Marketing Management End Term Report - FLIPKART Sumeet Tayal, BM-B-115 Debroop Sengupta, BM-B-076 Nikhil pandey, BM-B-095 Husain Jafar, BM-B-081 INDEX S. No| INDEX| PAGE| 1| ABSTRACT| 2| 2| INTRODUCTION TO E-COMMERCE| 2| 3| APPROACH OF ANALYSIS| 4| 4| SITUATION ANALYSIS| 5| 5| COMPETITOR ANALYSIS| 13| 6| CONSUMER BEHAVIOUR| 19| 7| SEGMENTATION, TARGETING, POSITIONING| 23| 8| ANSOFF MATRIX| 24| 9| BRAND BUILDING| 26| 10| SWOT ANALYSIS| 29| 11| FUTURE MARKETING STRATEGY| 30| ABSTRACT The paper includes detailed analysis of the strategic and marketing plan of Flipkart for its operations within the e-retailing industry.
Detailed macro environmental analysis has been performed to understand Political, Economic, Social, Technological and Legal factors that play a vital role in the development of Flipkart. Also the paper includes detailed competitor and consumer analysis that has helped us in understanding the current marketing strategy and in formulating future marketing framework for flipkart. The report objectives and the structure of the report will consist of three main sections that will enable us to recommend a strategic direction to flipkart, these are: 1. To establish background information on flipkart’s current strategic position 2.
To investigate, analyze and evaluate flipkart’s external and internal environment 3. To generate strategic options that flipkart could adopt, derived directly from the internal and external analysis BRIEF HISTORY Flipkart is an Indian electronic commerce company headquartered in Bangalore and was established in October 2007 by Sachin Bansal and Binny Bansal. The Company has shown promising growth over the last two years but is facing increasing competition from new entrants setting up an online presence and current e-retailers such as Amazon and EBay, which are increasing their geographical and product scope.
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Both the founders are the alumni of Indian Institute of Technology, Delhi and worked for Amazon. com before quitting and founding their own company. Initially they used word of mouth marketing and social networking websites to popularize their company. A few months later, the company sold its first book on flipkart. com - John Woods' Leaving Microsoft to Change the World. Within two years through word of mouth of their services, Flipkart became one of the top 100 Indian sites and was credited for being India's largest online bookseller with over 7 million titles on offer.
Flipkart broke even in March 2008 and claims to have had at least 100% growth every quarter since its founding. The store started with selling books and in 2010 branched out to selling CDs, DVDs, mobile phones and other electronic gadgets such as cameras. Flipkart has since then raised two rounds of funding from venture capital funds Accel India, in 2009, and Tiger Global Management to the tune of 10 million USD, in 2010. In December 2010, Flipkart acquired WeRead, a social book discovery tool from Lulu, a US-based on-demand publishing firm.
The stated goal was to give Flipkart a social recommendation platform for buyers to make informed decisions based on recommendations from people within their social network. INTRODUCTION TO E-COMMERCE E-Commerce transactions, particularly in the business-to-consumer (B2C) domain, are on an upswing in India, as both businesses and consumers realize the benefit of online transactions. According to a report by Internet and Mobile Association of India (IMAI) e-commerce business in India is expected to grow by 47% to reach Rs 46,000 crore in 2011.
Another report by Associated Chamber of Commerce and Industry of India (ASSOCHAM) confirms that e-retail market currently stands at 2000 crore and is growing at a steady annual rate of 35 per cent, expected to contribute about 6 per cent (Rs 2,700 crore) by the end of 2011 to the overall e-commerce business. The industry in India is likely to be worth Rs. 7000 crore by 2015 due to increasing availability of broadband services and increasing internet penetration across the country.
Also, the relative ease of online payments through credit cards or through Internet banking facilities – has enabled rapid growth in e-commerce transactions. The B2C E-commerce industry can be classified broadly in several categories as below: 1. Travel, comprising travel aggregators, tour operators, hotels and railways 2. E-tailing, comprising online retailers and online auctions 3. Classifieds, comprising jobs, matrimony, property, automobiles and the general category 4. Paid content subscription, comprising research, articles and exclusive videos 5.
Digital downloads, from Internet to mobile phones APPROACH FOR ANALYSIS We have adopted “A marketing oriented approach to strategy formulation and evaluation” (Source: Wind and Robertson 1983 p. 16) and designed the approach for analysis of Flipkart Marketing Model. “A marketing oriented approach to strategy formulation and evaluation” (Source: Wind and Robertson 1983 p. 16) Under this model we have selected the following tools for situational analysis and environment scan. The analysis phase has been categorized as internal and external scan.
In the internal environment scanning phase we have selected the supply chain model analysis, the resource based view analysis and the financial analysis. In the external environment scan phase we have adopted specific marketing tools and approaches including PESTEL analysis, Market Analysis, Competition Analysis and the GE Matrix. The analysis is to be summarized through SWOT analysis model. From the outcome of the analysis of the environment scan, key strategic challenges and constraints will be identified.
The step will be followed by generation of alternatives in marketing strategy for Flipkart. The scope of the project will also include TOWS Matrix and Ansoff Matrix and development of Methodology for selection of suitable alternatives for Flipkart in future. PESTELE factors| Key Points| Relevance to Flipkart. com| Political| Government Investment in Infrastructure to increase high speed internet penetration in India| Increase in internet penetration means larger potential customer base for flipkart. | Policies to promote E Commerce in India, increasing the competition in the E-commerce Retail segment| Comprehensive framework implementation based on culture and policy by the government will result in increased awareness of and reliability on e-commerce, increasing the opportunity for flipkart to increase its business. | | Rules, regulations and standardization for consumer data security, payment related security and for customer dissatisfaction or harassment. | The lack of policy has kept many internet users away from using e-commerce.
