E-commerce Industry

Question:

Discuss about the Marketing Strategy for Amazon Kindle Fire.

Amazon is a well-known brand carrying out e-commerce website for selling various kinds of goods to the customers. The company has been growing since it has been launched in 1994 in the city of Seattle, United States (Gordini and Veglio 2017). It is also known for its cloud computing business and one of the largest tech giants carrying out internet based retail business all over the world. The company has the largest capital and sales based all over the globe by maintaining a good brand recognition and customer base. Heff Bezos started the business as a bookstore and later it was expanded in electronic business selling various electronic devices. Along with selling the goods of other brands, the company also manufactures its own electronic goods in the name of Kindle that offers unmatchable service to the customer. One of its electronic goods named Kindle Fire was launched by the company in 2011 and offered preloaded benefits and services (Amazon 2017). The paper analyses the marketing strategy adopted by Amazon in launching its new tablet range Kindle fire in 2011. The report discusses both the internal and external situation of the business that lead to the success of the new launch such as the analysis of the industry it entered, its marketing plan, environmental analysis and so on.

E-commerce industry consists of companies selling software services and goods to the consumers that can help them improve their way of living and capabilities. In comparison to the condition of other industries in the world, e-commerce is growing at a faster rate and is recording huge orders and revenue. The growing condition of the industry is due to the improved usage of internet and busy life of the customers. Customers are not willing to visit markets to buy the products. Selling in e-commerce industry takes place through three branches such as business to customers, business to business and customer to customers (Laudon and Traver 2013). The e-commerce business in United States is increasing continuously from past years. Retail sales from e-commerce channels in United States have increased from $ 322 billion in 2016 to $353 billion in 2017. The sale is expected to increase further to $484 billion in 2021. On the other hand, the worldwide sale of the e-commerce retail industry is expected to reach $4trillion in 2020. Thus, the industry seems to grow continuously both worldwide as well as in United States. However, among all the e-commerce companies in United States Amazon ranks top in relation to sales and orders. The company experienced 183 million visitors in 2017 (Emarketer 2017).

Environmental Analysis for US Market

It is necessary for the online industry or any other industry to carry out effective environmental analysis in which it is going to launch a new product or enter in a new market. This is because the environmental analysis helps them to analyze the extent to which the consumers of that region will accept a new launch and the chances of risk while entering in that market. Amazon will analyze the environmental situation of United States to analyze the usage of online website by the consumers for purchasing retail goods and the chances of acceptability of its new product Kindle Fire (Zalengera et al. 2014).

United States is a politically stable and developed country offering a god scenario for a company to operate. Moreover, the country also maintains few business laws that the companies need to comply both in its internal and external environment.

Socially the country is very advanced and a modern economy. The people of the country love to live a luxurious life and have a keen interest in using new types of technology and products. Moreover, the people of United States are too busy with their life and thus mostly shop from online sources for their daily needs.

It is a highly developed and a mixed economy, which is also known as the largest economy of the world. The GDP of the country stands a $18.26 trillion in 2016 which is quite more than other economies of the world. Unemployment rate in the country has been decreasing over the years and stands at 4.9 percent in 2016. These factors make the economy a suitable zone for investing in new products (FocusEconomics 2017).

The country has continuously invested technology and innovation in various sectors. All the sectors of the economy are slowly inducing software and digitization in their operations. Information technology is also growing at a faster rate in the economy proving to be beneficial for e-commerce industry.

Legal factor is important for any company in order to start its business in a new market or introducing a new product. The corporate laws of the country regulate the power, finance and other governance of the economy. The country also maintains a 35 percent in its corporate tax that is required to be given by all the operating business in the economy.

The economy is environmentally not that strong as it faces various issues such as deforestation, climatic change, energy depletion and others. This is due to increasing development of industrialization and globalization for the advancement of the economy. Thus, various environmental conservation movements are carried out in United States by the non-governmental organizations.

Industry Analysis

Thus from the above analysis it can be seen that most of the factors are suitable for Amazon for its introduction of new products Kindle Fire that the consumers can buy from its online website (Fozer et al. 2017).

The industry in which the Amazon is operating in is an e-commerce retail industry in which the goods are sold through online sources to the customers. An analysis of industry in which a particular company operates helps the organization to analyze the amount of risk they might face from the competitors and the chances of profit in that industry (Porter and Heppelmann 2014).

