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Internationl Marketing and Leadership

Summary of the Situational Analysis

In the present times, the success of any company is guided by its potential to expand and to grasp the opportunities available to it. Ever since it was launched in 1994 by Jeff Bezos, the Global retailing giant Amazon has been on a path to success. In this study, a situational analysis has been presented on the expansion of Amazon into a new geographical location like India and the effects it would have on the company. Even though such an expansion may give birth to a number of challenges, it will increase the profitability and growth of Amazon to a great extent. Such challenges have been analysed in this essay with a step by step path provided for Amazon for launching into a new territory. The objectives of attracting new consumers and paving the path for market development have been chosen for this expansion. On these objectives, an effective strategy has been drawn, followed by a set of tactics that can prove to be effective. A practical action plan has also been drawn to explain how such an expansion could be conducted properly within a set budget. Next, certain control factors like Porter’s Five forces and McKinsey’s seven S models have been used to analyse how effective such an expansion could be for the company. Finally, numerous recommendations have been drawn on the subject of international marketing and strategising which can prove to be beneficial in the future course of the company. This situational critical analysis will help in analysing the strategizing and budgeting ability of the company and how it deals with the uncertainties that arise in a new market.

Objectives - two relevant objectives to reach a selected target audience.

Attracting new consumers: Any company works well when their business is boosted with the introduction of a new section of potential consumers (Chiu and Cho, 2019). A selected target audience can be attained by attracting the attention of new consumers which can be done by providing a high range of products for them to choose from at a reasonable price so that they choose Amazon over the other competitors. When launching in a new geographical location like India, Amazon needs to educate the potential consumers of that area about the advantages of using their platform to conduct shopping and establish other promotional activities like advertisements. This can help in attracting the attention of the potential consumers of that area.

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Increasing market share: Any online retailing company like Amazon usually aims at reducing geographic barriers in the world and treating the global community as their target audience. It is the aim of Amazon to provide high quality products at low prices to the people of the world in order to increase their market share. This can be done by expanding into newer territories and areas where the potential for growth is high. Such an objective is at the roots of Amazon ever since it was created in the US (Kristensen et al, 2017). The increase in globalisation has paved the way for Amazon to expand into newer countries like India and Nepal, fueled by the success they have achieved in the developed nations of the world. Increasing the market share will directly lead to higher profitability and growth which can prove to be highly beneficial to Amazon.

Strategy

Target Segmentation

Objectives

Consumer retention

In order to establish itself into a new geographical location like India, Amazon needs to adopt a strategic approach created on the basis of the consumer needs and preferences of the Indian markets. In India, the needs and preferences of a section of consumers keeps changing with every 100 kilometres (Wadhwa et al, 2020). Hence, it is necessary to focus on providing a high product range which suits the different needs of a high range of population. Such goals should be based on creating a vast market for Amazon in India and establishing smooth functioning through well equipped warehouses and loyal employees who focus on consumer satisfaction.

Increase in overall growth

Amazon aims to have a 15 percent growth in its operations and profitability over the course of two years after entering the Indian markets. The strategy of building a good base for warehousing, delivery, returns, refunds, post sale services, and regular consumers should focus on the long term goals with which Amazon intends to establish itself in India and maintain a good base of regular customers. As Amazon is well financed and has a high level of industrial strength, it should enter the Indian markets aggressively (Kwarteng, 2020). Instead of expanding its existing market into the Indian retail industry, Amazon can focus on establishing itself into the emerging Indian markets as a new entity

Tactics

In accordance with the Indian markets, Amazon can put into use various tactics that can serve to fulfil its short term goals like boosting sales, increasing website traffic, generating brand awareness, and increasing consumer satisfaction. Such short term goals need to be fulfilled by a company in order to function efficiently. This can be achieved through the following tactics which have proven to be effective in attracting consumer’s attention.

