How to Develop a Marketing Plan? The Example of the "Amazon Echo"


Term Paper, 2018

34 Pages

Anonymous


Excerpt

Table of Contents

List of Figures

List of Abbreviations

1. Introduction
1.1. Problem Description
1.2. Objectives

2. Marketing Theory

3. Company Profile & Offering

4. Marketing Plan
4.1. Strategic Plan
4.1.1. Marketing Analysis
4.1.1.1. Macro Environment
4.1.1.2. Micro Environment
4.1.1.3. Company-Internal Analysis
4.1.2. SWOT Analysis
4.1.3. Marketing Objectives
4.1.4. Strategic Recommendations
4.2. Tactical Plan
4.2.1. STP Strategies
4.2.1.1. Segmentation
4.2.1.2. Targeting
4.2.1.3. Positioning
4.2.2. Marketing Mix (Four Ps)
4.2.2.1. Product
4.2.2.2. Place
4.2.2.3. Price
4.2.2.4. Promotion

5. Outlook and Conclusion

Bibliography

Monograph

Internet

List of Figures

Figure 1: Amazon Echo (Alexa)

Figure 2: Amazon Echo Dot

Figure 3: Porter´s Five Forces

Figure 4: McKinsey 7S Model

Figure 5: SWOT Matrix.

Figure 6: Ansoff Matrix

Figure 7: Germany: Age structure from 2005 to 2015

Figure 8: Germany: Household gross income distribution 2015 in %

Figure 9: Germany: Household´s Expenditure

Figure 10: Target Group of Amazon Echo

Figure 11: Full Action Plan

List of Abbreviations

Abbildung in dieser Leseprobe nicht enthalten

1. Introduction

1.1. Problem Description

During the last decade, establishing a comprehensive marketing plan for any business has been dramatically gaining a great importance. It describes the current position of a business in the market and includes a set of activities which will be utilized to achieve the marketing goals as well as it includes the tactics for the next year. Companies are operating in continuously changing business environment. They need to develop marketing strategies for their new products and technologies alongside the macro environment and competitors based on the targeted customers´ needs and desires. Hence, marketing plans are now a survival tool for companies to adopt a viable strategy and tactics and shift from just advertising and promoting to interacting with customers.1

1.2. Objectives

The objective of this assignment is to develop a formal marketing plan for the launch of the new product “Amazon Echo”. It includes a review on the theory and approaches of a marketing plan along with concrete practical implications as a whole package to provide meaningful indications for concrete marketing activities based on marketing analysis in order to achieve the strategic objectives of the company regarding the new product.

2. Marketing Theory

As a kick start for the marketing plan, it´s important to explore the outlines of marketing theory. All marketing definitions revolve around identifying, meeting and even creating customer needs. One of the best short definition is “meeting needs profitably” which means turning a private or social need into a profitable business opportunity.2 The American Marketing Association provided more formal definition of Marketing as “the activity, set of institutions, and processes for creating, communicating, delivering, and exchanging offerings that have value for customers, clients, partners, and society at large” that requires large amount of work and skills.3 According to these processes, marketing management can be described as “the art and science of choosing target markets and getting, keeping, and growing customers through creating, delivering, and communicating superior customer value”.4

In order to make up a successful marketing management and marketing leadership, a set of tasks can be identified:5

- Developing marketing strategies and plans
- Capturing marketing insights
- Connecting with customers
- Building strong brands
- Shaping the market offerings
- Delivering value
- Communicating value
- Creating successful long-term growth

Emphasizing on developing creative strategies and plans, it´s important for organizations through its marketers to identify potential opportunities in markets for their products and services in the long-term by developing a marketing plan based on marketing strategy and tactics.6

Marketing plan is a documentation of a set of marketing activities that outlines the steps the marketer should take as it describes other business activities involved in achieving the marketing objectives for the coming year. Through its two levels, marketing plan provides a clear description of the current situation and position, targeted market and forecasting. It provides directions and focus on the product or brand and draws up the marketing strategies and tactics to accomplish strategic objectives. Marketing plan also documents a market research to identify the customer needs as well as it develops useful ways to fulfill these needs while generating an acceptable level of profit.

