Amazon Fresh and Its’ Advertising

Creative Advertising Development

Research & Analysis

Fiona Oudeman

5107201

Contents

SUMMARY ...... 4 ORGANISATIONAL ANALYSIS ...... 5 ORGANISATIONAL LEVEL OBJECTIVES ...... 6 MARKETING EXPENDITURES ...... 7 PRODUCT ANALYSIS ...... 8 BRAND ANALYSIS ...... 11 MARKET ANALYSIS ...... 14 MARKET TRENDS ...... 17 EXTERNAL FORCES ...... 22 COMPETITIVE ANALYSIS ...... 24 BRAND ANALYSIS FOR OCADO ...... 24 BRAND ANALYSIS FOR HELLOFRESH ...... 27 BRAND ANALYSIS FOR DELIVEROO ...... 29 CUSTOMER ANALYSIS ...... 31 SUMMARY OF KEY FINDINGS ...... 34 SMART OBJECTIVES ...... 35 REFERENCES ...... 36 APPENDIX ...... 38

SITUATION ANALYSIS

This report will follow the planning cycle proposed by Pickton and Brodrick (2005) covering Research & Analysis, Audiences and Objectives, in order to complete research and decision-making regarding Amazon Fresh and its’ advertising:

Research & Analysis

Audiences

Budget

Objectives

Strategy

Tactics

Implementation

Control

SUMMARY

This research aims to learn and understand through an extensive research, the internal and external environment of Amazon Fresh from an Advertising context perspective. In addition it will include the analysis of Amazon Fresh’s ideal customer through an ACORN segmentation framework. Furthermore an analysis of the different media choice of the specific target will be exposed and the SMART communication objectives will be defined.

Within the internal analysis, this report will cover the organisational values and mission statement vital for advertising. It will then cover the marketing expenditures of the company, a product analysis of their tangibles and intangibles and a brand analysis of their logo and past advertising campaigns.

Within the external context, market trends will be analysed with a greater focus of Social and Environmental trends. Furthermore a PESTLE analysis will be done plus their competitors’ mission statements and brand analysis.

At last the customer segmentation will be defined through ACORN including a positioning map. In addition the communication objectives will be identified through the SMART framework.

ORGANISATIONAL ANALYSIS

SUMMARY OF THE COMPANY

Amazon.com (Or most commonly known as Amazon) is an American electronic commerce which enables the sale of products and subscription, through the online marketplace, by offering a wide catalogue in their website (Amazon 2016). It was firstly aimed to sell only books online, founded in 1994 by Jeff Bezos and is now one of the world’s most innovative companies according to Forbes (2016). Within Amazon, Amazon Prime was created as a membership option to unlock better benefits of the company (such as faster shipping or more movies and TV options). Amazon opened a Kindle Store in order to sell books and created the Kindle Reader as a useful tool to read. Amazon Publisher was then created to develop and publish authors, filmmakers and musicians content and sell it. They have also created Fire tables, TVs and the latest electronic device Echo. It’s worth $292.6 Billion and although its’ industry started as Internet and Web Catalogue Retail, now they’re expanding to new markets (Online grocery shopping), which consequently means new challenges to overcome.

Mission Statement: "Our vision is to be earth's most customer-centric company; to build a place where people can come to find and discover anything they might want to buy online."

Amazon.com has decided to enter the online grocery shopping Industry by introducing Amazon Fresh (Amazon 2017). In order to be eligible to use their service, customers need to have an Amazon Prime membership, which costs £79 a year. On top of that, the Amazon Fresh delivery service costs an extra £6.99 per month (Brand View 2016).

It was first only available in 69 London postcodes, but they are slowly expanding to 190 postcodes currently. It offers same-day delivery services. One-hour slots between 7am -11pm, 7 days a week. In addition they have introduced the “Dash button” to order groceries without visiting the website.

Mission statement: “We believe that the key to the long term success of Amazon Fresh is to bring together the low prices, vast selection, fast delivery options and customer experience that Amazon customers know and love.” - Ajay Kavan, Amazon. (Retail Week 2016)

ORGANISATIONAL LEVEL OBJECTIVES

As stated by Kotler (2015), there are different objectives depending on the organisational level of the company (See Figure 1). For Amazon Fresh, their objectives can be divided by:

Corporate objective: "Our vision is to be earth's most customer-centric company; to build a place where people can come to find and discover anything they might want to buy online." Amazon 2017.

