Strategic Marketing Plan for Amazon Go
According to Ogunmokun, and Hsin Tang (2012), organisations use strategic marketing planning to create a marketing strategy that outlines their business objectives, programs used to attain these objectives, people accountable for these metrics, and a reasonable timeline to achieve these goals. Companies that employ strategic marketing planning over the decades have been seen to meet the market dynamics thus, building on their competitive edge. Besides, a good marketing plan helps an organisation’s management decide where the company wants to be in the future and offers an in-depth understanding of its customers and target markets. For instance, Amazon, a multinational technology corporation, has a strategic marketing plan focusing on customer service to provide personalized products to its consumers. This reflects a good example of an organisation that puts its customers first. However, with the introduction of Amazon Go, a new e-commerce mobile application that will enable UK consumers to buy items in physical stores without being checked by a cashier, Amazon needs to re-strategies its marketing plan for the new target market. It is worth noting that an effective marketing plan is paramount for a business entering a new market (Paul, 2019). Thus, this paper presents a suitable strategic marketing plan for introducing Amazon Go to UK-based Amazon consumers. This paper will include Amazon’s PESTEL analysis, Porter’s Model, SWOT, SMART strategic objectives, market segment, and marketing mix to come up with the most effective plan.
- 1. PESTLE analysis
PESTEL analysis is a tool used by marketers to monitor and analyze the macro-environment factors that will impact an organisation (Çitilci, and Akbalık, 2020). When a company considers entering a new market, it is important to consider these factors. PESTEL, in this case, as stressed by (Babatunde, and Adebisi, 2012), is an acronym for political, economic, sociocultural, technological, environmental, and legal factors in which a company operates. Countries differ when it comes to laws and norms that impact a business. For instance:
- Political: These are factors related to government influences and control over the industry or economy. A good example is the form of government in the United Kingdom. The UK is a constitutional monarchy that functions under the influence of a parliament system (Corcos, 2012). This makes the country be a stable and fair country with plenty of opportunities for businesses into the new market. Besides, the country has a robust economy and a permanent seat at the UN, which facilitates it to influence global scientific, social, military, cultural, and political issues. However, despite the vast opportunities for Amazon Go, the business will be affected by the country’s decision to exit from the European Union. This is because non-EU countries do not have access to current free trade arrangements for the EU as well as any customs blockages (Dreyer, and Popescu, 2014).
- Economical: These are factors that will directly impact the company’s long-term goals in the UK market. The United Kingdom has a strong economic position compared to other nations. Currently, the country expects to reach $ 2860.00 billion by the end of fiscal year 2021 (Trading Economics, 2021). This is according to the analysis done by the Trading Economics global macro models and analyst expectations. Besides, the country has a diverse economy, thus providing an equal opportunity for Amazon Go marketing strategy to grow and flourish. However, the country is experiencing slow economic recovery from the 2008and 2009 recession; hence, the company might find it challenging to generate its usual sale in other parts of the world.
- Social: These factors, such as culture and demographics, will impact the company by influencing purchasing habits, peak buying periods, and lifestyle choices. In the UK, a large number of the total population is technology literate hence a great strength for Amazon Go cashierless store. Besides, a decrease in unemployment and reasonable inflation rates puts UK’s citizens in the high-income earners. This means that the company will target more affluent customers who are more willing to pay.
- Technological: these are factors that are concerned with technological innovation, thus impacting the business operations of the industry as well as a deep analysis of the technological awareness in the current market. With the introduction of automated stores, which entails the use of sensors by Amazon Company, customers may experience difficulties, especially if the property is not properly charged or when their smartphones are not compatible with the sensors. Thus, before implementing Amazon Go, a deep analysis of the technology is required to minimise the likelihood of these obstacles from occurring.
- Environmental: Song et al, (2017), point out that, economic activities greatly impact the environment. Amazon Go, in this case, will be offering ready-to-eat food products; hence, a maintained temperature and a pollution-free environment will be of significance. Therefore, the automated store will be required to use block chain technology, which will allow the manufacturer to put information regarding food products in real-time.
- Legal: The automated store will, in this case, be required to adhere to UK‘s rules and regulations set for its industry. Amazon Go will be obliged to protect both its customers and employees from being discriminated against because of their color, gender, race, or any other differences.
