Marketing Plan
Justin Miller
Victoria Simard
Executive Summary
Product Costs
The Kindle product line is sold close to cost and makes most of its profits from applications and services from Amazon. The Kindle is made by and financed by Amazon.
Current Target Market
The current target market is females, particularly mothers, who have young children. The mothers are between the ages of 25-45 and have an income between $25,000 and >$100,000.
New Target Market
The new target audience is predominantly female, age 50+, who earn 45k+ a year. We plan to appeal to this aged market, who would generally have grandchildren and children they would like to communicate with. The Kindle can provide the older generations with the opportunity to embrace technology and the many improvements it can have on their lifestyles.
Objectives
We have several goals for the next twelve months. We strive to increase sales by 20% to the elderly ages 50+ in the United States. We will also increase market share within the U.S. tablet industry by 1% from 3.7%.
Suggested Strategies
We would like to expand our current market share, expand in our relationship marketing, and grow our new target market. We hope to see our new Kindle Fire Golden experience growth as it reaches its new market, as the elderly market is relatively untapped in the tablet industry.
Tactics
We plan to reach this new market through tactics that will appeal to the elderly. We will make slight adjustments to the Kindle Fire 8.9 to be more elderly friendly. We will offer this new product at the competitive price of $299. The Kindle Fire Golden will be offered through current distribution channels as well as a few new locations that are frequented more by our new audience, such as the Home Shopping Network. Additionally, the promotional events will be catered toward the elderly demographic.
A. Situational Environments
1. Demand and Demand Trends: The demand in the tablet industry is expected to grow rapidly. However, the demand for the Kindle Fire tends to drop drastically from Quarter 4 to Quarter 1, but continues to slowly grow into the remaining Quarters. This demand trend for the Kindle Fire is contributed to the holiday purchases, which peak in the 4th Quarter (Singh 2013).
2. Social and Cultural Factors: The most influential social factor that is currently affecting the Kindle Fire would be the reference groups of the target market. Additionally, the social status that the Kindle Fire represents appeals to those that aren’t affluent or trying to appear like they are a higher class than what they really are. The major cultural factor that plays well with the Kindle Fire would be the technology savvy consumers. In recent years, consumers have embraced the technology that companies have developed because many technology advancements have improved the quality of life.
3. Demographics: The predominate demographics for the Kindle Fire are:
• Gender: 56.6 % Female
• Age: 25-45
• Ethnicity: African American and Hispanic
• Income: 25K to <100K (See Appendix A)
4. Economic and Business Conditions: The U.S. and Global economy is growing at an extremely slow pace. In the U.S., the current unemployment rate is 7.6%, however, the true rate of unemployment in the U.S. is estimated to be around 13% due to people dropping out of the workforce (Matthews 2013). U.S. Gross Domestic Product grew 2.5%, but was below the 3% that economist forecasts. Amazon shares fell 7.2% on reports that net income fell 37% (Hwang 2013).
5. State of Technology: The Kindle Fire HD has state-of-the-art technology from the touch screen to the networking devices. The latest Kindle Fire HD 8.9 was released because the product life cycle is short because of the intense competition within the market. In order for Kindle to maintain its number two market share it must be constantly innovating the product to maintain a unique selling proposition that competition does not have.
6. Politics: The current political climate within the United States is that of great political strife. Currently, the House of Representatives is controlled by the Republicans whereas the Senate is controlled by the Democrats. This results in very few compromises being made by either side, which results in stagnation. The major issues that are being debated are the U.S. debt crisis and Democrats wanting to increase taxes instead of cut federal spending by a significant amount. Whereas, Republicans don’t want to increase taxes and want to cut spending greatly.
7. Laws and regulations: Currently, the major law that is affecting the Kindle would be the online sales tax that California recently passed.
B. Neutral Environs
1.Financial Environments: Amazon is maintaining profitability with their Kindle line. Their business is selling the device at close to cost, hoping that they will generate sales and profitability off of the things people can buy for the Kindle (Apps and accessories). Recently, Kindle’s market share and Amazon stock prices have increased. The Kindle line is financed by Amazon itself, who the largest online retailers. Amazon is one of the few American companies that are truly looking into future growth at the cost of present profits. As seen with Amazon’s creation of the Kindle product line; they have invested Amazon’s profits into this tablet market, which will eventually stimulate future growth through Amazon being an integral part in everyone’s’ lives. Several financial institutions invest in Amazon, as well as holders. There are 933 Institutions Holding Shares. Financially, Amazon and its Kindle line are in the position to reach a new market.