Improved policy and regulation means free, faster and reliable internet and payment services, an opportunity for flipkart to exploit the opportunity to maximum. | In order to analyze the market for ecommerce and its future prospects in India and scope for Flipkart in emerging Indian market, several levels of market research will be conducted to under the trend of the consumer behavior. The team has also proposed to reach out to the leaders of the business, suppliers, channel partners and competitors to gather information about the business and marketing processes.
SITUATION ANALYSIS The external environment is referred to as the macro-environment. This includes the broad environmental factors which will affect organizations at various levels. It is important to consider the potential impact of the external factors on the individual organizations. PESTEL analysis is used to identify how future trends in the political, economic, social, technological, environmental and legal environments might influence an organization (Johnson et al, P65). PESTELE factors| Key Points| | Relevance To Flipkart. om| Economic| Internet penetration in retail segment| Online retail industry is worth 7000 Crores in India. The buying and selling industry is valued at 2000 crores and is steadily growing at the rate of 35 Per cent. (Source ASSOCHAM). Details about consumer’s online shopping trend in Appendix 1. | Better market prospects for Flipkart. Have to tap potential customers who research about the product online but buy it from stores| | Disposable Income/ Per capita income| Real Average house hold disposable income has doubled since 1985.
It is expected to grow from 113,744 in 2005 to 318,895 by 2025. There will be a further increase in India’s Middle class. Seekers to rise from 5 per cent in 2005 to 41 per cent in 2025. India to become the largest consumer market by 2025. | Higher disposable income, growth in middle class and a high consumer market will benefit flipkart in its venture in online retail. | | Rising fuel costs and worsening traffic conditions| Fuel costs have risen in India| Conducive for growth of Online shopping. | PESTELE factors| Key points| Relevance to Flipkart. om| Technological| Person 2 Person transaction technologies| Safer transaction with third party involvement would fuel e commerce growth| | More devices for accessing internet| More sources of information. | | Banking Technology| Safer and ease of online transaction would increase online shopping trends in India| PESTELE factors| Key Points| Relevance to Flipkart. com| Social| Online social networking| Easily available feedbacks and reviews leads to complete and transitive information to the consumer. | Safer online transactions| Safer online transaction helps in increase the potential customer for flipkart| | Terrorist activities| People are motivated to do online shopping instead of visiting the public places – retail stores| Analysis We also need to consider the following data and trend for better understanding and analysis. (The Data has been simulated and graphically represented using Minitab) Year| Users| Population| % Pen. | 1998| 1,400,000| 1,094,870,677| 0. 1 %| 1999| 2,800,000| 1,094,870,677| 0. 3 %| 2000| 5,500,000| 1,094,870,677| 0. 5 %| 2001| 7,000,000| 1,094,870,677| 0. 7 %| 2002| 16,500,000| 1,094,870,677| 1. %| 2003| 22,500,000| 1,094,870,677| 2. 1 %| 2004| 39,200,000| 1,094,870,677| 3. 6 %| 2005| 50,600,000| 1,112,225,812| 4. 5 %| 2006| 40,000,000| 1,112,225,812| 3. 6 %| 2007| 42,000,000| 1,129,667,528| 3. 7 %| 2009| 81,000,000| 1,156,897,766| 7. 0 %| 2010| 100,000,000| 1,173,108,018| 8. 5 %| Year| online purchase (in crore)| 2006| 80| 2007| 120| 2008| 190| 2009| 280| 2010| 410| 2011| 560| Government is anxious to promote Information and Communication Technologies (ICT) within private and public sector organizations (including the government itself) and the Internet and e-commerce more generally within society.
This is seen as the wave of the future and one which, ramified through the ‘new economy’, is seen as essential for international competitiveness. Internet usage has been rising steadily. In 2009, 63 million Indians are using the Internet (defined as anyone who uses the internet once a month), representing a mere 5. 2% of the country's population. A survey conducted recently by the e-Tech group of IRB International and IAMAI for 2009-2010 (which also covered 100 SMEs among households, individuals and cyber cafes in 31 Indian cities) shows some interesting results.
It appears that a growing number of Internet users live in India's small- and medium-sized urban centers and not in metros as is commonly perceived. Of the total users in 2009, for instance, 34% lived in the top 8 metros, 18% in large towns, 12% in towns with 5-10 lakh population and a surprising 36%, the largest group, in towns with below 5 lakh population. Compare this to the year 2000, when only 5% of the total Internet usages (itself an abysmal 5 million users) was attributed to towns with population of less than 5 lakh people.
Clearly, the desire to be connected and use technology is widespread. The delivery of government services via the Internet, e-commerce, and ease of access to information, popularity of social networking among youth, a higher presence of e-kiosks, mobile phone penetration and affordable plans from ISPs are all contributing factors to this phenomenon. Government in India has been working primarily on two parameters related to the policy to promote e-commerce in India. Culture| Trust| Distrust developing countries’ businesses by developed countries’ consumers; Cannot establish relationships| | |
Corruption| Consumers of developing countries distrusted by developed countries’ businesses| Patterns of Communication| Cultural and physical distance promotes distrust; Lack of infrastructure may prevent relationships all together| | | | | Policy| General Commerce| Differing policies from different countries; Different tax laws, intellectual property, and trans-border information sharing| | | Specific to E-Commerce| Concerns regarding receiving payment or products; Lack of funds available for infrastructure development; Country policies on copying/stealing| | | | |
Government policies to improve E-commerce regulations and policies The government is aware of the increasing misuse of the electronic media and online frauds. Therefore, the government of India has passed the Information and Technology Act to keep a check on the transactions carried on via the electronic media and to make the process of Ecommerce safe and reliable. The Act imposes heavy penalties and punishment on those who try to misuse this channel for personal benefit or to defraud others. The law has also established the authentication of the electronic records.
