Kind Fire Tablet from the Amazon - Research Paper Example

Task Amazon (Kindle Fire) Introduction Kind Fire tablet from the Amazon Inc. has gained a lot of popularity from the populace through its best sales and friendly prices for its commodities. According to research concerning the company, it is estimated that it charges around $199 without other forms of taxes and charges (Rohida 4). This has presented the customers with the best deal for the tablet as compared to other companies dealing in the same commodity. Therefore, it has become evident that Kind Fire is willing to compete with the rest of firms that produce similar products, for instance Apple that produces the iPad. In order for it to stay at the top in its sales, more needs to be done to obtain competitive advantage that is essential to get rid of any competition in the prospect. Comparing with the rest of the firms, Kind Fire presents a gap of about $300 for a similar commodity, thus, allowing customers to enjoy significant sales from its target markets. The gap exists because the other firms seek to sell their commodities at $499 while Kind Fire sells its commodity at $199. From the recent market results, Kind Fire has hit a sale of five million in the period terminating on December 2011 although Amazon has already resolved to stop working for this company. In comparison, the market leaders Apple Inc. sold at eleven million for their iPad in the last quarter, thus, presenting an undefeatable upper hand. According to the CEO of Amazon, the company aimed at realizing smaller profits from these devices although in its capacity as the retail company has resolved to dwell in smaller margins a factors that only few electronic firms would manage. Comparing to other firms, Kind Fire from Amazon Inc. has revealed excellent pricing strategies, through price elasticity in order, to keep sales high above most influential firms in the sector. According to most analysts, Amazon has not much interest in obtaining a gap in the tablet device market rather it views it as an opportunity to develop into the market for the digital world and make use of the vast opportunities that exist within the target market (Rohida 1). The firm has the chance to present its services to Kind Fire similar to their tests concerning the digital content. In order to realize these objectives, Kind Fire and Amazon have used price as the tool for entering into the market. Price is considered to determine the purchases that occur within the digital and electronic markets. With the emergence of Apple Inc. and other firms that market commodities such as the iPad, the world has presented demand for the commodity although the prices do not favor the customers. Unless a marketer manages to offer his or her product an edge over the competitor’s commodity, only little sales can be realized. Therefore, marketers ought to give their firms an edge over the competitors in order to acquire competitive advantage that serves to augment the sales of firms that manage to establish one. Pricing strategies are offered on various grounds through consideration of different concepts such as the target market, demand, assortment of products offered and the commodity life cycle (Roth 2). Pricing strategies assists the marketer in realizing his or her pricing objective. Therefore, the pricing objective that a marketer prefers assists in the creation of the best pricing strategy. Both the pricing objectives and pricing strategies are guided by the business plan that a certain firm places in the business environment (Roth 2). Selection of a pricing objective precedes the determination of the best pricing strategy for the firm. Kindle Fire utilizes the penetration pricing strategy in which the firm seeks to obtain entry into the market environment, especially if there are other already established firms with a similar product. The aim of utilizing this pricing strategy is to attract customers into purchasing products from the new market entrant and improve the market share of that firm (Roth 5). In case the anticipated extents of the presented objectives are attained, the firm seeks to augment its prices on the products that it offers. In the case of Kindle Fire, the price of the tablet is $199 while the actual price in the market is around $399. Tablet sales cannot be sustained for an extended period, thus, indicating that the firm will necessitate a price increment in the prospect in order to continue with the business. Penetration strategy does not acquire profits for the firm, as this is the objective of most business undertaking; therefore, the strategy ought to be utilized in a strategic manner, to prevent extensive losses for the firm. The pricing strategy seeks to entice customers who for years have served as loyal customers of another firm. The firm offers customers a reason, to change their mind concerning the cost of the product offered by the firms they are loyal towards. In this pricing strategy, the firm places the price at a level where it manages to realize production cost within a specified period. However, the firm management is aware about the actuality that the price is not the best since it appears to be below the market range. The price is placed in such a manner that it appears at the lower end of the market environment scope. The strategy is utilized most resourcefully in case the pricing objective of the firm concentrating through revenue or quantity optimization (Roth 5). Therefore, it can be substantiated that a firm utilizes the strategy mainly to obtain maximum quantity of customers purchasing the product. Even if the strategy offers lower prices for its products, it still gains some substantial amount of monetary resources since many customers visit the firm for actual purchases. High numbers of customers purchasing the product augment the quantity of revenue as well as the product that a firm produces (Roth 5). In such a firm, the purchases can be projected lower than those that have already been established since the firm has less loyal customers. In addition, the firm has not gained the required confidence for customers to purchases their products. Amazon Kindle Fire utilized and continues to utilize the concepts of the penetration strategies in its business undertakings, thus, acquiring an enormous customer base. This strategy has seen the company manage to turn into the second company after Apple Inc in the sale of the tablet device or the iPad. Additionally, Amazon Kindle Fire may be measured to utilize the loss leaders strategy that is by looking at a divergent approach. Amazon may be attempting to makes more sales than its competitor by drawing customers into its business premises through cheap tablet devices with the hope that these customers will buy its products (Roth 4). Therefore, Kindle Fire can be supposed to play two divergent roles within the market. These two roles may be offering Amazon the chance of acquiring more purchasers by drawing more customers into its shops through cheap prices, and offering itself an edge over the rest of the firms through lower prices although this is anticipated to change after the firm obtains loyal customers. Positioning seeks to place certain commodities from a company to the best suited market location with respect to products from the competitors (Charleson 1). A firm creates awareness to the favored marketplace through various