Business unit: Increase total number of customers & Increase total number of service areas and number of suppliers.

Functional: Be the fastest and most trusted grocery delivery service

Marketing: New service development in London UK, Customer Service & Market Research

Product/Brand Marketing Communications: To be announced at the end of this report

MARKETING EXPENDITURES Amazon have been growing their expenditures in the last 6 years to a total of 7,233 million US dollars in the United States by 2016. The implications of this expenditure means Amazon is not afraid to invest in Marketing and is willing to experiment for its advertising with AmazonFresh (See Figure 1 )

FIGURE 1: ANNUAL GLOBAL MARKETING COSTS OF AMAZON FROM 2010 TO 2016 (IN MILLION U.S. DOLLARS)

AmazonFresh is only offered for Prime members, who have been proven to spend more than standard members in the US (See Figure 2). Which may be the reason why they are prompting UK members to follow this trend.

FIGURE 2: AVERAGE ANNUAL AMOUNT SPENT ON AMAZON ACCORDING TO U.S. AMAZON PRIME AND NON-PRIME MEMBERS AS SEPTEMBER 2016 (IN U.S. DOLLARS)

PRODUCT ANALYSIS TANGIBLES

Amazon Fresh offers a wide range of groceries. From organic, healthy choices to the British most loved brands. With their partnership with Morrison’s (Carroll 2016) they are introducing a wider range of products and gaining a more competitive advantage. They emphasize in local shops and markets, with fair trade options getting delivered in 1h slot time-frames. They also include a wide range of deals to choose from, making them competitive in price against competitors.

FIGURE 3: AMAZON FRESH PRODUCT CATEGORY AND OFFERS (SOURCE:HTTPS://WWW.AMAZON.CO.UK/AMAZON-FRESH-UK-GROCERY- SHOPPING/B?IE=UTF8&NODE=6723205031)

INTANGIBLES

Amazon Fresh offers an intangible service of one-day grocery delivery 24/7 days a week. Customers can choose their slot delivery and choose when they want to get it delivered. Furthermore Amazon Fresh offers Customer Service and Relationship through their commitment to local farming and fair trade (Amazon 2017), which gives customers an intangible asset to value against competitors. As stated by Payling (2016) customers’ value “Amazon's sleek delivery, broad offer and superior customer experience”.

AMAZON PRIME MEMBERSHIP

Joining AmazonFresh also means joining all the benefits of a Prime Membership, with faster deliveries of other products rather than groceries and exclusive TV and Media choices on their TV on-demand (Amazon 2017). The need for Amazon Prime does tend to distance potential customers to shop online (Carroll 2016). According to research, this barrier to entry with other forms of memberships does scare people away. Amazon Fresh needs to take this into consideration for gaining new customers (See Figure 5).

FIGURE 4: ATTITUDES TOWARDS SHOPPING ONLINE FOR GROCERIES FROM AMAZON, DECEMBER 2015 (SOURCE: MINTEL HTTP://ACADEMIC.MINTEL.COM/DISPLAY/767176/?HIGHLIGHT#HIT1)

Although 50% of UK customers have a delivery pass/membership or are willing to get delivery passes in the future, the other 50% of customers are reluctant to it (See Figure 5). This perception of delivery passes need to be changed in order to increase customers’ willingness to join a Prime Membership Pass.

FIGURE 5: OWNERSHIP AND INTEREST IN DELIVERY PASSES, DECEMBER 2015 (SOURCE: MINTEL HTTP://ACADEMIC.MINTEL.COM/DISPLAY/767176/?HIGHLIGHT#HIT1)

BRAND ANALYSIS Amazon Fresh has already started to get the benefits of the identity of the mother brand Amazon.com, as a trusted and innovative brand (Farfan 2017). Majority of sources agree than the strong identity of Amazon will influence the success of Amazon Fresh, which is why it will be further investigated:

Amazon’s Brand identity:

• Awarded first place in corporate reputation by Harris Poll (Farfan 2017). • World’s most innovative company (Forbes 2017) • Ranked the best Internet Retailer (Farfan 2017) • Fast and easy: Changing the way delivery and online orders are received (Farfan 2017). Amazon does that by using independent and third party shippers. It achieves same-day deliveries hiring contractors to deliver from their Amazon Flex program. • Humble beginnings (Amazon 2017). • Customer Relationship focused: Everything Amazon does is focused to enhance customer’s experience (Farfan 2017)

