Kogan.com: A brand known for price leadership through digitalization
Kogan.com is a group of retail and service store, including Kogan Mobile, Kogan travel, Kogan Insurance, Kogan Health and others. This company was established through Russian Kogan in the year 2006. The Kogan.com is a brand which is known for price leadership through the digitalization of products and services. The company has presently 8 million subscribers and the company has a strong focus on making the demand products and services. The company makes every effort to make the products and services accessible and affordable to the customers. According to the Wall Street Journal, the worth of Kogan is speculated around 400 million dollars. The Kogan online retail store has been segmented according to the SWOT analysis and its pricing, product and distribution strategy has been provided with different measures on control. International marketing theories concept with relevance to pricing strategy, distribution and promotional strategy has been explained. The SWOT analysis with respect to international Michael Porter Five forces model has been given.
Kogan.com utilizes different selection tools for analysis of macro environments. The following tools have been enumerated for market selection.
SWOT analysis stands for Strengths, Weaknesses, opportunities and Threat
Strengths-
- The company’s strengths are into highly skilled workforce and trained sales people and huge resources are deployed into training and development(Varadarajan, 2015).
- com has been operating in a number of countries and has been impacted through a number of political factors, but has been able to diversify its business. This is its major strength. The company is exposed to different political risks. Kogan.com has created a reliable network of distribution system.
- Economic Factors-The macro factors like inflation rate, interest rate and savings rate are taken into account in determining the aggregate demand and investments made in the economy. Kogan.com takes into account the different types of economic system and government intervention in retailing.
Weaknesses-
- The manner of doing things has an impact on the culture and this is due to the existing social attitudes and beliefs. Kogan.com must comprehend the population skill and demographic level.
- The power structure of society and classes must be determined. Different cultures existing in the society must be given relevance while launching the online retail store into markets (Mandal, 2017).
Opportunities-
- Technology is growing at a fast pace. Over the past 2 decades, the technological industry has undergone many changes. The Taxi industry is being dominated by Uber cabs.
- The Kogan.com needs to be involved with the technological analysis of competitors. An analysis must be performed to find out the impact of technology on a different range of products.
Threats-
- In different countries, the legal institutions and framework must be robust enough to protect the firm’s intellectual property rights.
- The Kogan.com needs to evaluate the different markets and provide the overall competitive edge for entering into the new market places. This includes- Discrimination law, consumer ecommerce and protection law, safety and health law and data protection law (Phillips and Hallman, 2013).
The Threats can be summarized as follows-
- Environmental Factors-Different countries markets have different environmental standards that can have a lot of impetus on the organizational profitability. The country states do have the different environmental laws and liability clauses. For instance- Florida has the different clause which protects the consumer during the environmental disaster. Whenever the company decides to enter into the new markets, the firm must evaluate the requisite environmental standards and consider following factors-climate change, weather, recycling and laws regulating the pollution factors (Cravens, 1998).
The SWOT analysis will have an impetus on the competitive edge and shaping the strategy in a different way.
Kogan.com is a brand name which is known in the market for LED televisions and LCDs. In year 2011, the Kogan online retail store conducted a survey amongst its customers, whether the people are interested into 3D televisions. The company has also manufactured the wide range of 3D televisions. Kogan.com is also known for selling the wide range of computer products like laptop and notebooks. The Kogan online retail store is a market leader and provides an extensive range of home appliances to the customers (Woodall, 2007). In March 2012, Kogan online store began selling the customized iPad at discounted prices. The Kogan online retail store provides the opportunity towards active partnership and showcases the millions of products to Australian buyers. The company has presented more than 6 million email subscribers and more than 1 million active subscribers. The company has partnered with selected brands and provides marketing and online distribution enhancement capability (Slater, Hult and Olson, 2010).
The Kogan online retail store is involved with analysis of sales of different brands comprises of measuring and assessing the total sales, distribution channel wise, customer wise sales, etc. The company has its own sales target and different measures are identified in which the sales for different categories of products are identified. The market share is utilized as the base for measurement, comparison and correction of results. Market share is regarded as proportion of the company’s sales out of total sales of industry. How the company is performing with relevance to its competition. The Performance of the company is assessed with relevance to its competitor’s base and market share. Another practice is to identify whether an organization requires product management strategy or not? How a company operates and different segments are operating across the different systems. If the implementation of any significant product or service or changes in strategy requires different level of costs, then a lot of benefit can be derived from the international management theories (Abdullah Saif, 2015). According to the statistics, the larger is an enterprise project and bigger is the cost associated with it, the greater the advantage derived through the Project Management Organization. The concept of product strategy must be in relevance to the company’s supply chain management.
