International Marketing Management: Expanding Amazon Alexa in South Africa
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This report explores the international marketing management of Amazon Alexa and its expansion into the South African market. It covers the evolution of the product, international market research, consumer behavior, and marketing strategies.
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INTERNATIONAL MARKETING MANAGEMENT
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TABLE OF CONTENTS INTRODUCTION...........................................................................................................................3 MAIN BODY..................................................................................................................................3 Evolution of the product with globalization................................................................................3 International Market Research.....................................................................................................5 Existing behaviour of consumers towards the competitive products..........................................6 Marketing Strategy......................................................................................................................7 CONCLUSION................................................................................................................................9 REFERENCES..............................................................................................................................10
INTRODUCTION International marketing managementis related to the expansion of a product in the international market and analysing the international market so that better marketing strategies can be developed (McCarthy III and et.al, 2017). Amazon Alexa, has already established itself in the entire world and now it plans to expand in South Africa as well. The following report will identify the different analytical tools that can be used and then ultimately develop a marketing plan for its expansion. MAIN BODY Evolution of the product with globalization The Alexa device launched by Amazon as an Artificial Intelligence tool has helped in addressing the multiple needs of all the users. Alexa was first developed by Amazon and launched on their platform along with the Alexa app. However, with time the services were regularly included in the Alexa such as Amazon Key, Amazon Take- out etc. that has helped in increasing the number of services that this technology can currently provide (Schoenmüller, Netzer and Stahl, 2019). In the initial phase, the device was available only in United States and later it was expanded to UK, Germany and Austria. It came to India in 2017 and was launched at full scale. In India, the growth of the device was initiated due t the smart home experiences that this voice command enabled device is able to provide. In India, recently the preference for the smart voice enabled devices has continuously increased where products such as smart lights, smart displays etc. and overall there are approximately 54% Indians, who are using at least one wearable smart device (Home smart home: India's booming home automation market,2020). Similarly, after Alexa was first launched in 2016, it has since then been able to capture majority of the market (Pfeifle, 2018.). Further the product Alexa has been made compatible with a multiple number of devices and these have collectively assisted in increasing the sales. However, the sales in the Indian market reached the peak when the language Hindi was first introduced in Alexa in the year 2019 (Loideain and Adams, 2019). Since that year the sales have only been increasing with almost 16 percent Indian homes that are using Amazon Alexa as per the latest report published in the year 2019. The market of voice automation is regularly rising where it can be ascertained that the 28% of the search in India is given in Hindi and they are growing every year by an estimated 400% (Home smart home: India's booming home automation market,2020). 3
It has been estimated that the overall size of this smart products oriented market would grow to $6 billion by the year 2022 and the shift towards taking assistance of smart products that can assist them in daily life is continuously rising (Home smart home: India's booming home automation market,2020). Figure1: Expected sales of smart appliance in India 4
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Source:Home smart home: India's booming home automation market,2020 As it can be ascertained from the diagram above, for the upcoming years, it is perceived that the sales will almost increase 3 times thus showing a huge potential for the growth if the Amazon Alexa in the Indian market as well. Therefore, it can be said that the existing trends only show a rise in the expected sales of the Alexa in the upcoming years as well thus showing a positive shift in the market or consumer houses of India. International Market Research It has been estimated that South Africa would be an extremely good country in which the services of Alexa can be expanded and the market can be developed aggressively. In order to better analyze the opportunity that this international expansion resents before the expansion of Amazon Alexa, the Pestle Analysis tools can be used that will help in identification of the opportunities in the external environment of South Africa. This can be done in following manner: Political Factors: Although the political environment of South Africa is full of corrupt leaders by the parties support the foreign investment if there is any in the company (Perera, 2017). This can help in successful launching of Alexa and the relaxed regulation will help