Executive Summary
With upwards of $48,077 in 2012 revenues and more than $862 in operating profits during the same period, Amazon.com is easily a major player in the online retail industry. The company’s internet operations, coupled by the wide range of products gives Amazon.com a critical advantage in the industry. Amazon.com caters for four separate markets including sellers, content creators, enterprises and final consumers through its retail websites, which are designed to have technical capacity to handle millions. In addition, the company’s extensive online infrastructure and immense R&D resources give it a particular advantage in facilitating the Kindle product extension.
Amazon.com is to introduce a smartphone on the back of its successful book-reading device (Kindle), which has served to allow Direct Publishing, e-bookstores and other publishing purposes (Yip & Hult, 2011). The new product, dubbed the Amazon Kindle Phone, is set to rival already established brands (Samsung Galaxy, Google Android and iPhone series), especially by building on the established kindle market and Amazon.com’s huge market presence.
The proposed product will be differentiated to target low and high-end market segments, besides ensuring that the product offer the utility expected of a smartphone, but still make the prices competitive. The major intention is to tap into the lucrative markets in the developing and emergent economies across the world, notably Brazil, China, South Africa and India.
Executive Summary 2
2.0 Situational Analysis 2
2.1 Market Summary 3
2.2 SWOT Analysis 3
Strengths 3
Weakness 3
Opportunities 4
Threats 4
2.3 Competitions 4
2.4 Product (Service) Offerings 5
2.5 Keys to Success 5
2.6 Critical Issues 5
3.0 Marketing Strategy 6
3.1 Mission Statement 6
3.2 Marketing Objectives 6
3.3 Financial Objectives 7
3.4 Target Markets 8
3.6 Strategies 10
3.7 Marketing Mix 10
3.7.1 Price 10
3.7.1.2 Place 11
3.7.1.3 Promotions 11
3.7.1.4 Product 11
3.8 Marketing Research 12
Implementation and Control 12
Contingency Planning 14
Marketing Organization14
Conclusion 14
2.0 Situational Analysis
Amazon.co remains one of the largest technology and retail companies in the world, which offers a wide selection of merchandise, including apparel, books, home improvement products, and electronics. The company, which employs upwards of 56,200 people, has operations across North America, Asia and Europe, runs multiple websites. The introduction of the Kindle Smartphone seeks to tap into the markets that have been least targeted buy the mainstream players i.e. the low-end low-income market segments, especially those outside the developed worlds. The product would seek offer high-quality Smartphone products as the least prices in the market.
2.1 Market Summary
The smartphone market is estimated to generate upwards of $ 1.3 billion in annual revenues, with a near 20% annual expansion since 2007 (MarketLine, 2012). The market is the widest in United States and the rest of the developed worlds. At present the Samsung and Google, which run on Android operating system command upwards of 40% of the market, while iPhone products control 23% of the market. Other major players include Black Berry (15%), Windows phones and others control (13%). The populations that are not served by the Smartphone market are 27% (Hammond Chiron, 2011).
2.2 SWOT Analysis
Strengths
Amazon Already has a large presence in the retail markets
The e-book market merge will expand the market considerably
The existent products are expensive
Huge R&D resources (MarketLine, 2012)
Weakness
Potential overlaps with Kindle
Amazon is not established in the Smartphone market (Gleeson,2010)
Competitors could release products that compete directly with Amazon’s product
Opportunities
Rapid market expansions in the emergent economies
Growth of the internet has increased demand for Smartphone’s
Rapid growths in the Smartphone market (Williams, 2007)
Kindle distribution channels could be used for the Kindle phone
Threats
Stiff competition from existent players
2.3 Competitions
The Kindle Smartphone competitors include Apple, Inc.’s iPhone range, Microsoft Windows, Phones, Samsung’s Galaxy, Nokia Lumia and Motorola BlackBerry. Over the past five years, Google’s Smartphone offerings are relatively cheap and target the same market that Amazon Kindle Smartphone would target.
2.3.1 Google Inc.
Pros
The company has an established presence on the internet
Huge resources pool for the company to draw on (MarketLine,2012)
Rapid Growth in its market share in the past five years
Has successfully stood up to Apple Inc.’s competition
Cons
Patent infringement lawsuits lodged against it by Apple and Microsoft
Lack of an established brand in the hardware market (Hammond&Chiron,2011)
Poor battery technology
2.4 Product (Service) Offerings
The proposed product will have a 5-inch screen, which is similar to the Amazon Kindle Phone’s competitor, Samsung Galaxy Note, and IPhone 5. The major proposition for this product is the ability to mesh well with Kindle Fire, coupled by a strong focus on consumer’s needs (Yip & Hult, 2011). The device would focus not only on the best internet experience, but perhaps most importantly, to give users the best success to the on-phone app experience. It will merge with Google Android, Apple iPhone and Kindle.