SWOT analysis and international marketing theories
Segmentation, Targeting and Positioning comprise of a 3 stage process where in the first step is to determine the type of customers which exist in the market. Second step is to select the customers which are known as Target Market and third is the implementation of a given segment of optimizing the products or services. This is known as positioning and how do the communication of products or services takes place and how to distinguish itself in the market places (Rosenbloom, 2007).
Segmentation-Segmentation involves finding the different types of customers with different needs. The Kogan.com needs to segment the market on four variables-
- Demographic Segmentation-Demographic segmentation includes the personal statistics like gender, income, location, family size and ethnicity. The Kogan.com needs to target from younger age groups to adult people.
- Behavioral Segmentation-There are few customers in the market which are brand loyal and stick with the product, irrespective of the product is competing with the other product in the market (Gheibi et al., 2018).
- Psychographic Segmentation-Dividing the market based on the different personality traits and interests and values of the customers.
- Geographic Segmentation-Geographic segmentation is the strategy through which the preferences of the target audiences are determined on the basis of location.
Targeting-Targeting one or more different is based on different variables. The targeting must be based on the specific customer groups. The strengths and weaknesses of the company must be determined and targeted accordingly. The Kogan.com needs to recognize the needs of its customers in Chinese and Australian markets and position the brand.
Positioning-Positioning is a marketing strategy where brands try to place its product in the mind of consumers and provides distinct benefits to it (Pathak, 2017). The Kogan.com is operationally excellent firm that has been able to maintain the efficiency and therefore providing reliable services to consumers at a lower cost. The Kogan.com has well positioned itself as the customer intimate company which caters to the needs of specific customers. The operational design of the manufacturing process allows the products to be moved at lower cost. Extensive systems which predict the exact quantities of supplies needed (Widya Yudha, Tjahjono and Kolios, 2018).
Kogan.com is one of the leading Australian firms and has been re-defining the ways in which business is conducted. The pricing strategy is a strategic framework which allows the company to take the strategic pricing decisions to be taken in a more appropriate way. The International pricing model focuses on how to build a competitive pricing in sustainable industry and create profitable opportunities (Helm and Gritsch, 2014).
The concept of buyers-Buyer is very demanding. Buyers are always interested in purchasing the offerings through paying the minimum price possible. Kogan.com is under a lot of pressure. Higher the bargaining power of buyers and higher is the possibility of seeking discounts as well as offers. Kogan.com needs to focus on creating a large customer base and emphasize on streamlining the production and sales processes and emphasizing on pricing too. The innovation of new products into the market and customers can seek discounts on new products (Nguyen, 2017).
Customer segmentation and targeting at Kogan.com
Kogan.com has adopted the penetration pricing strategy through its innovation in products system. The company has launched a wide range of products like TV, electronic gadgets, tablets and other categories. The pricing of the products is expected to rise due to the production cycle and shipping process.
Whenever a new product or service is launched into the market, there will be an effect on the industry profitability. The threat of a substitute product is always considered high as it offers the value proposition which is different from current offerings of industry. The Kogan.com needs to be service oriented, not just being product oriented. The Kogan.com must understand the core needs of customers and increase the switching costs of products and services (Eskandari et al., 2015).
New entrants can bring innovation and exert pressure on Kogan.com for reducing the cost and provide value to customers. The company has been able to manage all the challenges through the innovation of its products and services. New products will not only attract the new customers but also provide the reasons to create economies of scale. The company spends money on research and development and refines the standards regularly. This will discourage the new firms into the industry (Zia and Kumar, 2016). Bargaining Power of Suppliers- The retailing companies purchase the raw materials through various suppliers. This decreases the margin of revenue earned by Kogan.com. The company has powerful suppliers which use the negotiating powers for extracting the higher prices through the firms. This can be easily tackled through the effective distribution strategy. The product designs must be experimented through different materials. The development of dedicated suppliers and building third party manufacturers, which exert less bargaining power when compared with other distribution strategy of other companies.
Kogan.com operates in the competitive industry. When rivalry among the existing players is intense, then this will decrease the prices. Kogan.com needs to tackle the rivalry among the existing competitors through creating the sustainable differentiation through promotions.