Providing offers

Regular discounts and sales on grocery items and luxury products can attract the attention of potential and regular consumers. Amazon can launch special sales on occasions like Independence Day, New Year, and so on to increase traffic on their website and boost sales. Various offers and vouchers can be made available to consumers on their first purchase from Amazon.com in order to make them come back to buy more. Such tactics can prove to be detrimental in achieving the short term goals effectively.

Improving post sale services

Indian target audiences can also be attracted through convenient post sale services like installation, cleaning, servicing, and so on after the purchasing of products like electronic gadgets, furniture, and other expensive items. Proper manufacturer guarantees and warranty can also attract consumers who wish to purchase luxury items online. In the recent times of COVID-19, common people have been confined within the thresholds of their homes. Hence, they must make all purchases online (Kanakaratne et al, 2020). This can be beneficial for Amazon if they provide effective post sale services. This can make the consumers choose Amazon over its competitors.

Sending personalised reminders

Sending reminders to consumers who have been inactive for a while, have pending items in their carts, and about expiring coupons or vouchers can improve the overall consumer experience. Reminders and other notifications can help in boosting sales as they attract the attention of the consumer in light of various discounts or offers that he may not want to miss (Sunkari, 2020) .Personalised emails or notifications can also help in getting the attention of the consumer and make him feel more special and close to the company.

Fighting competitors

It is necessary for Amazon to be one step ahead of its competitors to maintain a dominating position in the highly competitive online retailing markets of India. The consumers will choose Amazon over its competitors if they see that they can get the product for the lowest possible price on this website. This can boost sales and improve the brand image of Amazon. However, it is necessary for the company to provide high quality products as well in order to retain consumers.

Action Plan

With a budget of approximately 30 crore rupees, Amazon can properly establish itself into the online retailing markets of India. They can launch trial websites before the actual release of the Amazon brand in order to assess how the Indian markets react to such a channel. After launching, they can focus on different plans and activities in order to promote their campaign.

Customer service

In order to establish an efficient market for itself in India, Amazon needs to focus on satisfying its consumer so that the overall brand image can be improved from the beginning. This can be done by providing a high range of products that can attain the needs of the masses. Such products must also be of high quality and low prices in order to satisfy the consumers. Provision of Post sale services like reviews, returns, refunds, and complaints is to be done efficiently to attain consumer satisfaction. Amazon must establish warehouses with high technology to maintain inventory, establish supply channels and fast delivery systems, and have staff working on consumer reviews and complaints in order to make the consumer experience worthwhile. Even though these operations may be heavy on expenses, they are highly necessary. For this to be carried out, the hiring of an efficient staff force and establishment of warehouses will cost Amazon approximately 4.5 crore rupees.

Social media marketing

While launching in a new geographic location, creating brand awareness, attracting consumer attention and increasing market share is the highest priority for any business. In present times, social media channels like Twitter, Facebook, Instagram, and so on have a high level of engagement and the image of any new company or brand is dependent on their social media presence. Through collaborations with social media influencers, polls, creative content, and effective communication, Amazon can attract the attention of potential consumers and build its brand image in India (Robischon, 2017). Such engagements will cost the company around 20 lac rupees.

Consumer loyalty programmes

An incentive offering is one of the most effective ways for improving online marketing experiences. Amazon can recompense its users for their loyalty and implementation of this plan and provide an online shop option for loyalty membership (Rodrigues, 2020). This is a very effective way of ensuring increased rates of conversion and recurring orders. The tactic of providing a reward to a consumer making a second purchase from the website is effective in ensuring that he will return again and again to make purchases. Such programmes will cost Amazon 45 lac rupees approximately.

Control Factors
PEST analysis

Political

Tax exemptions from starting up a company in order to generate more work are an opportunity because the firm will be obliged to pay fewer taxes in India, where the eCommerce sites will not have to pay tax if they have no physically active presence. Political disturbances can disturb supply chains, leading to sales declines. This is a threat and a vulnerability, as politics or civil conflict might hinder the enterprise. The expansion of the corporation in new markets can be impeded by internet regulations being in conflict with the practises and policies of Amazon which restrict their international expansion and prove to be a threat.