Increase in the Cybercrimes in Ecommerce is causing concern among the credit card users in India. There are three major participants in the e-commerce i. e. business enterprise, customer and governments. The potential of growth of E-Commerce in business to customer segment cannot be easily predicted. However, with the advent of time, transactions at business to customer level, Government to business level and government to customer level are going to pick up. The potential for growth of e-commerce is linked with reliability, security and to other electronic networking environment.
The growth will depend on the kind of industry, product involved and the type of customer-supplier relationship necessary to preserve or to develop. The consumers are generally concerned about: 1. Confidentiality of any information which they provide 2. Identity of the seller 3. The competition is open and the market is not artificially distorted. On the net, a single person can create many web sites and market the same product at different prices. 4. The goods are delivered at the correct place and the correct time. 5.
The goods delivered correspond to the description, quality and quantity for which he has effected payment. 6. He has effective grievance system and legal remedies if anything goes wrong. E-Commerce raises questions about the application of existing regulation concerning contract law, consumer protection, competition policy, intellectual property rights, dispute settlement mechanism, tax laws etc. Rise in Disposable income Real Average house hold disposable income has doubled since 1985. It is expected to grow from 113,744 in 2005 to 318,895 by 2025. There will be a further increase in India’s Middle class.
It will swell from the current population of 50 Million to 583 million by 2025. Seekers and Strivers population to rise from 5 percent in 2005 to 41 percent in 2025. Urban population will contribute 2/3rd of the consumption growth over the next 20 years. (Source: MGI: Bird of Gold May 2007) Rise in Fuel costs Fuel prices have increased by over a 100 Percent in the last decade, giving rise to an increase in logistics cost for companies and travel costs for consumers. The increase in fuel prices has subsequently fuelled the growth of online retailing industry in India. Source: http://www. mypetrolprice. com/fuel-price-chart. aspx ) Indian Banks too have been very successful in adapting EC and EDI Technologies to provide customers with real time account status, transfer of funds between current and checking accounts, stop payment facilities. ICICI Bank, Global TRUST BANK AND UTI-Bank also have put their electronic banking over the internet facilities in place for the upcoming e-commerce market speed post also plain to clone the federal express story with online package status at any moment in time.
Online social networking The social aspect of a company is about connecting with the consumer in an effective way so that the consumer can contextualize with the product. Online social networking provides a very suitable platform to the online shopping portals to build relationship with its users. Trust is built over a period of time via small, fruitful encounters online. Moreover, the infrastructure of the Internet now enables the sharing of information among networks at a velocity and scale that has been impossible in the offline world.
Applications like product reviews, recommendations and ratings have emerged as the most popular social media. They enabled customers to find out what their peers were thinking, and provided valuable user data and feedback to the retailer which could be reviewed in “real-time. ” Ninety percent of people trust recommendations of friends above any form of advertising. Social networking sites also provides a very suitable audience for advertising as the internet savvy people on the social networking websites are the most potential customers.
Below are the findings of a survey conducted by flipkart on Facebook on its page: Here are the other social networking websites that Flipkart has leveraged to its advantage for advertising and publicity. Overall internet transactions Safer Online Transactions: The “risk” associated with online transactions has always been a major concern for the consumers while doing an online transaction. But with emergence of better security provided to the online transactions, the risk has been substantially reduced in the recent years. Moreover, with the emergence of certified platforms for online transactions ike Bill Desk, VeriSign, PayPal etc. the online transactions by its nature have become safer. But despite this there still exists a huge portion of population which is vary of making payments online. The online shoppers base as on April 2011 in India is estimated to be about 34. 5 million, a good 6. 5 million bigger than last year’s figure of 28 million. However, of all these online shoppers, only 22% (or 7. 72 million) actually ‘buy’ online. The balance 78% online shoppers only search for products online and then probably buy them offline.
COMPETITOR ANALYSIS Although flipkart initial product offerings were limited to books with a very low starting range but by 2011 the company diversified to electronic gadgets, software and health care products. At present it offers a wide range of products including mobiles, movies, cameras, computer games, portable music gadgets and personal items. The success of flipkart is an indication of changing consumer behavior in India. The growing access to internet and confidence in online transactions has prompted major players to move in ecommerce.
The segment in India has considerable presence of brands offering online purchase options to its customers while retail trading portals are more popular because of the wide range of products availability. Global brand like eBay is very popular for its products and prompt services. eBay has strong brand presence also and high level of consumer confidence in metros. The major media houses have also ventured into online trading through their news portal platform and with gradual success of the endeavor the portals have emerged as separate entities.
The Times of India group has launched Indiatimes shopping which has products categorized in 26 main categories. Equipped with strong customer support team, supply chain and lucrative deals the website is emerging as a popular shopping destination. Indiavarta is an initiative taken by Indian Express Group on similar lines. In comparison to Indiatimes shopping, Indiavarta has a sleek appearance with optimum usage of color in the portal page. However, the consumer needs to search desired product through links. Homeshop18, an initiative from Network 18 group, emerged as a popular choice in online shopping domain.
