Marketing Channel Design and Integration for Kogan.com

This report analyzes the marketing channels of Kogan.com, a major consumer electronics retailer in Australia. It examines the external environment impacting the channels, strengths and weaknesses of the channels, and provides recommendations for new entrants in the industry. The report also includes background information on the company, its product range, and major participants in its marketing distribution channels.

Marketing channel design
and
integration

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Contents
Introduction...........................................................................................................................................1
Body......................................................................................................................................................2
Background of the company..............................................................................................................2
External environment impacting the channels of Kogan.com............................................................2
Strengths and weaknesses of the channels of Kogan.........................................................................4
Finding for industry...........................................................................................................................5
Conclusion.............................................................................................................................................6
REFERENCES......................................................................................................................................6

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Introduction
Consumer electronics market in Australia is large and there are many companies operating in
this industry which is giving tough competition to each other (IBISWorld, 2018). Every
company has their own set of strategies to compete in the market. It is essential that
companies choose best marketing channels so to reach to maximum possible customers
(Armstrong, et al. 2014). It is also crucial that there must be evaluation of business
environment so as to find opportunities and threats in the market. Based on this evaluation,
companies need to understand the strengths and weaknesses of the channels of the firm. This
report showcases the major broad product category of Kogan as well as the major participants
in the marketing distribution channels of the company. It also highlights the external
environment that is having impact on the Kogan’s marketing channels and hence identifying
the opportunities and threats in these channels. At the same time strengths and Weaknesses of
the channels of the firm has been provided in the report. In the last part of the report potential
new entrants in the industry and recommendations about the way in which any company can
enter into the market has been highlighted.
Body
Background of the company
Kogan.com is one of the biggest Consumer retailers in Australia. Company was founded in
the year 2006 by Ruslan Kogan. The growth of this company’s financial performance has
been between 200% and 300% per year. Kogan.com is a portfolio of retail and services
consists of Kogan retail (DickSmith.com.au and Kogan.com), Kogan Mobile, Kogan pet
Insurance, Kogan Travel, Kogan Marketplace, Kogan Insurance, Kogan Internet, and Kogan
life Insurance. Company has over 8 million active subscribers. In 2016, this firm acquired
Dick Smith Holding’s business on online mediums.
Its product range includes many broad categories of products like appliances, homewares,
consumer electronics, toys, hardware etc. Most of their products are from the consumer
electronics category. LED television and High Definition LCD television creates up the bulk
of the product of the Kogan.com. Apart from this they sell 3D television, computing products

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like netbook, laptop, region-free Blu-ray player, internet radio and tablets. It also sells
microwave ovens, vacuum cleaner and automatic coffee machine (Kogan.com, 2019).
Major participants in its marketing distribution channels are whole sellers, suppliers,
Kogan.com and the consumers. Whole sellers are providing materials and products that the
customers of Kogan demands for. Some of the big Whole sellers of the company include
Apple and other digital brands. It also has large numbers of suppliers attached with the
marketing distribution channel of Kogan. This helps them in arranging all the resources on
time which is necessary for maintaining the balance in the demand and supply of the
company. Apart from this, the distribution channel includes Kogan.com website where
people can place order (Rosenbloom, 2012). This website provides customers with the option
to select from wide range of products. It is helpful for them as it enables them to do choose
from wide range products at different price. Kogan.com also has delivery personnel’s that
delivers the products on time. At the last of the marketing distribution channel there are
customers. These customers are the actual buyers of the products and help the company to
complete the channel.
External environment impacting the channels of Kogan.com
Marketing channels are widely affected by the external environment confronting the business
of the online retailers. The factors that are affecting the Kogan.com are:
Political: The political condition of Australia is not stable. This is not good for the online
business as they look for the stability in the policies by the government. The change in
decisions also has effect on the suppliers as there are price variations noticed due to the
change in the government policies. On the other hand, it has been seen that Australian
government is promoting online goods and the taxes of the consumer electronics is on the
lower side (Levy and Gvili, 2015). It acts as an opportunity where companies like Kogan can
expand their business reach.
Economic: Australia being a developed nation provides a stable economic environment to
the online retailers. This is the reason why many investors are also coming to support the
online retail. With digital economy in place, it has become easier for the customers to place
orders online. In such an environment, company adds a lot more investors in their pool
(Birchall, 2013). The increasing purchasing power of the people is an opportunity for the
company that they can enhance their market share. Strong financial support has strengthened
this type of market distribution channels.