The threat from new entrant for an e-commerce industry is relatively high due to low investment requirement and easy access to the internet. To open a new online business a new organization does not require much investment to be put in buying and designing the website compared to opening a physical store. However, investment is needed to manufacture electronic products like Amazon Kindle (Webber 2014).

The e-commerce industry faces a huge rivalry in its market because of the existence of large number of competitors and no switching cost for the consumers. There are huge brands similar to Amazon that operates retail business and offers various kinds of goods to the customers such as eBay, Netflix, Google and others that offers similar products as Amazon and offers action facility as well in which the customers can auction the price of the product they want to buy. This put a great threat on the company operating in the e-commerce industry.

It is seen that the buyers faces no switching cost to move from one online site to the others. They just need to open their own account to buy the products and that requires no cost. Thus die to low switching cost and existence of large number of sellers the bargaining power of the buyers is high in this industry.

The suppliers of the industry serve these huge giants and do not lose their business by bargaining on the price or any other reasons. This puts the suppliers at a low power to bargain with these e-commerce companies.

There are substitutes to this e-commerce industry such as the physical stores in the market that sells electronic goods as well. Due to no switching cost, the consumer can easily shift their demand from online companies to physical stores if they get the same product at lower price. Thus, threat from substitute is relatively higher in this industry (Rothaermel 2015).

Competitive Environment

The e-commerce business exerts a lot of competitive environment to the companies operating in it. Amazon too faces a lot of competition from its competitors that also carry out online business selling electronic goods to the consumers. Its competitors are as famous as Amazon is and is slowly growing in the e-commerce industry. The biggest competitors of Amazon in United States are eBay, Netflix, Wal-mart, Apple Sites, Google and others. The competitors of Amazon are in the electronic business and general merchandise segments as well (Sila 2013). As most the competitors offer similar products and services to the customers such as the device sold by Barnes & Noble, iPad introduced by Apple and android introduced by Google was similar to Kindle Fire of Amazon. It creates a tough competitive environment for the company. Moreover, some of the e-commerce companies also offer action services that allow the customers to auction the prices of the product they want to buy. Thus, it is seen that the e-commerce industry offers a strong competitive environment to Amazon operating online business (Castaño-Díez 2017).

The above figure shows the position of Amazon compared to its competitors such as Wal-Mart and Apple Sites in relation to number of customers visiting the store in a year. Amazon experienced total customer visit of 183 million visitors, while others received comparatively less customers.

Resources are vital for any industry as it defines the strength of the business over its competitors. The resources are of two types such as tangible and intangible resources. Among the two, the intangible resources are the best, as the competitors cannot imitate the services of the human resource. Amazon too has tangible and intangible resources that help the company to operate successfully. The company has a financial base of $ 48077 million in the year 2011 which was quite more than its previous years. Moreover, the strongest resource of the company was its cloud computing information technology and the Simple Storage Service that it offered to the customers. The stock of the company stood at 468 million in the year 2011which gave it a strong financial condition and market strength. Other resources are the staffs of the company that helped them to run the business and the engineers that visits the customers to help them understand the feature of the new products. It also invented logistic infrastructure and advanced algorithms for better online experiences (Chen 2017).

Resources of Amazon

Amazon is indulge in offering cloud computing storage technology to the consumers that are tech savvy and to students that stores hue study materials in the device. Thus, the company has a competency in researching into new technology and electronic device that can use cloud storage to prevent data loses (Chen 2017).

Core competencies are technology that the company used in its new tablet the Kindle Fire. The tablet was introduced by the company in2011 and has used certain features that are rare and not easy to imitate. Amazon used free cloud storage in the device and the device came preloaded with the modified version of Google Android OS. The new tablet was a mixture of various kinds of technology in one device, which is rarely seen in tablets produced by other brands. The new Kindle Fire offered by Amazon has everything a customer would love such as Amazon web services, instant video screening and others. This was done by Silk, which is its cloud web browser. In its instant screening the company offered 18 million movies, songs, magazines and other shows (Chen 2017).

	Rare?	Valuable?	Costly to imitate?	Non-substitutable?
Cloud Based resources	Yes	Yes	Yes	Yes
Research in cloud storage related areas	Yes	Yes	Yes	Yes

Table: Core Competency of Amazon Kindle Fire

Source: (Chen 2017)

The value chain analysis shows the activities done by the company to maintain its business structure.

