Products are not only the physical goods that we typically think of them; they also include services – sometimes as a different product and many a times as an extension of the product itself. At the heart of every product (or service) is providing value to consumers and getting value in return from them in the form of profits. With virtually every attractive market flooded with numerous competitors, service as an extension of the product offered sometimes becomes the point of differentiation (Zappos.com) and some other times becomes the USP of a product (Dell computers and Southwest Airlines). This extension of the concept of a product which strives to add value to the core product benefit encompasses what we can call as an ‘augmented product’. The concept of the augmented product can be better illustrated with the diagram shown in Appendix 1.
Even while competing with hordes of similar products, the Kindle Fire is much more than just another ‘Me too’ tablet. It is a media device, not a substitute for the ipad or the PC. It is simply a device you can use to read books, watch videos, listen to music, play simple games and connect to the web. It is a platform to make Amazon products and services easily accessible. Amazon is a global online retail behemoth which I feel it can leverage very well to spur the growth of a host of its product offerings placed on its Kindle Fire platform.
Thus, it really is a bundle of a variety of products and this combination makes it an interesting concept. However, will this strategic move really have any effect on Amazon’s bottom line is still to be seen. Interestingly, the sales numbers of the device don’t say anything about the success of the strategy, the effect of these sales on the bottom line (if people spend on the website services) will hold the key for the company.
There are mainly 2 types of Kindle Fire devices available – advertising subsidized and the one without advertising on it. Amazon is, like many other tech players, interested in controlling the underlying system – end-to-end customer interaction. Reports say that the advertising subsidized versions are doing much better sales than the premium version.
The real beauty of the product is its pricing when compared to similar products by Apple, Samsung and Google. The pricier tablets out in the market do offer sometimes larger memories, better picture quality, better screen resolutions, cellular capabilities; the Kindle fire still provides the biggest bang for the buck. The additional features like profile sharing capabilities with innovative content filtering capabilities coupled with Amazon’s huge collection of books, music, movies, games and other such applications make this product well worth its cost.
Amazon is trying a revolutionary new strategy on its kindle products – it is selling the hardware at cost to drive its sales of online media products (which enjoy higher profit margins) through their hardware platforms. This is notably different from Apple and Google who make money on every product they sell (Apple even boasts of such a value added services based eco-system). Amazon’s strategy has historically been customer-centric and the Kindle Fire fits perfectly into their strategy going forward. With cheap hardware, it retains present customers and attracts thousands of new ones every day. Place
Place is one of the factors that can work both in favor and against Amazon. Amazon wants to sell the Kindle Fire in the countries it can and already does sell its online services. It makes absolutely no money on the devices sold unless people respond to their ads and spend on their website. Currently, the device will be up-for-sale in the US, a few European countries,
The major location for sale of the devices is the website itself which saves overhead costs but limits customer reach to a certain extent. Many customers like to see, compare and play with their products to convince themselves of its value. This makes it tougher for the Kindle Fire to compete with other tablet products that have wide physical presence in the market. This can be turned to say that Amazon controls its product strategy and the message it wants to reach the public.
Kindle Fire is being portrayed as a device the whole family can share and use. The new Kindle FreeTime feature enables a parent to filter content available to kids and kids can enjoy an interface and appearance more appealing to them. Amazon, like many other tech companies, does not really appreciate the use of ‘Marketing’ terminologies internally but acknowledges the importance of the marketing tools of consumer-centric approach and a unified strategic approach to all of its products. Amazon thinks of itself as an innovative technology company and does not like to allocate too many resources to the traditional mediums of marketing – like the print or TV ads. Word of mouth is a big positive factor for Amazon’s products. Mr. Jeff bezos, the founder and CEO of Amazon has himself said that they make no money on the hardware but expect to make money on the services (Razor and blades strategy).
This is a very bold new approach and is yet to be proven successful or otherwise. This created a media buzz which reached the public (which is the end goal – to reach the mass). Mr. Bezos has appeared on some other shows and has been present at press conferences to address questions, to derive as much promotion from every public event as possible. Kindle has also been placed in visual and spoken product placements multiple times in popular TV series like ‘The Big Bang Theory’ and even featured on the Oprah Winfrey show (with Jeff Bezos himself) and her website (a short tutorial video featuring Jeff Bezos again).
Customers began receiving their Kindle Fires on November 15, 2011, and in the following December, customers purchased over 1 million Kindle devices per week. International Data Corporation (IDC) estimated that the Kindle Fire sold about 4.7 million units during the fourth quarter of 2011. Recently, the Amazon Kindle Fire helped the company beat their 2012 first quarter estimates. As of October 2012, the Kindle Fire is the second-best-selling tablet after Apple’s iPad, with about 7 million units sold according to estimates by Forrester Research.