Ecommerce: Product Range Analysis for key players in India. e-Commerce Portal India| Antiques| Apparel| Arts| Baby Care| Books| Camera & Accessories| Cars & Accessories| Computer & Accessories| Consumer Electronics| Fashion Accessories| Food| Game CD/DVD| Gifts| Health Care & Beauty| Kitchen Appliance| Jewellery| Lingerie| Mobile| Movies| Music | Personal Care| Picture| Real Estate| Sports & Accessories| Toys/ Soft Toys| Travel & Tickets| 20north| | ? | ? | ? | ? | ? | ? | ? | ? | ? | ? | ? | ? | ? | | ? | ? | ? | ? | ? | ? | | | ? | ? ? | 99Acres| | | | | | | | | | | | | | | | | | | | | | | ? | | | | a1book| | | | | ? | | | | | | | | | | | | | | | | | | | | | | amazon| | ? | | | ? | ? | ? | ? | ? | ? | | ? | ? | ? | ? | ? | | ? | ? | ? | ? | | | ? | ? | | balgopal| | | | ? | | | | | | | | | | | | | | | | | | | | | | | bigfang| | | | | | ? | ? | ? | ? | | | | | | | | | ? | ? | ? | | | | | | | bigflix| | | | | | | | | | | | | | | | | | | ? | ? | | | | | | | bindaasbargain| | ? | | ? | ? | ? | ? | ? | ? | ? | | ? | ? | ? | ? | ? | | ? | ? | ? | ? | | ? | ? | ? | caratlane| | | | | | | | | | | | | | | | ? | | | | | | | | | | | dealsandyou| | ? | | ? | ? | ? | ? | ? | ? | ? | | ? | ? | ? | ? | ? | | ? | ? | ? | ? | | ? | ? | ? | | dealsivore| | ? | | ? | ? | ? | ? | ? | ? | ? | | ? | ? | ? | ? | ? | | ? | ? | ? | ? | | ? | ? | ? | | dell| | | | | | | | ? | | | | | | | | | | | | | | | | | | | Ebay| ? | ? | ? | ? | ? | ? | ? | ? | ? | ? | | ? | ? | ? | ? | ? | ? | ? | ? | ? | ? | | | ? | ? | ? | edigiworld| | | | | | ? | ? | ? | ? | | | | | | | | | ? | ? | ? | | | | | | | egully| ? | ? | ? | ? | ? | ? | ? | ? | ? | ? | ? | ? | ? ? | ? | ? | ? | ? | ? | ? | ? | | | ? | ? | ? | ezone| | | | | | ? | ? | ? | ? | | | | | | | | | ? | ? | ? | | | | | | | Fernsandpetals| | | | | | | | | | | | | ? | | | | | | | | | | | | ? | | firstcry| | | | ? | | | | | | | | | | | | | | | | | | | | | | | flipkart| | | | | ? | ? | | ? | ? | | | ? | | ? | | | | ? | ? | ? | ? | | | | | | flykingfisher| | | | | | | | | | | | | | | | | | | | | | | | | | ? | goair| | | | | | | | | | | | | | | | | | | | | | | | | | ? | goindigo| | | | | | | | | | | | | | | | | | | | | | | | | | ? | grabbon| | ? | | ? | ? | ? | ? | ? | ? | ? | ? | ? | ? | ? | ? | | ? | ? | ? | ? | | ? | ? | ? | | homeshop18| | ? | ? | ? | ? | ? | ? | ? | ? | ? | ? | ? | ? | ? | ? | ? | ? | ? | ? | ? | ? | | | ? | ? | ? | hushbabies| | | | ? | | | | | | | | | | | | | | | | | | | | | | | indiagiftportal| | | | | | | | | | | | | ? | | | | | | | | | | | | ? | | Indianairlines| | | | | | | | | | | | | | | | | | | | | | | | | | ? | indiaplaza| ? | ? | ? | ? | ? | ? | ? | ? | ? | ? | ? | ? | ? | ? | ? | ? | ? | ? | ? | ? | ? | | | ? | ? | ? | Indiaproperty| | | | | | | | | | | | | | | | | | | | | | | ? | | | | -Commerce Portal India| Antiques| Apparel| Arts| Baby Care| Books| Camera & Accessories| Cars & Accessories| Computer & Accessories| Consumer Electronics| Fashion Accessories| Food| Game CD/DVD| Gifts| Health Care & Beauty| Kitchen Appliance| Jewellery| Lingerie| Mobile| Movies| Music | Personal Care| Picture| Real Estate| Sports & Accessories| Toys/ Soft Toys| Travel & Tickets| indiatimes Shopping| | ? | ? | ? | ? | ? | ? | ? | ? | ? | ? | ? | ? | ? | ? | ? | ? | ? | ? | ? | ? | | | ? | ? | ? | infibeam| | ? | | | ? | ? | ? | ? | | | | ? | ? | | | | | ? | ? | ? | | | | | ? | | inkfruit| | ? | | | | | | | | | | | | | | | | | | | | | | | | jetairways| | | | | | | | | | | | | | | | | | | | | | | | | | ? | jetlite| | | | | | | | | | | | | | | | | | | | | | | | | | ? | kidloo| | | | ? | | | | | | | | | | | | | | | | | | | | | | | landmarkonthenet| ? | | | | ? | ? | | ? | ? | | | ? | ? | ? | | | | ? | ? | ? | ? | | | | ? | ? | mydala| | ? | | ? | ? | ? | ? | ? | ? | ? | | ? | ? | ? | ? | ? | | ? | ? | ? | ? | | ? | ? | ? | | myntra| | ? | | | | | | | | | | | ? | | | | | | | | | | | | | | ngaloriginals| | | | | | | | | | | | | | | | | ? | | | | | | | | | | Pantaloons| | ? | | | | | | | | | | | ? | | | | | | | | | | | | | picsquare| | | | | | | | | | | | | | | | | | | | | | ? | | | | | Rediffshopping| ? | ? | ? | ? | ? | ? | ? | ? | ? | ? | ? | ? | ? | ? | ? | ? | ? | ? | ? | ? | ? | | | ? | ? | ? | saffronart| ? | | ? | | | | | | | | | | | | | | | | | | | | | | | | seventymm| | | | | | | | | | | | | | | | | | | ? | ? | | | | | | | shop. in| | ? | ? | ? | ? | ? | ? | ? | ? | ? | ? | ? | ? | ? | ? | ? | ? | ? | ? | ? | ? | | | ? | ? | ? | shoppersstop| | ? | | | | | | | | | | | | | | | | | | | | | | | | | snapdeal| | ? | ? | ? | ? | ? | ? | ? | ? | ? | ? | ? | ? | ? | ? | ? | | ? | ? | ? | ? | | ? | ? | ? | ? snapfish| | | | | | | | | | | | | | | | | | | | | | ? | | | | | sosasta| | ? | | ? | ? | ? | ? | ? | ? | ? | | ? | ? | ? | ? | ? | | ? | ? | ? | ? | | ? | ? | ? | | spicejet| | | | | | | | | | | | | | | | | | | | | | | | | | ? | spicejet| | | | | | | | | | | | | | | | | | | | | | | | | | ? | strapsnstrings| | | | | | | | | | | | | | | | | ? | | | | | | | | | | suratdiamond| | | | | | | | | | | | | | | | ? | | | | | | | | | | | taggle| | ? | | ? | ? | ? | ? | ? | ? | ? | | ? | ? | ? | ? | ? | | ? | ? | ? | ? | | ? | ? | ? | | talash| | | | | | ? | | ? | ? | ? | | ? | ? | | | | | ? | ? | ? | | | | | ? | | tradeus| | ? ? | ? | ? | ? | ? | ? | ? | ? | ? | ? | ? | ? | ? | ? | ? | ? | ? | ? | ? | | | ? | ? | ? | utsavsarees| | ? | | | | | | | | ? | | | | | | ? | ? | | | | | | | | | | victoria's secret| | | | | | | | | | | | | | | | | ? | | | | | | | | | | zoomin| | | | | | | | | | | | | | | | | | | | | | ? | | | | | Amazon. com: Amazon. com Inc. (AMZN) is a leading global Internet company and one of the most trafficked Internet retail destinations worldwide. Amazon is one of the first companies to sell products deep into the long tail by housing them all in numerous warehouses and distributing products from many partner companies.
Amazon directly sells, or acts as a platform for the sale of a broad range of products. These include books, music, videos, consumer electronics, clothing and household products. The majority of Amazon’s sales are products sold by Amazon, with the remaining amount from third-party sellers. Amazon was founded in 1994 and is headquartered in Seattle, Washington. It has direct international operations in the United States, Canada, France, Germany, Japan, and the United Kingdom. Since 2004, Amazon has begun to rapidly expand its web services arsenal.
Products such as Amazon EC2 (Elastic Compute Cloud) and Amazon S3 (Simple Storage System), Amazon Route 53 have been large successes. Some of Amazon’s recent acquisitions include Shopbop (2006), Abebooks (2008), Zappos (2009), LOVEFiLM (2011). As of Q1 2011, Amazon has approximately 137 million active customers worldwide. It was also reported that there are 2 million merchants selling on Amazon equaling a third of the total listings. North America currently represents 55. 4% of sales with the other 44. 6% in the International market. eBay. com: Founded in 1995 in San Jose, Calif. eBay connects millions of buyers and sellers globally in the world’s largest online marketplace, utilizing PayPal to ensure secure transactions. The company also operates specialized marketplaces such as StubHub, the world’s largest ticket marketplace, and eBay Classifieds sites, which together have a presence in more than 1,000 cities around the world. eBay items can be sold either via a silent auction, in which users input the maximum price they are willing to pay and for which the site will automatically increase bids as necessary up to that maximum, or via “Buy it now,” with which they purchase items at a set price. Bay products and companies include eBay Marketplace, Media Marketplace, Skype, PayPal, half. com, MicroPlace, Shopping. com, Rent. com, Stubhub and various online classifieds. Infibeam: Infibeam. com owns and operates an e-commerce retail portal www. infibeam. com as well as customized products portal www. picsquare. com. The company also provides e-commerce and interactive marketing services to brands, retailers and media companies in India and internationally.
