Marketing Plan For alibaba.com, Essay Example

Contents:

1. Company background / Product or service
2. Mission statement
3. Situational analysis
4. Marketing strategy
5. Organizational structure & personnel needed
6. Budget & financials
7. Outline implementation steps
8. Contingency plan
9. Executive summary

Marketing Plan

Company Background

Open Sesame, a well-known line that has been engrained in pop culture references and vocabulary since the tale of those memorable words. Even more so is the story from which it came from, the journey of a poor man who stole money from a magical cave. The man’s name is apart the famous medieval Arabic literature Ali Baba and the Forty Thieves. The story of the man with the infamous name has been told throughout the world. However, now his name is synonymous with the global company, a privately owned Internet based E-Commerce businesses that cover B2B online marketplaces, retail and payment platforms, shopping search engine and data-centric cloud computing service.

The founder Jack Ma was born in Hang Zhou in 1964. When he was 12, he became interested in learning to speak English. In order to practice his English, he pretended to be a free tour guide in the Hang Zhou West Lake district for foreigners. The eight years in the West Lake district help him broaden his mind on the world. Ma entered the Hang Zhou Teacher University in 1988 and soon became an English teacher after he graduated. By then his English was superbly sufficient that he started a translation company that help to create some of the first business relations with China and the United States. Soon he traveled to the US in 1995 as an interpreter. Ma did not know particularly much about the Internet until he visited his friend in Seattle. He was so inspired from his time using the Internet. When he searches for beer on the Internet, he found several results. However, when he searches for China, he did not receive any in his search results. His time spent on EBay, motivated him to make a similar platform for Chinese citizens. From that point, he had discovered the many business opportunities the Internet could have for China. Later on in 1995 he set up the web yellow pages in China. He competed with China Telecom for about a year and set up a joint venture with them. He was then later able to sell the business to China Telecom. He soon starts the B2B e-commerce company Alibaba.com in 1999. He chose the name after getting some coffee in San Francisco and realized that it was already a memorable name, after speaking with patrons he realized that it was not only easy to spell and say, but already universally well-known from literature. With the gathered support from 17 staff members, he started the business with US $60,000 capitals.

Alibaba has become one of the largest business-to-business platforms in the world and also is the flagship company of the Alibaba Group. It main focus is operating as the premier B2B marketplace for retail and payment platforms. This company is about 40% owned by Yahoo. Alibaba.com is able to connect Chinese manufactures with overseas buyers, better than any other site within China. Since its inception in 1999, Alibaba.com has sold over a billion products and has 20 most visited sites globally. One of their business objectives is to help the SMEs to make money. Alibaba.com is the online middleman, which provide trade platform to allow the SME to trade online with companies and people in China. SME have the opportunity to list their business features and functions such as, what they supply or produce, their contact information, and other useful information easy to find for the potential buyer. The information of the SME is divided in to different categories of the industry. The users of Alibaba.com are able to search through the user-friendly platform to identify potential trading partners, and interact with other companies to conduct business. In fact, Alibaba has four business-to-business marketplaces, which including the company’s international marketplace, the China marketplace, the Japanese marketplace and the AliExpress marketplace. First, the china marketplace is mainly focus on the business-to-business trade in China. Second, the Japanese marketplace is focus on transactions trade to and from Japan. Third, the company’s international marketplace is developed for business-to-business trade from importers and exporters in more 240 countries or regions. The last one is AliExpress marketplace, which mainly focus on the small quantities of products with fast shipment method.