AmazonFresh Brand Identity:

• Easy and reliable: Looking to represent their ease of deliveries with their groceries (Carroll 2016). • Fast delivery (Focus on one-day delivery + 7 days a week) • Focus on Britain’s Best-loved brands & local independent food • Focus on Accessibility, with an AmazonFresh App.(Amazon 2017) • Focus on Innovation, introducing their Amazon Dash button to shop. • Focus on taste, with freshly produced food (Amazon 2017). • Exclusive for Amazon Prime members.

LOGO ANALYSIS Keeping the identity of Amazon is crucial. So Amazon Fresh uses the same version as the mother brand, with an arrow from the A to the Z to mean users can find any products (From the A- Z) in their marketplace.

Using green gives the meaning of healthy and eco- friendly (Farooq 2016). Amazon also uses a leaf as part of the typology as a metaphor for freshness.

ADVERTISEMENTS

As seen in their advertisement banner online, they show a wide range of English products with their brands clearly visible such as Heinz and Persil. There are also showing international brands (Kellog’s, Ben&Jerrys, Colgate…) emphasizing on availability on a different range of products. Furthermore colours are vivid, high saturated to add the diversity factor (Farooq 216). At the back, colours are bland whites and greys, to emphasize the focus on the food at the centre:

FIGURE 7: AMAZON FRESH BANNER (SOURCE AMAZON HTTPS://WWW.AMAZON.CO.UK/AMAZON-FRESH-UK- GROCERY-SHOPPING/B?IE=UTF8&NODE=6723205031)

There is a pattern identified in their advertisements; the second banner also uses bland whites and greys at the back to emphasize focus in the product. The product shown is some piece of fruit next to a green Amazon Fresh bag, which is vivid green. The use of the bag places the logo in consumers’ mind and associates it with the fruit placed next to it.

FIGURE 8: AMAZON FRESH BANNER (SOURCE: AMAZON HTTPS://WWW.AMAZON.CO.UK/AMAZON- FRESH-UK-GROCERY-SHOPPING/B?IE=UTF8&NODE=6723205031)

Truck advertising is a very powerful tool of advertising for delivery services (EMC Outdoor 2016). The green colour makes it distinct to any other truck and exposes the logo to anyone on the streets or on the road. At the back of the truck images of fresh fruit and vegetabes are placed:

FIGURE 9: AMAZON FRESH BANNER ON TRUCK (SOURCE: HTTPS://WWW.GOOGLE.CO.UK/SEARCH?Q=AMAZON+FRESH+TRUCK)

The Website outlook is analysed as part of the brand and part of the product offered. With a list of categories on the left it makes it easy to browse and accessible. Colours are the same as the mother brand Amazon.com replacing their distinctive orange for a vivid green, in order to still be associated but give it a little distinctive identity.

FIGURE 10: AMAZON FRESH WEBSITE (SOUCE: HTTPS://WWW.AMAZON.CO.UK/AMAZON-FRESH- UK-GROCERY-SHOPPING/B?IE=UTF8&NODE=6723205031)

MARKET ANALYSIS

The online food market is revolutionizing the way people shop online. Consumers are getting used to the convenience of getting food delivered (Mignot 2015). This growing market is extremely profitable, and Amazon Fresh will get part of its share in the market, as long as there is no more supply than demand. The entry of new start-up companies can be of major threat for Amazon Fresh, which will be explained in the External analysis. Overall there are different business models emerging to fulfil this need, or types of meal delivery services:

1. Traditional grocery shops delivering online.

2. Software-only marketplaces

3. On-demand marketplaces

4. Fast-food 2.0.

FIGURE 11: GROCERY DELIVERY MARKETS (SOURCE: HTTPS://TECHCRUNCH.COM/2015/07/11/THE-BILLION- DOLLAR-FOOD-DELIVERY-WARS/)

AmazonFresh would fit into the Grocery Delivery market, competing with brands such as Ocado, Hubbub and FreshDirect. An analysis from its competitors can be found under competitive analysis.

