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MKT00720 Nature Of Amazon Australia Marketing Strategy

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Questions:

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:

1.What marketing strategy or strategies has Amazon Australia has adopted since it was created? Answer this question by applying one or more of the theoretical approaches discussed in the course.

2.What marketing options can you describe for Amazon Australia if it wishes to remain a successful organisation throughout the next decade? Answer this question based on the circumstances that exist in 2018 and your best forecasts of relevant future industry factors.

 

Answer:

Introduction: 

The following research focuses on the marketing strategies that Amazon Australia used since it started its business in Australia. Theoretical approaches have been used to understand the relevant marketing strategies. Besides, the marketing strategies that the company can use in the future have also been discussed in the following research.

Company overview: 

Amazon.com, Inc. is an electronic commerce company based in America. Jeff Bezos. The CEO and founder of Amazon started his business in 1994. Currently, Amazon is the world’s largest internet retailer. Headquarters of the company is in Seattle, Washington. Although Amazon started as an online retailing business, now it also produces electronic devices such as Kindle, Fire Tablets, Echo etc. Amazon entered the Australian market in the year 2013. The company has more than 5 million employees worldwide. The mission of the company is to offer affordable products to the customers, and the vision of Amazon is to use technological advancement to fulfil the customer requirements.

 

Marketing Analysis

The Nature of Amazon Australia’s Marketing Strategy or Strategies since it began.

Amazon entered the Australian market to expand its business in Oceania. Initially, the company offered apparels, kitchen items, books, health and beauty products etc. However, the company has also mentioned that it will provide fresh food items on their websites as well (The Financial Express, 2018).

 STP strategy: 

Amazon is not only one of the world's largest e-commerce websites, but it also has an international presence. Therefore, the company uses STP strategy for its marketing purpose. To segment the market, Amazon Australia follows psychographic and demographic segmentation. The segmentation of Amazon Australia is based on the purchase behaviour of the customers. The company targets each of the customers through their search history and purchase history. The target market of Amazon Australia is the high-income and middle-income group of people who have their certain buying preferences. Thus, the company can position itself and the products to fulfil the requirements of each of the customers even if they reside in the remote areas (Li, 2017).

 

Marketing Mix:

Amazon started to offer its service in Australia from 2013. The company has a huge range of products such as books, electronic gadgets, household items, apparels etc. provided by many vendors through the website. The customers can either view the site or open the mobile application to browse through the available products, which are delivered to them once they place an order. Amazon Australia has placed itself as one of the most trusted e-commerce websites. It has an R&D team that keeps the customer information secure. In order to promote its service in Australia, Amazon has used television ads, billboards, social media platforms as its promotional tools (Datta et al. 2017). The pricing strategy of the company is competitive. Both affordable and expensive products are available through the website. Besides, the customers can also opt form Amazon Prime, which allows the products to be delivered faster.

BCG Matrix:

Some of the businesses has been cash cows for Amazon Australia as per the BCG Matrix. Amazon Prime, its on-demand movies, Alexa, Web store etc are the cash cows for the company as these generate maximum revenue. On the other hand, video on demand, Kindle etc are among the question marks on the BCG Matrix as these services have low demand (Suksantilap et al. 2017). The star products for Amazon Australia on the BCG Matrix are the products that have a higher rate of growth and high market share as well. These are E-Books, electronic items etc that have high demand.

Distribution strategy:

Initially, Amazon shipped the products from USA to Australia. However, the company soon realized that the company can increase its sales through quick delivery. Therefore, Amazon Australia has focused to improve its distribution strategy. Amazon Australia has increased the number of distribution centres and warehouses to cater to the need of the customers as well as offer employment (Wahlquist, 2018). Besides, the structured network of the company allows customers in remote areas to purchase products of their choice. The distribution strategy of Amazon Australia allows the customers to avail free delivery service by making a minimum amount of purchase.

 

Brand equity:

Amazon started its business as an e-book provider. However, the company has steadily increased its market value through brand equity. Amazon Australia has spent quite a large amount of money in promoting the brand. Besides, the company has also allowed trusted vendors to work with Amazon Australia in order to maintain the brand equity. According to the Forbes list, Amazon is one of the most valuable brands in 2017 (Forbes.com, 2018). 55% of its customers return to the online website for purchasing products of different range.

Competitive study in the marketing strategy: 

As Amazon Australia has catered to different types of needs, the competitors of the company will change based on the business sectors. Amazon faces stiff competition from Apple when it comes to providing e-books, movies or audio-books. In terms of providing web service, Google is the main competitor of Amazon Australia. Woolworths is the biggest competitor of Amazon Australia with its huge online retail option. Other emerging e-commerce companies like The Iconic, BigW, JB HiFi etc have also increased the competition for Amazon Australia.

Strategic Marketing Options for Amazon Australia moving forward 

Since Amazon launched its web services in Australia in 2013, the company has applied many marketing strategies to enter the market and establish itself as one of the leading companies. Although Amazon Australia has a competitive edge, the company now wants to increase its revenue and market share in Australia.

The reason behind Amazon targeting the Australian market:

According to a study, almost 65% of the Australian population shops online (Forbes.com, 2018). Thus, Australia is a promising market for e-commerce companies like Amazon. Australia has a steady economy, and the internet is also accessible to a large number of people. As the e-commerce market is growing in Australia, Amazon has a huge chance of increasing its sales as well. These are the reasons that Amazon is targeting to improve its service in Australia. To get hold of the Australian market and retain customers, Amazon Australia must incorporate some new marketing strategies along with the older ones.  

Marketing strategies that will increase the customer base for Amazon Australia:

Amazon has already entered the Australian market, and it is now trying to expand its business in Australia. Currently, Amazon earns revenue of 500 million AUD to 700 million AUD annually. Although the income is a fraction of Amazon's 220 Billion AUD yearly revenue, Amazon is looking forward to increasing the sales.

