Critical discussion on Amazon international marketing strategy
Task: You are required togive advicebased on your role as a strategic international marketing manager to Amazon.com on its strategy to enter the Dutch market in 2020-2022.Assumeyou are the international marketing manager of Amazon, andwrite a reportto the management team, addressing the following areas:
- Description of Amazon and its growth strategies in an international perspective
- A plan on ‘How’ to enter the Dutch market from Amazon’s perspective. Which model (Global or Organic path from theory and literature) would you use?
- Who are the main competitorsfor Amazon in The Netherlands?
- What competitive reactions are to be expected and what is your competitive strategy?
- What is the entry strategyfor the Netherlands (use literature)?
- What cultural and management differences can you identify (use literature)?
- What will be your operational (marketing) plan to be successful (use literature)?
Where you refer to specific supporting facts about the organisation please detail and reference these in your Reference section.You are required to do desk research about Amazon, the Dutch market and their competitors.
You are to apply knowledge gain from the module. Especially from the powerpoint presentations and other resources in the module area and on the Internet.
Introduction The present report explores the discussion on Amazon international marketing strategy in an effective manner. Globalization of business is a trendy business application, under which companies usually expand their business to overseas market in order to address better opportunities. The opportunities may come from several aspects when a business becomes globalized. For example, the opportunities may come from acquiring larger consumer market, earning more revenue, earning profit in foreign currency etc. There are several aspects, a company should consider at the time of expanding its business in the international market, and this particular report is going to explore those areas of Amazon international marketing strategy. The purpose of this report is to make Amazon international marketing strategy, because the company is going to expand its business in the market of Netherland.
Amazon is world’s largest e-commerce company and it is led by Jeff Bezos. Initially the company started by selling books online, but gradually the company has gowned significantly and currently the brand is selling a wide range of products (almost anything a customer needs) online. The reach of this organization is huge. At this moment, Amazon operates in 13 countries with 13 different country-based websites (Enright 2016). The company has employed over 8, 40,000 employees across the globe. So, it will be interesting to assess this huge organization’s growth strategy and then suggesting the most suitable marketing system, competitive and market entry strategy to enter into the e-commerce market of Netherland.
Amazon’s growth Strategy
When it comes to Amazon’s growth strategy, it follows almost all the strategies because of its multiple forms of e-commerce businesses.
To Amazon, market development is the most intensive growth strategy. The main purpose of this Amazon international marketing strategyis entering and growing into a new market (Arnawa, et al., 2017). Due to this intensive market development strategy, Amazon has decided to enter into the market of Netherland.From the initial days of its business, the company has expanded its business beyond the borders and never stopped in serving new customers. Initially the company started providing services to the customers of US, but currently the brand operates 13 country websites to provide service to the customers belonging from those 13 countries.
Amazon’s second most intensive growth strategy is market penetration. The core objective of this Amazon international marketing strategyis generating more profit from the market, where it currently operates. Amazon’s whole business model is largely dependent on the consumers, so when the consumption grows, Amazon’s business automatically grows, and the brand is able to earn more revenue from it. So in order to make this growth strategy successful, the company always tries to encourage customers to buy online through several strategies (Juncu, 2019).
In the third place, the product development strategy takes its position when it comes to Amazon. The core purpose of this Amazon international marketing strategyis to develop new products in order to attract more customers as well as earning more revenue (Elverum, Welo and Tronvoll, 2016). The growth of Amazon’s business is partially influenced by developing new products. For example, Amazon has its own products like Amazon Echo products, which it sells online and through it earns revenue (Juncu, 2019).
Diversification is the least important growth strategy to Amazon. The core purpose of this Amazon international marketing strategyis to grow business in new platforms (Jones, Ryan, and Fisher, 2016). For example, Amazon has acquired the brand Audible to enter in the market of audio-books. Amazon has interest to grow even more and enlarge its dominance in several new market segments near future (Juncu, 2019).
SWOT is basically a combination of both internal and external strategic analysis commonly considered by most of the companies and analysis. In SWOT,Strengths and Weaknesses are internal elements and on the other hand,Opportunities and Threats are external elements.
Being the leading and biggest e-commerce website, Amazon has several strengths which would help the brand in terms of entering and growing its business in Netherland. The biggest strength the company has, that is its strong brand name. This strong brand name will definitely help Amazon in terms of doing business in the new market. Second strength the company has, is its customer oriented business model. The impressive growth strategy is the third most important strength Amazon has. Cost leadership is another significant and effective Amazon international marketing strategythe company pursues, that is cost Leadership strategy. Amazon never invests extra money in structuring physical stores and offices which helps the brand to keep the product or service prices low for the customers (Business Strategy Hub, 2020).