Currently, banks are not generally lending money unless you have 20 percent down. This means that to startup and business with a bank loan is extremely hard to achieve and provides a barrier to entry for potential threats to Amazon’s core business as well as the tablet industry.
2.Government Environment: The major current political issue that will affect the marketing of this product is the proposed law to tax all internet sales within the United States. The Kindle is sold mainly online, so this will easily affect the sales of the product because its major selling point is its price. With tax, the price effectively increases. Amazon is used in all regions of the world, and the Kindle is marketed throughout the country with no restrictions. Kindle is currently expanding their market overseas, and it is to be seen as to if our government applies any legislation that affects the foreign market.
3.Media Environment: The media has portrayed the Kindle as the primary eReader for consumers. Currently, the Kindle is being marketed as a competitor with the Apple iPad. Although, the iPad holds a larger market share, Kindle is competing by offering a product at a much cheaper price, and with features they claim superior to the iPad Mini. They have a commercial out right now that shows the consumer that the Kindle Fire HD offers the same retina display and pixels as the iPad. They challenge the consumer to try and see the difference between the Kindle and the iPad. Their goal of this advertisement is to show the consumer that they can get the same quality product for around half the price. The media portrays a favorable image of the Kindle in the market because it is comparable to the industry’s leading tablet and available for the consumer who wants a tablet, but not for Apple prices. Amazon boldly put on their homepage in October, “Much More, for Much Less,” as they are trying to convince shoppers that they offer a better value than Apple (Skillings 2013).
4.Special Interest Environment: Recently, Amazon put out a Kindle ad that had the message of supporting gay marriage. Amazon has publicly contributed donations to causes that supported gay marriage in the past, and their commercial was an outward comparison of the iPad to the Kindle, with a special interest message embedded. The setting was at a beach where a man and woman were both using their tablets. The woman who was reading on her Kindle without the glare of the sun was recommending to the man the great qualities of her device. The man ends up purchasing a Kindle on his iPad right there at the beach. The two discuss celebrating his new purchase, and the woman denies the request because her husband is at the bar getting her a drink. The man responds, “So is mine,” and the commercial concludes with the two tablet owners waving to their husbands. The support of gay marriage in such an open way is bound to create interest in the gay and lesbian community, and will possibly lead to more sales and support of Amazon. This special interest group is relevant to our target market in that women tend to have an open and empathetic view towards the issue of gay marriage, and this ad might compel them to purchase the Kindle over the iPad based on the company’s support of the cause. The gay and lesbian community is very prominent in the United States, and by Amazon targeting this group, they can generate greater sales by appealing to a group that tend to be high earners.
Amazon also offers a way for independent authors and publishers to make their books available to Kindle customers. They offer their Kindle Direct Publishing, which is an online place in which these writers are able to have their work seen in the Kindle store. Kindle also offers programs in which artists in different industries such as music, film, and books, can sell or publish their work through Amazon. Amazon and the Kindle have made it possible for authors to control their book online, distribute it globally, make in multiple languages, and reach the market quickly. Supporting professionals through Kindle is a great way to satisfy the public, and keep them interested in the product.
C. The Competitive Environs
In the tablet world, there are many competitors such as Asus Nexus 7, Samsung Galaxy Tab 2 7.0, and Barnes and Noble’s Nook in the Android market. Also, there is Apple’s iPad that operates on its own operating system. The indirect competition is from desktops, laptops, and smartphones; as they are similar in terms of services and functionality.
1. Apple Ipad has the Ipad 16gig 4th generation ($500) and the Ipad mini 16gig ($330) of these two products the mini is in more direct competition with Kindle Fire HD. Apple’s main competitive advantage is the extremely loyal customers. Most people that own Apple products love them and won’t even consider anything else. Apple’s financial stability is very robust; they are currently one of the most profitable companies in the world. They made their case to enter the mini tablet market based on the apparent success of the Kindle Fire. A smaller iPad would allow Apple to continue to grab market share as its competitors nip at its heels on the lower end. Apple’s official announcement last week did two things. It quickly demolished the market share argument—at a $329 price point, Apple is obviously not targeting the lower end of the market. And it also reinforced the thesis that Apple plays a profit-share game; that is, it’s focused instead on soaking up any possible profits with a carefully designed pricing strategy. In short, the iPad mini is not competing on price; in fact it is not even competing for the same customers as other players in the 7-inch tablet market (Srinivason 2012).
