Your STP proposal should address the following elements:  Purpose of STP Process: Describe the major reasons why your company should execute the international market segmentation process.  Bases and Variables: Propose the bases and variables that should be employed in the international market segmentation of the product’s consumers in the target market.  Effective Segmentation: Justify how your proposed segmentation meets the requirements of an effective segmentation process.  Positioning Strategy: Propose the main positioning strategy your company should undertake to best position the brand and product in the consumer’s mindset.  Consumer Culture Positioning: Propose the consumer culture positioning method that your company should employ.  Summary: Summarize how your STP proposal will break down (target) the market for your product into different groups of consumers that differ in their respons

Situational Analysis and Target Summary

Jada Blanco

Southern New Hampshire University

Situational Analysis

Product line

Amazon’s main product line is the Prime service. With this Prime member have access to fast and free shipping on products, streaming benefits in music and videos, shopping benefits such as grocery delivery, wardrobe assistance, as well as multiple discounts. Currently Japan only has access to the video streaming service with Amazon, however we plan to expand their service availability with Prime.

Amazon has shown to be a competitive giant in the online retail industry, so much that the company has reshaped the industry to a new standard. Many people refer to this change as the “Amazon Effect” where other companies have begun emulating their practices (Agrawal, 2019). The ecommerce industry is steadily growing and has shown to increase at least 15% every year on a global scale (Flow, 2019). Amazon’s global net revenue is up 22% from 2017 (Clement, 2020) and international sales revenues has increase 18% from last year, 2019 (Davis, 2020).

Amazon value chain holds five primary activities; inbound logistics, operations, outbound logistics, marketing and sales, and service (Dudovskiy, 2020). Inbound logistics consist of the fulfilment of inventory for amazon products as well as independent sellers. The operation activity is split into three segments, North America, International, and Amazon Web Services. Outbound logistics are the fulfilment centers, co-sourced and outsourced arrangements, digital delivery (downloads), and physical stores (Dudovskiy, 2020). Through the marketing and sales activity, the marketing expenses have continued to increase through the years. Due to their push in marketing expansion this section is seen to be a major source of value to the company (Dudovskiy, 2020). The service activity for Amazon is also a major source of value, being that their vision is to be the most customer-centric company on earth. The customer service offered is known to be exceptional, providing multiple streams of contact for their buyers and sellers.

Target Market

Our target market for our product, Prime service, is adults ages 25-64. This market may seem broad however, japans e-commerce industry user distribution is fairly close. For example, users ages 35-44 and 45-54 make up 25% each, while users ages 25-34 and 55-64 each make up 20% (Clement, 2020). As far as gender is concerned both male and female users total about 50% each (Clement, 2020). Low, middle, and high-income receivers share about one-third of the online retail use (Clement, 2020). Internet users ages 16-55+ have a 95% or higher daily internet usage rate. With all of this data in mind I feel that our wide age range would still be successful given that the online retailing industry is seeing constant growth in that country in all aspects of users.

Sociocultural environment

The cultural environment in Japan is different from the United States. Their culture is very hierarchical where authority and leadership is expected, especially as a manager in a work environment. Respect and courtesy are essential when approaching senior members of organizations (culturewizard, 2020). Relationships in Japan are seen to be more interpersonal than in the U.S. It takes time to build relationships with others, colleagues, however once they are created trust is gained. When it comes to work the Japanese prefer more group-oriented styles, like a family. “People tend to value their role as a family or team member, so they may identify themselves as part of a group before considering their role as an individual” (culturewizard, 2020). Time management is a very valuable skill in the Japanese culture. Disorganization and tardiness are considered to be rude and unprofessional, especially in the work environment. Formality is also held to a high standard in business settings. It is important to address others by their titles and being overly friendly to subordinates is frowned upon and seen as inappropriate (culturalwizard, 2020). In a business environment it is best to motivate others through status and achievement. There isn’t a huge work-life balance in Japan, instead business is most important and personal time is expected to be sacrificed.

PESTEL Analysis

The external macroenvironmental opportunities for expanding Amazon Prime in Japan are extensive. Politically speaking the government is clean with little to no corruption which allows our venture to be smoother. The industry regulations and freedoms for ecommerce is also well established and has allowed Japan to be in the top 5 on a global scale. The government business policy isn’t very difficult when creating new businesses. When the right steps are taken the process can be fairly quick with little no obstacles which is a great opportunity for the company. The economic factors such as taxation, unemployment, inflation rate, and economic stability are in good standing which is very favorable for the expansion. Socially, Japan has shown great opportunity as well given their good income distribution, buying patterns, urban population, and demographics. The technological advances in this country are also appealing for the Amazon company. Social networking users continue to rise, increasing the communicative infrastructure which has contributed to the constant growth in their ecommerce industry. Japans robotics industry supplies 52% of the worlds robots bring great opportunity for the delivery systems in warehouses. The legal factors are also favorable for the expansion due to the ease of doing business index, exceptional labor rights, and low tariff barriers for trades. Japan has similar fuel/energy use as the United States which makes the transition more adaptable. Transportation abilities are growing which is favorable for the delivery systems needed.

The risks of expanding our company in japan include the laws on data protection and environmental restrictions. Japan has strict laws against data usage for companies and has an APPI amendment in place to protect consumer information. Amazon does require access to some consumer data to actively advertise certain products, creating a slight risk for the company. Japan is also known to have vigorous weather changes with tsunamis and earthquakes which creates risk in the flow of business.

