Kindle Fire Case Study
Kindle Fire Case Study BUAD 4890
Popular in Strategic Management
Popular in BUAD
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This 2 page Class Notes was uploaded by Anna Notetaker on Saturday September 24, 2016. The Class Notes belongs to BUAD 4890 at Middle Tennessee State University taught by Richard Mpoyi in Fall 2016. Since its upload, it has received 7 views. For similar materials see Strategic Management in BUAD at Middle Tennessee State University.
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Date Created: 09/24/16
Amazon: The Face of Innovation When you contemplate purchasing a product, your first thought as a consumer is what truly makes this product different when compared to the competition? Is it the sleek design or the stateoftheart technology? Often, consumers purchase products that are popular in the market regardless of the price. In the marketplace, we, as consumers, can see purchasing loyalty with a brandnamed products, like Apple and Sony. Soon, a change was going to transpire in the marketplace through a basic product with an advanced design that no one anticipated from a company known as Amazon. In 2007, Amazon introduced a product that was unlike any other on the market. This product was known as the Kindle. It was the first EReader that introduced an on board dictionary and Wikipedia along with memory for two hundred titles. An SD card can be added, which only gives the buyers more and more memory along with the Whispernet, which was the internal 3 GB storage. Amazon was innovated in this development by creating selfupdates through your Amazon account. Kindle stood out against the competition because it was a larger device with longer battery life, better screen resolution, and a lower discount price when compared to Sony or Barnes and Noble EReaders. As the years moved on for technology, Amazon kept their products innovated and in 2011, introduced a new and improved EReader known as the Kindle Fire. Before the introduction, Amazon did their research and brought the desires of the public to the product as well as the yearnings of the publishers in the company. The Kindle Fire had 8 GB storage and used your account on Amazon for Cloud Storage. Unlike the first Kindle, the Kindle Fire has a unique feature of WiFi connections and a screen of color. It soon created more of a differentiation in the market place by the set of the price. Amazon began selling the Kindle Fire for $199, which soon became known as the atcost and even a loss to the company. This amount allowed individuals to be owners for the first time to tablets as well as initial adopters of this product. This price also generated a turmoil in the sales of the Kindle Fire to many first buyers and even devoted customers of other technology products. Because of Amazon selling the Kindle Fire at such a low value, this strategy fashioned an enormous number of sales and a narrow profit that was certainly perilous. Soon, Amazon reaped the rewards of this risk and eventually beat the competition of other EReaders and tablets, even the Apple IPad. Amazon also transitioned their focus groups by concentrating on children and Higher Education. With children, games were established especially for the Kindle Fire and was exclusively retailed by Amazon and in Higher Education, this opened new doors. The Kindle Fire allowed students as well as professors to have textbooks all on a small handheld device that fit effortlessly in a bag. Even though there was great modernization with Amazon and the establishment of Kindle Fire, complications began to develop. Soon, buyers criticized the Kindle Fire for performance because of the low battery life, lagging display or the screen and apps, as well as the small features on the device. Kindle Fire: Market Shift in Strategy Amazon presented Kindle Fire as a product that was sold to consumers atcost or below cost to produce. The Kindle Fire was introduced to the market at the sale’s price of $199, which was a refreshing change to the Apple IPad sale’s price of $499. This risk made by Amazon produced a narrow profit for the Kindle Fire, but also the hope of more volume sales of this new product. With this risk, Amazon had negative as well as positive results. In the Value Chain, Kindle Fire was produced at a minimum cost from raw materials to products in the consumers’ hands. This eliminated steps in the value chain when the prices of materials was reduced. This action also made the Kindle Fire a benchmark. It stood out when compared to standards in the marketplace because of the greatly reduced product price. Now, negative factors came into play with the product. Amazon began to focus too much on the cost of the product and the details in the technology began to lag. Amazon also began to focus on volume sales of the Kindle Fire at the atcost or below cost value, which showed a great risk of not reaching a revenue. All in all, Amazon created a strategy that engrossed a Focus Low Cost strategy with the Kindle Fire.
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