In addition, their payment method is an online third party platform, AliPayment that provides an escrow service, where customers are able to verify whether they are happy with goods brought before paying the seller. Similar to eBay, Alibaba’sAlipay teamed up with Visa, MasterCard, and over 100 financial institutions and other major credit card companies to provide payment solutions to all of their companies within their network of websites, called Alibaba Group. Alibaba Group is the world’s biggest e-commerce company comprised of Tabao.com launched in 2003, Ma strategy moved towards a more consumer approach, an auction site that is particularly similar to eBay, however, quickly bested eBay as China’s homegrown favorite. Other networks include, Taobao Mall, China’s leading business to the consumer market online for quality name brand products. ETao, the comprehensive search engine comparable to Google, and of course China’s own China Yahoo, one of their leading search engine portals. “Alibaba Cloud Computing, a developer of advanced data-centric cloud computing services and technologies.”(Business Wire, 2012) Alisoft, which is the provider of web services to the Chinese SME marketplace. Alimama serves as an online advertising exchange company, which allows web publishers and advertisers to trade online advertising inventory. China Civillink, a firm that provides domain name registration, and lastly Alipay. Altogether Alibaba Group consists of 25 business units and is focused on fostering the development of an open, collaborative and prosperous e-commerce ecosystem. (Alibaba.com, n.d)

Mission Statement

Alibaba’s mission is “to make it easy to do business anywhere.”(Alibaba.com, n, d) Their vision includes, “becoming the first platform of choice for sharing data, to be an enterprise that has the happiest employees, and to last at least 102 years.”(Alibaba.com, n.d) Alibaba follows a set of core values that differentiate them from other global companies by focusing on SMEs. Also, their imitative to put customers first, have good teamwork within their working environments, embrace change within the fast paced moving industry and economy, integrity of the company to deliver on their commitments, passion for their work, and commitment for the company and employees to continually strive for excellence and professionalism in every aspect of the business. Moreover, Alibaba also aimed to deliver products to consumers with high-speed shipment and competitive prices in both China and internationally such as United States. At the meanwhile, Alibaba also aimed at introduce its online shopping platform to consumers in other countries and allow them recognize this company in order to attract more consumers and guard against competitors who attempt to provide similar services or products. Their outlined core values, mission, and vision statement are what drive the company to continue to grow and expand within the market.

Situational Analysis

The SWOT analysis presents an overall drawing of the company’s position in the marketplace. Alibaba has built some essential strength while looking forward to new opportunities internationally. However, as Alibaba considers attract more customers in China and entrance into new markets, the company will have to provide more benefits to consumers so that prevent from the entrant of strong competitors in the marketplace.

Marketing Strategy

Growth Strategy

One of its recent strategic moves was the acquisition of Yahoo China. This was expected to have a large impact and allow the companies to integrate and join forces with their combined resources that will with time lead to growth. A restructuring strategy of Yahoo China began after Yahoo failed to generate profits. In December 2007, Yahoo China removed the three original departments: new media, network search and communications departments. In turn two new departments: website operating and mailbox departments.  Merging of network search and e-business and digging into the potential of network search will be the future direction for development within Yahoo! China. E-business search technology will also be a main focus because the company believes that developing this technology will lead to greater profits (Kerin, 2012). This strategy is extremely focused because Alibaba realizes that the acquisition of Yahoo represents an overwhelming opportunity to grow and gain a larger market share because Yahoo is such a recognized company. The company realizes that for optimal results changes within the company has to take place. Restructuring of Yahoo is a step in the right direction.

Alibaba is very focused on expanding overseas Mr. Wei, chief executive at the company, continued to explain that his strategic move is to attract more clients in markets including India and Japan, because according to Wei “more suppliers outside China will look for new markets like China.” At present, about 4% of its 400,000 users Alibaba have chosen to look more outwardly to Chinese markets. To show how committed the company was to broaden its boarders, and it announced a joint venture with Japan’s Softbank Corp. This together with other international alliances has helped to elevate this company into the Global marketplace.

Another of Alibaba’s main strategies involves capitalizing on its international consumer base and driving a large successful marketplace between businesses. The company’s leaders have shown that they know how to seize market opportunities and to expand its strategy to the small and medium sized enterprises (SME) economic growth throughout Asia, USA, Europe and South America. In order to achieve this, the company uses its strengths. The combination of Eastern wisdom, western operational techniques and international capital invested in the global market reflect the power that this company manages to maintain in the industry (Kerin, 2012). This strategy allows the company to be more flexible and efficient. Alibaba understands change and the ever evolving of the external environment in which it competes and thanks to environmental studies and expectation studies the company is well aware of these changes. Today, the company can fairly be referred to as a giant global trade market because the company is one of the most active in B2B marketplaces (Kerin, 2012). Its main goal is to make conducting business easier for small businesses around the world, which makes sure that each business capitalizes on all the advantages of having an international business. Furthermore, Alibaba operating as an Asian company wants to still be known as an inter-cultural organization that has an inter-cultural management team and thus focus.