in operating in the industry in a more feasible manner. Therefore this acts as a favourable aspect of expansion. Economical Factors: The economical factors of South Africa indicate that although the economy is on a lower growth scale and overall a weaker economy yet it can be adequately said that the preference for small products is gradually evolving (Achinas and et.al., 2019). The need of smart home appliances has been identified and it can be attributed to the fact that the consumers are willing to spend on such products that will add on to their comfort level. Social Factors: The society of South Africa is regularly evolving and they are increasingly accepting the technological innovations (SHTAL and et.al., 2018). The recent rise in the start- ups shows the desire of innovation and therefore, it acts as a perfect market to be captured by South Africa. TechnologicalFactors:Astheacceptancefortheinnovationhasincreased,the technological development and integration amongst the people, of South Africa has also 5
increased drastically (Policy, 2016). It can be said that if Alexa is launched in the market, then it will be revolutionary due to existing market conditions acting as a favourable market factor. Legal Factors: The legal environment and factors of the South African environment are comparatively much relaxed and it is easy to comply with them without incurring any major costs (Racz and et.al., 2018). This can therefore help in the expansion of the targeted market of Alexa. Environmental Factors: The environmental factors and CSR activities at the South African environment are easy to operate with and the resources are also available in abundance. This therefore helps in the easier targeting of the public and the other necessary duties and regulations can also be followed thus creating a win- win situation for the entire economy (Vallati and Grassi, 2019). Therefore, on the basis of the analysis undertaken it can be adequately said that the existing environmental conditions of the South Africa are extremely favourable to engage in international expansion and capture the market as soon as possible before the competitors try to venture into it. Existing behaviour of consumers towards the competitive products The current environment of the South Africa regarding the competitiveness that Alexa can face in the international market can be evaluated using the porter’s five force model. This will help in ascertaining what are the different aspects of the competitive industry and environment and how these can probably impact the venture of Alexa in this market: Existing Rivalry (Low): Currently, the technological environment of the company is still on expansion, i.e. this indicates that the existing rivalry of the organisation is at a much lower scale (Lewis, 2017). The current environment is therefore favourable where the expansion of Alexa can help in early capture of the smart home appliances before the potential competitor Google Home grabs the market. Hence this factor is currently in favour of Amazon Alexa. Bargaining Power of Suppliers (Moderate): The bargaining power of suppliers indicates that whether the potential suppliers of raw material in the economy are any power over the organisation. In the current context of the Amazon Alexa, there are very minimum suppliers in the economy of South Africa but the power that they will hold is still moderate (Moreno- Izquierdo, Ramón-Rodríguez and Perles-Ribes, 2016). This is because if they increase their 6
prices then this can lead to the company arranging for direct import of products in South Africa which is ultimately loss making for economy only. Bargaining Power of Buyers (High): The buyers in the economy of south Africa will be limited in the initial period and therefore the power that they will hold is comparatively higher (Varelas and Georgopoulos, 2017). They can switch over to the next best competitor i.e. Google Home who provides similar services and this can be a loss making situation of the company who has just ventured in the economy of South Africa. Therefore, the impact of this factor will be comparatively higher. Threat of New entrants (High): the new entrant of the similar kinds of product in this market is lower in case of any such companies except Google Home. It has not yet ventured in to the market of South Africa, but if it does so then the threat to the existing market of Alexa can be higher (Huang, 2019). Although there are many strategies that can be adopted by Alexa based on the superior quality of Alexa, but still Google Home can capture a significant market if its strategies are more on point. Therefore, the threat of this factor is high for Amazon Alexa. Threat of Substitute Products (Low): There are no substitute products for this product i.e. for Amazon Alexa and therefore the threat of this aspect is comparatively lower (Nurlansa and Jati, 2016). Therefore, it can be said that the company can adequately enjoy the market share by venturingonto this international market share and capturing the market for smart home appliances by the earliest entry. Marketing Strategy In context of the decision that has been made to launch Alexa in the international market of South Africa, there are some major factors that can be discussed related to the proposed market strategies. SMART Objectives: To develop the proper strategy for launching of the Amazon Alexa in the international market of South Africa. To increase the market sales of the product by 35% amongst the South African market. To ensure the availability and accessibility of all the potential resources that might be required for the launching of the product and its management. To ensure that the market is feasible and product will be adopted by the customers. 7
