International Marketing Management: Expanding Amazon Alexa in South Africa

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.

INTERNATIONAL
MARKETING
MANAGEMENT

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 management is 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).
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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).
Figure 1: Expected sales of smart appliance in India
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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.
 Technological Factors: As the acceptance for the innovation has increased, the
technological development and integration amongst the people, of South Africa has also
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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
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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 venturing onto 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.
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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’s Impact
Product The product that is being planned to launch is Amazon
Alexa.
Price The pricing strategy that will be used is value pricing
strategy where the product offered will contribute
immensely in the additional value that it is giving (Blut,
Teller and Floh, 2018).
Place The product will be launched in the entire South African
market.
Promotion The different social media platforms and their
technological means will be used to increase the
promotional reach of the product and develop the potential
market.
Budget:
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The potential budget for the intended expansion in the South African market can be
ascertained as follows:
Particulars Amount
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.
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REFERENCES
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In 2nd International Symposium on Social Science and Management Innovation (SSMI
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Loideain, N.N. and Adams, R., 2019. From Alexa to Siri and the GDPR: The gendering of
Virtual Personal Assistants and the role of Data Protection Impact
Assessments. Computer Law & Security Review, p.105366.
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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, PESTLE and multi-criteria decision analyses. Clean Technologies and
Environmental Policy. 20(9). pp.2013-2024.
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Schoenmüller, V., Netzer, O. and Stahl, F., 2019. The extreme distribution of online reviews:
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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>
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