The inbound logistic of Amazon is its cloud computing system, business algorithms that are used by the company to produce its electronic device for the customers. Other inbound logistic is the human resource that the company is using for manufacturing its product and offering it to the customers (Chen 2017).

Outbound logistics of Amazons are all the electronic goods that the company offers such as e-readers, tablets and accessories to the customers from time to time. The e-book facility offered by Amazon is another important outbound product of the company.

Amazon is engaged in all kinds of innovative activities in the e-commerce market especially for electronic device. The main operation of the company is to manufacture goods and innovation in the electronic market. Recently the company engaged itself in offering computing storage services and web services to the customers.

The company invested $7959 million in media and marketing in 2011 and estimated a sale of 26705 US$ million in 2011. The company adopted online channels to market its products, as all its products are available online in its own website. It also used media services such as news channels and TV commercials to show the features of its products.

The most important service of the company is offering online web services to its customers through which it sells most of its products. Other services are delivery service, help service to meet the need and problems of the customers ordering products online.

With the increasing growth and brand, recognition of Amazon the brand also received various criticisms for its newly developed product Kindle Fire. Some of the criticism that the company received for this product was lagging display, low battery life, other feature complaints. This proved to create a bad image of the company in the market. This showed that company had weakness of not testing the devices that it manufactures before offering it to the customers (Chen 2017).

From the above analysis, it is now possible to state the strength weakness, opportunity and threat of the company (Bull et al. 2016).

Amazon has a very strong market share because of the products and facility it is offering to the customers. It is the best e-commerce website offering electronics and the general merchandises to the customers. The total number of visitors of the company in 2016 was 183 million in United States which was far more than its competitors such as eBay and Apple. Its strength also lies in the cloud computing storage facility it offers to the customers along with android OS (Chen 2017).

The weakness of the company lies in its inability to test the fault it has in its new products before launching it in the market. This shows that the company lacks proper testing units in its manufacturing units. The high tech tablets manufactured by the company might not prove to be user friendly to maximum of customers (Kryvinska et al. 2014).

The company has the opportunity of expanding its testing division and offer problem free devices to the consumers and introduces some user-free tablets. This will offer the chance to most of the customers to use a user-friendly tablet that will suit their needs. The company still has the chance to move further into the hardware market of the world.

The most crucial threat that the company will receive is from their competitors such as Apple and Google that are trying to enter the cloud storage technology used by Amazon along with the android features. The company might increase the threat if it continues receiving criticism on its products like the Kindle Fire. Moreover, the business that sold e-books for the Kindle tablet has started heading towards offering business to Apple’s iBooks (Hassan et al. 2014).

The current strategy of the firm focused at inventing technically advanced products for its company that it would offer to the customers. The company aims at standing out from its competitors with such kind of strategy. The company mainly targets a specific customer’s base for the Kindle Fire tablet such as the technology savvy customers, higher education students, mobile gamers and the media junkies that would love the features offered. The company positioned its product in the market as a low cost entrant and the internet user of United States (Wirtz and Lovelock 2017).

Along the current strategies, the company also has the opportunity to implement other strategy to use the opportunities and remove the threat to the business. The company should think about manufacturing products that can be used by all toes of consumer and can thus target the mass market (Hollensen 2015). This will help the company earn more revenues and retain their supplier of eBooks as well. Moreover, the company should start implementing pre launch testing to test the product fully and modify all the defects that is detected. This will help the company to get rid of all its threats and save themselves from losing the customers to their competitors. Further, the company can also offer free demo sessions to the consumers by engineers visiting the customers and giving them an explanation about the feature. This will help the company to get better customers loyalty and traffic even in the scenario of tough competition from other online electronic companies (Metcalf et al. 2016).

Conclusion

From the above analysis, it can be concluded that the Kindle Fire introduced by Amazon has been a successful one even after receiving various criticism from the customers. the economy of United State is a suitable economy for an E-commerce business like Amazon to flourish. This is because people of United States are highly active in the internet and love to use new technologies. Moreover, most of them can afford expensive products due to high GDP rate of the country. However, it is seen that the e-commerce industry exhibit huge threat from competitors as most of them are selling similar products, investment cost is relatively low and bargaining power of the buyers are high due to low switching cost. Thus, the company has to formulate various kinds of strategy to stand outside the others. For this, it has to position itself in the mass market so that even if some of the customers were reduced the revenue if not affected. It should start manufacture user-friendly tablets as well so that mass consumers can use that product. This will help them to retain their supplier of eBooks as well.

References

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