Overall Online Grocery Retailing Industry UK

The traditional market is the predominant service owning 73% of market share, although the delivery market is growing thanks to the growth of Ocado. Amazon Fresh owns 5% of market share in the UK grocery market (The Guardian 2017). And is setting trends in the industry to go online:

FIGURE 12:ONLINE GROCERY MARKET WORTH 2015 (SOURCE MINTEL: HTTP://ACADEMIC.MINTEL.COM/DISPLAY/747983/)

According to Carroll (2016), 48% of consumers shop for groceries online, with an increase from 43% in 2015. Furthermore, the sector seems to be in awe with a constant growing rate (See Figure 14).

FIGURE 13: GROWING SALES IN THE ONLINE GROCERY MARKET; SOURCE MINTEL (HTTP://ACADEMIC.MINTEL.COM/DISPLAY/747983/)

One of the main barriers for online grocery shopping is the delivery charge fees (Carrol 2016). Which is why there has been a proliferation of Loyalty schemes, memberships and passes. This can be of advantage for Amazon Fresh, which prompts consumers to become members of Amazon Prime as a requirement to get Amazon Fresh.

Furthermore, the wide availability of goods is a key enhancer of online grocery shoppers for consumers (Carroll 2016). This may prompt them to switch stores. Amazon Fresh needs to make sure to provide a wide range of brands and products to enhance the online experience and be able to compete with other brands.

MARKET TRENDS Market trends will involve Social and Environmental trends. A full Political, Economic, Technological and Legal analysis can be found afterwards.

OPPORTUNITY

As of shopping trends, 52% of Londoners shop groceries online (Rao 2012). And Amazon Fresh’s expansion in the UK is benefitting of consumer’s shift on shopping habits with an already growing demand (See Figure 14):

A third part of consumers

in the UK would happily shop from Amazon Fresh, the other two thirds would buy if there wasn’t a Primer Membership FIGURE 14: ONLINE GROCERY SHOPPING, DECEMBER 2015; SOURCE requirement or if prices MINTEL (HTTP://ACADEMIC.MINTEL.COM/DISPLAY/767170/) were cheaper.

FIGURE 15: ONLINE GROCERY SHOPPING, DECEMBER 2015; SOURCE MINTEL (HTTP://ACADEMIC.MINTEL.COM/DISPLAY/767170/)

OPPORTUNITY

Market trends to note are the need for availability of products online, quality of fresh foods and improved loyalty schemes (See Figure 16). Amazon Fresh can offer a wide range of available products to consumers online, which are fresh and are part of Prime as the loyalty scheme.

Choice and frequency of buying is predicted to keep growing (Carroll 2016). Amazon Fresh can get more profit of more frequent buyers and can offer wider range in choice.

FIGURE 16: ONLINE GROCERY SHOPPING, DECEMBER 2015; SOURCE MINTEL (HTTP://ACADEMIC.MINTEL.COM/DISPLAY/767170/)

OPPORTUNITY/THREAT

Consumers’ perception of locally sourced products has increased after Brexit (Mintel 2016). 74% agree it is important. 64% agree products produced in the UK will be more important now, and 22% agree that quality of groceries will decrease (See Figure17):

FIGURE 17: ONLINE GROCERY SHOPPING, DECEMBER 2015; SOURCE MINTEL (HTTP://ACADEMIC.MINTEL.COM/DISPLAY/767170/)

OPPORTUNITY

Consumers are also increasing their healthy choices and are more aware of product ingredients than before (See figure 18). This can be beneficial for Amazon as it includes healthy, organic and locally produced choices.

FIGURE 18: IMPORTANT FACTORS FOR ACTIVE CHANGERS ACHIEVING A HEALTHY DIET, BY CONSUMER SEGMENT, 2016 SOURCE MINTEL (HTTP://ACADEMIC.MINTEL.COM/DISPLAY/767170/)

THREAT:

On-demand services and delivery options are proliferating and the market is getting more competitive by the minute (Magnot 2015). Suppliers will have more options to choose from and the saturated market will increase its rivalry. Amazon Fresh may have to compete with more start-ups entering the market.

OPPORTUNITY

Growth of a new consumer demographics: Millennials have more disposable income, open-mindness, and are not yet worried about mortgages and children (The New Economy 2014). According to Advertising Age (2014) Millennials will spend $200bn annually and $10trn in a lifetime. A potential target for Amazon Fresh.