Alibaba is constantly working on ways to make business easier for its members. It recently unveiled a new pricing model to draw more members. They launched a starter package for Gold Suppliers, which offers fewer services for a 60% discount. Alibaba.com David Wei says that the program is interested in increasing website’s customers even at a risk of set backing its profit margins. He stated in an interview, “We believe if we increase our customers, we will increase our revenue later and the process will take care of itself.” This strategy is more of a long-term one that illustrates that the company understands that creating a loyal customer/supplier base is what’s most important because loyal suppliers will eventually raise profits from the raised sales revenue. When this first strategy was introduced, signs pointed to a positive result in the first period under the new pricing model, total sales were higher than what the company usually receives in a month. Analysts seem to like the new pricing model. Citigroup says it expects the company to decline in 2009, but 2010 should be a rebounding year because” it should benefit from a more sustainable model, delivering a faster growth and higher margins.”

Differentiation Strategy

It has already been noted that Alibaba.com is presently the world leader in business-to-business e-commerce. This is something that the company has capitalized on in the most unique way. Alibaba.com targets small to medium sized businesses. It focuses on buying and selling among small and midsized organizations, and it has more than five million suppliers. Alibaba.com has successfully recognized that it could fill a gaping market need that China has. The country has virtually no printed directories or electronic databases that allow companies to describe their products and help buyers and sellers find one another while still providing a certain level of comfort that these companies are on the up and up. Alibaba.com focuses on small family type businesses in China of which are many in number.

According to Yuxin Chen, a marketing professor at New York University’s stern school of Business, “Alibaba’s major advantage is that it is located in a country that has emerged as the manufacturing base of the world.” Most companies in China are these small businesses and Alibaba has put itself in the position to take advantage of this.  Most companies exporting in China are not big companies, so for these companies Alibaba provides a platform. To continue to provide for this market of small businesses, access to Alibaba’s portals is mostly free of charge. Membership fees are charged ranging from $300-$8000 and various membership programs is offered which provide different membership opportunities.

Price Strategy

Alibaba’s primary revenue is derived from charging customers for value-added services and from subscription fees, listing fees and secondarily through advertising avenues. In terms of the price (membership fees) paid by B2B clients, the business buyers and supplier who want to find potential trading partners via e-commerce marketplaces have available to them certain membership packages to appeal to the most varied amount of businesses.  Fee-paying members can enjoy “priority placement of supplier storefront”, priority listings in the industry directory and advanced search results at Alibaba.com marketplaces.  Alibaba.com promises price savings that can’t be found through more traditional forms of business. The marketplaces provide many advantages to businesses; businesses can get access to the active global buyer community and vice versa for buyers, businesses can launch marketing activities to potential buyers in a economical way, buyers can get access to high quality and organizational information on products, potential sellers, and additionally the convenience which is real time and 24 hours services for both the buyers and the sellers (Kerin, 2012).

One specific pricing strategy that Alibaba has put in place is the Gold supplier premium membership. This is a certification that the site offers to specific supplier companies which gives them the opportunity to post an unlimited number of products online. Gold suppliers also have more of an advantage with global trade because of the certification Alibaba has provided showing that this organization is authenticated. This means much more access to customers than the businessman who doesn’t have a paid membership. Testimonials from gold suppliers speak to the effectiveness of this pricing strategy. Customers believe that the price for the membership, which varies, is a small cost to pay for the services that are available as a registered member. The realm of possibility is great which makes global trade a possibility for small companies who wouldn’t have this opportunity otherwise. Customers are jumping at the opportunity to sign up to be a Gold supplier, which gives Alibaba the upper hand and the opportunity to create revenue. Many spin off’s of the gold supplier membership have provided other services and benefits at lower cost to the customer but with fewer benefits. The gold supplier tag is more prominent still.