The company's technology services include e-commerce engine with a set of configurable features and functions that enables Web store functionality, such as shopping cart, product presentation, and merchandising. It also offers a wide range of Web store management tools along with a host of services such as fulfillment, customer care, interactive marketing, and online advertising and design. Infibeam. com was founded in 2007 and is headquartered in Ahmedabad, Gujarat. The online trading services are primarily focused on products consumer electronics, apparels, gifts, books etc. But there are niche segments like photography, property, food and ollectibles. Within the product range of flipkart it faces competition from infibeam, landmarkonthenet, a1books and global player amazon. An analysis of Google trend traffic shows that since inception the growth of internet traffic in flipkart has been considerably higher than its domestic competition. The trend comparison between flipkart and amazon shows that the internet traffic in amazon has remained static during last 12 months while the same for flipkart has been increasing. The analysis shows that during the last 12 months the flipkart internet traffic has grown by 250%. (Internet traffic Trend: Amazon Vs Flipkart)
CONSUMER BEHAVIOUR The concept of Business or consumer model for internet marketing in India can be described through traditional framework of transaction alternatives. The internet offers additional degrees of freedom where buyers and sellers can interact seamlessly. In B2C, Business to Consumer Model, the companies create market their products directly to the consumer while in B2B, Business to Business, the business relation is between two organizations. Source: Business or Consumer Model, Internet Marketing Strategy, Implementation & Practice, Prentice Hall (Second Edition, 2003) Flipkart model is built on the model B2C.
The consumer can browse through the options of wide range of books, mobiles, movies, music, games, cameras and computers and avail attractive offers from the seller on price and delivery. The consumer behaviour within the domain of web based marketing differs in a distinct way than conventional marketing. The consumer has wide variety of choice from plethora of options that the webs offer. The products and services are customised to the needs of the consumer and placed at an attractive price. Last few years there has been considerable progress in understanding the behaviour of the consumer in ecommerce domain.
These studies have lead to the development of tools and techniques to study the customers. As per the e-marketing strategy (Ian Chaston, 2001), this range from simple attitude and usage studies through to the development of complex multivariate equations that define the relationship between sales and all the variables within the marketing mix. Ian Chaston identifies that one way of approaching the modeling process ia to assume the buyer behavior is divided into five different phases. A five phase Consumer Purchase Process (Source: Ian Chaston, 2001) Need recognition is the most important step for purchasing process for a consumer.
It depends of internal and external stimulus that results in need recognition. Need of a consumer cannot be created but can be invoked by the aid of stimulus. This has prompted the ecommerce companies to adopt brand promotion through different channels. The ecommerce has found its success rooted in the growing consumer confidence in web based security and trust on online marketing companies for their reliable service and customer support. The reason of success can also be attributed to low price of the products that are offered in the online market place.
For the suppliers who have always supplied their goods through their own supply chain now finds it easier to sell them through online mall. It on one side reduces significant cost of operations and on the other hand the cost benefit is delivered to the final consumer. The web based marketing companies reaps the benefit of the low cost offering of products and services. We have analyzed the models from pure economic approach. From the operational effectiveness, that is merging the marketing and distribution network for the consumer goods the web based marketing can offer a price benefit to the final consumer.
This results in a shift from brick model to the click model for the consumers. The consumer now can avail the benefit of minimized cost and effort for their purchasing process. In fact once a consumer avails the benefit of price it considerably reduces his/her WILLINGNESS TO PAY for the similar product or services. For example, if one consumer purchased a set of new story books worth Rs. 500 from flipkart at a discount of 10%, then in future he would not like to pay an extra amount to buy similar books. Positioning- In order to understand the positioning of flipkart, it is important to nderstand the consumer behaviour in India for eCommerce. Reliability plays very important role in purchase decision of the buyer. So flipkart had to address the issue in the first place. Small transactions of Rs. 100 and efficient supply chain management helped to build flipkart the consumer confidence and resulted in flipkart to grow through customer acquisition and retention. Flipkart succeeded in establishing itself as a cost effective eMarket for books and subsequently for electronic gadgets and health products which has a reliable supply chain for delivery of items.
The aesthetics of the graphical user interface is simple and user friendly and easy to search so flipkart is able to provide its consumer a superior experience of shopping. Simplicity is a key parameter for web portals to attract consumers. One more marketing strategy flipkart adopted that placed it in a reliable zone in consumers’ mind is the COD service where consumer can pay after the receipt of the consignment. Positioning- In order to understand the positioning of flipkart, it is important to understand the consumer behaviour in India for eCommerce. Reliability plays very important role in purchase decision of the buyer.
So flipkart had to address the issue in the first place. Small transactions of Rs. 100 and efficient supply chain management helped to build flipkart the consumer confidence and resulted in flipkart to grow through customer acquisition and retention. Flipkart succeeded in establishing itself as a cost effective eMarket for books and subsequently for electronic gadgets and health products which has a reliable supply chain for delivery of items. The aesthetics of the graphical user interface is simple and user friendly and easy to search so flipkart is able to provide its consumer a superior experience of shopping.
Simplicity is a key parameter for web portals to attract consumers. One more marketing strategy flipkart adopted that placed it in a reliable zone in consumers’ mind is the COD service where consumer can pay after the receipt of the consignment. Targeting- During the initial phase of flipkart, it targeted book lovers who have access to internet and purchase them online. The market size was small due to low penetration of internet in India and low consumer confidence in online transactions. However, with increase in product range flipkart now aims at larger audience based in metros and tier 1 cities with high income and comparatively less spare time. The idea of trading electronic consumer items, health products and kitchen appliances depicts its objective of delivering values to customers in terms of opportunity to choose from various categories and enjoy superior delivery service at an affordable price. The target customer segment also includes people who do not have easy access to book store or shopping outlets for the products or family members have little or no time to purchase the utilitarian products for the households.