Many companies develop marketing plans to support and implement their strategic and tactical decision-making for the next year and use it as the base for many years later. The contents of marketing plan usually cover the following areas:7

- Market situation analysis
- Objectives
- Marketing strategy
- Action plan
- Financial forecasting
- Implementation controls

3. Company Profile & Offering

As the largest internet-based retailer in the world by total sales and market capitalization, Amazon is now considered as the iconic of electronic commerce and cloud computing based in Seattle, Washington. Amazon, the American company, was founded by Jeff Bezos in 1994 selling books through an online-based bookstore. Gradually, it started to diversify by selling CDs, DVDs, Blue-rays, video games, toys, food, apparel, jewellery, and furniture and ended with a very wide range of products where customers can offer or buy these products as a C to C business. The company also produces many electronic products such as Kindle e-reader, Fire tablets, Fire TV and Amazon Echo, also called “Alexa”, and its compatible devices Amazon Echo Dot and Amazon Echo Plus.

Now the company is considered as the most valuable company in the United states regarding market capitalization, the fourth most valuable company in the world and the largest internet-based company in the world by revenues.

In order to ensure physical presence, the company started to acquire other companies such as Whole Foods Market and even creating new companies such as A9.com, Search Engine and Search Advertising Technology, Amazon Web Services, and Amazon Lab126 which is a research and development and computer hardware company including the Echo products.

Amazon Alexa is an intelligent voice assistant with more than 24,000 skills (capabilities) developed by Amazon and made popular by the Amazon Echo and the Amazon Echo Dot devices developed by Amazon Lab126. The product was launched in November, 2014 in English and German languages. The product has functions in the following fields:

- Home automation
- Ordering
- Music
- Sports
- Messaging and calls
- Voice interaction
- Information search

The product has been available in Germany since September, 2016 with a good start up over big competitors, Google, Apple, and Microsoft.

Figure 1: Amazon Echo (Alexa)8 Figure 2: Amazon Echo Dot9

Editorial note: Figure 1 and 2 have been removed due to editorial issues.

4. Marketing Plan

Marketing plan for the example of Alexa (Amazon Echo) launching a new product in Germany will be conducted in this assignment by two parts, strategic and tactical.

4.1. Strategic Plan

The strategic part includes detailed marketing analysis through macro environment, micro environment and internal company analysis. It determines the marketing objectives as a reference for providing strategic recommendations.

4.1.1. Marketing Analysis

4.1.1.1. Macro Environment

The external environment analysis presents the external factors that directly or indirectly influence the firm and its marketing activities.10 These factors are usually represented in the DESTEP analysis which includes six factors any organization has to investigate externally as the following:11

- Demographic
- Economic
- Socio-cultural
- Technological
- Ecological
- Political-legal

Regarding the demographic factor, the German population is predominantly urban (75.3% of total population) and has been constantly increasing since 1960 to reach 82.2 Million in 2015. The good life conditions in Germany has increased the median age to reach 45.9 in 2015 and this statistic is expected to increase to reach 47.6 by 2030.12 The life expectancy in 2015 was 78.7 years for men and 83.4 years for women. The fertility rate in Germany is witnessing a constant declination and went from 830,019 in 1991 to 737,575 in 2015.13 Furthermore, the legal immigration policy as well as attracting young qualified workforces plays a big role in preventing the number of population from shrinking.

The German economic situation is positively influencing the intelligent devices market. The Germany´s gross domestic product in 2015 amounted to 41,197.41 US dollar per capita and projected to reach 44,667.92 US dollar per capita by 2020. Germany is thus among the leading countries in a world GDP ranking.14 The free market processes and welfare programs and protection as well as other government policies regarding subsidies to certain sectors have positive effects on the economic lifestyle. The unemployment rate in Germany was the lowest in the EU by the end of 2016 and recorded 3.9% which is projected to decrease while the employment rate was 75.51% for the people aged 15 – 64.15 The minimum wage in Germany in 2016 was 8.5 € per hour and started in 2017 with 8.84 € per hour.16 These economic components explain the growing economy in Germany and ability of customers to spend more on technology as well as on intelligent products.

In the context of socio-cultural factor, the idea of having intelligent products is becoming more popular in Germany and people´s lifestyle is becoming faster which explains the need of having devices that make tasks-performing faster and more efficient from checking traffic or weather conditions to remotely turning on the office coffee maker. The social media is also playing an important role regarding brand awareness where customers post their experiences with Echo on Facebook, Instagram or YouTube exploring its skills pool. Besides, the trend towards self-realization and the pursuit of self-expression are more present than ever which make having such products a need rather than luxury to demonstrate a symbol of good life. This transition of the people mindset has a positive influence on the whole market of intelligent voice assistant.