Leveraging the existing users:

Generally, the users of Amazon Australia keep revisiting the website, and they have a good relationship with Amazon. Therefore, Amazon Australia can utilise these existing users to penetrate the market even more. Using the STP marketing strategy, Amazon can position its products (Michael et al. 2015).

 

Using the smart technology and database:

Amazon has used the knowledge and data about the customers to influence their purchase behaviour. This can be a great way to attract the Australian customers as well. Using smart technology Amazon Australia can keep track of products purchased by every individual customer. Thus, the company can target each of them as per their needs.

Associating with the local suppliers:

If the customers can buy products from the local vendors, they will not use Amazon. Therefore, Amazon must associate itself with the local suppliers. Apart from shipping international products to Australia, Amazon Australia should also supply local products to encourage customers and suppliers to use the platform for business (Business Insider Australia, 2018).

Influencing the market through different processes:

Amazon has developed business models for getting hold of a market. Similarly, Amazon can increase the amount of capital for the forward progress of the company. As mentioned earlier, Amazon is a Big Data company that can utilise the customer data to cater to the customers as per their requirements. If Amazon Australia wants to become successful, it must focus on improving the supply-chain management as this can create new opportunities for the company (Ireckon, 2018). Amazon Australia should create awareness among the customers about the competitive pricing that the website offers. Using the innovative approaches such as drone delivery, faster delivery through Amazon Prime subscription etc. can also increase the customer base of the company.

Improvising existing marketing strategies of Amazon for catering to the Australian market 

Amazon Australia has become successful because of its user-centric approach and efficient application of the marketing strategies. However, the company must improvise its existing marketing strategies to improve its place in the Australian market. Amazon follows e-mail marketing since the beginning, and it creates awareness among the users about any offers (Forbes.com, 2018). Generally, these e-mails show similar products that the customers have purchased. However, to encourage the customers to purchase more, the e-mails from Amazon must include products that are connected to the purchase history of the customers. Reviews and ratings are very important as most of the customers buy a product only after going through the reviews and ratings. Amazon can encourage the customers to write honest reviews by paying them a small amount of incentive. To increase customer loyalty, Amazon Australia can offer some reward system based on their purchases. Even if the users share videos or use hashtags to share photos of Amazon or refer their friends and family to use the website, they should be awarded as well. The online video streaming option that Amazon has recently started to offer is a good venture. The quality of the videos should be high resolution for better experience of the customers.

Conclusion: 

As it can be seen from the study above, Amazon Australia has already penetrated the Australian market successfully. However, as the company has been facing issues to compete with the local vendors as well as the local e-commerce websites and retailers, the company must improve its marketing strategies. Along with the tried and tested strategies, the company must include some new marketing strategies that will ensure the growth of Amazon in Australia.

 

Reference list:

Amazon.com.au. (2018). Amazon.com.au: Shop online for Electronics, Apparel, Toys, Books, DVDs & more. [online] Available at: https://www.amazon.com.au/ [Accessed 22 Sep. 2018].

Business Insider Australia. (2018). Amazon is quietly building a supplier network for direct sales in Australia. [online] Available at: https://www.businessinsider.com.au/amazon-is-quietly-building-a-supplier-network-for-direct-sales-in-australia-2017-11 [Accessed 22 Sep. 2018].

Datta, H., Ailawadi, K.L. and van Heerde, H.J., 2017. How well does consumer-based brand equity align with sales-based brand equity and marketing-mix response?. Journal of Marketing, 81(3), pp.1-20.

Forbes.com. (2018). [online] Available at: https://www.forbes.com/sites/forbespr/2017/05/23/forbes-releases-seventh-annual-worlds-most-valuable-brands-list/#71cac87d5b55 [Accessed 22 Sep. 2018].

Forbes.com. (2018). [online] Available at: https://www.forbes.com/sites/theyec/2015/04/03/email-marketing-strategies-you-can-borrow-from-billion-dollar-e-commerce-giants/#6dcc7c2629e8 [Accessed 22 Sep. 2018].

Forbes.com. (2018). [online] Available at: https://www.forbes.com/sites/greatspeculations/2017/05/09/heres-why-amazon-is-expanding-in-australia/#12a745cf1043 [Accessed 22 Sep. 2018].

Ireckon. (2018). What is the Amazon Australia threat and what to do about it? - Ireckon. [online] Available at: https://www.ireckon.com/customer-experience/amazon-australia-threat/ [Accessed 22 Sep. 2018].

Li, J.J., 2017. Rational Thinking of the Marketing Strategy Based on Customer Equity. In Proceedings of the 23rd International Conference on Industrial Engineering and Engineering Management 2016 (pp. 69-73). Atlantis Press, Paris.

Michael, E.P.I., Lanza, J.B. and Indriolo, J.A., SocialSign. In, Inc., 2015. Leveraging online identities to grant access to private networks. U.S. Patent 9,178,883.

Suksantilap, P., Leelasantitham, A. and Glesner, M., 2017. A Survey of Demand Factors Utilized in the Facial Surgery Service Business Using BCG Matrix. INTERNATIONAL JOURNAL OF APPLIED, 10(2), pp.124

The Financial Express. (2018). Online retail giant Amazon enters Australian market. [online] Available at: https://www.financialexpress.com/industry/online-retail-giant-amazon-enters-australian-market/961120/ [Accessed 22 Sep. 2018].

Wahlquist, C. (2018). Amazon expands in Australia and plans huge warehouse. [online] the Guardian. Available at: https://www.theguardian.com/technology/2017/apr/20/amazon-expands-in-australia-and-plans-huge-warehouse [Accessed 22 Sep. 2018].

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