elements such as business image and other related aspects. Various approaches are utilized in the positioning of a firm to the preferred location within the marketplace environment (Charleson 1). However, Kindle Fire utilizes the form of positioning that concerns two imperative elements, which are price and quality. Utilization of either price or quality is utilized frequently in positioning. Kindle Fire has realized that price is not the sole factor to consider in the positioning within the market. Therefore, it has combined the two factors in order to allow for an effectual positioning within the market environment (Charleson 1). Kindle Fire has deemed quality through the provision of properties comparable to those offered by similar products although these quality factors are not all present. For instance, the iPad from Apple has a camera while that from Kindle Fire lacks this feature. Nevertheless, comparing Kindle Fire iPad from the Nook tablet presents the actuality that Kindle Fire presents quality that is comparable to products from similar companies. The properties from these two tablet devices have many similarities with only few differences. Nonetheless, the prices are still different, taking into contemplation the features present within the two devices from diverse companies. As evident in positioning for the Kindle Fire case, the two factors have been utilized to offer the most effectual positioning with the consideration that quality and price work best in synchrony. According to Kindle Fire positioning, pricing plays the greater part since it serves as the driver while quality is considered as the second imperative component in ensuring the firm acquires exorbitant sales. Comparing the approach of Apple, with that of Kindle Fire, presents entirely different results. Contrary to the positioning presented by Kindle Fire, Apple Inc. utilizes the quality aspect as evident in the products that it develops. Apple Inc. offers its consumers products that have excellent features obtained through innovation and creativity. This has offered the firm a high profile in the provision of quality products, thus, serving as the basis for positioning. Looking at Nook tablet, its approach seems equivalent to that of Kindle Fire since they have lower prices compared to Apple Inc. and equitable features. Price elasticity seeks to quantify the receptiveness of the demand for a certain commodity to transformations relating to its price. Price elasticity for Kindle Fire offers several assumptions since the situation presented by the firm is intentional and aims at providing a certain number of customers. The firm offers high price cuts than the other firms in the sector, thus, triggering high demands for its commodity. Therefore, the responsiveness presented by the target market is aided through lower prices although it cannot be easily substantiated. Consequently, price elasticity for the target market has proportionally shifted, thus, offering elasticity. Nevertheless, this cannot be necessitated because the situation is expected to continue for some time after which the prices will augment, thus, leading to shifting price elasticity. The firm’s utilization of the low prices may be to carry out the low prices for some time in order to gain customer confidence, and a stronger customer base after which it is supposed to augment its prices, to almost similar levels to that of the competitors. Therefore, the aim of the firm is to carry on the elastic plasticity in their prices although it does not fetch high profit margins due to the lower prices after which they are anticipated to change the tactic concerning price elasticity. While setting up the price for Kindle Fire, assumptions made were that price plays a chief role in consumer attraction at the psychological level. The other was that since the tablet device is created for content management and storage, massive profits can be made through digital media as evident with the inclusion of Amazon content on the tablet device. Additionally, the allotment of costs for the digital content is secondary. The pricing strategy that the firm utilizes markedly assists the firm in realizing its marketing objectives. The pricing approach concerning penetration of the products into the market that the firm presents has considerable influence, on the realization of the marketing goals of the firm. Utilization of low prices achieves the goals of introducing numerous customers into the market environment of Kindle Fire. As evident, price has produced extraordinary sales for Kindle Fire making the firm jump from a new entrant into the second position, with sales near to those generated by Apple Inc. The firm has attracted many customers through its low pricing strategy in order, to gain more customers, to offer the company a strong customer base even after it augments its prices upon achieving market objective. Penetration pricing has, therefore, succeeded in ensuring that the company gains a large customer base and as time goes the firm will manage to have many loyal customers so that even after augmenting its prices it will still stay in business (Rohida 4). Conversely, the perception that Amazon is utilizing the loss leader approach to attract more customers who later purchase its products still seems logical. This is because the firm has added up digital content to the Kindle Fire offering. In addition, many customers utilize the opportunity to purchase the tablet devices from Amazon, thus, boosting its sales. The pricing strategy utilized by Kindle Fire seems to function in synchrony with the positioning strategy that has been offered. Positioning using quality and price offers a chance for customers to change their buying behavior since the same product is presented at a reduced price. The company has ensured that it offers its customers products that are comparable to those of the market leaders even if the features are not similar. Conclusion Kindle Fire has managed to gain enormous market split through lower pricing as equated to other competitors. The boost in tablet sales for the company has also enabled Amazon to increase their total profits since the customers may still purchase other commodities from the company. It is expected that the firm will eventually raise its prices upon realizing the marketing objective, which is the period that it has influenced the market share enough to gain customer confidence. The pricing strategies together with its positioning strategy have a lot to do with the triumph of the firm at the initial stages of conducting business. Therefore, these two factors can be attributed markedly to the success of the firm in achieving the marketing goal for Kindle Fire. Works Cited Charleson, Mary. Proper positioning is essential for sales success. 2003. Web. Mar 3, 2012. Available at < http://www.charleson.ca/pdfs/issue730.pdf> Hickie, Brandon. Amazon Pricing Strategy: Bundling Its Way into a Competitive Position. 2011. Web. Mar 3, 2012. Available at < http://blog.openviewpartners.com/amazon-pricing-strategy-bundling-its-way-into-a-competitive-position/> Roth, Sarah A. Understanding Pricing Objectives and Strategies. 2007. Web. Mar 3, 2012. Available at < http://pubs.cas.psu.edu/freepubs/pdfs/ua441.pdf> Rohida, Deepak. Amazon.com, Inc. (AMZN). 2011. Web. Mar 3, 2012. Available at < http://tippie.uiowa.edu/henry/reports11/amzn_f11.pdf > Read More