Economical

Increasing the purchasing power of developing countries offers the opportunity to introduce innovative products which enable Amazon to expand. Like Nature’s basket, Amazon aims at providing e-grocery opportunities; nonetheless, that presents a difficulty to the company, as Other e-grocery companies are well-established in the product range and Amazon's stock price has been reduced. Fluctuations in currencies could be dangerous, as they affect multiple countries' economic conditions. The prices shown are, for instance, in USD and will change when delivery is made, when converted at the time of purchase into a foreign currency like INR. This will be a concern for Amazon if the rate increases as the consumer will have to pay an increased amount for the same product

Socio cultural

Growing consumption in emerging markets is an opportunity as the procurement power of customers increases as disposable income increases. The expanding habits of on-line purchase by youngsters are both an opportunity and a threat because they have a habit of lazing around which will make them explore further websites, leading to pricing comparisons. As customers can visit the website or the application anywhere, they gain only from conveniences offered by e-commerce stores (Onyusheva and Seenalasataporn, 2018). Due to the availability of high-speed Internet and improved technology in most parts of rural and urban India, many clients have been drawn to Amazon.

Technological

Technological impermissibility is growing and both this is a threat and an opportunity, since its IT department needs to be constantly improved, resulting in the loss of the load on the website of outdated servers and an opportunity, since its website is secured by a network that increases customer confidence. Making the application's platform more user-friendly is an opportunity since more clients from urban and rural areas will be attracted to the app or site if it is easy to comprehend and use (Bansal and Vora, 2018). Increased cybercrime poses a concern for the organisation since it risks consumer data leaks if it does not have a secure network. The focus on updating technology is bound to cost the company heavily. However, it has effectively reduced the burden on manual operations.

Porter's five forces

Threat of new entrants (low): Amazon is already a global firm with $177.9 billion in market capitalisation in 2017 (Kristensen et al, 2017). Any new entrant in the Indian markets must have a strong customer base, be financially healthy so that they are able to expand globally and fight with Amazon. As a consequence, we categorized this thread as "weak."

The bargaining power of buyers (High): The negotiating strength of customers relates to the easy way they can change to different solutions. We believe, for example, that Amazon customers might easily switch to Flipkart, as Flipkart offers a variety of products. Amazon needs to focus on providing customers with high-quality information in order to maintain its strong base of retained customers (D'Agostino, 2018).

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The bargaining power of suppliers (Moderate): It is because there are a low number of suppliers and they have limited authority over the corporation that keeps this force as medium (Lincoln and Andrew, 2018). A multimillion dollar giant like Amazon is not affected by the wishes of the suppliers.

The threat of substitute products and services (High): Keeping their brand image could be a major difficulty because the cost of changing customers is quite low as there is a wide variety of cheap products on the Indian markets which Amazon can not supply.

Rivalry amongst competitors in the industry (High): After researching market strategies for Amazon and others, we have concluded that Amazon is competing with other companies on an online or offline basis on a daily basis. For example, companies like Flipkart and Snapdeal, provide the same high-quality Amazon products and offer a vast choice of products (Arora, 2018) Hence, the cost of changing customers is low because there are plenty of opportunities and since cyber crime is increasing, it is very easy for a company to lose a reputation in case client data is lost.

TOWS Matrix
Porter's five forces  (By the Author)
Table 1: TOWS Matrix

From the TOWS matrix, it is evident that Amazon can align various of its strengths, opportunities, weaknesses, and threats with each other to draw out strategies that can prove to be effective in its expansion to India.

