Table of Contents
Description of Business
Amazon.com opened its virtual doors on the World Wide Web in July 1995 and offers Earth’s Biggest Selection. We seek to be Earth’s most customer-centric company for four primary customer sets: consumers, sellers, enterprises, and content creators. We serve consumers through our retail websites and focus on selection, price, and convenience. We also manufacture and sell Kindle devices. We offer programs that enable sellers to sell their products on our websites and their own branded websites and to fulfill orders through us. We serve developers and enterprises of all sizes through AWS, which provides access to technology infrastructure that enables virtually any type of business. In addition, we generate revenue through other marketing and promotional services, such as online advertising, and co-branded credit card agreements.
We seek to be Earth’s most customer-centric company for four primary customer sets: consumers, sellers, enterprises, and content creators. Goals and Marketing Objectives
Our financial focus is on long-term, sustainable growth in free cash flow per share We seek to reduce our variable costs per unit and work to leverage our fixed costs Because of our model, we hope to turn our inventory quickly and have a cash-generating operating cycle We expect spending in technology and content will increase over time as we add computer scientists, software engineers, and merchandising employees. We seek to efficiently invest in several areas of technology and content, including seller platforms, digital initiatives, and expansion of new and existing physical and digital product categories, as well as in technology infrastructure to enhance the customer experience, improve our press efficiencies, and support AWS. We will continue to focus relentlessly on our customers
We will continue to make investment decisions in light of long-term market leadership considerations rather than short-term profitability considerations or short-term Wall Street reactions We will continue to measure our programs and the effectiveness of our investments analytically, to jettison those that do not provide acceptable returns, and to step up or investment in those that work best. We will continue to learn from both our successes and our failures We will make bold rather than timid investment decisions where we see a sufficient probability of gaining market leadership advantages. Some of these investments will pay off, others will not, and we will have learned another valuable lesson in either case When forced to choose between optimizing the appearance of our GAAP accounting and maximizing the present value of future cash flows, we’ll take the cash flows We will work hard to spend wisely and maintain our lean culture. We understand the importance of continually reinforcing a cost-conscious culture, particularly in a business incurring net losses We will balance our focus on growth with emphasis on long-term profitability and capital management. We will continue to focus on hiring and retaining versatile and talented employees, and continue to weight their compensation to stock options rather than cash. Organizational Structure
Kindle is currently dominant in the Market share for e-readers. It holds a 48% share of the market while Sony, Nook, and others share the rest. Because of our quickness in the market, we were the first to really shine. Additionally, because of our already strong client base with our books on Amazon.com, it was an easy transition for most of our customers. Customer
Meet Pam! Pam is a representation of our primary target customer. Pam is a middle-aged, college-educated woman with a constant desire to exercise her mind. Some days she desires to learn more about the Amazon forest while other days she just wants to read a good mystery. Pam is a housewife and stay at home mom of 4 children who keep her busy and on her toes. She is strongly politically affiliated, always keeping up with the Wall Street Journal and the various new stations. She uses her Kindle for all of her books and subscriptions. Pam loves knowing that her Kindle is reasonably priced and will help her to stay mentally active.
Charts and Matrices
Product/Market Opportunity Matrix
Product/Market Opportunity Matrix
The Kindle is a representation of a new product in a present market. Reading itself has been around for ages, and therefore is not a new market. However, the e-reader is new to the reading world! E-readers have presented affordability and easy access to the world of reading. Porter Generic Strategy Model
Porter’s Generic Strategy Model
The e-reader in the Porter’s Generic Strategy Model is low cost in a narrow market. The market for e-readers is not that broad. 1. Not that many people have a desire to read for recreation. 2. Some people prefer to use traditional books. Therefore, the e-book market is relatively targeted. Also Kindle use a lower price strategy to try to win over various customers.
Boston Consulting Group Matrix
Boston Consulting Group Matrix
Relative Market Share
Industry Growth Rate
The Kindle in a Boston Consulting Group Matrix scores high in relative market share because of its early entrance into the market. The Kindle holds about 48% of the current e-reader market. It scores low on industry growth rate because the rate of people likely to read often doesn’t increase much. General Electric Business Screen
The industry attractiveness of a Kindle scores a medium on the General Electric Business Screen because the reading market, as previously stated, is somewhat static. However, it does score a high on company business strengths because of Amazon’s innovation and quality. General Electric Business Screen
Company Business Strengths
Porters 5 Forces
Porter’s 5 forces model shows the different forces that impact the industry and the Kindle itself.
