Kindle Fire: Amazon’s Heated Battle for Tablet Market
Amazon has created a value product that resolves around services over the device itself, known as the Kindle Fire. With the emergence of e- readers, various competitors immediately offered iterations of the Amazon Kindle Fire tablet. The CEO of Amazon, Jeff Bezos, must decide and define its most promising target segments and positioning of the Kindle Fire against competing products in the market.
Based on the initial sales of the Kindle Fire, it is recommended that Amazon move forward in positioning with Apple’s iPad and targeting its consumer segment to “media junkies”. An extensive financial analysis was then conducted to have found that a pricing strategy at $149, selling at a loss would actually be the company’s most rewarding and profitable opportunity. On the other hand, the consumer analysis identified the Millennium and Generation X cohorts to be heavy consumers of tablets. The considerable purchasing power and growing technology preference from the “media junkies” gave favour to Amazon’s Kindle Fire. Marketing efforts will be contributed to focus on the interests and values of technology from the Millennium and Generation X cohorts.
The recommendations to define its target segments and positioning will be implemented immediately alongside its new pricing strategy. It is crucial that the Kindle Fire is a separate brand from the existing traditional Kindle e-reader. Advertising will be concentrated on the “Full Amazon Experience” also known as the user experience to differentiate itself from the market. To facilitate further growth of the Amazon brand, consumers will be then integrated into the Amazon ecosystem of content goods and services to be purchased.
It is imperative that Amazon provides the end- to-end Kindle Fire experience and value proposition to entice its consumer segments and market position. Refining Amazon’s strategy will ultimately translate to the growth of Amazon, signaling investors to the future growth prospects of the Amazon business. Problem Statement
The primary issue for Amazon is how to define its target segments and positioning of the Kindle Fire, in response to its competition and its traditional Kindle e-reader. Secondary issues include determining the price point and how to create a selling experience known as the “Full Amazon Experience” as opposed to selling a product or device. The most relevant constraint is Amazon’s heavy dependence on subsidizing the Kindle Fire hardware device. Amazon made a clear assumption that its “superior end- to – end experience” would lead to incremental purchases of commerce and content sales, and the margins thus gained would offset the hardware subsidy. However, the low margins translate to a low margin of safety, hindering higher risk and decline in potential profitability limits for Amazon’s Kindle Fire. Amazon needs to find the ideal price for its product line to maximize its profit. Situational Analysis
Jeff Bezos has created a very successful name for Amazon, as it became the largest online bookstore. The business strengths are primarily focused on internal technology development offering its customers the ability to discover, purchase, and sync content as quickly and easily wherever they happened to be (Exhibit 1). The Kindle Fire offered sophisticated specifications at a discounted price. By leveraging its cloud- based resources, Amazon packed numerous unique features and services into the Kindle Fire. It eventually sold itself, having reached a sales success of nearly 5 million in a little over three months.
A current analysis of Amazon’s financial reveals that Jeff Bezos’ runs a very profitable and sustainable business (Exhibit 3). Through the traditional Amazon technologies such as the rapidly expanding Amazon Web Services, Elastic Compute Cloud platform, and the Simple Storage Service, Amazon indicated approximately $50 billion in revenues. With...
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