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Social: The social demands have changed. People are trying to do more purchase from the
online mediums. This is because the internet facilities have reach to the hands of people with
the use of mobile technologies. People are also looking for comfort hence preferring to buy
things online. The changing purchasing behaviour of the people has promoted the companies
to boost their online marketing distribution channels. Even the whole sellers and suppliers are
looking for the base where they can promote or sell their products. It has given opportunity
for the marketing distribution channels.
Technology: Australia is a technologically advanced country. There are large numbers of
people who are connected to fast internet facilities and technology that is easier to use. With
the help of technology the marketing distribution channel has boosted because it has helped
every participant in the channel to know their position and hence brings transparency in the
overall process. It gives opportunity for the companies like Kogan.com to speed up the
process of marketing channels. In future the technologies such as IOT and data management
are going to boost up the process of marketing for this company. Data management software
provides opportunity for the companies to understand the behaviour of consumers as well as
it helps the firms to do marketing accordingly.
Legal: Complexity in the legalities within the online marketing has been removed by
government of Australia. This has given support to the online marketing mediums so as to
conduct their services easily. This company will have to ensure that they fulfil the customers
need because consumer related laws have strengthened (Kozlenkova, et al. 2015). With the
increasing threat in the online marketing due to hackers company will also have ensure that
are using appropriate security to prevent any legal compliances.
Environment: Since the Australian government has become strict over the issue of
environmental concerns hence companies like Kogan will have to ensure that they have an
appropriate logistics and waste management system to ensure that environmental concerns
are addressed. The use of optimised marketing distribution channels will help the firm to
reduce their carbon emission.
Competition: Since technology has helped even the smaller firms to do their marketing
appropriately and reach to maximum possible customers with their distribution channels
hence the competition has gone to much higher levels (Bolotaeva and Cata, 2010). Increase in
the competition has enhanced the threat for the companies as their market share has been
seriously challenged by the incumbents. For marketing channels such competition has

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benefitted customers. In the consumer electronics market, this competition has gone to much
higher level. Companies are forced to choose the offers in marketing where their own profit
margin reduces. Companies like Kogan have to face the challenge from the mega-giants like
Amazon which has large control on the prices in the market.
Strengths and weaknesses of the channels of Kogan
Marketing distribution channel of the Kogan has different kinds of strengths and weaknesses.
Strengths
 There are many big whole sellers that are attached with the company. This includes
the brands like Apple. This strengthens their marketing position as Apple has a strong
brand presence in Australian market.
 There are large numbers of local and global supplier attached with the company and
this has helped the firms to make the demands and supply balanced.
 Company has a brand name in the market especially in the products such as consumer
electronics. This uniqueness of it has helped them in gaining control of the market.
Due to this their marketing channels have to be much strong to reach out customers.
 Kogan has a sufficient consumer base which is increasing at much faster rate. This is
helping them in improving their business process and enhances their scope in the
business. With the help of this consumer base company can easily support their
marketing distribution channel.
 The growth rate of the company is exceptional as it is growing with a speed of more
than 200%. This has helped them in achieving their business objectives and has given
them advantage over the competitors like Harvey Norman. Their marketing
distribution channel will have to be ready for changing demands (Hawkins and
Mothersbaugh, 2010).
 Highly skilled workforce is attached with Kogan.com and their program is also in
such a manner that they add value to the marketing channels. This is also due to the
fact that their workforce is highly motivated. This has helped in performing well in
the new markets adding new revenue streams and hence diversifying the risk in the
economic cycle.
Weaknesses