Organizational Structure & Personnel Needed

Alibaba is a governance structure company, which is a dual-class voting structure for company’s shares with 28-partner control structure that to set company’s strategic course without being influenced by the fluctuating attitudes of the capital markets to protect company’s long-term interest of its customers, company itself, and all shareholders.

Alibaba group was originally comprised of 5 subsidiaries including Alibaba B2B Operation (Alibaba.com), Taobao, Alipay, Alibaba Cloud Computing and Yahoo! China. Since 2011, Alibabagoup has made three major changes to reorganize its organizational structure.

1. In 2011, Alibaba Group reorganized Taobao into three separate companies – Tmall.com, Taobao Marketplace and e Tao – to better adapt to China’s fast-growing B2C market for a e-commerce in June.
2. In July 2012, Alibaba Group reorganized into seven business groups which Jack Ma called the “seven swords”. They are Alibaba B2B International Operations, Alibaba B2B China Operations, Taobao Marketplace, Tmall.com, Juhuasuan, eTao and Alibaba Cloud Computing. Alipay was separated from Alibaba Group and became an affiliate of Alibaba Group.
3. In 2013, Alibaba Group reorganized again into 25 business units. Alibaba Small and Micro Financial Services Group, which include Alipay, insurance, loans and guarantee services to small businesses was formally founded in March 2013.

Personnel Needed

For Alibaba, they think the customer always be the first, then followed by employee second, and shareholder third. Company wants its employees work for their dreams, shared values, naturally optimistic and happy, enjoy work and can turn stress and challenges into innovation, and be smart to work together. Alibaba seeks the people who have strong professional skills, which characteristics are even more important in deciding whether a person will join, stay, and enjoy working in the company. Here is the Alibaba group’s six core values to guide its operations, which are fundamental to its culture and an integral component of Alibaba Group’s DNA:

Budget $ financials

The marketing plan of the alibaba.com will be delivered to ensure that the company gets value for the investment.  Since its inception, Alibaba.com has enjoyed stable patronage from the many customers that have preferred to purchase goods online as opposed to driving to the stores to buy the goods physically. The table below shows the projected sales of the company for the period of one year. It will include the additional expenses that will be brought by the implementation of the marketing plan.

The projected budget of the Alibaba.com is estimated to increase by about 16% as a result of the activities of the brand awareness that will be undertaken especially in the new markets. Alibaba.com is very focused on expanding overseas to explain that his strategic move is to attract more clients in markets including India and Japan, because the company needs to be the more preferred choice of all business to business transactions outside china. But in the long run, the effective implementation of this plan will result in not only increased sales but also revenue (Kotler & Keller, 2012).

In Alibaba.com business plan, E-business search technology will also be main focus because the company believes that developing this technology will lead to greater profits. This strategy is extremely focused because Alibaba.com realizes that the acquisition of Yahoo represents an overwhelming opportunity to grow and gain a larger market share because Yahoo is such a recognized company

Alibaba.com strategy is to make business easier for its members. This is what informed the new pricing model known as that is known as the Gold starter package to draw more members. As a result, members will be given 60% discount on some transactions.

Budget summery plan

Outline implementation steps

The implementation of the growth and the efforts to make the company started with the acquisition of the Yahoo china. The new mail box department is expected to make the company make more of its advertisement online. Alibaba.com is expected to shift its business to the E business technology that will enable it to be more profitable.

Since alibaba.com is a recognized world leader in business to business E-commerce, the marketing strategy will capitalize on this strength to increase its user base.

In implementing this marketing plan, the direct mail and Facebook advertisement will be tailored towards the small and the medium term business organization. Alibaba.com currently has more than five million SME suppliers.