2. Nook by Barnes and Noble is the most direct competition to Kindle Fire, since they were both originally sold and marketed as an eReader. If you want to purchase books they must come from Barnes and Nobles’ app, similar to how Kindle books work. The financial strength of Barnes and Nobles is weakening. They have lost a lot of market share in recent years due to the increasing competition within the tablet industry. Barnes and Noble was the first major book retailer to understand that eReaders were the future of the book industry and were first to develop an eReader. As such they were able to survive as a business unlike its main competitor in 2009, Border’s, who was late on the eReader trend. However, while Barnes and Noble were able to survive, they entered a niche market of eReader, which were only able to access eBooks and music files. Currently, Barnes and Noble is creating and marketing the Nook as a tablet, which is one of the most intense and fierce industries in the current economy. Due to the history of competition between Kindle eReader and the Nook eReader as well as the low price point; the Nook is viewed as one of the closest tablets in direct competition with the Kindle Fire. (Trachtenberg, 2013)
3. Google Nexus 7 is the newest competitor within the ever increasing tablet market. Google has been a major player within the tablet and smartphone industry for quite some time. Google’s Android operating system has been utilized in many smartphones and tablets since beginning of the tablet industry. Due to Google’s presence in the tablet industry for quite some time, many experts knew that Google’s entry with its own tablet was imminent. Google is in a similar situation in terms of business models because Google can also sell its tablet at incredibly thin profit margins (even thinner than the Kindle Fire) and still remain incredibly profitable. Google achieves this through Google’s core business of advertising. By Google selling more tablets and gaining market share, they are able to dramatically increase advertising revenue (similar to how Kindle Fire makes money through the selling of Apps, Content, and accessories). The Nexus 7 is a major competitor due to the simple fact that Google is an extremely well established and major player within the technology industry. Additionally, much like Apple and Amazon, Google has a cult like following. Most of Google customers jump onto any product Google puts out on the marketplace (Osborne 2012)
4. Samsung Galaxy 2 Tablet was one of the first companies to start the Android tablet market they believe that they have the competitive edge and will continue to be competitive. Samsung is a major competitor to the Kindle Fire because it has the brand name, knowledge, and know-how to compete head to head with any company within this highly competitive industry. However, Samsung is so focused on taking on Apple head on that they haven’t had many resources to compete with another tablet company, especially one as large as Kindle Fire. Additionally, Samsung does not have the same business model as Kindle Fire and thus cannot compete on price alone like the Kindle Fire is able to do. Currently, the Kindle Fire must acknowledge that Samsung is a strong competitor, but doesn’t need to compete directly with them (Volpe 2013).
D. The Company Environs
Amazon Kindle’s current strategy is to sell their products at cost and make a profit from the content (Levine-Weinberg 2013). When Amazon first released the Kindle Fire HD 8.9 they were hoping to sell it at a profitable price. Later they announced that they would be lowering the cost as a result of increased production, however it can be argued that their new increased prices were a failed strategic attempt causing them to lower prices to retain their previous low cost positioning.
For the amazingly low price point of $199, many people that originally thought they wouldn’t be able to purchase a tablet are now able to afford one. This price significantly broadened the tablet market through this low pricing cost structure. The price also allows for mothers with younger children to rationalize better with buying a cheaper tablet for them in case it gets ruined or broken by the child. Many people originally had a hard time handing over a $500-$700 dollar tablet to a small child who might drop it and it break. Additionally, the price point allows for mothers with more than one child to buy 2 tablets for the price of one, which eliminates the constant fighting over who gets to use the tablet.