THREAT

However, according to the International Markets Bureau (2012). Kids in between 13-18 years are less concerned about health and wellness. They spend their income in foodservice, such as convenience food and beverage. This is an interesting fact to look at if Amazon Fresh is looking for long-term sales effects in the grocery industry. They might want to include less healthy options in their service. More information here: http://www.agr.gc.ca/resources/prod/Internet-Internet/MISB-DGSIM/ATS- SEA/PDF/6217-eng.pdf

OPPORTUNITY

The market is also shifting from BOGOF once-a-time promotions to every-day-life prices (Carroll 2016). Amazon Fresh offers the cheapest basket compared to traditional grocery shops (See Appendix to see Figures) offering every-day-life prices:

FIGURE 19: ONLINE GROCERY SHOPPING, DECEMBER 2015; SOURCE MINTEL (HTTP://ACADEMIC.MINTEL.COM/DISPLAY/767170/)

Environmental:

OPPORTUNITY:

On an environmental level, there is an increase from both parties, consumers are rising their interest in environmental programs while corporations are increasing their interest in sustainability (Jackson et al. 2017) This may be a great opportunity for Amazon Fresh to cover environmental-friendly packaging, while adding fresh, organic and local farming produces of food. Furthermore focusing on Green Marketing and Green advertising can be of advantage to fulfil this new market trend. Furthermore research shows consumers don’t like to waste and are concerned with the environment (See Figure 20). This is important to emphasize in Amazon Fresh advertising.

FIGURE 20: REASONS FOR BEING GREEN, DECEMBER 2013: FILE:///C:/USERS/OUDEMANF/DOWNLOADS/THE%20GREEN%20CONSUMER%20- %20UK%20-%20MARCH%202014%20-%20EXECUTIVE%20SUMMARY.PDF

EXTERNAL FORCES A PESTLE analysis will be used as a tool to identify external factors that may affect and shape a company’s prospects (Kotler 2016). Amazon operates in an online environment subordinate to constant changes and challenges over time, which makes it crucial for the company to assess all factors affecting this macro environment. All factors identified will be shown at the end summed up in Threats and Opportunities in a SWOT framework.

COMPETITIVE ANALYSIS As said before, there are 4 main markets in the online grocery delivery industry. In the traditional market there are competitors such as Tesco and Sainsbury’s. In the software-only market the main competitor is Ocado, which delivers groceries with no physical store attached such as Amazon Fresh. In the fourth market on-demand delivery Amazon Fresh competes with brands such as HelloFresh, which delivers groceries according to food recipes and ingredients for specific meals. And on the fourth market competitors such as Deliveroo are taking the market share, which delivers already prepared and ready-to-eat foods from restaurants. These brands will be analysed further on:

The competitive analysis chosen for this research will be Ocado, HelloFresh and Deliveroo, as they are disruptive companies into growing markets online, with a different business approach than traditional grocery shops. To see a wider range of direct and indirect competitors see Appendix.

BRAND ANALYSIS FOR OCADO Mission statement: “We aim to find the best and simplest way to help our customers, to make shopping easy and convenient for them, and give them more time to spend on more important things. You might call it “feel good shopping” Ocado 2017

Ocado uses the same technique as Amazon Fresh exposing colourful fruit and vegetables in their advertisements. Some brands are visible (Hellman’s,

Tilda, Ribera…) which allows consumers to see their availability of food products. The difference with Amazon Fresh is their camera angle. The photo is taken from upside down, which is mimicking someone’s eye when the food is in the kitchen table.

The brand also uses green to reflect fresh and healthy food choice (Farooq 2016). Although the tone of green is slightly lighter.

F IGURE 2: HTTPS://WWW.OCADO.COM/WEBSHOP/GETOFFERS.DO

Ocado uses the same techniques over all their banners. Again English

brands such as Heinz, Doritos and PG are exposed in a colourful and

organized way. They also offer discounts for new members to prompt them

to purchase. The Ocado truck shows a close -up of light green apples, to imply freshness (Farooq 2016). It has the logo in the middle and sticks with simplicity. A trend has been noticed throughout grocery shop advertisements, where they use the same approach showing fresh fruit in their trucks. Amazon Fresh should look for a differentiating point for their advertisement.

FIGURE 3: HTTPS://WWW.OCADO.COM/WEBSHOP/GETOFFERS.DO

CAMPAIGNS DONE IN THE PAST

Advertisements done in the past includes a humour approach.