International Trade Environment

The international trading environment for Japan is very positive. This country is ranked 16^th globally and 3^rd in East Asia (World Economic Forum, p.4, 2016). The major trading industries for this country include auto parts, aerospace, textiles, electronics, and pharmaceuticals (export.gov, 2019). “Japan is the fourth-largest export market and trading partner for the United States, which has a trade deficit with Japan of $68.5 billion in and a trade surplus of $10.5 billion in services” (export.gov, p.2, 2019). This country has also began making moves to create a bilateral trade agreement with the United States. The tariff structure is a bit complex with over 750 distinct ones in place, however the average level is low at 4.9% and is efficient (World Economic Forum, 2016).

Situational Market Summary

SWOT Analysis

Strengths and Opportunities

Amazon has strong brand recognition in online retailing which has made them leaders in the ecommerce industry. These strengths allow more opportunity for them to create a new business in Japan quicker while also utilizing their economic stability as an advantage (The world Bank, 2020). Their innovative practices, product variations, and customer service allows them to stay competitive in the steady growing industry. The positive trade regulations offer in Japan along with the large urban population bring potential to Amazon as well complementing their practices, products, and values.

Weaknesses and Opportunities

The government business polices and economic stability in Japan be utilized to create more physical stores and offset any margin loss due to free shipping form Prime (The World Bank, 2020). Japans large urban population and steady growth in the ecommerce industry could help Amazon launch more services that are offered in the states. Beung that the industry in increasing other companies may try to duplicate their practices, however a change in the business model could help them stay competitive.

Strengths and Threats

There are potential threats with data protection laws, industry regulations, and taxation issues however their brand recognition and customer service values can help reduce them. For example, their need to be customer centric will push them to abide by the laws and regulations as much as possible. The inactive practices will give Amazon the opportunity to avoid any environmental restriction that could arise in the country.

Weaknesses and Threats

The new products that may not show success in other counties could be a success in Japan as long as the comply with the industry regulations. Margin loss for the company could be avoided as long as the taxation issues in Japan remain constant given that it hasn’t changed in recent years (The World Bank, 2020).

References

Agrawal, A. J. (2019, January 3). The ‘Amazon Effect’: How Ecommerce Will Change in 2019 and Beyond. Retrieved from https://www.entrepreneur.com/article/325556

Amazon.com,Inc. (2020). About Amazon Prime. Retrieved from https://www.amazon.com/gp/help/customer/display.html?nodeId=201910360

Clement, J. (2020, January 31). Amazon: global net product revenue by quarter 2019. Retrieved from https://www.statista.com/statistics/999686/amazons-net-revenue-by-product-group-quarter/

Culture Wizard. (2020). Culture Profile Comparison. Retrieved from https://snhu.culturewizard.com/app/tool/53070

Dudovskiy, J. (2020, April 3). Amazon Value Chain Analysis – Research-Methodology. Retrieved from https://research-methodology.net/amazon-value-chain-analysis/

Export.gov. (2019, September 6). Japan – Market OverviewJapan – Market Overview. Retrieved from https://www.export.gov/article?series=a0pt0000000PAu7AAG&type=Country_Commercial__kav

Flow Commerce, Inc. (2020, February 5). Global Commerce: What Is International E-Commerce: Global Expansion. Retrieved from https://www.flow.io/international-e-commerce/

World Economic Forum. (2020). Regional overview: East Asia and Pacific. Retrieved from http://reports.weforum.org/global-enabling-trade-report-2016/regional-overview-east-asia-and-pacific/?doing_wp_cron=1588520603.5590479373931884765625

The World Bank. (2020). Ease of Doing Business in Japan. Retrieved from https://www.doingbusiness.org/en/data/exploreeconomies/japan#DB_sb

Appendix

PESTEL Analysis

Political – Government business policy brings a good opportunity for amazon because the process isn’t too difficult for new businesses. The risk of starting a business in Japan is low which is very favorable for the company. Freedoms allow for all customers to have the ability to buy/sell their products without any restrictions from the government. Being that there is freedom for the ecommerce industry in Japan provides a great opportunity for Amazon and is favorable. Industry regulations in Japan are pretty good considering that they are top 5 in the ecommerce industry on a global scale which is a great opportunity for the company and is favorable. Corruption in japan isn’t too bad, they are in the top 20 in being clean politically and have been for the past few years. A corrupt country would make it hard to do business so starting our venture in japan brings great opportunity and is favorable.

Economic – All of the factors listed pose a great opportunity to move forward in expanding the company to Japan. As a whole I see no major risks due to the stability of the economy, low inflation and unemployment rates, along with moderate taxation burdens. This category is favorable.

Social – After evaluating the factors, I believe that the opportunity social is positive for the expansion to japan. They have steady income distribution, high population rates, and health consumer habits for the ecommerce industry. The is category is favorable.

Technology – From evaluating these factors, I believe they hold great opportunity for Amazon in growing in Japan. As a whole there is some risk when getting involved technologically speak but it is still a great opportunity. The is characterized as favorable.

Legal – The factors in this section collectively present a good opportunity for amazon to pursue business in Japan. There is risk in the data protection factor. We see this as a favor category.

Environmental – After evaluating these factors, I believe there is a good opportunity for amazon to build their business in Japan. The transportation abilities are growing, and the fuel/energy usage is similar to the US. There is however, a risk in the environment with the weather and natural disasters such as tsunamis and earth quakes which can hurt the business flow. This category is still favorable.

e to the firm’s marketing mix program.