The technological progress constitutes an opportunity for the voice assistant market providing new instruments regarding R&D and further developments that enrich the product capabilities to be more attractive for consumers. New technology could invent a new kind of batteries that fit into Amazon Echo for long working hours, since the device has no battery and has to be plugged into the wall, or it could improve the Intelligent Battery Base made by Amazon to work more than 4-8 hours. It could also provide new developments for voice recognition and skills. Besides, digitalization revolution is positively influencing the voice assistant market. 68 million people are using internet in Germany and 81% of them are making purchases online.17 The A.T. Kearney Global Retail E-Commerce Index 2015 identified Germany as Europe’s second largest online market behind the UK which grew 70% from 2012 to 2015.18 This trend is not only supportive for selling the product but Alexa itself can be used to make purchases online.

The ecological factor has long been a high priority in Germany which is one of the world´s leaders in the environment protection and a pioneer in green growth. Germany is planning to exit gradually from nuclear energy and focus on sustainable energy sources to ensure healthy living and good conditions. The policy of Germany in this context is to achieve a combination of economic growth and environmental protection as a national objective through efficient use of energy and resources and the smart use of regenerative raw materials. The voice assistant offered by Amazon have to fulfill the requirements of environment friendly products and production processes as well as the packaging.

Like other internet-connected devices, the legislation of voice assistants falls under the regulation of data protection laws in Germany by demanding high privacy standards. The German Federal Data Protection Act has ensured privacy in online services including voice assistants and regulated electronic information and communication services.19 But on the other side, Although German law prohibits data transition without receiving a consent of users and although German law applies to any collection of data inside the country, Germany cannot enforce these laws against global players.20

4.1.1.2. Micro Environment

The micro environment includes a group of elements within the industry the company operates in such as customers, suppliers, competitors and other companies operating in the same market to create company´s value delivery system.21

The best tool to analyse the industry environment after identifying its boundaries is the Porter´s Five Forces model focusing on five forces within the industry as the following: (1) the Competitive Rivalry, (2) the Bargaining Power of Customers, (3) the Bargaining Power of Suppliers, (4) the Threat of New Entrants and (5) the Threat of Substitute Products.22 The five forces of Porter describe how the strength of each force could negatively affect the ability of company of regard to raise prices and generate profit. The model is formulated as shown in the following figure:

Figure 3: Porter´s Five Forces 23

Abbildung in dieser Leseprobe nicht enthalten

Source: Cf. Hill, C., Jones, G., 2009, p. 43.

Amazon with its new product “Echo” is operating among strong competitors manufacturing similar voice assistant devices such as Google (Google Now), Apple (HomePod), Microsoft (Cortana). These competitors are prestigious and have been investing heavily in R&D regarding intelligent voice assistant technology possessing strong financial abilities and know-how to catch up the technology advancements. At the same time, amazon is playing in a very strong position among small number of competitors with 71% market share worldwide and started aggressively in Germany to achieve 1.4 Million units sold from October to December 2016.

The bargaining power of buyers can be considered as moderate due to the limited number of choices in the market regarding intelligent voice assistant where these kind of products are offered by small number of companies. On the other hand, some competitors didn´t obtain the quality and number of skills Amazon obtained in Alexa. Also the design and some of the capabilities in Alexa such as the 7-Microphones and Kit (a tool allows users to develop additional skills) are unique. Thus, customers don´t have strong influential force on Alexa.

The bargaining power of suppliers constitutes a low force because Amazon has always the upper hand on its suppliers. Even though the number of suppliers is large, they also have to follow certain rules and standards set by Amazon such as ethical working principles at the workplace. Since Amazon is a very big player and due to the huge amount of units sold, there is a large number of suppliers who are ready to supply Amazon with the required parts and thus, the switching cost is negligible and suppliers have low force to influence the product prices.

Amazon is advocating large efforts and capital in the space of intelligent voice assistant industry taking advantage of its main function as an online retailer and other services Amazon is providing. Among 5000 employees working only on Alexa, highly skilled developers are working on improving Alexa´s capabilities and skills which jumped from 3000 skills in 2015 to 24000 skills in 2017. Hence, the threat of new entrants is low because the latter need huge investments and time to catch up the growth and expansion of Amazon beside of many other factors like brand reputation which makes it difficult to take on such a giant like Amazon.

