Amazon’s Strategy, of offering its customers “Premium Products at Non Premium Prices” Jeff Bezos, deploys an Integrated Cost Leadership /Differentiation Strategy. Amazon is offering kindles at low prices with product differentiation.
The kindle product set has a series of product differentiators:
- Most advanced E Ink display
- Audible integration offers to have book read to you
- X-Ray offers details on words or phases in the book
- EasyReach offers better way to navigate device one-handed
- Whispersync, syncs your place in books, movies or TV shows
- Real Pages, offers page numbers on electronic books
- kindle Touch 3G offers free 3G service for $149 price
- kindle fire offers color display, movies, and music
Amazon offers tables products and services for low prices.
kindle $79
kindle touch $99
kindle touch 3G $149
kindle fire $199
This strategy is bringing more value to its customers. Specifically with the kindle fire Amazon customers will have a tablet that offers books and now movies and music for $199. Apple IPads start at $499 and most Android tables start at $299.
Although Amazon does not break out it revenue, “ Amazon.com Announces Second Quarter Sales up 51% to $9.91 Billion “, by product type it seems to be implementing a Related Diversification Multi-product Strategy. Most of its profits come from its online retailing business. With kindle its profits are diversifying into the mobile / handheld device business.
Amazon is using its corporate-level core competencies in developing its current and new product offerings. An example of this is a new product they announced this month called Amazon Silk. Amazon Silk reinvents how the browser works by splitting the computing done by the browser between what runs on your Kindle device and Amazon’s cloud computers. Amazon’s core competency in cloud computing enabled them to offer a new product.
A faster Internet for their customers and their customer do not have to spend more or change Internet provider.
Amazon is also utilizing operational and corporate relatedness across its businesses. On the operational side they are using their expertise in fulfillment in the online retail business to decrease their cost for kindle. On the corporate side they are using their expertise in marketing to assist the launch of the kindle fire.
It looks like Amazon is looking to improve its end-to-end business. These new kindles at the new prices and Amazon Silk continue the diversification process of Amazon. Some would say “the are only purpose for these products is to give every human their own personalized check-out aisle at the Amazon superstore”, WSJ 9-30-11 Amazon and our Giant Connected Heads by Holman W. Jenkins, Jr, http://www.emailthis.clickability.com/et/emailThis?clickMap=viewThis&etMailToID=1596808442
Other would see what Amazon is doing and think of the possible. “Who would have guessed that a bookstore would pave the way for how we use computing resources” Dave Rosenberg, CNET How long is it before Amazon competes with Mac or PC computers? Is an Amazon Netbook too far off?
To view the full Amazon Keynote 2011 click here.