The TV advertisement in china, India and USA will be very effective in filling the gap Market needed by the Chinese business people. China has no printed directory or electronic data base that can be used by the small and medium scale companies to describe their product and therefore enable the buyers and the sellers to find each other and conduct business.

The newspaper advertisement will mainly be done to target the small family type business in china. Alibaba.com will increase the awareness of its products to these large communities of the business people to tap into the global market.

In a strategic move to extend the market share on the international market, Alibaba.com will conduct aggressive marketing campaign in USA, India, Japan and china. The advertisement will be done to grow the number of customers who are able to use the services to increase their business transactions overseas.

So as to capitalize on the international consumer base and drive the competitive market place business between businesses. The TV advertisements will be tailored to target the Asian SMEs who are the core of economic growth not only in Asia USA but also Europe and South America.

The strategy undertaken by the firm to increase sales is meant to make it easy for the members to make transactions. This is reflected in the new pricing model that was adopted to even draw more members. The Gold suppliers offer services for 60% discount to the customers. This is a long time strategy that is targeted at increasing the customer base and creates loyal suppliers that will eventually lead to an increase in the sale revenue.

Contingency plan

In the event that the implementation of the marketing plan does not produce the expected results, the following is the contingency plan.

1. Engaging in aggressive marketing campaign in USA and China to ensure that its strengthen its dominance in providing business to business services.
2. In the event that the current strategy adopted of providing 60% discount does not yield the required result, the company will aim at increasing its growth in profit by expanding its portfolio to cover different business segments.
3. Since most of the companies in china are small and medium enterprises, the other strategy for Alibaba.com is to advertise and market itself aggressively though radio, television and direct marketing. This strategy will enable Alibaba.com to not only position itself to advantage of the exporting companies in china that are small in nature. Alibaba.com will be able to provide effective platform for these entrepreneurs to reach a wider market locally and internationally.

Executive summary

Alibaba.com has the mission of making it easy to do business everywhere and the vision of becoming the first platform of choice for sharing data driven by the happiest employees. Alibaba.com is a web portal that has developed its reputation for providing platform for the traders to sell products and services to customers all over the world. Some of the business solutions that the company offers include B2B online market places, retail and payment platforms and shopping search engine data services. The company that has effectively connected the Chinese manufacturers and overseas buyers has   been previously ranked among the 20 most visited sites.

The situational analysis of the company indicate that while the company has strengths in its relationship with world leaders, utilization of current internet technologies to facilitate business transactions that has given it the global market place, the business plan will aim at tangling the weaknesses that include improving the technology system, change from the labor intensive and deep Chinese cultural influence.

This marketing strategies and activities will take advantage of such opportunities in the business environment like growth in profits in the sector,  its dominance of  the USA market due to the fact that it entered the market earlier than most companies in the same industry. On the other hand, Alibaba.com is driven to develop the marketing plan that will enable it counter such threats like entrants of new players in the E-commerce industry in china that competing for the same clients, and the global economic crisis that has resulted in reduced sales (Kotler & Keller, 2012).

The marketing strategy is based on the developing a growth strategy that will not only increase the client base of the company but also enable it reposition itself in the minds of the customers as the preferred choice in providing platform for business to business transactions. All the advertisement campaigns have the intention of making the process of conducting transaction easy for the members. This is has been demonstrated by the starter Gold supply Package that offers some services at a 60% discount.

As a differentiation strategy, Alibaba.com has deliberately targeted the small and medium manufacturers and companies in china. It currently has more than five million suppliers that will increase has it fill the gap that exists in china.

The marketing plan is aimed at expanding the four business to business market places that include china market, international market international market place, Japanese and Ali express market place.

Direct mail and advertisement on Google and Facebook will be done with the intention of increasing the membership of the Ali Express market place in the more than 240 countries it currently operates in. the service is improves the  interaction of importers and exporters who want to  move small quantity goods using  the fast shipment method.

References

Kotler, P. & Keller, L. K., (2012). Marketing Management 14e. Pearson Education Limited 2012.

Kerin, R. A., (2012). Marketing: The Core. McGaw-Hill Ryerson. p. 31.