The Kindle Fire’s main unique selling proposition is the value that it provides to its customers. The value is derived from the low price, but what the Kindle Fire brings to its customers is vast. One way that the Kindle Fire adds value is through the peace of mind that it brings to parents with its unique parental controls. The peace of mind is something that is hard to quantify, but knowing that your child is protected from explicit content on the internet and certain apps provides a major relief. Another way the Kindle Fire adds value is through its close connection to Amazon’s other services. For customers that utilize Amazon.com frequently, they benefit greatly from Amazon Prime, which gives Amazon customers access to movies/TV shows, eBooks, and free 2 day shipping on all items. Additionally, the Kindle Fire is able to rapidly access the Amazon store, which is a small but nice perk for the Amazon loyal customers. The Kindle Fire also comes with a 1year warranty, which covers any defaults in the product itself. The warranty helps alleviate some of the perceived risks with purchasing a slightly most expensive item and helps reassure customers of the quality of the product.
As previously mentioned, Amazon’s pricing is what brings in the majority of their customers (See Appendix B).
New Target Market
Demographics
The new target market will be predominately female, age 50+, who earn 45k+ a year.
Psychographics
This new target market will most likely have younger grandchildren (3-13). Many of these grandparents will not see their grandchildren on semi-regular basis do to primarily distance issues. The elderly will have a semi-negative view of technology because they just aren’t comfortable with using it. However, the benefits of owning the Kindle Fire tablet would outweigh their negative views about technology. The lifestyle of the elderly market would be the retiree lifestyle, where there is a lot of free time, vacations, and a lot of relaxation; this lifestyle is often referred to as the Golden Years.
SWOT Analysis
Strengths
· Value. Kindle Fire HD offers customers great value because of it extremely low price compared to competition. The low price gives customers the perceived value that the tablet was a great deal and it’s just like or better than the competition. Many people that own a Kindle Fire HD would not have owned a tablet if it wasn’t for the low price because they would/could not afford any other tablets out on the market place. This has allowed Amazon to greatly increase its market share in the tablet industry by reaching this previously untapped market/niche.
· Customer Loyalty. The people that already own a Kindle Fire HD love it and since Amazon has hugely loyal customer base that have also transferred that loyalty into the Kindle Fire. The extremely loyal customers are the most profitable because they use the Kindle Fire to access other Amazon products, like its app store and amazon.com.
· Financial Backing. Amazon has the finances to properly fund the Kindle Fire and its R & D. The backing of Amazon allows Kindle Fire to be initially sold at a loss, but later be made up in the backend through Apps and other Amazon services.
· Amazon App Store and other services. The Kindle Fire uses a modified version of the Android operating system, which locks out the Google Play Store and has the Amazon App Store instead. The apps allow Amazon to create revenue through their users purchasing these apps, which is unlike how many other tablets do. Additionally, Amazon Prime is a membership service that gives access to its video and book content for a yearly price of $80. The Amazon app store and other services generate revenue over the course of the users Kindle Fire experience and thus provide Kindle Fire/Amazon with a major competitive advantage.
· Company Culture. The company culture consists of frugality, analytical, risk-taking, and incredibly smart people. This provides Kindle Fire HD to be introduced, innovated, and manufactured in such a way that blows away the competition. The best example of this culture in action is in the design of how the Kindle Fire HD is able to be sold at a loss and yet still able to return a profit years after the initial sale. The employees that came up with this business model complete re-envisioned how the tablet industry can operate
Weaknesses
· Lack of product innovation. The Kindle Fire has been catching up with the latest and greatest technology. The lack of innovation doesn’t provide the Kindle Fire with anything new and/or better than what the competition is currently providing to its customers.
· Amazon App Store. The Amazon app store currently has around 17,000 apps whereas the competition has more than 500,000 and is growing. The small amount of apps means that there isn’t an app for everything unlike Apple or Google’s app store.
· Previously high customer dissatisfaction. Initially, the Kindle was filled with problems, which lead to high customer dissatisfaction among users. This dissatisfaction has forced the Kindle Fire HD to rebrand itself as a solid, reliable tablet.
Opportunities
· Economy. The current economy is slowly recovering, which provides Kindle Fire with a great opportunity for growth. While, the economy is slowly recovering Kindle Fire’s value is something that people are currently looking for.
· High Demand. Since, the Kindle Fire offers such a great value at a low price its demand has skyrocketed since its release. Additionally, the overall demand in the tablet industry is expected to grow in the future.
· Technology. The fast pace evolution of technology provides Kindle Fire with a unique position to exploit any great innovations in either the manufacturing of the product or the adoption of the latest technology features.
· Expanding into new markets. The Asian market is an emerging market for Kindle Fire and the demand within this market is expected to increase considerably. Additionally, the overall economy within the Asian markets is relatively good.