Porter’s 5 forces
According to Juliana, and Nyoman, (2019), Porter’s 5 forces framework is an analytical model used by business managers and marketers to analyse the operating environment of a business’s competition. The level of competition, in this case, is not only influenced by the increase in the number of competitors but also depends on the five fundamental forces. These forces include the threat of new entrants, suppliers’ bargaining power, buyers’ bargaining power, the threat of substitute products, and competition in the industry. However, it is worth pointing out that if these forces are going to be tense, then the business will be negatively be affected, and if the forces are mild, the company will have higher returns. Therefore, proper use of Porter’s 5 forces will effectively help the company save a lot of expenses and help develop operational marketing policies. These five forces include:
- The threat of new entrants: The concept of grab-and-go goods from automated stores may seem radical. And one of the key reasons as to why it has not been introduced to the wider market target is because of its technical complexity that exists (Linzbach et al, 2019). Thus, for competitors to pose a significant threat to this company, they must also be adept in deploying deep learning, computer vision, and sensor fusion. This makes Amazon Go to have a low pressure concerning new market entrants. .
- Bargaining power of suppliers: The management of Amazon Go impedes brands representatives from promoting their products and brand in-store. This is especially worrying more so local ad small suppliers who rely on such tactics to establish the presence of their brands with hopes of eventually expanding it globally. Therefore the bargaining power for suppliers will be low.
- Bargaining power of buyers: As automated stores will be rolled out, there is no doubt that this will attract hordes of enthusiastic and eager customers. Given this discrepancy in consumer to firm ratio and the absence of substitute services, buyers’ bargaining power will be low.
- The threat of substitute services: So far, no other grocery stores in the UK allow customers to exit without paying physically at the checkout. Thus, the only substitute service that exists is the traditional grocery store. However, despite Amazon Go providing the practicality of quick entry and exit, customers may still prefer to shop at the traditional and well-established grocery chains due to being adamant about changing or simply to maintain their customer loyalty. Therefore, the pressure of substitute products and services will be medium.
- Competition between existing firms: For Amazon Go, the likelihood of having stiff competition from other companies is very low. This is because of its new concept of cashierless stores, which does not exist in the UK’s current market. Thus, taking this into account, this strategy may help Amazon Go to stand out in the market.
Bititci et al, (2016) state that, SWOT analysis is vital for an organisation as it helps it get visibility on its current status, letting the business understand and measure its overall performance. It lets companies analyse their strengths, which in return helps them better penetrate a new market to meet their goals. SWOT analysis stands for Strengths, Weaknesses, Opportunities, and Threats that Amazon Go will encounter both internally and in the macro-environment that it operates in. These include:
- Strengths: Amazon is one of the leading e-commerce companies globally, which is best known for its fair price and high-quality products. Being a well-known company, this will be a strength for Amazon Go as consumers will exhibit brand loyalty thus, devoting themselves to the new Amazon product. Further, Amazon Go is a unique idea that other companies have not implemented, hence thwarting competitive pressure.
- Weaknesses: Maintaining Amazon Go will be costly since high technology will be used to implement the automated store. This will require frequent testing and maintenance, which can be costly.
- Opportunity: By rolling out the Amazon Go system, Amazon will have a great opportunity to scale up considerably, bearing in mind that concerns over cashierless shopping as far as privacy and security are concerned are among the topmost issues in consumers’ minds.
- Threats: As a result of increasing cybercrimes, consumers will be scared of their data exposure, consequently affecting the successful implementation of Amazon Go. The company should, in this case, move swiftly to alleviate customer concerns over its new automated store and ensure that online security and privacy are guaranteed.
Amazon’s main internal stakeholders are employees, directors, officers, and shareholders. Its top officers include the CEO, the president, the senior vice president, and the board chairman. Shareholders are the most powerful stakeholders of this company since they can significantly influence its operations (Rahman, n.d). Jeffrey Bezos is the company’s main shareholder, with 10% of the total outstanding shares. On the other hand, the external stakeholders for Amazon Company include the government, customers, local communities, and competitors. Studies have shown that millions of customers visit the Amazon site every month. Besides, the company competes with a number of leading giants globally, with eBay being its biggest e-commerce competitor. Also, millions of sellers use Amazon to sell their products. They provide customers with what they look for, and without them, the company’s business model will be unsustainable (Palmer, n.d).
- SMART strategic objectives for the organisation
Laursen, and Thorlund, (2016) argue that, for a company to achieve its strategic objectives, the objectives, in this case, should be SMART; that is, they should be Specific, Measurable, Achievable, Relevant as well as Time-based. SMART goal strategy will be vital for Amazon Go, especially in maintaining the tractability and structure of goals. In the account of this, the SMART objectives for Amazon Go will entail:
- Specific: The goal of Amazon Go is to sell more products while elevating its UK’s customer experience, which will be enabled by smart building technology.
- Measurable: The automated store will be equipped with various data-gathering devices to track consumers’ activities inside the store.
- Achievable: By the end of July 2020, Amazon had 89 physical stores, out of which 26 operated using the Amazon Go services (Redman, 2021). This increased from only 6 Amazon Go automated stores in December 2018. This shows that this goal can be achieved if it is implemented effectively.