Kogan technologies sell all its products and services through ecommerce systems. The company has undergone number of trial and error strategies. Online auction and promotions are other online promotional strategies. The Kogan.com has been into selling the products and services through ebay.com. The company has been actively involved with creating communities on social networking sites and promoting the products and services. The company has launched a weekly email service for its users through which the health related message is communicated to the larger base of clients. This is how the company can tackle with the rivalry among the existing competitors through effective promotions like advertisement, sales promotions and others (Kushner, 2005).
Pricing strategy of Kogan.com
The main motive behind the management control and management systems evaluation is to ensure whether a company is able to achieve the sales and profit margins and other goals associated with the annual plan of the company. The management of the company needs to set the quarterly or monthly goals. The Kogan.com management needs to monitor the performance in a given target market. Management needs to determine the deviations in serious performances and take the corrective action which can eliminate the gaps between performance and goals. Managers need to utilize the different measures through which performance can be checked (Sun and Ma, 2009).
- Streamlining the culture with corporate strategy.
- The company must enable high-performance within the organization.
- Identification and development of methodology, best standards and providing oversight to project staff.
The sales analysis, customer attitude tracking and marketing expense analysis must be in relation with sales goals. The company sales may not reveal how well a company’s market share is rising. The management plan created by the company needs to ensure whether the firm is not overspending for achievement of its goals. Customer satisfaction is one of the key components of evaluation and control. The market systems need to monitor the different levels of customer needs and preferences and satisfaction as the company gets affected through sales and management. Strategic control is another type of efficiency, control which weighs the long term strengths and weaknesses. The Kogan.com needs to create an evaluation plan and measure the marketing effectiveness. The marketing assessment incorporates feedback information like input from the customers and creation of internal reports like adequacy and efficiency of marketing information, strategies and integration processes (Forlani and Parthasarathy, 2003).
The marketing audit comprises of strategic control of raw materials. The periodic role is to ensure the marketing plan must focus on the country’s strengths and these must be compatible with the market sentiments, preferences, present events, fashions and significance of market players.
The evaluation and control encompass different aspects of market climate and looking at the macro or micro factors. The marketing audit comprises of firm’s marketing strategy, marketing systems, marketing productivity and marketing organization. This must be done in a systematic way to offer concrete elucidations based on the assessments based (Hansson, 2006). This must be done, not only when the marketing plan must be in question. The marketing audit must be done in a periodical way to eliminate the problems before it arises. The complete analysis of different strategies and this can provide the overall picture of profitability within the organization. The identification of changing trends and early responding is necessitated (Pehrsson, 2009).
Threats and competition in the industry
Conclusion
The Kogan online store needs to emphasize on the strategic output and revenue generated. The output generated must be attuned with the goals of the company. The company needs to resort to best ideologies and define measures for the project execution. The strategic practices adopted can be external or internal. An internal strategic practice bridges the gap between iterative development and agile development. These are effectively common in the organization which is running large programs through business method transformation.
A few recommendations for the Kogan online retail store can be enumerated as follows-
- Provides long term and repeatable business advantages.
- The company must be able to adapt to strategic shifts.
- The integration of data through corporate strategic projects is possible through the implementation of the balanced scorecard.
- The Kogan Online store must present a streamline structure by reducing the fixed costs and creating a business credentials in the market.
- The company must take concentrated efforts for strengthening the management platform and enhance the corporate image. The Kogan Online store must promote the cost and business structure for creating a robust management platform that can respond with the changing market conditions.
The company must focus on accelerating the business expansion into emerging countries by understanding the consumer needs of different markets. Efficiency control and profitability control will allow the Kogan online store to effectively monitor the profit and sales of the company. Profitability control is an assessment adopted for demonstrating the profit earning capacity of a wide assortment of products and services. A Company must get surprised to see that a very small percentage of products and services can contribute to a larger base of profits. Efficiency control will involve the macro and micro level analysis of different elements of environmental variables. This includes sales force, promotion, advertising and distribution. In order to understand the efficiency of a sales force, the company need to keep track record of sales per unit made very quarter. The Kogan online store needs to resort to strategic control process and allow the managers to evaluate the company’s program from a critical perspective.
Project Timeline-
A detailed analysis of firm’s organization and ability of the company to maximize the market opportunities is possible through different strategic tools. The company can overcome its weaknesses in next 2 quarters (over a period of 6 months). The company must engage in adopting the different strategic tools for the evaluation and assessment of the environmental factors. The company must periodically assess the tools and techniques which are compatible with the market sentiments and current fashions and preferences.
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