Though Amazon is the biggest e-commerce, it has certain weaknesses. Easily imitable business model is the main weakness the company has. After Amazon international marketing strategy, there are other organizations which have adopted this particular business model, and gradually improving their customer bases in different markets. Manufacturing flop products is a popular trend in Amazon. Few years back the company made its own Smartphone which was a huge failure. Amazon has suffered from several controversies, among which tax avoidance is an important one. These controversies usually lower the brand reputation (Business Strategy Hub, 2020).
When it comes to opportunities, then there is a lot. The global e-commerce market is rapidly increasing. Currently due to the COVID 19 pandemic, consumers across the globe prefer buying products online instead of buying them from the physical stores. So, this particular opportunity has effectively captured by Amazon in all international market and in US as well (Business Strategy Hub, 2020).
To Amazon international marketing strategy, threats are common. The technology is changing every day, and in order to run side by side with always changing technology,Amazon international marketing strategyshould continuously keep its observations on the research and development strategies, otherwise it will lag behind. The increasing market competition is another major threat for the brand (Business Strategy Hub, 2020).
What are the main competitors of the company in Netherlands
Though Netherland is a geographically small country, it plays significant role in the world economy. Netherlands took participation for the introduction of Euro (currency) and also the founding member of NATO (European Union). In Netherland, e-commerce is a very popular concept.Every year, there are several e-commerce events organized. Based on an authentic data, in 2018 Netherlands, there were 16.4 million internet users, which reflect that 97% of the Dutch population has the full access to internet, which is significantly large and opportunistic for any e-commerce brand (Ecommerce News Europe, 2020a). It has been also found that there are 13.5 million online shoppers in Netherlands (Ecommerce News Europe, 2020a). Now when it comes to e-commerce companies operating in Netherlands, then the list is quite long. Here is the list of top ten e-commerce websites.
- Albert hejin Online
- Van Dijk Educatie
- Media Market
- Nextail (Wilt, 2020)
Now these organizations have e-commerce businesses in different specific segments. For example Bol.com is a Dutch marketplace, Wehkamp is an online departmental store, Coolblue is electronics and household e-commerce platform, H&M is a Swedish Fashion retailer etc. Unlike these e-commerce platforms, Amazon is a global market place, it has all of the above mentioned business platforms in a combined manner. Therefore, the competition Amazon is going to face will be significantly high in Netherlands (Ecommerce News Europe, 2020b).
In the previous section, it has been identified that Amazon international marketing strategywill be going to face significant competition in the e-commerce sector of Netherlands. So, in order to address and complete this higher degree of competition the brand should follow certain plan.
Though Netherlands is ranked at the number one position in the world for the proficiency in English as a second language, a huge portion of the Netherland prefer to buy products from e-commerce sites which use Dutch as the primary language in their website content. So, Amazon should also put an option its website through which the Dutch customers can have choice to select either Dutch or English as the website’s content language. This can be the first step for Amazon’s competitive strategy.
In Netherlands, the Dutch customers always prefer to buy products in Euro. So Amazon has to make sure that it will put all its product prices selling in the website, in Euros. This can be the second stage of making the competitive strategy.
Fast delivery has always been one of the key strengths of Amazon across different markets in the globe. So, in Netherlands also Amazon should take the advantage of these strengths and should make its delivery optimized, fast and customized for the customers as well. Customized delivery service refers to, the ability of the customers to set delivery date and time according to their convenience.
Payment is one of the most important ways of earning competitive advantage for an e-commerce organization. This is the era of digital payment/cashless payments. Most of the customers across the developing and developed countries prefer to purchase products online through digital payment services. So, in order to have competitive advantage in this particular area, Amazon should include digital payment gateways as many as possible so that all the customers will have all kinds of payment options.
Meanwhile in the Netherlands, most e-commerce brands have different demands, using a feed management tool isimportant.
Amazon international marketing strategyshould introduce more and more categories in the Dutch market only after studying the market. It will help the brand to attract more and more customers that will result in competitive advantage for Amazon.
The market entry strategy of Amazon international marketing strategyfor the market of Netherlands should have certain steps, which it should consider.
