Case analysis : The Kindle Way

Rana Sarkar-108138

Ashwani Kumar- 108286

Bimlesh Kumar Singh-108309

"Our vision for the

Kindle is to have

every book, ever

printed, in any language, all

available in under 60

seconds from anywhere in the

world."

Product & Brand Management

Faculty : Dr Sanjay Patro

PGCBM-19

Amazon.com

� Founded in 1994 by Jeff Bezos

� World’s no 1 online book retailer

� Low price strategy for e-books as compared to hardcover books

� Active customer accounts 144+million as on Q2-2011

� Active sellers accounts 2+million as on Q2-2011

� Annual Revenue Growth Rate – max 50.97% in June 2011 and last five years average growth rate-34.46%

� Market cap crossed 100 billion on July-2011

Amazon Kindle - eBook Reader

� Amazon product :an electronic book reader

� Kindle—The most ambitious invention after the Gutenberg Printing Press invented in the Holy Roman Empire by the German Johannes Gutenberg around 1440.

� High volume sold product in USA

� Kindle prices started from $359 in USA

� Now selling at $139 in USA

� But ideal price for e-Reader is below $99 as per survey

� New E-Ink screen:50% better contrast

� Readable in sunlight in daytime

� Built in WiFi : download e-books within 60 seconds

� Fun to read & carry during holidays, allows downloads via Wi-Fi.

� E-ink– reduces glare even in sunlight and reads like a printed document.

� Kindle-had plenty of favorable reviews.

� Kindle-a e-book reader from Amazon, which can store up to 3500 books, even newspaper & magazines.

� Kindle-Can run up to one month on a single charge with the wireless connection turned off & 10 days on wireless turned on.

� Lighter in weight 17% and sleek design 21% smaller.

Amazon Kindle - eBook Reader (Contd…)

Competitor : Sony e-Readers

� Japan’s largest exporter of consumer electronics.

� Various products ranging from $299.99 to $399.99

� Focus on quality statement : dedicated e-Readers within price range of $500: add features to basic products and charge higher prices (price skimming strategy).

� Plan for launching new product range named S1 and S2 from $180 to $300.

Competitor : Nook e-Reader

� A product of Barnes and Noble

� 2nd largest online book seller in USA

� Color Touch screen e-Reader : an added feature

� Lowest price as compared to others at $139

� Enhanced books, magazines, newspapers, kids books

� Popular applications like games, music and more

� Enhanced web with video

Other competitors in India

� Apple iPad: a multimedia tablet that includes e-book reader

� QUE (California based Plastic Logic)

� Alex (Fremont based spring design has hyperlink as an additional feature

� iIiad: a product from Philips at US$399

� Upcoming Apple’s tablet PC

� Flipkart.com

� LetsBuy.com

� Exclusively.in

� Sharp

� Others

Opportunities : e-Book Technology

� The consumers love electronic media like music and next area to develop is books and print media

� In the online business , it is beneficial to both parties (the seller and the buyer). The seller gets more customer base and customer gets more options while sitting at home.

� It saves transportation and other costs in e-business

� Environment friendly: e-book is basically a book without paper. It saves the paper and saves cutting of trees, so helps to conserve the earth environment.

� Generation-Y is more technology savvy :82% having mobiles and 9 out of 10 having PC

� No need of carrying heavy hard copy of books and other printed items. Luggage carrying can be saved.

� No need of storage of hard copy materials. The e-books can be saved in a small instrument like e-book reader.

Opportunities in India

� Huge population base in India

� Economic growth 7~8% annually

� Developing country wherein huge infrastructure development projects are in progress

� Fastest growing economy along with China

� IT infrastructure is underway like 2G/3G

� Many IT players are coming in development

� Industrial growth is handsome in India

� People are becoming more computer savvy

� Industrial growth providing more jobs to people

� Per Capita Income is improving in India

� Young generation is moving towards gadgets very fast and India has huge population who can understand English well.

� Indian market is price sensitive, to penetrate Indian market it would have to lower the price. Lowering the prices will create a grey market for US.

� Broadband availability in India is limited, so faster download is not possible

� Largest mass of India does not have access to internet

� Hard to change consumer behavior from book reading to e-reading

� Newspaper & magazines largest share of profit comes from advertisement , Amazon would have to treat them as partner

� Presently e-reader is a status symbol� People love print media and books reading in India

so behavior can not be changed immediately� People are more conservative in India like

generation-X. They are more traditional in nature.

Challenges in India

� Kindle does not have a specific strategy for Indian market.� No specific advertisement is being carried out to market in India. Still it believes in WOM (word of mouth) advertisement

� Kindle is only available online to buy� Its price & services are not focused to beat the competitor� India is undergoing second wave of e-commerce boom� India is a multilingual country, to maximize reach it will have to diversify in each language

� Low adoption of e-Reader and e-books� Information Technology infrastructure is not fully developed

� Internet facilities Broadband are not available to all� Connectivity of all people lags in internet access� Lack of basic needs to a large amount of population � Most part of population live in villages where electricity roads, hospitals, schools are still not fully accessible to people.

� Prices are sensitive to people here in India� Special Indian editions of international books are cheaper

Challenges in India

ANALYSIS

� Kindle is a early follower, with the leadership taken by Sony e-reader.

� CUSTOMERS WANTS:

a) Handy book: which kindle has

b) Easy download : This depends a lot on marketed country network. Amazon would have to rope in local area network leader to provide customer fast download

c) Less Price :Presently Kindle is priced $139 which is just above the $99 price tag that many analysts have cited as required price for mass adoption.

