Amazon kindle case-study PDF

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Amazon Kindle Case Study  

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Segmentation and Targeting Positioning (positioning our offer in the mind of customer towards competitors) These two are strategic marketing process Marketing mix This is operational marketing process

Segmentation and Targeting (red-disadvantages, green-advantages) 1. Media Junkies a. Availability of media content b. Low price c. Coherent with target needs in terms of functionalities d. Competitors e. Screen performances f. Do not purchase from amazon platform because of compatibility with other devices 2. Kids a. Low price b. Low functions needed c. Growing segment d. Does not break easily e. Kids do not have purchasing power 3. Gamers. a. Weak performance (screen + processor) b. Growing segment c. Lower price 4. Education industry. a. High investment b. Weak relationships with industry players c. Growing segment d. Lower price of tablets and books e. Interface to take notes and colored screen 5. E-readers After defining targets, we will choose based on Compatibility with offer and market growth For Amazon, Kindle Fire is not a device, but un-tablet. Which target we will choose? Maybe price conscious gamers. E-readers – we can cannibalize our own product kindle – customer may think it is a substitute, as it is colored device it is not the best medium to read in terms of need. Most suitable one is media-junkies. Positioning:

Kindle - $149

Kindle Fire - $199

I-pad - $499

E-reader (black & white)

Cloud service Ecosystem Partnerships Books, movies, games Internet Amazon App

Focus on product

Others Google – $499 Nook - $259

They offer a way to access a content, it is not positioned as a tablet, but un-tablet. Kindle fire – 1-month free trial. Point of difference is the service and experience. For kindle fire is not more focused on product as much as I-Pad is. We should also differentiate kindle fire against our own product kindle. We don’t want customers perceive kindle fire just as a more expensive version of kindle. So we don’t want to cannibalize our own product. So, we should position against i-pad and kindle in the mind of our audience. This positioning is:   

Great for media junkies Also ok for kids as they can play games, they are not interested in e-reading, it is easier to use for them than i-pads Not for e-readers, they will purchase kindle

So, being an un-tablet is a distinctive feature for positioning. Price: Prices are quite different. How do we evaluate if it is the right price or not? Internal cost. They have zero margin, they don’t take any profit, so they have to increase their price to be able to take profits. Generally, depends on the objective. If it wants to focus on price or ecosystem.  Cost -$200  Revenues – 199$  Incremental rev. on platform - $10 music/month and each year it will be increased by 10%, books + 12 year at $10 each + 10% year,  Rev. advertisers,  Rev. final customers $30  Rev. e-commerce $50/month + 5% year

When we consider price, we have to consider it for a business model of the company. The case of razorblade model. It assumes that, if you sell up-cost that cover the loss for your basic product. Competitor’s price. Fire’s price should be higher than kindle and lower than i-pad acc. To 3C model.

You should look at value of customer, competitors price and internal cost. 3Cmodel of pricing. From a qualitative point it is right. If it is a suitable price to generate such revenues or you have to lower or increase it?

Channels:  Online – more coherent  Physical distributors (2 of them shown in the case) maybe for kids and moms  Social media Communication: (how it will differentiate you from comoetitors, you should advertise the content not the tablet itself)  Amazon users itself Why amazon took this challenge? They already had kindle etc. why they want to do that? They want to enter the hardware market ??? Amazon is not a manufacturer it is a platform. Positioning should be coherent with the overall strategy. Price is also coherent, because Apple is a manufacturer of premium products. Amazon does not look at high margins, it looks at high volume. We want to sell a lot of tablets to attract more customers. It is coherent. Ecosystem, high volume, low margin etc. Apple wants to have top product, not many products. Amazon doesn’t have top products, they got long tails, niche products available that few people ask. The range of offer is really wide. It is the long tail approach. Thus, it is very coherent with the overall strategy of the whole company. Amazon is really flexible in terms of business, they provide more access, enlarge the scope, not really compete with Apple in terms of device. It reconnects our marketing strategy to the overall company strategy. It is marketing, but it comes from the strategic approach....