Suppliers: This chart shows the Bargaining power of the suppliers as one force. The suppliers for a Kindle would be those who contribute materials for the Kindle itself and also the writers/publishers for the books that the Kindle uses Customers: The chart touches on customer bargaining power. These are the readers and the purchasers of the product. Without the support of the readers the Kindle can't flourish. Entrants: The chart shows a threat of new entrants as a force. New entrants consist of our main competitors, such as Nook and Sony. With new rivalries, we may need to adjust how we do our business. Substitutes: The chart explains that there may be potential substitutes for our product that will affect the market. These would be traditional books and newspapers, as well as other forms of media (TV, News Channels, Movies) SWOT Analysis
We have a rapidly evolving business model
We do not collect sales or consumption taxes in some jurisdictions Strong Customer Base
Ease of purchase
Our expansion Places a Significant Strain on our Management, Operational, Financial and other Resources We experience significant fluctuations in our operating results and growth rate The seasonality of our business places increased strain on our operations Our stock prices is highly volatile
New to delivering hardware
A few design complaints
Entered E-book market early – Major success
Online Lending Library
We Face Intense Competition
Our Expansion into New Products, Services, Technologies and Geographic Regions Subjects Us to Additional business, legal, financial and competitive risks We may not be successful in our efforts to expand into International Market segments If we do not successfully optimize and operate our fulfillment centers, our business could be harmed Out business could suffer if we are unsuccessful in Making, integrating, and maintaining commercial agreements, strategic alliances, and other business relationships Our business could suffer if we are unsuccessful in making, integrating, and maintaining acquisitions and investments We have a foreign exchange risk
We may not be able to adequately protect our intellectual property rights or may be accused of infringing intellectual property rights of third parties We could be subject to additional income tax liabilities
We are subject to payments-related risks
We could be liable for fraudulent or unlawful activities of sellers Product Life Cycle
The life cycle for the Kindle is most likely nearing maturity. Although the market for e-readers hasn’t changed, the efficiency of technology has. Because of the newest and most innovative tablets (iPad), the traditional e-readers may begin to fade. However, with the new Lending Library idea, we can extend the life of the traditional e-reader.
Competition Placement Grid
In the competitive placement grid, it is clear to see that the Kindle is superior. It comes at a lower price than the Sony but also at higher quality and popularity than the Nook. This grid shows only a few of the main competitors in the e-reader market, but the rest would still fall short of the Kindle. Marketing and the 4 Ps
The product of interest is the Amazon Kindle, an e-reader. At Amazon, we have decided to reach out to potential customers with a new aspect of our current Kindle. The idea consists of adjusting the current Lending Library to allow Kindle owners to rent books instantly for a low fee for a period of 2-3 weeks. This application will be offered only on Kindle devices, thus drawing in the customer comparing with other brands. After the two weeks of rental, the book will be automatically returned and an option for renewing checkout will be available. The idea of the Lending Library is comparable to that of Amazon’s current ability to rent out videos instantly on an Amazon account. Viewers pay$2-$5 for access to that video for 48-hours. Similarly with the Lending Library, we are hoping to reach the customers that are wary of purchasing whole books without knowing how much they will like it. Price
The price of the basic Kindle is $69 and the Kindle PaperWhite is $119. The PaperWhite consists of a few more advanced features such as a backlight for low-lighted reading, reading speed calculator, and extra storage space. The lending library prices will vary per book, based on release date, popularity, and length. However, the prices will be low, between $2-$5. Placement
The placement for our product is mainly online. Although a few electronic stores do sell some Kindle devices, Amazon.com has much comparability and variety for customers to choose from. The Lending Library application will be automatically applied to every Kindle, allowing every user to have access. Promotion
The plan of promotion for our product idea is the use of a well-known reader! Oprah Winfrey already greatly appeals to our target customer base because of her show, magazine, and status as a well-rounded woman. Additionally, Oprah already participates in a Book Club, drawing in an even greater variety of people. Our hope is to get Oprah on board for promoting the Kindle and the new Lending Library, focusing on its convince and affordability. Advertisements
Our Kindle has various advertisements out currently. On TV, the have several commercials which show a device that downloads books in 60 seconds and portrays that readers can live in different world’s with books.
The Kindle has various adds on
The Internet, allowing potential
Customers to see the benefits of
Having a Kindle as to traditional books.
In this particular photo, you can see that the marketers are trying to portray that reading is sexy. Although this might not appeal directly to our target market, it’s probably designed to attract a wider variety of people to books. Summary
Amazon in the future is hoping to stay on top of the curve for technology and retail. With such an innovative team and good luck we truly believe we can be and stay the best. In respect to the Kindle, we acknowledge that technology is a rapidly growing industry and to keep up we must keep our minds open. The Kindle has opened doors for us in the retailing industry and we hope to proceed with power.
Marketing Objectives Summary
As far as marketing goes, we hope to keep our current customers coming back as well as gaining new customers every day. We hope that with the use of Oprah and her Book Club we will be able to be able to bring a whole new aspect to the Kindle with the Lending Library. Without, all of our faithful customers we would be nowhere near where we are, so we thank them for their loyalty. References
Ascoli, A., Cullina, D., Kunesh, L., Peng, C.-C., & Xu, S. (2008, June 4). Amazon Kindle. Retrieved Dec 11, 2012, from www.mcafee.cc: http://www.mcafee.cc/Classes/BEM106/Papers/2008/Kindle.pdf Jain, P. AMAZON.INC SWOT Analysis. PGDM.
Marakmat, S. (n.d.). Amazon Porter's 5 Forces. Retrieved from Scribd.: http://www.scribd.com/doc/40107282/Amazon-Porters-5-Forces Mind Tools. (n.d.). Porter's 5 Forces. Retrieved Dec 11, 2012, from Mind Tools: http://www.mindtools.com/pages/article/newTMC_08.htm switch11. (2009, Dec 3). eReader Target Markets & Kindle, eReader death predictions. Retrieved from Word Press.com: http://ireaderreview.com/2009/12/03/ereader-target-markets-kindle-ereader-death-predictions/ switch11. (2010, Aug 14). Kindle Market Share Estimate, Projections. WordPress.com . The Official Board.com. (2012, Nov 21). Amazon.com. Retrieved Dec 11, 2012, from The Official Board.com: http://www.theofficialboard.com/org-chart/amazon.com Yahoo! (2012, Dec. 11). Amazon.com INC (AMZN). Retrieved from Yahoo! Finance : http://finance.yahoo.com/q/in?s=AMZN+Industry