Using Amazon’s Prime Service as the Key
Amazon Prime was first initiated as a value proposition through providing free services, but gradually Amazon has expanded its prime service and has included several other sub-services. So, In order to enter into Netherland’ market, Amazon should focus on its prime service first, so that it can attract more customers at the initial stage.
Performing as the Key drivers for the local Domestic Businesses
At the time of entering into Netherland’s market, Amazon should consider the local businesses. The core business model of Amazon is based on other sellers, whether they are big domestic or international organizations or even small or medium domestic companies. In order to start operation in Netherlands, Amazon international marketing strategyneeds to encourage and acquire the attentions of the local small businesses so that they become interested in selling their products through Amazon’s website.
Home Delivery and Supply Chain Logistic
In order to keep its delivery services fast, Amazon should purchase a domestic logistics company which will be responsible for delivering only Amazon’s products to the door steps of the customers across the country. Amazon international marketing strategyshould also include its Drone delivery services in the metro cities of Netherlands.
Being acquired by Amazon is the desire of most small or medium sized companies. So Amazon should also acquire certain domestic companies in which it can notice significant potential. By doing this, Amazon will be able to use that organization’s sources and resources for the benefit of itself and that company as well. This is also another major market entry strategy Amazon follows traditionally, and in this market also it will be an effective one.
Identified Cultural and Management Differences
In order to identify the cultural differences in Netherlands, Hofstede Cultural Dimension Model can be considered.
Figure 1: Netherlands Hofstede Cultural Dimension Model
Figure1 reflects the score of Netherlands in six cultural dimensions. The first dimension is Power Distance, and here the country scores a low 38. This particular score reflects that the consumers of Netherlands want to stay independent. They prefer hierarchy for better controllability and equal rights as well. In Individualism the country scores 80, which is pretty high. This score reflects that there is a higher level of preference towards a loosely-knit social structure within which people can take care of themselves and their instant/immediate family members only. When it comes to Masculinity, Netherland scores 14, pretty low again. This lower score depicts Netherlands is a feminist society where women has more power than men. So at the time of doing marketing campaigns and CSR campaigns, Amazon should consider this fact. In Uncertainty Avoidance, Netherlands scores 53 which is moderate. This score depicts that the people of this country moderately love to maintain rigid norms of belief and behavior. In Long Term OrientationNetherlands has a high score of 67 which reflects pragmatic side of the nature. Lastly, in IndulgenceNetherlands scores high as 68. This high indulgence score reflects that the Dutch people are interested in realizing their own pulses and desires associated with enjoying the life and having fun (Hofstede, 2020).
What is the role of Amazon international marketing strategy?
Amazon international marketing strategyfor Netherlands should depend on certain core areas, such as:
- Delivering the widest range of products to the Dutch customers.
- Implementation of customer friendly interface in both the mobile application and website.
- Scaling easily from small to large.
4Ps Marketing Strategy
This particular Amazon international marketing strategywill basically focus on Amazon’s product, price, place, promotion and some other sub areas of these 4Ps. Amazon should mainly focus on these 4Ps. So that it can deliver its business message clearly to the customers. Considering the product, Amazon should provide maximum number of products through its online website. When it comes to price then Amazon has to keep its product prices competitive in order to achieve competitive advantage over other e-commerce websites. Place should include all the areas starting from metro cities, urban and rural areas. Amazon should market its business in such a way, that its message should reach every individual living in Netherlands. Last but not the least Amazon should consider its promotional marketing through both traditional media (TV, Print Media) and social media (Facebook, Instagram, YouTube) platforms.
Segmentation, Targeting and Positioning
Amazon should segment its product and services in several segments so that it can consider the widest and largest portion of Dutch customers. Amazon will target all type of customers because it will provide a wide range of products and services which will easily cover a huge target customer. Amazon will position itself as a highly valued brand which is responsible for providing best quality products and services at the most affordable prices.
Amazon’s Unique Selling Proposition
This generally includes the widest portfolio of products and services at the most affordable prices, fast delivery service, Prime services and extraordinary customer service. The e-commerce giant allocates these unique selling propositions as the essentials of its marketing communication messages. Marketing Communication Amazon international marketing strategy In order to make effective communication with the customers, Amazon should use social media platforms, emails and calling services. Other than these, the company should include customer feedback section in Amazon Netherland website as well.
From the analysis of Amazon international marketing strategy and after making a market entry plan for the company, it can be seen that Netherlands will be a place where the company will face significant competition, but if it integrates the above mentioned strategies it will be easy for the brand to operate and earn significant profit from the new market. ?
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