool Innovation approach towards marketing (Lehtinen 2017, pp. 18-34). The CEO of Australian Wool innovation has announced in his general annual meeting that amazon has become a threat to company`s marketing strategies. Moreover, the challenging behaviour of Amazon continued which has resulted in several challenges to the existence of Australian Wool Innovation. The renowned retailers in Manhattan, New York are declining because of emerging and growing Amazon. Australian Wool Innovation (AWI) attempts to notice the declining and risky stage of other Australian retailers. The marketing arm of the retail industry named as Woolmark is doubtful whether to join Amazon in its heavy push into the fashion trends (Weinstein & McFarlane 2017, pp. 73-84).
In April 2017, Amazon confirmed the plan to bring its retail offering to Australia with vast selection and the fast delivery. The modern supply chain operation and the discounted pricing was combined with offering such as prime subscription services, which enabled the Amazon to havoc the traditional retailers in Australia. Amazon has destroyed other Australian retailers with faster, better, and cheaper customer experiences. The company have been making different marketing strategies and campaigns to attract the potential customers (Salvatierra & Walters 2017, pp. 73-84).
Marketing campaigns such as Amazon Prime day, Amazon Fashion, and Amazon in India show more sales than the regular days. The time when Amazon came up with Amazon Prime Day, it showed a drastic increase in sales. In Australia, the two major revenue emerging streams are digital ads and fintech. Amazon Australia has positioned its image as a hub for eyeballs, which makes its resources valuable for selling the ads. Amazon Australia implemented an online ad product program, which was expected to generate more than $1 billion revenue in 2017. These product ads breaks up the Google and Facebook monopoly in online advertising (Thurner & Proskuryakova 2016, pp. 649-659). Amazon has already added Amazon cash in its financial services, which enables the customers to add their Amazon.com balance by scanning barcodes at checkout locations. The key marketing strategy options include some major strategies such as delivering and engaging strategy to target the specific niche, offering specific searchable product features, take advantages of several subscription services, utilising personalised email marketing, capture the potential customers by making programmatic advertising for audience, and explore licencing and exclusive deals Migacz, Zou & Petrick 2018, pp. 83-98).
Amazon Australia not only wanted to grow as the biggest company but also pitch the market at very high level. They wanted to capture all levels through effective marketing strategy. AWI (Australian Wool Innovation) was forced to re-evaluate its marketing strategies and its prior focus, which was luxury-end of the market. The CEO of AWI named “McCullough” admitted that even with the typical marketing strategies, there is a probability that strategies may roll out in the stores. Moreover, typical strategies do not work anymore on garments because it is sold online.
From the above report, it can be concluded that Amazon Australia is performing tremendously well in capturing, penetrating, and grabbing the Australian retail sector. The AWI (Australian Wool Innovation) and the marketing arm named as Woolmark in Australia has admitted that it is very difficult to stand in competition with typical marketing strategies. Amazon`s marketing strategies is so efficient that it does not need help from Woolmark regarding the information of fashion trends. Due to large residential area with almost 24 million people, it becomes difficult for Amazon to promise reliable shipping times to customers.
Babones, S 2018, Amazon opened in Australia, and nothing has changed, viewed 12 September 2018, <https://ses.library.usyd.edu.au/bitstream/2123/18452/2/Amazon%20opened%20in%20Australia%2C%20and%20nothing%20has%20changed%20%E2%80%94%20yet.pdf> pp. 1-3
Chernev, A 2018, Strategic marketing management, 9th ed. viewed 12 September 2018, cerebellum press, US, viewed 12 September 2018 <https://books.google.co.in/books?hl=en&lr=&id=CUlNDwAAQBAJ&oi=fnd&pg=PT11&dq=Strategic+Marketing+Options+&ots=JIhfLCUFnS&sig=-popXkNp-qigLveQ_QTzypWpHMA#v=onepage&q&f=false >
Coyne, A 2017, Amazon launches online store in Australia, viewed 12 September 2018, < https://www.itnews.com.au/news/amazon-launches-online-store-in-australia-479134>
D’Souza, VH, 2015,’ Amazon’s strategies in the eBook and eReader markets, viewed 12 September 2018, < https://pure.au.dk/portal/files/86407610/201208071_thesis.pdf> pp. 25-34
Ireckon, 2018, what is the Amazon Australia threat and what to do about it, viewed 12 September 2018, <https://www.ireckon.com/customer-experience/amazon-australia-threat/>
Lehtinen, N 2017, STRATEGIC MARKETING ANALYSIS Case: DNA Plc, viewed 12 September 2018, < https://www.theseus.fi/bitstream/handle/10024/136513/Lehtinen_Nina.pdf?sequence=1>
Migacz, SJ, Zou, S and Petrick, JF, 2018,’The “Terminal” effects of service failure on airlines: Examining service recovery with justice theory, Journal of Travel Research, vol. 57, no. 1, pp.83-98.
Ritala, P, Golnam, A and Wegmann, A 2014,’Coopetition-based business models: The case of Amazon. Com’, Industrial Marketing Management, vol. 43, no. 2, pp. 236-249.
Salvatierra, J and Walters, G, 2017, ‘the impact of human-induced environmental destruction on destination image perception and travel behaviour: The case of Australia’s Great Barrier Reef’ in Journal of Vacation Marketing, vol. 23, no. 1, pp.73-84.
Segarra, LL, Almalki, H, Elabd, J, Gonzalez, J, Marczewski, M, Alrasheed, M & Rabelo, L, 2016, ‘A Framework for Boosting Revenue Incorporating Big Data’, Journal of Innovation Management, vol. 4, no. 1, pp.39-68.
Thurner, T and Proskuryakova, L, 2016, “Sectoral entry-barriers for entrepreneurial activities – a Russian start-up between challenging global markets and local conservative path dependencies,” Foresight: The Journal of Future Studies, Strategic Thinking, and Policy, vol. 18, no. 6, Pp. 649-659
Weinstein, AT and McFarlane, DA, 2017,’How libraries can enhance customer service by implementing a customer value mindset’, International Journal of Nonprofit and Voluntary Sector Marketing, vol. 22, no. 1, p.e1571.
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