The target age group falls within 15 to 65 with high income group having access to internet and are comfortable with online transactions. V Targeting- During the initial phase of flipkart, it targeted book lovers who have access to internet and purchase them online. The market size was small due to low penetration of internet in India and low consumer confidence in online transactions. However, with increase in product range flipkart now aims at a larger audience based in metros and tier 1 cities with high income and comparatively less spare time.
The idea of trading electronic consumer items, health products and kitchen appliances depicts its objective of delivering values to customers in terms of opportunity to choose from various categories and enjoy superior delivery service at an affordable price. The target customer segment also includes people who do not have easy access to book store or shopping outlets for the products or family members have little or no time to purchase the utilitarian products for the households. The target age group falls within 15 to 65 with high income group having access to internet and are comfortable with online transactions.
V Segmentation – The primary segmentation of consumer base is on the basis of access to the internet and purchase product and services online. In the initial phase flipkart product portfolio was dominated by categories of books. From the product approach the customer segmentation was based on demo graphics. Age, gender, Location, reading preference of consumers would be the attributes to segment the customer base but with diversification of portfolio flipkart needs to understand in depth the variation in consumer behaviour for its roducts. Flipkart has taken up a more customer centric approach to develop its product range. This product range includes electronic gadgets, mobile, camera, music players and personal and health care products. These diversified product range compels to segment the market in terms of family income, family composition, job engagement, disposable income, music preference, games addiction, computers and electronic gadget density, food preference, washing frequency, hobbies, expense on hobbies etc Segmentation –
The primary segmentation of consumer base is on the basis of access to the internet and purchase product and services online. In the initial phase flipkart product portfolio was dominated by categories of books. From the product approach the customer segmentation was based on demo graphics. Age, gender, Location, reading preference of consumers would be the attributes to segment the customer base but with diversification of portfolio flipkart needs to understand in depth the variation in consumer behaviour for its products.
Flipkart has taken up a more customer centric approach to develop its product range. This product range includes electronic gadgets, mobile, camera, music players and personal and health care products. These diversified product range compels to segment the market in terms of family income, family composition, job engagement, disposable income, music preference, games addiction, computers and electronic gadget density, food preference, washing frequency, hobbies, expense on hobbies etc SEGMENTATION, TARGETING AND POSITIONING Russell Haley's Benefit Segmentation of Online Retail|
Segment Name| Discount seekers| Time Savers| Availability seeker| Variety Seekers| Principal Benefit Sought | Lower price| Time saving by avoiding going to a store| Easy availability of a specific product| Variety to chose and compare among different products| Demographic Characteristics| Middle income group| Urban, Professional| Tier II cities, Remote areas, Suburbs| Urban youth| Special Behavioral Characteristics| Price-sensitive| -------------| ----------| Choosy| Brands Disproportionately favored| Flipkart, snapdeal| flipkart| Flipkart| flipkart, pantaloons, landmarkonthenet|
Personality Characteristics| | Type A personality| ---------| High self-involvement| Lifestyles| Value Oriented| Busy| Rural Semi-Urban| Gadget freaks| PRODUCT MARKET EXPANSION GRID| | Existing Products| New Products| Existing Markets| Market Penetration Advertising (Books) Books available in regional languages now Higher discount through improved operations Cash on delivery Over 40 lakhs books now | Product Development Introduced new products like Electronic Gadgets, DVDs, Home Appliances and Healthcare products Enhanced Variety of books| New Market| Market Development Penetration to Rural and Semi-urban areas Even where courier services are not available, market is catered though Govt. Postal service)| Diversification _______________________ | The flipkart has diversified its product portfolio from books to electronic gadgets and now moving towards the general home appliances with foray of personal healthcare products. Clearly the shift in its strategy is to leverage the value from the supply chain with different and high margin products. Initially when flipkart has started its operations its products were limited to books. The customer for books through online marketing is very limited.
Although it operated on the same e-Commerce model that was not very successful in India. We observed the model with which the major domestic competitors of flipkart operate in India were not very different. But what was strikingly different in its website design and robust delivery model. After the recent rebranding of the flipkart, the brand has generated much hype within its consumer base. The internet traffic trend shows that the popularity in terms of hits on the website is on increasing trend and is expected to throw a tough competition to Amazon in near future in Indian soil.
Figure: Brand Perception Mapping for flipkart and major competition The brand is rated high in both trustworthiness as well as value for money by aware consumers. The credibility of the organization has been developed through relentless effort in improving its customer centric model. Starting with a minimal transaction of Rs. 100 book, the company has growth in leaps and bound through retaining customers and acquiring new of them. BRAND BUILDING The challenge for flipkart is now more strategic than operational. And more emphasis lies on the marketing strategy.
The diversification of the product portfolio has opened new sets of customers for flipkart who was not their previous customer before. We understand from our research that the customer behavior differ widely even in the ecommerce scenario in case of purchase of books to purchase of electronic gadgets or home appliances. Flipkart needs to identify correct medium to communicate to its target customers on the wide range of products. Flipkart primarily communicates with its customer via small television ads, online advertising and periodic print ads.
Now in view of the online marketing the target audience needs to be identified to choose right mix of portals for effective visibility. 849,853 849,853 One major area of visibility is social network. Flipkart has already built a brand within a consumer base that is young, earning and ready to spend online due to extreme scarcity of time. Social media is an effective brand building opportunity for flipkart. We propose to start a brand building campaign through the social media platform and eventually after buzz generation and initial awareness campaign the program will have a nationwide launch in other portals and media as well.
