N2N5 : Marketing : Involvement of Internet and Globalization
Question:
a. Growth
b. Profitability
c. Macro environment ( PESTLE factor)
Answer:
Introduction:
Involvement of internet and globalisation has brought drastic changes in the business markets and conditions. With regards to this, organizations are adopting new and advance measures to make their products and services unique as well as effective in comparison to their competitors. Internet has eased the life of an individual as well as of an organization because with the help of internet individuals as well as business organization could reach to any extent. Expansion of business in the domestic and in international market has also become an easy task. Another advantage of internet is online shopping, people could shop from anywhere at any time and online shopping industry is growing rapidly. Amazon is one of the behemoth players of this industry which is present in online shopping industry, entertainment, cloud and webs services and in the production of other merchandise. Amazon believes in innovation and creativity in order to retain its existing and potential customers along with attracting new customer segments. Their recent innovations are Amazon Prime Services, Alexa, drone delivery system, etc. (Alexa, 2018).
In this report, Amazon’s latest innovation i.e. Alexa will be highlighted along with determining its growth, profitability as well as the opportunities available for Alexa in order to execute the marketing audit. Alexa is an artificial personal assistant which is capable enough to work as same like a human personal assistant and it is useful in terms of booking appointments, recording, reminder, telling live updates and weather conditions, playing songs, etc. This device works through internet and it is available in two versions which could be purchased by consumers as per their requirements. Alexa is smart appliance and falls under consumer electronics segment. With the help of Alexa, Amazon has been able to enhance its market share in the consumer electronics goods’ market along with strengthening image of organization amongst the target audience. The first phase of this report will focus on analysis of external environmental factors which could affect Alexa’s performance and in addition to this, SWOT analysis of the product will also be determined in comparison to its primary competitors. Further phase of the report will aim over identifying the p
rimary and secondary target market segment for Alexa along with determining positioning strategies for the particular product through which appropriate brand image could be developed amongst the target customer segments. In relevance to this, Alexa’s position will be determined in comparison to its primary competitors’ products.
Macro Level
Alexa is an artificial personal assistant which helps its users in various ways. It has been launched by Amazon in two versions i.e. Amazon Echo and Amazon Echo Dot. These are smart speakers and capable in making to-do list, music playback, setting alarms, voice interaction, playing audiobooks, streaming podcasts, and providing various other real time information for traffic, weather, sports update, etc. This was announced in back November 2014. Alexa was inspired by conversational system and computer voice and it is a unique and innovative product for public, thus, impact of external environmental factors on Alexa is bit high (Chen et. al., 2014).
PESTEL Analysis
Political
Political stability, rules, regulations, implication of overnight policies, etc. are certain crucial aspects of political factors which could affect performance of a product, of an organization, as well as the whole industry. Alexa will listen to its users and keep control over its user’s activity every time i.e. 24 * 7 until, user will not switch off it. Thus, certain countries may raise their voice against this because it may affect the privacy of a user and user’s information could be misused as Alexa stores whole information in cloud, there is no other storage option available with Alexa. On the other hand, Amazon is dealing in various segments since 1994 and they have constantly uplifted their performance. The major factor behind organizational success and development is customer centric approach adopted by Amazon and with regards to this policy; organization has attained sustained growth in various parts of the globe. Thus, Alexa has also been introduced with the motive of enhancing customer satisfaction as well as to facilitate an artificial personal assistant to its target audience and there are no chances of leakage of customer’s information. Currently, Alexa is successfully operating in various countries across the globe and recently, it has been introduced in France in 2018 (Alexa, 2018).
Economic
As Alexa is a virtual assistant developed by Amazon and it is made for those people who have busy schedule or weak memory and they are not able to recall the things which they are required to do in a day. Alexa helps those people and along with this, there are numerous other features available in Alexa through which users could easily manage their daily activities. But impact of economic factors will be huge over Alexa because it falls under luxurious category goods which will mostly be demanded in developed countries as their individual disposable income is sufficient enough to afford artificial personal assistant as their basic needs gets fulfilled easily. Thus, target customer segment for Alexa is limited to the developed countries (Mao, Liu & Zhang, 2015).