· Increased Hispanic demographic. The Hispanic demographic is expected to increase within the United States. Since, the Kindle Fire appeal to the Hispanic community the increasing Hispanic demographic is great news for the Kindle Fire.
Threats
· Economy. The economy could slip right back into a recession, or even into a depression, which would present a major problem for the Kindle Fire. Even though the Kindle Fire is one of the cheapest tablets on the market it is still susceptible to fluctuations in the economy.
· Limited retail store locations. Since, the Kindle Fire is closely networked with Amazon.com many retailers won’t sell the tablet because it detracts from their sales. The most notable absent retailer is Wal-Mart, which would be the perfect venue for the Kindle Fire because of the low price and great value, which is Wal-Mart’s market.
· Online Sales Tax. The federal government has proposed a bill that would force states to collect sales tax for online sales. The Kindle Fire is mainly sold online and would be taxed accordingly. The cheap sale price would now effectively be increased due to this tax. The tax could potentially cause potential customers to not purchase the tablet because it’s beyond their budget.
· Apple. Apple is Kindle Fire’s number one competitor with both Kindle and the iPad going head to head with each other. Apple has introduced the iPad mini which effectively went head to head with the Kindle Fire HD and Kindle Fire HD 8.9” was launched to go head to head with the iPad2. Apple has the cash, technology, and innovation to wither Kindle Fire out of market share.
· Google. Google’s Android operating system is used on the Kindle Fire and if Google decides to no longer license the operating system to Kindle Fire they will be left without a way for users to operate the Kindle. Additionally, Google has partnered with Asus to manufacture Google’s tablet, which is a major competitor to the Kindle Fire because it offers the same low price for a tablet. Google has the funds to compete in this marketplace and it has the know-how and technology to be successful.
· Samsung is another major competitor within the tablet industry. Samsung has the technology, customer base, and experience to dominate within the industry. However, Samsung currently is focused on Apple’s market share.
· Increasing competition. The market for tablets is increasing and is a profitable industry. The two factors alone make this industry very attractive to a lot of companies. The ease of entry into the market makes new competition coming in a major concern for Kindle Fire.
SMART Objectives
· Increase sales by 20% to the elderly ages 50+ in the United States within the next 12 months.
· To increase market share within the U.S. tablet industry by 1% from 3.7% within 12 months.
Marketing Strategies
Expansion of market share within current market
The Kindle Fire product line is currently targeting families with young children. Expansion within this market is vital to the future success of not only the Kindle, but Amazon as a whole. Since, young children will grow up with the Kindle they will subconsciously develop a strong, lasting relationship with the company. Since, these children are young they will spend their lifetime utilizing many Amazon/Kindle services and thus provide Amazon with future revenue growth. Amazon is currently one of only a handful of companies that is taking the time and money to invest in its future and through this current market they are ensuring that the company will have future customers to thrive on these investments.
Expansion of relationship marketing
The Kindle Fire must continue to develop its relationships with its existing customers, not just focus on attracting new customers. The entire goal of the Kindle Fire is to create brand loyalty for Amazon and the Kindle; and in order to accomplish this task creating a strong and ever evolving customer retention program is paramount to establishing loyal customers. Currently, dissatisfied customers can return the Kindle Fire to Amazon by shipping the table back to Amazon within 30 days at no cost to the customer. While, this is a nice start at reducing some of the customers discontent it doesn’t reduce it enough. Amazon should extend this return policy to 60 days and should have a survey prior to receiving the return labels to determine why customers are dissatisfied with the product. Additionally, Kindle Fire should have random customer satisfaction surveys that when completed earn a free .99 cent app, which will provide enough incentive for customers to fill out the survey and increase customer satisfaction in the process.
Growth in New Markets
The new market should be expanded to the elderly. Currently, the elderly is an untapped market with huge potential for growth for the tablet industry. The elderly would be a perfect market for the Kindle Fire because the tablet has already established a brand identity as a great eReader, which many elderly folks do. Additionally, since the current target market is families with young children the two markets are closely related by the elderly being the grandparents to many of these children. The Kindle Fire should be marketed in a way to link the two markets together. One way of accomplishing this could be advertising the Kindle Fire as a way to connect with your grandchild through the use of apps (like a webcam). Additionally, the Kindle Fire is relatively easy to use and offers limited potential frustrations for the elderly. Many of the elderly often shun technology away because they simply don’t know how to use it and often say, “My three year old grandchild knows how to use this better than I do.” Well, the Kindle Fire minimizes this problem through its easy to navigate operating system, large adjustable size font sizes, and intuitive design.
