Amazon Kindle Fire

Executive Summary

After the launch of the Kindle Fire, Amazon has captured half of the non-Apple tablet market share, but the Kindle Fire is being sold at cost and it is unsure whether content and commerce revenues would be able to make up for the hardware price subsidy. With other competing products such as Google Android Tablets, Apple’s iPad and Barnes & Nobel’s Nook entering the market, the CEO of Amazon, Jeff Bezos, need to refine the strategy of Kindle Fire. The key tasks Amazon now face are how the company should position the Kindle Fire in response to the new entrants in the tablet market, which segmentation of consumers should be the core target and how it should be positioned against competing products. After evaluating the 3 alternatives, it is recommended that Amazon position the Kindle Fire as the best digital textbook device and target the college students to increase market share and achieve long-term sales growth.

Alternatives

Alternative 1: To college students who have a lot of readings and unwilling to pay for the high prices of paper textbooks, the Kindle Fire is the brand of the best digital textbook device that offers cheap, easy-to-read, digital textbooks and help decrease financial, physical burden because (1) the device is easy to use and carry, (2) digital textbooks and the Kindle Fire both are cheap, (3) it provides a lot of free entertaining apps. The brand character is knowledgeable, personal, intimate and promising.

PROS:

• With the growing numbers of college students switching from paper textbooks to digital textbooks, Amazon has a large customer base for the Kindle Fire.
• The e-book business shows growth potential, and positioning this way would also help the company maintain and defend its position as the largest online seller of new textbooks.
• Amazon is setting up pickup places on campus, penetrating into the textbook aspect at the same time can help protect the Amazon ecosystem and insert the Amazon lifestyle into students minds.
• Students are tech-savvy and likely to try out new digital technology.
• The competing price is attractive to students thus successful propaganda will increase the market share.

CONS:

• Kindle Fire would need to establish a completely new format in order to develop the capability for a better display of e-textbooks.
• Pressures from competitors- the iPad’s iTextbok platform is showing premium product quality and Nook Color is already working with publishers, which makes Amazon a little late to the market.
• Amazon also made it difficult for books purchased outside of Amazon to be accessed on the Kindle device, which might cause unsatisfied experiences for some of the users.
• Targeting college students does not differentiate the Kindle Fire from its e-book device, the Kindle.

Alternative 2: To active game-loving children under 12, the Kindle Fire is the brand of a pain-point relieve tool for parents and a game-playing toy for children that enables the children to be engaged in activities and help parents release life pressure because (1) it’s easy to use and has the parent control function, (2) it is cheap and durable, (3) it provides thousands of games and apps. The brand character is enjoyable, friendly and relaxing.

PROS:

• Data shows that children under 12 use tablets to play games in 70% of U.S. households so targeting this segmentation ensures that Amazon has a huge customer base.

• Children can be nagging and in high-maintenance, the Kindle Fire can be very helpful for the parents to release the stress of accompanying their children all the time since it’s children-friendly and has parent control, differentiating it from the iPad.
• Comparing to a hundred bucks iPad, the Kindle Fire is cheap and durable.
• Children influence the purchasing behaviors of parents and few tablet competitors are targeting this segmentation, giving Amazon the chance to be the leader in this market.

CONS:

• The children segment is a comparatively smaller market.
• The screen of Kindle Fire freezes often and due to its price, there are for sure many other gaming platforms offering better gaming experiences, such as Apple’s ipad.
• Focusing on the gaming function neglects the other features of the Kindle Fire, such as e-book and movies, which are huge potential markets.

Alternative 3: To people with low-incomes but want an iPad, the Kindle Fire is the replacement device for iPad that offers the same functions and enjoyable experiences as iPad but charges much less because (1) it is easy to use, (2) it has a good price, (3) it has multiple functions. The brand character is practical, responsive and “the cheap Apple/iPad”.