Socio-cultural
Socio-cultural factors have also great influence over a product’s success and failure in a particular market. In developing countries, major chunk of population is youth and millennials and they are more inclined towards technology. Thus, Alexa would easily be adopted by those people that will ultimately help the organization to promote its new product in the developing markets as well. Further, they will act as the promoter of Alexa and their feedbacks will be useful for the organization that could make Alexa more effective and efficient (Iachini et. al., 2016).
Technological
Alexa is a result of technology, thus, tech-enthusiasts will easily be targeted by Amazon in order to promote Alexa. Along with this, Alexa has been launched in two versions i.e. Amazon Echo and Amazon Echo Dot. Both of these devices are smart speakers with numerous functions which could attract tech-enthusiast, business professionals and various other customer segments.
Environment
Alexa does not impact environmental factors because Alexa does not extract harmful rays which could affect environment. Apart from this, Amazon is engaged in contributing towards environment sustainability in order to sustain in the dynamic business environment for longer period of time. Amazon’s corporate social responsibility strategy is significantly efficient in terms of enhancing organizational performance (Tsou & Hsu, 2015).
Legal
Legal factors such as laws, regulations related to data storage could affect Alexa’s performance. As Alexa does not have storage capacity except cloud storage, thus, there are certain countries that regulate and control their citizen’s data in order to prevent misuse of the data. In relevance to this, Amazon needs to consider these laws and regulations in order to match up with the laws and regulations of countries for enhancing their target market along with expanding their market share across the globe.
Industry Analysis
Visual assistant is a software agent that performs tasks for an individual. Since last year i.e. from 2017, usage of visual assistants is increasing rapidly. Along with this software, companies are producing products with a strong emphasis on voice user interfaces. This software is mainly used by Apple’s Siri, Google Assistant, Amazon Alexa, and by Microsoft Cortana. Industry of visual assistant is growing rapidly and along with the industrial growth, profitability in this industry is also expanding. This could also be verified with the increasing number of users of virtual assistant in developed as well as in developing economies. Mid-2017 shows that digital virtual assistant users were approximately 1 billion across the globe and as usage of virtual assistant are increasing rapidly from smartphones to smart speakers, automotive, health, retail, education and telecommunication sectors are also planning to make utilisation of virtual assistant (Walters et. al., 2015).
As per business experts, market growth of virtual assistant is pretty much high as it has been predicted to grow at a CAGR of 34.9% globally in the period of 2016 to 2024. Global market size of this market will reach approximately to US $7.5 billion by 2024. Despite the fact that these figures are predicted on the basis of demand of virtual assistant in North America, Asia-Pacific region is also one of the fastest growing regions globally. Main players of this region are India and China and both these markets are predicted to grow at annual growth rate of 40% in 2016-2024 in terms of usage of virtual assistants.
Opportunities
Thus, opportunities for Alexa are huge in order to enhance its market share in the international market. Amazon is currently selling its smart speakers over their online website in various countries and for other countries; organization is taking permission from the government authorities. As per the latest trends in the market, people are engaging number of tasks every day and remembering everything regarding every task is bit difficult which ultimately affects user’s personal as well as professional life. Alexa will help those people to maintain balance between professional and personal life through which new consumer markets could easily be targeted (Business Insider, 2018).
Threats
Apart from the opportunities, there are numerous threats such as numbers of companies are already producing their virtual assistants such as Google, Microsoft, and Apple. Along with this, number of companies is planning to enter into virtual assistant market. Aggressive competition in the virtual assistant market is another big threat for Amazon Alexa which could affect its demand. Apart from this, Amazon Alexa is available in smart speakers whereas other companies like Apple, Google and Microsoft are providing their virtual assistants along with their smartphones, thus, users are not required to purchase separate device while in terms of Amazon Alexa, users are required to maintain a separate device (Marinchak, Forrest & Hoanca, 2018).
Competition
Alexa is a unique combination of virtual assistant software and computer voice. With regards to this, Amazon has entered into the artificial intelligence market and in order to mark its separate presence in the virtual assistant industry, Amazon has made their smart speakers capable enough to enhance customer satisfaction along with helping users in executing tasks or services for them. With the help of home automation system, Alexa could be used for controlling multiple smart devices at one time. Alexa is currently available in English, German, and Japanese and in French language. Organization is planning to introduce Alexa in other local languages also in order to enhance the demand as well as for making it available for larger customer segments (Canbek & Mutlu, 2016).