The range of products that can constitute a threat of substitutes for Alexa is relatively wide. People may use many other products to conduct research, make purchases online, order some food online, or to connect to smart homes such as laptops, tablets, smartphones including the associated applications that provide limited voice interaction. But on the other side, no one of these devices is able to perform all the functions of Alexa especially the voice interaction feature with its huge database as well as the voice commands to control smart homes and other devices. For these reasons, the threat of substitutes for Alexa is low.

4.1.1.3. Company-Internal Analysisp

In order to analyze the company´s internal environment, the 7S Model is a useful tool to conduct such analysis. The tool is adopted by McKinsey to analyse the organizational design of a company through 7 internal elements; strategy, structure, systems, shared values, style, staff and skills to investigate how effectively have the company employed these elements to achieve its objectives and to facilitate and guide the strategy implementation process.24 These elements have to be compatible and connected to each other as shown in the following figure:

Figure 4: McKinsey 7S Model25

Abbildung in dieser Leseprobe nicht enthalten

Source: Global Journal of Management and Business Research, 2015, p. 8.

The main strategy of Amazon is the focus on diversification based on leveraging technological capabilities and adopting cost leadership strategy to offer greater value for its customer as much as possible at the lowest prices and to wrap its business around the customers as a customer-based business rather than competitors. Beside of focusing on technology, Amazon is constantly actualizing the benefits of economies of scale and linking its external drivers to internal resources to leverage efficiencies.

The company structure can be classified as hierarchical with Senior management team including two CEOs responsible for the worldwide consumer and Amazon Web Service and three vice president who are responsible for various vital aspects of the business.

[...]


1 Cf. Webster, F., The Changing Role of Marketing in the Corporation, 2016, p.1-22.

2 Cf. Kotler, P., Keller, K., Marketing Management, 2012, p.27.

3 Cf. Kotler, P., Keller, K., Marketing Management, 2012, p.27.

4 Cf. Kotler, P., Keller, K., Marketing Management, 2012, p.27.

5 Cf. Kotler, P., Keller, K., Marketing Management, 2012, p.28.

6 Cf. Kotler, P., Keller, K., Marketing Management, 2012, p.48.

7 Cf. Kotabe, M., Helsen, K., Global Marketing Management, 2007, p.576.

8 Https://www.amazon.com/

9 Https://www.amazon.com/

10 Cf. Ferrell, O., Hartline, M., Marketing Strategy, 2010, p.43.

11 Cf. Ferrell, O., Hartline, M., Marketing Strategy, 2010, p.43.

12 Cf. Statista, average age, 2016, n. p.

13 Cf. Statista, Geburtenrate, 2017, n. p.

14 Cf. Statista, Gross domestic product, 2017, n. p.

15 Cf. Trading Economics, Arbeitslosenquote, 2017, n. p.

16 Cf. Trading Economics, Arbeitslosenquote, 2017, n. p.

17 Cf. GTAI-Germany Trade and Invest, E-Commerce, 2017, n. p.

18 Cf. GTAI-Germany Trade and Invest, E-Commerce, 2017. n. p.

19 Cf. Edith Palmer, Online Privacy Law, 2012, n. p.

20 Cf. Edith Palmer, Online Privacy Law, 2012, n. p.

21 Cf. Ferrell, O., Hartline, M., Marketing Strategy, 2010, p.43.

22 Cf. Hill, C., Jones, G., Strategic Management Theory, 2009, p. 42.

23 Cf. Hill, C., Jones, G., Strategic Management Theory, 2009, p. 43.

24 Cf. Ravanfar, M., Analyzing Organizational Structure, 2015, p. 7.

25 Cf. Ravanfar, M., Analyzing Organizational Structure, 2015, p. 8.

Excerpt out of 34 pages

Details

Title
How to Develop a Marketing Plan? The Example of the "Amazon Echo"
College
University of applied sciences, Düsseldorf
Year
2018
Pages
34
Catalog Number
V514857
ISBN (eBook)
9783346116932
ISBN (Book)
9783346116949
Language
English
Tags
Marketing, Amazon, Alexa, Echo, Plan, Analysis, Advertisements, Price, Promotion, SWOT, DESTEP, 7sModel, Customer
Quote paper
Anonymous, 2018, How to Develop a Marketing Plan? The Example of the "Amazon Echo", Munich, GRIN Verlag, https://www.grin.com/document/514857

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