Where they use their USPs to attract new customers and

emphasize on comical lines to connect with the audience.

FIGURE 4: HTTPS://WWW.OCADO.COM/WEBSHOP/GETOFFERS.DO

FIGURE 5:HTTPS://WWW.OCADO.COM/WEBSHOP/GETOFFERS.DO

BRAND ANALYSIS FOR HELLOFRESH Mission statement: “to give customer everything that they need for a delicious, healthy, home- made dinner except the chef.”

HelloFresh has also opted to show their product range, but with no brand labels available, only the food outside their packaging. They have also chosen to FIGURE 6:HTTPS://WWW.HELLOFRESH.CO.UK/TASTY/FOOD-BOXES/ show a traditional kitchen in the background instead of only bland whites and HelloFresh uses light greys. vivid colours exposing

not only food, but also the process of making the food. This goes strongly linked with their mission statement and what they offer as a service, fresh recipes easy to make home

(Hello Fresh 2017).

FIGURE 7:HTTPS://WWW.HELLOFRESH.CO.UK/TASTY/FOOD-BOXES/

Advertising in trucks is not their strength.

They show a basket of their products with their logo in a white background, which is not very visible from distance.

FIGURE 8:HTTPS://WWW.HELLOFRESH.CO.UK/TASTY/FOOD-BOXES/

Instead of truck-vertising. HelloFresh focuses in Celebrity endorsement as a strategy to endorse its products and be associated with an excellent chef in the UK market (HelloFresh 2017).

BRAND ANALYSIS FOR DELIVEROO Mission statement: “We deliver high-quality food from favourite local restaurants to people's homes and offices, and we do it quickly” Greg Orlowski (Wired 2015)

Deliveroo has opted for a simplistic look in online banners, only showing their logo and their distinctive blue colour to remind consumers on the web of their existence. Simple but effective.

FIGURE 9: HTTP://BLOG.DELIVEROO.CO.UK Deliveroo has also opted for advertising in public transport stops, underground, street banners and city billboards with several taglines such as “Hungry? Don’t be” and exposing their logo surrounded

by meals already cooked and prepared to be eaten. Their strategy is of positioning the ads in well- thought places where their target audience may be passing by.

FIGURE 10: HTTP://BLOG.DELIVEROO.CO.UK

FIGURE 11: HTTP://BLOG.DELIVEROO.CO.UK

FIGURE 12:HTTP://BLOG.DELIVEROO.CO.UK

Deliveroo doesn’t use trucks but bicycles instead. Their outfit is bright blue and they expose the logo to anyone passing by which increases awareness. Furthermore they choose strategic places to advertise following FIGURE 13: HTTP://BLOG.DELIVEROO.CO.UK guerrilla strategies in London subways and in other locations.

CUSTOMER ANALYSIS

For this section, the ideal customer segments for Amazon Fresh will be identified through the ACORN classification user guide, in order to get an accurate interpretation and in-depth analysis of the ideal customer for their service. Secondly, one segment will be identified as the ideal one to target and a positioning map will be illustrated to demonstrate how the brand is perceived in this specific segmented consumers’ mind.

ACORN SEGMENTATION

For Amazon Fresh, the ideal customer would be Category 2: Rising Prosperity Types 28 D City Sophisticates 30 15 including Younger professionals in smaller flats & 30 16 City Sophisticates.

This 2 segments of the population are younger, well-educated and generally successful in their career and prosperous people living in major cities, following an urban lifestyle in this case in London. Their marital status varies, however the majority are single people and couples without children, who are graduates, highly educated and confident in their expenses.

They live in modern, executive city flats, with higher incomes than the average, although they may not be saving the money up for investing it, which means they’ve got more disposable income. At the same time they own more smartphones and technology than national average, with frequent internet access. They like socialising and spending. This is a major benefit for Amazon Fresh, as they are more likely to spend in online grocery shopping to get delivered. A deeper analysis will be done next.