Alexa’s primary competitors are Apples’ Siri, Google’s Home and Microsoft Cortana. As Apple’s Siri is not yet developed enough to help its users in terms of accomplishing tasks or performing the services, thus, it falls under secondary competitors’ category. Along with Siri, Cortana is also not much in action as Microsoft phones are not yet demanded, thus, Cortana is also not a big competitor for Amazon Alexa (McAlexander, Koenig & DuFault, 2016). So, the main competitor of Alexa is Google’s Home and both processes stores data in cloud. When Amazon Alexa was launched in the market, there was no company offering their virtual assistants in smart speakers but recently, Google has entered into market with Google Home in two variants i.e. Home mini and Home Max (López, Quesada & Guerrero, 2017).
Strengths of Google Home
- Voice controlled applications through which it provides factual response to questions of its users.
- Google Home is product of one of the giant search engine; thus, this device has much knowledge regarding people, places and other things which helps its users to resolve their queries along with getting adequate responses for the questions asked (Moore, 2018).
- Google Home is capable enough cast videos on TV which include YouTube and in future, Netflix and other online entertainment services (Lauterbach & Bonim, 2016).
- Multiple users could use Google Home device at once.
- Supports YouTube and other online platforms for playing music.
- Currently, Google Home is available in Canada, Australia, Germany, France, Japan, United Kingdom, and United States (Dale, 2015).
Weaknesses of Google Home
- Lacks in fulfilment of user’s demands and unavailability regular updates.
- Less skill in comparison to the Amazon’s Echo.
- Lacks in third party support in comparison to the Amazon Echo.
- Insufficient in sending or reading mails on behalf of users.
- Google Home does not hear to its users from distance whereas Amazon Echo’s reachability is high (Yadgar et. al., 2015).
- Application of Google Home is not user friendly.
- Present in few markets but Amazon Echo is present in various markets.
Consumers
Primary target markets for Alexa are developed countries’ public, tech enthusiast, young generation people and all other customer segments who are weak in scheduling their day. With regards to this, organization has launched Alexa in various parts of the globe whereas Google’s Home is not yet present in various markets where Alexa is present (Hoy, 2018).
Segmentation and targeting
|
Segmentation Type |
Segmentation Criteria |
Target Customer Segment |
|
Geographic |
Region |
Alexa is available in 38 countries |
|
Density |
Urban areas. | |
|
Demographic |
Age |
Over 18 years |
|
Gender |
Both Male & Female | |
|
Life Cycle Stage |
Amazon Alexa does not have expiry date, thus, it could be used for lifetime. | |
|
Occupation |
Students, business professionals, and all other customer segments | |
|
Behavioural |
Loyalty |
Amazon operates with customer centric approach due to which it has created high brand loyalty amongst its customers. Amazon Alexa has also received positive feedbacks till the date. |
|
Psychographic |
Social class, lifestyle |
Upper middle class and higher class people. |
These are certain primary target market segments for Amazon Alexa. As United States’ and other big markets are being saturated, companies are moving towards fastest growing economies. Amongst the fastest growing regions, Asia-Pacific region stands on the top, thus, organization has launched Alexa in Indian market which is also one of the fastest growing nations across the globe. Mainly population of India is youth which is considered as millennials and tech-enthusiast. They are found as curious about the introduction of new technology; thus, organization has chosen Indian market in the Asia-pacific region for introduction of Alexa (Chung, Iorga, Voas & Jee, 2017). Developed economies are considered as the primary target market segment for Alexa whereas developing countries such as India are considered as the secondary target market segments. The use of social media promotional technique is another essential tool for generating demand for the new product in different customer segments. Social media connects different parts of the globe and with the help of social media platforms, people could stay connected with each other, thus, Amazon uses this platform for promoting their new products and technology (Ruiz-Pava & Forero-Pineda, 2018).
Developed countries are organizational primary target markets because there, people have sufficient disposable income for investing into luxurious products for making their life easy. Thus, the design and features of Alexa has been designed on the basis of their primary target market segments. Along with this, organizational decisions also get influenced with the demands, wants, buying pattern and consumer behaviour of the primary target market segments (Forrest & Hoanca, 2015).
