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Amazon is a Fortune 500 e-commerce company based in Seattle, Wash. It has the distinction of being one of the first large companies to sell goods over the Internet. In 1994, Jeff Bezos founded Amazon, which launched the following year. Amazon considers itself a completely customer-centric company. In fact, Amazon has described itself as \”customer-obsessed.\” The company really believes that if they do not listen to the needs of customers, it will subsequently fail. Amazon has stated that it wants to take advantage of any opportunity that presents itself to the company during a time of unprecedented technological revolution.
Amazon’s generic corporate strategy can be described as “concentric diversification” which is based on leveraging technological capabilities for business success and following a cost leadership strategy aimed at offering the maximum value for its customers at the lowest price in addition to wrapping its business around the customers wherein they find Amazon to be the go-to portal for their online shopping needs. The way in which Amazon has leveraged technology as a source of competitive advantage and reaped the benefits of the economies of scale in addition to leveraging the synergies between its internal resources and external drivers has spawned many rivals who aim to imitate and better its business model.
One of the many questions posed to Amazon is what market segment will the Kindle Fire will be provided for.
Amazon decided to go with three segments: children and mobile gamers, media junkies and higher education. Judging on the Kindle’s capabilities the higher education segment proves to be the most lucrative. This segment can be beneficial to Amazon as students are always seeking ways to access the cheapest prices for textbooks and have the ability to not having the burdensome weight when they can simply purchase it on the Kindle and have it there. This avenue can have the potential for consistent growth not on financially but also in terms of market share.
It was on September 28th 2011 that Amazon introduced the Kindle fire and Jeff Bezos referred to the device as “the culmination of the many things we’ve been doing for 15 years.” The introduction of a new product to any market a company must seek to consider what will be their competitive advantage, how will the company achieve product differentiation and ultimately how will the compete against the products of other companies. The product was generally assumed to have entered the market at cost or loss leader which proved to be a risky strategy but could be considered a method to earn vital market share in the initial stages. Being priced at $199 sales exponentially grew because of being a loss leader. If the price was to decrease to $99 it is my belief that more devices would be potentially reaching new and returning customers which will enhance sales and boost product awareness in the tablet market.
Product positioning proved to be a cause of concern for Jeff Bezos due to the similarity in specifications and functionality among their rivals the iPad and the B&N Nook tablet. It is my belief that the Kindle’s Fire price would have been more attractive to those households that are lower to middle-income as opposed to the iPad where the differences are minor. Interpreting the critical points of the case Amazon needs to place focus on e-readers as opposed to putting their entire focus on competing with tablets with superior technology.
In conclusion Amazon’s product, the Kindle Fire even though being introduced as a loss leader in the market still which was deemed to be risky offered them the opportunity to capture vital market share upon entry. This cheaper price compared to the iPad enabled Amazon to capture enough consumers to make them want to purchase or repurchase the product. No negative numbers appeared on their accounts even though they operated as a loss leader which is commendable also doing a splendid job of reshaping their vision to pleasure their current e-reader consumers while being a new entrant into the tablet market.