FIGURE 14FIGURE 3:CITY SOPHISTICATES ACORN CLASSIFICATION GUIDE.PDF

BUYING HABITS OF TYPE 15

Type 15 are younger professionals in smaller flats in London. They are under 35 years. Majority will have a degree and have a high incomes which freely spend with credit cards and overdrafts. Spending in leisure and entertainment, cinemas, eating out, hotels, holidays… They are likely to post comments and reviews for brands. Mobile phones are extremely important. They are more likely to enter competitions and engage with advertising online. They are also more interested in travelling, lifestyle and financial content. Furthermore they use Social Media more. This can be used in advantage for Amazon Fresh to include travel, cinema tickets & holidays promotions, to encourage them to write reviews online through competitions and to advertise through Social Media as their preferred media choice.

FIGURE 15: YOUNGER PROFESSIONALS IN SMALLER FLATS. ACORN CLASSIFICATION GUIDE.PDF

BUYING HABITS OF TYPE 16

Type 16 is also a very appealing segmentation for Amazon Fresh. They have a more expensive taste and lifestyle. Incomes are above the average nationally, financially aware although own several credit cards and multiple bank accounts. They save more than the last segment, and they form the majority of the internet population, they like technology and apps, and a third spend over 3 hours a day online. They often read reviews and consumer ratings and they share their opinions in forums. Amazon Fresh may benefit of their high disposable income, they are a good target as they create content on the web and word-of-mouth for their advertising, and they read reviews that the other segment could be encouraged to share.

FIGURE 16: METROPOLITAN PROFESSIONALS. ACORN CLASSIFICATION GUIDE.PDF BRAND POSITIONING MAP

The positioning map positions Amazon Fresh against competitors regarding the cost of Membership for the service and their Delivery flexibility, as those are the 2 key barriers of concern for consumers. The most expensive membership is HelloFresh, followed by Ocado, Asda and then Amazon Fresh. The cheapest ones are Tesco and Sainsbury’s and Deliveroo with no membership fees. Regarding flexibility hours for delivery, Deliveroo offers delivery in 35min. average, Amazon Fresh offers same-day delivery, followed by Ocado which offers 24/7 delivery 6a.m-11.30pm, then Asda, followed by Sainsbury’s and Tesco which is limited to weekdays and specific hours on the weekend. At last HelloFresh only delivers 3 days a week with exceptions in specific areas.

Cost of Membership

Delivery flexibility

SUMMARY OF KEY FINDINGS

Key issues Actions Importance Amazon Prime membership Change consumers’ views of High might be a barrier for some what a membership can do consumers. for them through advertising. Teens are not as concerned in Include less healthy options Low healthy choices as older age and advertise variety of cohorts. products. Consumers are concerned Make prices in Amazon Fresh High about pricing. competitive against Tesco and Sainsbury’s. Market trends predict more Amazon Fresh should include Medium UK local productions and local as many English foods as foods available possible and tag them with a Locally produced guarantee. Consumers expect more Amazon Fresh should link High speed in delivery than before. Amazon’s identity to their own to include brand nodes such as innovative and fast delivery. Increase in environmental Increase green Marketing High concern and expectations techniques in Amazon Fresh’s towards companies. advertisements. Technology is evolving quickly Include Drones in Amazon Low introducing newer tracking Fresh’s advertisements to services and drones. make it distinct from competitors. Increase in disposable income Target this specific segment in High from young professionals in the next advertisement for London Amazon Fresh

SMART OBJECTIVES

Amazon Fresh needs to follow a profile strategy communicating their mission and their goals to all stakeholders, including distributors, suppliers and mostly customers. Therefore the SMART objective proposed is:

On a corporate level:

• To increase market share from 5% to 15% within the second year of operations in the online grocery delivery industry within the United Kingdom. • To do so Amazon Fresh needs to achieve the sub goal of an increase in Amazon Prime membership sales up to 25% more than in 2016.

On a communications level:

• To achieve these 2 goals, communication needs to emphasize not only on Grocery shopping but also to prompt users to get a Prime Membership. This will be done with the campaign designed for the next assignment. • The target to approach is consumers in within the ACORN classification of City Sophisticates with high disposable income and on-the-go lifestyles;

The final SMART Objective is:

• To prompt City sophisticates to take action and increase sign-ups for Amazon Prime as well as Amazon Fresh by 25%, this is to be done within 2017 in the area of London, United Kingdom.