Conclusion:
From the aforesaid information, it can be concluded that virtual assistant market is growing rapidly and with regards to this, various companies like Amazon, Google, Microsoft and Apple have introduced their artificial assistant platform to ease the life of their users. These assistants are capable enough in handling organizational operations of their users. In this report, marketing analysis of Amazon Alexa has been discussed. It was introduced in 2014 in United States and from then till February 2018, it was expanded its market to 38 countries across the globe. The report has concluded macro environment analysis, industry analysis, competitive analysis and primary and secondary target market segments for Alexa.
References:
Alexa. (2018). Alexa’ Marketing Stack. Retrieved from: https://www.alexa.com/.
Business Insider. (2018). The best smart speaker you can buy: Amazon Echo vs. Google Home vs. Sonos One. Retrieved from: https://www.businessinsider.com/best-smart-speaker-amazon-echo?IR=T.
Canbek, N. G., & Mutlu, M. E. (2016). On the track of artificial intelligence: Learning with intelligent personal assistants. Journal of Human Sciences, 13(1), 592-601.
Chen, Y., Wang, Y., Nevo, S., Jin, J., Wang, L., & Chow, W. S. (2014). IT capability and organizational performance: the roles of business process agility and environmental factors. European Journal of Information Systems, 23(3), 326-342.
Chung, H., Iorga, M., Voas, J., & Lee, S. (2017). Alexa, Can I Trust You?. Computer, 50(9), 100.
Dale, R. (2015). The limits of intelligent personal assistants. Natural Language Engineering, 21(2), 325-329.
Demirkan, H., Spohrer, J. C., & Welser, J. J. (2016). Digital innovation and strategic transformation. IT Professional, 18(6), 14-18.
Forrest, E., & Hoanca, B. (2015). Artificial Intelligence: Marketing's Game Changer. In Trends and innovations in marketing information systems (pp. 45-64). IGI Global.
Hoy, M. B. (2018). Alexa, Siri, Cortana, and More: An Introduction to Voice Assistants. Medical reference services quarterly, 37(1), 81-88.
Iachini, T., Coello, Y., Frassinetti, F., Senese, V. P., Galante, F., & Ruggiero, G. (2016). Peripersonal and interpersonal space in virtual and real environments: Effects of gender and age. Journal of Environmental Psychology, 45, 154-164.
Lauterbach, B. A., & Bonim, A. (2016). Artificial intelligence: A strategic business and governance imperative. NACD Directorship, September/October, 54-57.
López, G., Quesada, L., & Guerrero, L. A. (2017). Alexa vs. Siri vs. Cortana vs. Google Assistant: a comparison of speech-based natural user interfaces. In International Conference on Applied Human Factors and Ergonomics (pp. 241-250). Springer, Cham.
Mao, H., Liu, S., & Zhang, J. (2015). How the effects of IT and knowledge capability on organizational agility are contingent on environmental uncertainty and information intensity. Information Development, 31(4), 358-382.
Marinchak, C. L. M., Forrest, E., & Hoanca, B. (2018). The Impact of Artificial Intelligence and Virtual Personal Assistants on Marketing. In Encyclopedia of Information Science and Technology, Fourth Edition (pp. 5748-5756). IGI Global.
McAlexander, J. H., Koenig, H. F., & DuFault, B. (2016). Millennials and boomers: Increasing alumni affinity and intent to give by target market segmentation. International Journal of Nonprofit and Voluntary Sector Marketing, 21(2), 82-95.
Moore, Q. (2018). Google Home Pros and Cons, Advantages & Disadvantages. Retrieved from: https://moorethoughts.com/google-home-pros-and-cons/.
Ruiz-Pava, G., & Forero-Pineda, C. (2018). Internal and external search strategies of innovative firms: the role of the target market. Journal of Knowledge Management.
Tsou, H. T., & Hsu, S. H. Y. (2015). Performance effects of technology–organization–environment openness, service co-production, and digital-resource readiness: The case of the IT industry. International Journal of Information Management, 35(1), 1-14.
Walters, G., Gustavii, E., Jonsson, R., Wieweg, A., Petrovic-Lundberg, S., & Hjelm, D. (2015). U.S. Patent No. 9,172,747. Washington, DC: U.S. Patent and Trademark Office.
Yadgar, O., Yorke-Smith, N., Peintner, B., Tur, G., Ayan, N. F., Wolverton, M. J. & Kathol, A. (2015). U.S. Patent No. 9,082,402. Washington, DC: U.S. Patent and Trademark Office.
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