Product Life Cycle Analysis
(Mwpnl 2008)
“In the growth stage, the firm seeks to build preference and increase market share. Product quality is maintained and additional features and support services may be added. Pricing is maintained as the firm enjoys increasing demand with little compensation. Distribution channels are added as demand increases and customers accept the product. The promotion is aimed at a broader audience (www.quickmba.com 1999-2010). The following is an analysis of the Amazon Kindle product life cycle that provides evidence of how the Kindle is still in the growth stage. In order to increase our market share we will be creating a new product that is designed for ages of 50+. The new product, the Kindle Fire Golden, will feature larger text, a larger screen, easy to access tutorials, and a golden backplate. All of the newly added features on the Kindle Fire Golden are meant to attract an older demographic, which will in turn allow us to increase our market share by acquiring an untapped market.
The pricing will remain the same regardless of the new features. As we attempt to reach our newly expanded target market we will most likely be adding distribution channels. Lastly, our promotion will be geared toward the older target market in hopes of gaining their sales. Overall, the Amazon Kindle product line still has the ability to gain more market share and increase its demand.
BCG Growth-Share Matrix
Cash Cow: Amazon
Amazon is the power behind the Kindle. Due to Amazon being the number one online retailer, they are able to financially back their innovations such as the Kindle line.
Stars: Kindle Fire HD
Kindle Fire HD is the current star of the Kindle Product line because it is their top seller and consumes the largest part of the market share.
Dog: Kindle Fire
The Kindle Fire is the first of the kindle line that was marketed more as a tablet than just an e-reader. This product can still be purchased new from Amazon.com; however, it is outdated in comparison to the other products Kindle has released more recently.
Question Marks: Kindle Fire 8.9 and Kindle Fire Golden
The Kindle Fire 8.9 is a question mark because its market share is relatively low, peaking during the fourth quarter as a result of holiday sales. With proper marketing the Kindle Fire 8.9 is expected to consume a larger portion of the market share. In order to expand our market share we are creating a new product that will be targeted primarily to the elderly. The creation of the Kindle Fire Golden is another question mark in the Amazon Kindle product line. The Kindle Fire Golden will require some monetary investment but is expected to differentiate the kindle product line which will result in a larger consumption of the table market share.
Tactics (4P’s)
Product
If the Kindle Fire expands its market to include the elderly some minor yet critical developments are needed to make the Kindle Fire friendlier to the elderly. Some of these critical updates are:
1.Increased font size upon shipping- By increasing the size of the font before shipping it would alleviate the most common complaint from the elderly when dealing with text, which is its too small and I can’t read it. Additionally, by defaulting to the larger text many shouldn’t have a need to have someone else increase the size for them and reduce the amount of complaints.
2.Increased screen size- Currently, the largest screen that the Kindle Fire has is 8.9 inches which is a modest size for the average user. However, with the elderly a slightly larger screen would make it easier for them to hold and accommodate the increased text size.
3.Free, easy to access tutorials- The tutorials should be located in a clear spot that is easy to access. The tutorials will help with some of the most common problems with learning to operate the Kindle Fire. Additionally, upon first turning on the Kindle Fire there should be an introduction tutorial that explains the basics of using the tablet. In addition to tutorials, there should be a tips pop up screen that offers advice while utilizing/navigating the tablet, which offers an option to turn off the tips.
4.Gold colored back plate- The gold color would be only offered for the Kindle Fire that is made specifically for the elderly. The gold color is associated closely with the Golden Years, which is the time of life after retirement from active work.
The new product line for the Kindle Fire would be called Kindle Fire Golden to associate the product with the elderly.
Price
The pricing for the new Kindle Fire Golden would be around the $299 price point, which was the original price for the newly released Kindle Fire HD 8.9”. The price could only be lowered upon reaching economies of scale and/or scope or the advancement in manufacturing technology. Any reduction in Kindle Fire costs will be passed along to customers through lower prices. However, the Kindle Fire HD 8.9” has recently (within the last month) experienced a price cut from $299 to $269, which was a result in increased production volumes and a decrease in unit costs.
