E-commerce and digital marketing in China Pirelli case study

Abstract

The Chinese economy is changing very fast. Thanks to the increasing number of people using the mobile phones and laptops in China, a new way of shopping spread all over the country. This is called online shopping. It means that people can comfortably stay at home using their mobile phone or laptop for buying everything they need. This new tendency has affected the business in different ways. First it seems mandatory for a company to create their online shop and often a company sells more on their online platforms than on their brick and mortar shops. The first part of the thesis has the objective to analyze the current situation of the online Chinese market in this regard. At approximately 5.16 trillion yuan ($7552 billion) of online retail sales in 2016, China is the world’s largest and fast-growing online retail market with 26% of growth rate from 2015, more than double the growth rate of overall retail sales. According to this data, China already surpassed U.S. as the world’s largest online retail market. Chinese main e-business type is B2C, the business to consumer. It will follow an analysis of the most famous B2C platform as Tmall, Jingdong and Suning. Alibaba group changed the shopping world, especially Taobao and Tmall. Taobao is mainly a C2C platforms where consumers can sell goods to other consumers and everyone can open a Taobao shops. With the quick and safe payment App Alipay payment became more convenient and fast. Tmall is a B2C platforms. It is safer than Taobao and with more rules about the opening of the shops and the goods sold. In fact the online shop can only be open by companies with specific characteristics and the goods sold have to be original and not counterfeit. Giving the importance of this two platforms in China, the thesis analyze the two platforms from their business model in terms of: key activities, strategic partners, value proposition, distribution channel, customers segments and revenues. At the end of the first part there is a focus on the Chinese online consumers group. This analysis is helpful to understand the current situation of the market and it will help to understand the case study proposed in the second part of the thesis. The second part of the thesis consists of an analysis of the digital strategies used by the Italian company Pirelli in China. This want to show how companies, especially foreign companies, are forced to change their business strategies to fit the new market’s requests. The case study starts with an introduction of the company and its history, the APAC strategy of the company, the main products sold in China, the product positioning in the Chinese market and the distribution channels. It will follow a 4Ps analysis of the Tmall shop of Pirelli in China. This analysis will show what are the strong and weak points of the company in this regard. Moreover, Pirelli will be confronted with its main competitor Michelin. The successful Michelin Tmall shop will serve as way to better understand where Pirelli can improve and where instead needs to stay firm. To sum up, the thesis has the scope to introduce this new and digital world of online shopping and make companies understand the importance of consider a new digital marketing strategy if they want to be successful, especially in the Chinese market.