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To achieve the targeted expansion and achievement of sales figure by the end of one year. STP Analysis: Segmentation: The customer segments can be categorised into four broad classifications i.e. on geographical basis, demographic basis, psychographic basis and behavioural means (Yan and et.al., 2016). In the current context of international expansion into South Africa, the major customers segment would be on psychographic and behavioural measures where the convenience that Alexa brings will be highlighted. Targeting: The targeting can be done by highlighting the better features of the intense products and they will be targeted on a psychographic and behavioural means making them understand that after the come in possession of Alexa, how much simpler and entertaining their loves could possible become. Positioning: The positioning of Alexa will be in second quadrant of the positioning map i.e. the prices will be moderately high but the quality of services would be extremely high. Marketing mix: The marketing mix for the product can be developed in following manner: 4 P’sImpact ProductThe product that is being planned to launch is Amazon Alexa. PriceThe pricing strategy that will be used is value pricing strategywheretheproductofferedwillcontribute immensely in the additional value that it is giving (Blut, Teller and Floh, 2018). PlaceThe product will be launched in the entire South African market. PromotionThedifferentsocialmediaplatformsandtheir technologicalmeanswillbeusedtoincreasethe promotional reach of the product and develop the potential market. Budget: 8
The potential budget for the intended expansion in the South African market can be ascertained as follows: ParticularsAmount Direct Material£ 37000 Direct Labour£ 29000 Overheads£ 19000 Marketing£ 57000 Others£ 8000 Total£ 150000 Risk: The most potential risk that Alexa and its launching in South Africa can face is in the form of external market risk i.e. the external factors in the market might not be as productive as it was expected thus leaving the product to be exposed (Išoraitė, 2016). The weaker economy might prove to be unpredictable and affect the expansion in a negative manner. Monitoring and Evaluation: Continuous monitoring and evaluation can be done using tools like benchmarking technique, 360 degree feedback analysis etc. that can assist in better evaluation of the performance and then develop correct strategies accordingly. CONCLUSION On the basis of the research done above, it can be adequately concluded that the entire process of international market expansion is heavily based on the market research aspect. In this report, pestle analysis, porter’s five forces etc. was used in order to develop better research analysis and then adequate marketing strategies as per the analysis done was also presented. 9
REFERENCES Books and Journals Achinas,S.,andet.al.,2019.APESTLEAnalysisofBiofuelsEnergyIndustryin Europe.Sustainability.11(21). p.5981. Blut, M., Teller, C. and Floh, A., 2018. Testing retail marketing-mix effects on patronage: A meta-analysis.Journal of Retailing.94(2). pp.113-135. Huang, Y., 2019, December. Strategic Environment Analysis of Logistics Enterprise based on SWOT-PEST-Michael Porter's Five Forces Model--Taking SF Express as an Example. In2nd International Symposium on Social Science and Management Innovation (SSMI 2019). Atlantis Press. Išoraitė,M.,2016.Marketingmixtheoreticalaspects.Internationaljournalofresearch granthaalayah.4(6). pp.25-37. Lewis, R., 2017. Porter's Five Forces of competitive advantage. Loideain, N.N. and Adams, R., 2019. From Alexa to Siri and the GDPR: The gendering of VirtualPersonalAssistantsandtheroleofDataProtectionImpact Assessments.Computer Law & Security Review, p.105366. McCarthy III, B.A., and et.al, 2017.Home monitoring and control. U.S. Patent 9,772,612. Moreno-Izquierdo, L., Ramón-Rodríguez, A.B. and Perles-Ribes, J.F., 2016. Pricing strategies of the European low-cost carriers explained using Porter's Five Forces Model.Tourism Economics.22(2). pp.293-310. Nurlansa,O.andJati,H.,2016.Analysisporter’sfiveforcesmodelonAirbnb.Elinvo (Electronics, Informatics, and Vocational Education).1(2). pp.84-96. Perera, R., 2017.The PESTLE analysis. Nerdynaut. Pfeifle, A., 2018. Alexa, What Should We Do about Privacy: Protecting Privacy for Users of Voice-Activated Devices.Wash. L. Rev..93. p.421. Policy, P., 2016. What is pestle analysis. Racz, L., and et.al., 2018. Extensive comparison of biodiesel production alternatives with life cycle,PESTLEandmulti-criteriadecisionanalyses.CleanTechnologiesand Environmental Policy.20(9). pp.2013-2024. 10
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Schoenmüller, V., Netzer, O. and Stahl, F., 2019. The extreme distribution of online reviews: Prevalence, drivers and implications.Columbia Business School Research Paper, (18- 10). SHTAL, T.V., and et.al., 2018. Methods of analysis of the external environment of business activities.Revista ESPACIOS.39(12). Vallati, M. and Grassi, A., 2019, July. AI to Facilitate Legal Analysis in the PESTLE Context. InThe EMerging Technology conference (EMiT) 2019(pp. 66-68). IET. Varelas, S. and Georgopoulos, N., 2017. Porter’s competitive forces in the modern globalized hospitality sector–the case of a Greek tourism destination.J Tour Res.18. pp.121-131. Yan, Y., and et.al., 2016. STP approach to model controlled automata with application to reachability analysis of DEDS.Asian Journal of Control.18(6). pp.2027-2036. Online Home smart home: India's booming home automation market.2020.[ONLINE] Available through :<https://economictimes.indiatimes.com/tech/software/home-smart-home-the- indias-booming-home-automation-market/articleshow/74630996.cms?from=mdr> 11