The rationale behind selecting this campaign is that the core business of the company is based on building consumer confidence in e-Commerce and supply chain of the company. In order to do this we have benchmarked some famous campaigns. These campaigns as known as................ , do not directly address the consumer to buy the product or services instead it speaks about some socially relevant issues and creates awareness about the same. In case this campaign successfully launched the outcome of the campaign would fetch in long term return for the company.
It will reinforce the brand loyalty and respect amongst the consumer and associate trust factor with flipkart brand name. If we closely observe the Tata Tea Jago Re campaign, the message of the advertisement hints strongly on a socially relevant issue such as corruption but delivers the message of tea drinking with a fine note through the statement “ab se khilana bandh pilana shuru” Similarly we observed that despite the fact that Johnny Walker is a liquor company but it conveys a strong message about life via its message in its advertisement.
Many brand worldwide talks about voice of youth, voice of women and youth power. These brands create a strong impact on consumer perception. Here brand becomes more important than product. Proposed flipkart campaign SWOT ANALYSIS| | | | STRENGTHS| WEAKNESS| 1) Diverse product protfolio. 2) Strong Logistics. 3) Easy customer interface. 4) Cash on Delivery options| 1) No physical Presence in India. 2) Online presence only in India. 3) No market presence in tier 2 cities. | OPPURTUNITIES| THREATS| 1) Growing rate of E-commerce in India. ) Government support to increase internet penetration. 3) Increased Consumer Spending in India. 4) Safer and easy online transactions. 5) Increase in Social Networking in India| 1) Strong competition from Companies who have physical presence and are venturing into e-commerce business. | FUTURE MARKETING STRATEGY We propose to project flipkart as a brand identity that consumer would perceive with trust, commitment and delivery. The campaign would direct towards building national commitment against corruption, indiscipline and ‘doing your own business well’ thoughts and ideas.
One big challenge the company is facing is to gain trust of the consumers who would invest for gadgets or home appliances. Instead of approaching the same way the company had garnered consumer confidence from books of low financial value to high value items. Instead the company would try to build a perception of trust through this campaign. PROMOTION The company has to identify proper domain to promote itself to the right consumer. The consumer of books differs significantly from the consumer of video games.
The behavior of each type of consumer would vary as per their need and want. However, the company needs to identify domain that would be The individuals who will be target consume for the game and console would be frequent visitors of online gaming companies (e. g. zapac, EZ games, minimax etc) or will visit Sony, Nintendo for product information. Flipkart need to eye the domains that these game lovers frequently visit or the domains that divert these surfers to the specific websites and promote their brand through online branding and advertisement.
PRODUCT PORFOLIO DIVERSIFICATION The company needs to identify the product diversification opportunity to leverage on the cost benefit of the supply chain option. The company needs to build in more robust design to its ensure its operational ability. In comparison to its foreign competition the company do not enjoy the products with high profit margin but in view of growth aspiration the company needs to incorporate those product items in the portfolio for. We have developed 2 step strategies to approach the entire product spectrum that can be offered online.
This would ensure that with robust model it will be difficult for any new entry to compete with the services of flipkart. Antiques| Cars ; Accessories| Gifts| Watches| Apparel| Computer ; Accessories| Health Care ; Beauty| Shades| Arts| Consumer Electronics| Kitchen Appliance| Movies| Baby Care| Fashion Accessories| Jewellery| Music | Books| Food| Lingerie| Personal Care| Camera ; Accessories| Game CD/DVD| Mobile| Picture| Travel ; Tickets| Toys/ Soft Toys| Sports ; Accessories| Real Estate| Phase I| | Phase II| | Phase III| SUPPLY AND DISTRIBUTION CHANNEL The company at present has 3 storage locations in India. In order to incorporate maximum reach the company may follow the following options 1. Create more channel partners and outsource operational activities with trusted vendors. 2. Incorporate rural reach through postal service of government of India 3. Increase the location storage capacity. Introduce sub-location storage fog highly demanded components. ADVERTISING AND BRAND BUILDING STRATEGY
From our research, we concluded that still there is dearth of awareness about flipkart in its target market segments. The company has to work extensively in advertising and brand building propositions. TELEVISION: As per our research, the target customers of e commerce i. e. youth in the age of 20-35, have lower affinity towards regular television series. Hence if Flipkart eyes Advertising via television media then the prime focus should be advertising in sports events. EVENT: Flipkart should work on extensive marketing in colleges across the nation.
The advertising campaign can range from sponsoring major events of the college, to distributing goodies to spread awareness. The company can also arrange for book stall in colleges to increase visibility of the Brand. PRINT MEDIA: Flipkart can work on advertising via print media. Advertisement using pictorial ads as well as using editorial based articles can be used for making the people feel secure while ordering products using flipkart. This will also help in increasing the visibility of the brand within the potential customer.
INTERNET: Recently, Flipkart has taken a bold step in advertising via the internet medium. Its huge presence can be felt by its advertising in majority of websites and social networks. | PROACTIVE NEED IDENTIFICATION Leveraging Market Information system Flipkart uses its Market Information System to display relevant choices to the customer based on the items recently viewed by the customer, best seller items and top new releases. Flipkart should focus more on proactively identifying the “need” of its existing customers, i. . customers who have already purchased a product from Flipkart and hence has provided his/her email id. It should work on a database management system that can recognise the need of customers. For eg. If a customer orders a camera, then Flipkart can send him relevant mails on arrival of different accessories for the camera. However, care should be taken so as to not flood the mailboxes with too much information i. e. the perception of the consumer should be such that all mails/information from Flipkart are relevant to him.
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