- Relevant: The cashierless store will offer various benefits such as speedy shopping, which will not require Amazon shoppers to stand in queues for check out.
- Time-based: For the strategic objective to be effective, the company will require 9 months. This will be enough time for consumers to familiarize themselves with the new system, thus, enabling the company to achieve its goal.
Camilleri,(2018) notes that marketers use market segmentation to create subsets based on needs, demographics, common interests, priorities, and other behavioral or psychographic criteria used to understand the target market comprehensively. It will be challenging for Amazon Go to pay attention to everyone without having a specific segmentation. Amazon’s marketing managers will better understand consumer needs and wants with a specific market segment. By implementing the cashierless store system of purchasing, the best market segmentation for Amazon will be the smart shoppers.
A smart shopper is a type of market segment composed of a group of people who prefer ease over price. Besides, they prefer to feel smart while shopping by minimising the costs related to shopping trips such as money, time, or effort, and maximising the benefits like ease of getting the correct product (Mittal, 2016). The smart shopper, in this case, will help Amazon Go to effectively market its services as it will be easier for the company to target a particular population group. Besides, it will not be difficult for the organisation to attract smart shoppers within the shortest time possible.
Amazon Go will provide a consumer-oriented brand positioning that will focus on speed, convenience, and the removal of pain points. Queues and pain points of purchase will be removed through the innovative use of mobile technology. Thus, Amazon Go’s brand positioning strategy should entail fair price, instant access, extraordinary convenience, and comprehensive selection. This will create both physical and emotional engagement with the Amazon brand. Further, it will also combine offline and online experiences to offer smart shoppers a holistic experience.
- Marketing mix and proposed pricing, promotional and distribution strategies
A marketing mix is a set of tactics or actions that a company employs to promote its product or brand in the market. Marketing Mix, also referred to as the 4Ps of marketing entails various areas of focus as part of a comprehensive marketing plan. The 4Ps, in this case, talk about a company’s pace, price, product, and promotion (Khan, 2014). Thus, it will be significant for Amazon Company to understand what the automated store will offer its customers. For instance, Amazon Go will offer various products ranging from grocery items, home décor, beauty products, health, personal care items, consumer electronics, baby products, electronics apparel, and gourmet food. The vast range of products will help the company fulfill the different needs of consumers in one store. Besides, the wide product range offered by Amazon Go will be a great opportunity for the company to pay more attention to products with high demand hence, enabling the business to expand its product line.
However, the company should develop a pricing, promotional, and distribution strategy in order to sell its products effectively. For instance, the price of different health and personal care items can range from $10 to $500, depending on the item. Products with more benefits and features can be priced higher. This is because different consumers need to perceive the benefits of what the store will be selling, and the higher the perceived benefit, the more the company should charge. Besides targeting consumers with different buying behavior, Amazon Go should develop favorable prices for these products. For instance, high-end consumers will be looking for high-level benefits hence, will be willing to pay more for those benefits.
Moreover, the company should develop the best promotional strategy for health and personal care items. For example, Amazon Go can use advertising, public relation, sales promotion, and direct marketing to promote these products. However, advertising will be an ideal strategy for the company. Since the company will know where the customers are and when they are checking into a specific store, it can utilize this opportunity to offer push notifications that can be geo-fence to a particular store to upsurge product trial and/or incentivize consumers to impulse buying.
Additionally, in order to effectively distribute these products, Amazon Go should adopt the indirect distribution strategy. The company can get these products from the manufacturers and sell them directly to the end-users. Amazon Go will, in this case, act as the intermediary where goods from different manufacture will pass through the stores before getting to customers.
Besides, using this form of distribution channel Amazon Go will be able to rely on its own sales as well as marketing networks and teams. Therefore, the company will have all necessary procedures in place to deliver the outcome in the most efficient way (Ding, 2017).
The strategic marketing plan for Amazon Go suggests the possible approaches and strategies suitable for the company to attain the leading position in the UK market. Further, by conducting marketing research, the company will understand how to enter the new market and come up with a competitive analysis taking into account consumer experience. Developing a marketing plan will also benefit the company since it will help the business establish its marketing objectives and goals. The most common way for the Amazon Go system to achieve these is by setting SMART goals. These goals will be set in a certain time frame, thus, enabling the organisation to keep them specific and measurable in order to achieve them. Additionally, using the PESTEL and Porter’s 5 forces Amazon will be able to enhance its competitive position in the new market. A SWOT analysis will also be significant as it will help the company build on what it does well, minimise risks, and address what the company will be lacking. Last but not least, Amazon Go’s market segmentation will let the organisation develop a unique marketing mix for its target market segment. To effectively enter the UK market, Amazon Go has to follow the proposed strategies and use every tool efficiently suggested in the strategic marketing plan.
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