2.5 Keys to Success
The product’s key success factors include Amazon.com’s established distribution channels including those for Kindle and Amazon.com. Is the world’s biggest online retailer and this would give the Kindle Smartphone a critical start: In addition, the product will target consumers without Smartphones’ at present (27%) of the developed world’s market (Gleeson, 2010).
2.6 Critical Issues
- It is important to tackle the established brand names in the Smartphones industry including Samsung, Apple and Google.
- A new product brings massive design and technical challenges that may threaten the new phone’s brand image (William, 2007)
- Launching the product in a competitive market requires enormous resources
3.0 Marketing Strategy
Avoid drawing direct competition from established companies. We will observe the competitors; concentrate on the market that is currently without Smartphones, including the market that considers Smartphones expensive (Yip & Hult, 2011).
3.1 Mission Statement
3.2 Marketing Objectives
- The company realizes the enormous potential that the emerging markets present to the information technology industry. Effectively, Amazon.com is hoping to ensure that the Amazon Kindle Smartphone is rolled out in major emerging markets, including China, Brazil, South Africa and India (Yip & Hult, 2011)
3.3 Financial Objectives
- The total market will be based on upon women and men posted in the US Census report 2010. Ages 45 to 60 with a total women 158.3 million, men ages 45 to 60 with a total of 153.3 million (2010 Census Report File summary).
- The Smartphone is used by both sexes but priced for the low-end market users whose average income is $37,118 a year
- With a response rate of 5% of the market and conversion rate of 4% in the first year we forecast the product will sell over 200,000 units. With exposure from our advertisements and the quality of the product is spread by mouth there will be a higher projection rate in Year 3. Expectations are that we will progress in sales. As we grow so will investment in the marketing plan. This will lead to higher cost but an increase in projected sales and to more revenue. The company’s financial objectives include the following (Yip & Hult, 2011):
- Ensure that the company’s revenues are diversified from the retail and Kindle markets, which are present facing stern competition from Barnes & Noble Inc, Wal-Mart Stores, Books-A-Million Inc, Best Buy Co. and Columbia House Company, Apple Inc, among others.
- Increase the company’s market capitalization to reach $250 billion by the close of 2014 on the back of the Amazon Kindle Smartphone
- The return on assets and the return of equity on the Amazon Kindle Smartphone to reach above 2% each, by the close of the initial year of the product’s launch
- Ensure that the Operating Margin (ttm) reaches above 3% of the revenues during the first 15 months of the product’s launch
3.4 Target Markets
The Pew report states that one-third of cell owners (33%) say that their phones are Smartphone and a considerable proportion of the population without some kind of smartphones intend to purchase one in the next five years. Effectively, it is absolutely critical for the Kindle Smartphone to ensure that it appeals both to the current smartphone owners, but perhaps most crucially, to the huge potential caused by the possible growth in the number of smartphone owners. One of the reasons for the poor ownership is the relatively high prices of the existent products. People, especially those in low-income brackets want a less expensive Smartphones (MarketLine, 2012).
The proposed Amazon Kindle Smartphone will be designed in order to offer a huge range of utility expected of smartphones, but perhaps most importantly, to ensure that the product is availed at a very competitive price in order to appeal to the markets that are currently scared of the high prices. This is especially relevant for adults, who are going back to school in hard economic times, coupled by the middle aged adults that have extracurricular activities such as choir directors, walkers etc (Yip & Hult, 2011). The Amazon Kindle Smartphone will be designed in such a way as to give it the possible features to satisfy the needs of these markets, but ensure that the products are affordable.
In addition, the Amazon Kindle Smartphone will target the retired Individuals who no longer employed want to keep abreast of Smartphone products. Unfortunately, the existent smartphone products are designed for the “dot com” generation, complete with applications that cater for the same. The Amazon Kindle Smartphone will seek to tap into the retiree market.
3.5 Positioning
The Amazon Kindle will be positioned as a compromise between iPhone, Kindle and Samsung Galaxy S3. It will be sold as an affordable compromise that however offers the best possible quality and value for the customers’ money (Yip & Hult, 2011). The product is will particularly seek to position itself as offering the utility and convenience of smartphones products, while at once giving the best possible pricing compromise (Belz & Peattie, 2009). This product comes from a company that is famous for the online retailing and the book publishing/reading hardware/software, and it is critical for the new product to appear to perfect these product offerings. Effectively, Amazon Kindle Smartphone will ensure that it positions itself as giving consumers the best of the smartphone technologies as well as the traditional products that Amazon.com is best known for.