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APPENDIX Leading online grocery competitors are:

• Tesco Online • Sainsbury’s Online • AmazonFresh (Online grocery shopping) • Ocado (Online grocery shopping) • HelloFresh (Online fresh food recipes delivered) • Deliveroo (Online restaurant food deliveries) • Asda Online • Waitrose Online

Traditional Competitors list:

• Tesco (Online and offline grocery) • Sainsbury’s (Online and offline grocery) • Asda (Online and offline grocery) • Waitrose (Online and offline grocery) • Marks and Spencer (Offline grocery) • Morrisons (Offline grocery)

Traditional grocery competitors:

AmazonFresh has the cheapest basket in comparison with other UK supermarkets (FMCG 2016). See Figure 3. This positions them in the market as a good price competitor.

BrandView pricing comparision for typical basket of 29 items including Fresh, Frozen and Ambient everydayy items

PRICE, DELIVERY AND LOYALTY SCHEMES COMPARISION BETWEEN ONLINE GROCERY SHOPS

Lowest delivery charges (Rao 2012):

• AmazonFresh (Orders over £40) FREE: • Waitrose (Free over £50). • Ocado (Free after 10pm) • Sainsburys (Free over £100 Monday to Thursday after 14.00) • Tesco (Over £40) (Free next day delivery over £10) • Click and Collect for Free: Tesco (Over £10) Asda and Waitrose

NOT FREE • AmazonFresh £4 fee. • Saibsurys, Tesco and Asda (And Ocado) between £3 and £6 • Click and Collect: Tesco (£2 for it) • Click and Collect same day: Sainsburys £6 (Under £40, £2 more than £40 spent)

Shortest Slot length: AmazonFresh (1h Slots) • Sainsburys and Ocado (1h slot) • Tesco (Sometimes 1h or 2h) • Others (2h)

Longest Delivery hours: • AmazonFresh (Between 7am to 11 pm) • Ocado (6am to 11.30pm). • Asda, Sainsurys. Tesco and Waitrose (All 8am to 10pm)

Loyalty schemes: • Amazon Fresh: Amazon Premium £79/year AMAZON FRESH 79 • Asda (Free delivery over £99 and using Asda Reward Credit ASDA 99 Card) OCADO 109 • Ocado (Delivery Pass offers a year-ong free delivery after SAINSBURYS 60 initial payment of £109.99) TESCO 60 • Sainsbury’s Annual Pass (Free delivery for £60/year) HELLOFRESH 552 • Tesco ClubCard Boost (6 months: Anytime £7 per month, Only Tuesdays, Wednesdays and Thursdays for 3.50/month; Anytime 12 months: £60)

Minimum spend: • Asda (£25 min) • Ocado (£40 min) • Saisburys (No minimum, but charge more if its less than £40).

Same day delivery: • AmazonFresh (After 5pm if orders ar emade before 1om) • Sainsburys (After 6-7pm)

EXTENDED PESTEL

Political Prime Minister Theresa May has also Amazon may also be eligible for OPPORTUNIT promised for 2017 a long-term a Programme UKD7. With up to Y Industrial Strategy to help businesses £5 million available in growth grow in the UK. And according to capital for established UK Financial Times (2017) Banks will be businesses to grow and create lending more from 2016 onwards. new jobs (Atkinson 2017). Nevertheless there is still controversy about the government support and To know more about this financial institutions in the UK, arguing scheme: that most of successful companies have http://www.ukbusinessgrants. had to be self-funded (Rigby 2017). org/blog/?s=government+supp ort+e-commerce

Social There is also a global trend increasing AmazonFresh may take OPPORTUNITY consumerism in developing countries advantage of this with their (The Guardian 2017). speed and easy to consume by just a “click” in their app.

Economic Deflation rates: The decreasing value of A weaker sterling also means THREAT the pound. A weaker currency may costs will start to increase for UK reflect a devaluated economy and may manufacturers (Rigby 2017) reflect uncertainty in trade (Jackson et Therefore AmazonFresh may al. 2017). find it challenging to invest in advertising due to the economy’s deflation rates.

Economical Less unemployment rate (Jackson 2017) Success in employment and job OPPORTUNITY offers to distributors to work with AmazonFresh Economical The grocery shopping industry is AmazonFresh has a great OPPORTUNITY expected to start growing form 2017 opportunity to invest in onwards (See Figure). advertising and expand.

Legal Research confirms rising product This may be a threat for THREAT regulations and environmental Amazon Fresh as it will be protection regulations to happen. more costly to get organic products, however, in doing so they are also meeting consumers’ needs and wants for environmental-friendly products.