Place
The optimal venue to sell the Kindle Fire Golden would be through the Home Shopping Network, The network provides two major benefits to our new product. Its target audience is mainly within the target audience’s age group as well as it provides an easy demonstration. The demonstration will be done by a senior citizen, which will provide a validation to other senior citizens.
Kindle can rent a booth at the AARP’s Life@50+ expo, which takes place in Las Vegas, NV and Atlanta, GA. The expo will provide the platform that best encompasses the target demographic. The event takes place in the spring and fall, which provides two great opportunities to raise awareness for the new product.
Kindle can plan to implement business to business transactions with retirement homes. The retirement homes can offer to sell the Kindle to their residents to be used at group readings, etc.
Promotion
For senior citizens, we will offer a $25 credit to the Amazon App Store, with purchase of the Kindle Fire Golden, which would help stimulate sales with our new target market. Another, form of promotion that would be effective is for every Kindle Fire Golden sold 5% of the sales will be donated to AARP, John Hopkins, or Alzheimer’s Association, which is left up to the customer to donate to.
As for advertisements, we will air a commercial, which shows a grandparent using the Kindle Fire Golden to connect with their grandchildren, who are using the Kindle Fire HD. The commercial would air during shows such as: The Price Is Right, Jeopardy, and Wheel of Fortune.
Additionally, the Kindle Fire Golden can sponsor the AARP’s Life@50+ expo. The sponsorship will give Kindle Fire the exposure needed to this demographic. The AARP is one of the largest organizations in the United States and is the organization that best represents the new target market.
Contingency Plan
If the current planning environment changes substantially during the life of this marketing plan, the following contingency plans will be considered:
· To pursue the stability strategy, Amazon Kindle can continue to serve this market but cut back on the in person training sessions or modify the financing plan.
· To pursue the harvest strategy, if Kindle finds that the golden age market is just not working out for them, they could detract from this strategy and continue with the current market.
· To pursue the transition strategy, we could reposition our products to focus on the educational institutions. Although this would be a different direction we have the platform currently in place to work from therefore reducing the transition cost. Our products would be used in educational institutions to reduce the cost of purchasing books annually.
Implementation
Currently, the 50+ age demographic is an untapped market in terms of the tablet industry. By creating and marketing a tablet specifically towards this untapped market Kindle Fire will have the greatest opportunity to increase market share dramatically over the competition. The costs of creating this new product is estimated to be around $10 million dollars, which isn’t much because this new product is just a variation of the current Kindle Fire HD 8.9”. The cost in marketing this product to this new target market is estimated to be around $14 million dollars. However, these initial costs are easily recouped within 12-18 months.
Due to the high cost of rolling out this new product to a new market, Kindle Fire will have an initial test market in Florida. Florida has the highest percentage of retirees and thus serves as the perfect test market to see the reception of the tablet within this elderly demographic. The test market will allow for any changes in the product to be made prior to mass distribution. Additionally, if the product is not well received within this new target market it will allow Kindle Fire to minimize its losses.
Due to the business model, the Kindle Fire is sold at cost (or close to cost) and makes up the money in the backend with sales of apps and accessories. So, by selling at costs it provides customers with a very low price point, which helps Kindle Fire greatly, increase its market share. The entire business model relies upon selling as many tablets as possible, which translates into more revenue streams later on.
Income Statement (Projected)
Control Measures
· Compare anticipated profits to actual profits on a quarterly basis
· We will check our liquidity ratios on a monthly basis.
· Check sales/revenues on a monthly basis
· Evaluate the collection period to ensure payments are being received in a timely matter.
References
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Appendix A: Demographic Information
Appendix B: Prices
Kindle 2: $189.00
Kindle 3: $189.00
Kindle 3 WiFi: $139.00
Kindle 4: $79.00
Kindle DX: $379.00
Kindle DX White: $329.00
Kindle Fire: $159.00
Kindle Fire 2: $159.00
Kindle Fire HD: $199.00 - $249.00
Kindle Fire HD 8.9: $299.00 - $369.00
Kindle Fire HD 8.9 4G: $499.00 - 599.00
Kindle Paperwhite: $119.00
Kindle Paperwhite 3G: $179.00
Kindle Touch: $99.00
Kindle Touch 3G: $149.00
(socialcompare.com 2013)