3.6 Strategies
Amazon Kindle will capture 5% of the market. Create a brand that send a clear and concise message to the target market, customers and potential customers. Create a unique icon that the target market can get excited about. Advertise in, “Church Bulletins”. Keep abreast of the budget by constantly summarizing my cost and timelines from each marketing program. Revamp make marketing as necessary (MarketLine, 2012). Stay honest with the budget and marketing plan and stay connected with the customers. The competitive advantage is a low end, low income market segments. The price must be reasonable. The market should be serving another market within in five years.
3.7 Marketing Mix
3.7.1 Price- The product will be priced in such a way that it is cheaper that both iPhone range and Google Android. The company would utilize its efficient distribution channels to cut costs, hence reduce prices. Keep cost down and to remain social responsible we will locate in an area such as Greenville, South Carolina because of high unemployment and cost of living is low this a benefit for state and the country. South Carolina has one of the lowest property and corporate taxes in America (Yip & Hult, 2011). In addition, the Amazon.com Kindle will seek to tap into the huge market in the emerging and developing economies, with the pricing strategy is set to play a critical role in ensuring that this occurs (Hooley, Nicoulaud, & Piercy, 2012). The product’s pricing will be differentiated in order to make it accessible to the huge population in the developing and emerging markets.
3.7.1.2 Place -Amazon.com websites, which have a global reach, will be used to distribute the products. The company’s online retailing market is virtually unrivalled. Effectively, the company will make certain that it uses its extensive infrastructure to reach the markets across the world. In addition, the company will forge partnerships with FedEx, United Parcel Post, DHL and the United States Post Office among other courier services in order to avail its products to a huge market across the world, including those markets that presently not served by its retail network. Amazon.com will also forge partnerships with other players in the industry in order to make its products available across the world.
3.7.1.3 Promotions- TV, radio and internet adverts will be employed, coupled by celebrity endorsements, promotion merchandise will also be used to market to schools, organizations, health fairs, concerts, and give away. In addition, Amazon.com websites attract millions of customers, making them ideal for the company to advertise its products to the huge market. Other promotion activities will include sponsorships of sporting activities and other events, celebrity endorsements, product placements among others.
3.7.1.4 Product- The design will ensure quality from a wide, adjustable, high-resolution screen, sleek shape and lightweight with a selection of colors (Yip & Hult, 2011). In addition, the product will offer all the utility that all the products that are presently in market, including immense publishing and book access capacity than the current products. This will make it accessible to the low-income population. The company’s state-of-art manufacturing facilities, coupled by the immense R&D resources will be used to ensure that the product is of the highest possible quality and affordable (MarketLine, 2012).
3.8 Marketing Research
It will be critical to ensure that the company conducts adequate research to determine the exact market needs in order to ensure that it does not design products that already exist. To get good and accurate data we will use primary data to give us an edge over the competitor therefore, a marketing research firm will conduct the initial research. In addition, it is important that the customer feedback is incorporated onto the design for new products (MarketLine, 2012).
Implementation and Control
The implementation of the plan will be according to the schedule given below. The plan will be assessed according to the schedule on a bi-monthly basis. The shortfalls will be identified and remedied at every stage in order to make certain that the objectives are met.
Contingency Planning
The implementation plan would be evaluated on a bi-monthly basis, with shortfalls being identified and recommendations made in order to make up for the failures. This is critical because the plan cannot completely anticipate all the conditions in the market and thus the bi-monthly appraisal will ensure that the practical factors are built into the implementation plan (Hooley, Nicoulaud, & Piercy, 2012).
Marketing Organization
Amazon.com’s marketing department will carry out the marketing activities of the new product. The department has considerable resources including human capital, finances and a huge brand across the world, which will be helpful for the success of the new product. However, in order to ensure efficiency, the company will engage independent companies to carry out some of the marketing functions for the product. These will include outsourcing market research functions, distribution functions in areas that are not presently reached by the company, among others (Thorsten & Ursula, 2000).
Conclusion
Amazon.con does have immense resources that can be successfully leveraged in order to extend its current product portfolio. It has a ready retail network that can be used to rapidly roll out the Amazon Kindle Smartphone in a short time. In addition, given the stern competition in the online retail industry, the diversification of the company’s revenues is extremely important (MarketLine, 2012). This is particularly important for a company that is currently exploring growth opportunities away from the internet. These opportunities are extensive in a fast expanding smartphone market both in the developed and in the emerging economies across the world.
References
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Hammond, J. &. (2011). Amazon.com's Inc., European Distribution Stragtegy. Harvard Review.
Hooley, G., Nicoulaud, J., & Piercy, N. (2012). Marketing Strategy and Competitive Positioning, 3rd Edn. London: FT Prentice Hall.
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Thorsten, H.-T., & Ursula, H. (2000). Relationship marketing: gaining competitive advantage through customer satisfaction and customer retention. London: Springer.
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