LEADERSHIP STRATEGY: IS AMAZON’S KINDLE FIRE BEING MARKETED ON PRICE?
perhaps a loss leader strategy?
The new Kindle Fire from Amazon, is setting out to compete with the iPad. The new tablet is in full color and priced at $199—well below iPads sale price of $499. The Kindle Fire is getting good reviews and analysts are projecting sales of 5 million units by end of 2011, but Amazon will have its work cut out for them. Apple sold 11 million iPads last quarter and would appear to have an insurmountable edge.
by LSI contributor Jaynie L. Smith
Two competitive advantages may help the Kindle Fire compete:
- The Kindle Fire is being marketed as a tablet built specifically for media consumption—wisely, it’s not trying to be all things to all people nor is it trying to offer everything that iPad can access in terms of apps. Instead, Amazon is promoting the KINDLE FIRE as a compact, easy-to-use tablet that can be used to watch movies or TV, listen to music, or read.
- It’s much cheaper than iPad—a relevant competitive advantage. Strategically, it may be serving Amazon as a loss leader, enticing customers to buy their movies, books, and other media from Amazon.com—thus creating a robust platform from which to sell products, even if it means taking a loss on the sale of every Kindle Fire.
Despite early signs of success, a word of caution for Amazon: they should not market the Kindle Fire exclusively on price. People buying tablet PCs are not all motivated by price. Many buy because tablets are new, fun, and capable of bringing new experiences into their lives.
The iPad, was a big hit with early adopters and tech evangelists—with these folks price doesn’t matter. People who aren’t tech enthusiasts will probably wait awhile before buying a tablet—they may still need to be convinced of value. Competing on price alone is usually misguided—historically winners focus on delivering value.
Conclusion:
If a value-based competitive advantage is accurately conveyed, customers will pay more.
this post is sponsored by Smart Advantage