Recommendations

In international marketing, there is always scope to grow and expand. Amazon can highly benefit from expanding its online retailing business to countries like India where the online retail industry is on the rise. Even though it poses a number of challenges, effective strategizing and carrying out a properly laid out plan can improve the overall performance of Amazon to a great extent. As a developing nation in the times of coronavirus, India has an exponential possibility for growth and with the strong financial standing of Amazon, it must prove to be profitable for the company to enter the Indian markets. However, certain recommendations can be drawn out for Amazon in the future course of its international marketing and leadership. If Amazon wishes to expand into other developing nations, The company has to face great impediments to online trade in those countries where the legal systems monitor internet and mobile application use. The biggest problem for the corporation is dealing with those markets in accordance with the legal systems of these countries. The company requires a strategy to increase its brick and mortar stores to cope with these issues (Sadq et al, 2018). This is crucial for them to preserve their worldwide market leadership and brand recognition. As an online store, it is also necessary for Amazon to keep their cybersecurity measures updated and prioritise keeping consumer data safe. The company can also focus on its logistics management in order to ensure speedy delivery of products in order to maximise consumer satisfaction. In order to cater to the diversified population of consumers, Amazon must eventually have a section devoted to all types of products that can be bought in a physical marketplace so that the losses that the company faced in regards to a specific product can be borne by the success in another category. Certain effective push and pull strategies based on promotional activities and other offers can also prove to be effective for the company as they can present Amazon as an innovative company which is altering its strategies as per the needs of the country it is operating in.

References

Kristensen, M., Penner, J., Nguyen, A., Moy, J. and Lam, S., 2017. Company Synopsis for: Amazon. com, Inc.

Sunkari, J., 2020. Customer communication for an online retail company based on the example of Amazon.

Kwarteng, E.M., 2020. Management of innovative projects of the enterprise (on the example of Amazon. com) (Master's thesis).

Wadhwa, B., Vashisht, A. and Phutela, N., 2020. Business model of amazon India-A case study. South Asian Journal of Marketing & Management Research, 10(1), pp.32-40.

Bansal, R. and Vora, H., 2018. Amazon India: Disrupting the market with digital innovation.

Arora, K., 2018, February. E-COMMERCE AND THE GROWTH OF GLOBAL RETAIL BUSINESS-A CASE STUDY OF AMAZON. COM, INC. In 2 nd INTERNATIONAL BUSINESS & FINANCE CONFERENCE, 2018 (p. 28).

Robischon, N., 2017. Why Amazon is the world’s most innovative company of 2017. Fast Company Magazine, 2.

Furnelli, A., 2021. Amazon Go convenience stores: skip the lines. The CASE Journal. D'Agostino, J.L., 2018. The Impact of E-commerce on Brands: An Analysis of Amazon and a Plan for the Future (Doctoral dissertation, University of Oregon).

Onyusheva, I. and Seenalasataporn, T., 2018. STRATEGIC ANALYSIS OF GLOBAL E-COMMERCE AND DIVERSIFICATION TECHNOLOGY: THE CASE OF AMAZON.

COM INC. The EUrASEANs: journal on global socio-economic dynamics, (1 (8)), pp.48-63.

Sadq, Z.M., Sabir, H.N. and Saeed, V.S.H., 2018. Analyzing the Amazon success strategies. Journal of process management. New Technologies, 6(4).

Lincoln, I. V., and Charles Edward Andrew. "Porter Analysis: A Business Strategy of Amazon. Com Through a Value Chain and Comparative Advantage Analysis of Amazon’s Trademarks and Intangibles." Com Through a Value Chain and Comparative Advantage Analysis of Amazon’s Trademarks and Intangibles (November 27, 2018). Practical Guide to US Transfer Pricing, (2018).

Rodrigues, M.M.M.L.A., 2020. Competitive advantage in the age of digital platforms: the case of Amazon. com (Doctoral dissertation).

Chiu, W. and Cho, H., 2019. E-commerce brand: The effect of perceived brand leadership on consumers’ satisfaction and repurchase intention on e-commerce websites. Asia Pacific Journal of Marketing and Logistics.

Kanakaratne, M.D.S., Bray, J. and Robson, J., 2020. The influence of national culture and industry structure on grocery retail customer loyalty. Journal of retailing and consumer services, 54, p.102013.

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