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 They do not have big name outside Australia which is restricting its scope of
expansion. Their marketing distribution channel has not become so much effective
that they can expand their business outside Australia where they have enormous
opportunity.
 Their organisational structures are supporting their current model of business but are
not effective for their future scope of their marketing distribution channel. This is
limiting the growth of the company at the same time limiting their marketing growth.
 They also have weakness in the supply chain when compared with its competitors like
Amazon. They need to implement more advanced technologies so as to improve their
performance at the global levels (Pash, 2018).
 They lack in terms of using advanced technologies such as IOT and advanced data
analytics software in their supply chain management. This is a big weakness for the
sustainability of the marketing distribution channels.
 Company has been poor in utilising the platforms such as Social media so as to create
brand awareness and creating closer relationship among the partners in the marketing
distribution channel.
Finding for industry
It has been found that the purchasing behaviour of people is changing and in this
environment, Companies like Kogan which is known for selling its products through online
mediums has made their mark in the industry. As most of the companies are taking the online
route for selling their products hence the competition in the industry has been at the top most
level. Industry need to think the way they can incorporate new technologies so that they can
be more competitive (Pan and Li, 2011). It is expected that with the increasing use of
advanced technologies, more and more companies are going to take this medium for their
marketing distribution.
This industry has an enormous potential as the cost of operations is relatively on the lower
side and the management of business can also be done easily. New entrant with a specific
amount of capital can easily make their market. Two things they need to aware about is how
to engage with the customer so as to make a closer bond with the marketing channel
participant and other is that how company utilises advanced technologies so as to gain
competitive advantage.

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It is recommended that companies that are planning to enter into the industry takes use of
advanced technologies especially the ones that are innovative (Wang, Song and Yang, 2013).
It is also recommended that companies work on the data management skills so as to optimise
their marketing channels for improving their effectiveness.
Conclusion
From the above based report, it can be concluded that Suppliers, Whole sellers, Kogan.com
and the customers are the major players of the marketing distribution channels of Kogan.
Being one of the biggest consumer electronics retailers in Australia, the effect of external
environment is not so much. Kogan.com will have to make advancements in the technology
so as to stay competitive in the long term. They have opportunities in the new markets but the
limitations in their marketing distribution channel are limiting their scope of expansion. New
companies will have to ensure that they take use of innovative technologies for creating their
position in the market.

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REFERENCES
Armstrong, G., Adam, S., Denize, S. and Kotler, P., 2014. Principles of marketing. Pearson
Australia.
Birchall, A., 2013. They're Kogan's heroes. Management Today, (Mar 2013), p.30.
Bolotaeva, V. and Cata, T., 2010. Marketing opportunities with social networks. Journal of
Internet Social Networking and Virtual Communities, 2010, pp.1-8.
Hawkins, D.I. and Mothersbaugh, D.L., 2010. Consumer behavior: Building marketing
strategy. Boston: McGraw-Hill Irwin,.
Kogan.com, 2019. About Us. [Online] Available at: https://www.kogan.com/au/about/.
[Accessed on 13th April 2019]
Kozlenkova, I.V., Hult, G.T.M., Lund, D.J., Mena, J.A. and Kekec, P., 2015. The role of
marketing channels in supply chain management. Journal of Retailing, 91(4), pp.586-609.
Levy, S. and Gvili, Y., 2015. How Credible is E-Word of Mouth Across Digital-Marketing
Channels?: The Roles of Social Capital, Information Richness, and Interactivity. Journal of
Advertising Research, 55(1), pp.95-109.
Pan, B. and Li, X.R., 2011. The long tail of destination image and online marketing. Annals
of Tourism Research, 38(1), pp.132-152.
Pash, C. 2018. This is how just 1% of the market is driving growth at Kogan.com. [Online]
Available at: https://www.businessinsider.com.au/kogan-results-growth-mobile-phones-
2018-8. [Accessed on 13th April 2019]
Rosenbloom, B., 2012. Marketing channels. Cengage Learning.
Wang, Q., Song, P. and Yang, X., 2013. Understanding the substitution effect between online
and traditional channels: evidence from product attributes perspective. Electronic
markets, 23(3), pp.227-239.
IBISWorld, 2018. Online Consumer Electronics Sales - Australia Market Research Report.
[Online] Available at: https://www.ibisworld.com.au/industry-trends/specialised-market-

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research-reports/online-retail/online-consumer-electronics-sales.html. [Accessed on 13th April
2019]