ANALYSIS

SEGMENT AGE LIKES BRANDINGWAY

FORWARD

School Children

<18 years of age

Early learners

Marketed in schools as substitute of text books

Once the kindle reaches in every ones hand, it be marketed as free, and charges be

taken based on downloaded

data

Generation Y

Age group 18-28 Years

Early adopters, focussed on urban life style, swing dancing, outdoor life

Potential for future growth, Kindle can be marketed as gift item to each other, savvy item, status symbol

Generation X

Age group 29-42 Years

Use technology extensively

Giving them extra feature & faster download facility

Kindle : Marketing Plan SWOT Analysis

Strengths•Very popular brand in USA-growth 56%•Huge customer base in USA-144million•Amazon’s no1 selling brand•E Ink technology with 50% better contrast•New sleek design with lighter weight/size•Improved battery life•Double storage up to 3500 books•Built in WiFi Download within 60 seconds•Text to speech

NegativesPositives

Internal

External

Weaknesses•Major presence in USA only•Products are costlier as compared to others•Not able to keep the price of Kindle below the ideal price of $100.•Pricing of e-books like Harry Potter and the Deathly Hallows –initially US $ 34.99 then reduced to US $ 23. But In Indian Portal like Rediff.com the price starts from US $ 18.And the pirated one costs US$ 2!

Opportunities•Huge customer base in India•India is developing at 7% growth rate•Economic growth in India is positive•IT infrastructure in India is developing fast•India is rated as fastest growing economy after China

Threats•Many competitors are entering in India•Low priced products ready to come in India•Slow entry of Kindle in India•Prices are more sensitive in India•Domestics players know the people better India

Kindle : Marketing Strategy

Target C

ustomers &

Brand Positioning in India forKindle : A

mazon

Kindle : Marketing Strategy

� Marketing 4Ps are related to 4Cs

Kindle must provide additional features and functional solutions to customers

Kindle must be provided at competitive prices to customer as on date below $99

Kindle must be provided at proper places where customer can approach easily in India

Kindle must be communicated to people in India with technological awareness.

Kindle : Marketing Plan

� Objective : Market Penetration through Low Pricingin India : Amazon should set low price of Kindle within the range of Ideal market price of $100 initially in order to penetrate the market quickly and deeply to attract large no of buyers in India and win a large market share.

� International Pricing : Amazon must adopt the market penetration strategy in emerging economy like India and Kindle can be priced at low levels as compared to its current price of $139 in USA because India is a growing economy and electronic spares are becoming cheaper due globalization effect specially from China.

Kindle : Marketing Strategy

� Customer-Driven Marketing Strategy:

The goal of the company is to create value for the

customers and build profitable customer relationships in India. The company decides which customers to serve (segmentation and targeting) and how to serve (differentiation and positioning). Variants with difference in cost and product features need to be launched so that all segments of customers can be served. Customer segments may be

� Students (with low income),

� Academicians with Income,

� Higher middle class persons who want to educate children , Mahabharata, Ramayana and other Religious and Traditional Epics and having purchasing capability of Kindle.

Kindle : Marketing Strategy

� Captive Product Pricing: � Kindle can be priced at low levels of $99 in India and other captive products like e-books downloading on Kindle network can be priced slightly higher to compensate the gap with competitors.

� Special tie ups to be made with major Publishers like Pearson, Tata McGraw Hill for special Indian e-books with lower cost like Special Indian Edition books. This is more required as the cost of e-books are not much lower than the hard copies.

� With the pricing, Amazon should not expect that Middle class in India will afford to buy the Kindle. So reduction in price is of utmost priority.

Kindle : Marketing Strategy

� Promotion: � Amazon to advertise on the net through Yahoo.com, Hotmail.com to attract the customers who does not use internet much except email.

� Amazon to advertise Kindle with top notch educational institutions like IIMs , XLRI , IITsNITs with special offers on Management and Engineering Books.

� To promote Internet usage as well as Kindle Amazon to alliance with Internet service providers especially 3G to sell Kindle as a bundle offer. It will be beneficial to both Amazon and Internet Service provider.

Kindle : Marketing Strategy

� Promotion (Contd..): � Amazon to arrange demos on Retail Book stores in the markets which are famous for books selling in India.

� Amazon to display in Major book fairs like Kolkata Book fair to reach book loving people and offer special discounts or bundle offers with Tata Mc Graw Hill, Pearson etc.

� Amazon to take part in Mega Trade shows for display of the Kindle firstly in major cities in India and then to the smaller cities

� Amazon to strategically place advertisements in media, in IN FLIGHT Magazines in Airlines, Educational Journals etc to attract people who have reading habits and purchasing power.

Kindle : Marketing Strategy

� Promotion (Contd..): � India has huge potential for e-book ,specially post IT boom but lack of cheap e-Readers and technological awareness among the people is hampering its growth.

Therefore awareness in the people about this product is very much important. Hence Amazon must focus on this aspect of awareness.

� People are very much price sensitive in India. Hence Amazon must focus on low pricing of the product as compared to competitors.

� Availability of the product in electronics consumable stores must be ensured because there is huge population in India who enjoy shopping in shops rather than online shopping.

References

� A text book.. Principles of Marketingby Phillip Kotler , Gary Armstong , Prafulla Y Agnihotri, Ehsan Ul Haque

� A text book.. Strategic Brand Management by Kevin Lane Keller, M G Parameswaran, Isaac Jacob

� Amazon.com website