amazon and consumer electronics market
TRANSCRIPT
Amazon and the Consumer Electronics MarketBusiness Strategy
Problematic
“Can Amazon become a bigger
competitor in the Consumer Electronics market?”
What are The Consumer Electronics?
Consumer electronics are equipment intended for everyday use Most often in entertainment, communication and office
productivity Concern products as smartphones, tablets, laptops, GPS devices,
Game console and so on. Big actual manufacturers on this market : Samsung, Apple, HP,
Western Digital, Sony, etc.
The Consumer Electronics Market
Strengths- Big companies with large portfolio of
products- High innovation rate
- High growth rate in various segment
Weaknesses- Some devices being rapidly
replaced by others- Strong competition between actors that leads to oligopoly
Opportunities- More and more digitalized world- Computers are less centralized
which leave spaces for other devices
- Growing middle class in developing countries
Threats- Governments put regulations on
environmental issues - High competition between big
companies - Price fluctuations
SWOT Analysis
Amazon’s Global Strategy
Strengths- Strong brand image
- Product lines with low price- Strategic partnerships
Weaknesses- Low profit margins- Little know-how
Opportunities- Digital transition
consumption- Attractive market- Growth in cloud
computing
Threats- Law’s governments- High competition
-Volatility in exchange rate
SWOT Analysis
Concentric diversification strategy !
Amazon CE market’ Strategy
According to Bowman : Low price Low added value
Amazon CE market’ Strategy
Generic strategy of Porter (overall cost leadership): Scope: total market Competitive advantage on cost
Blue Ocean’s approach Design and functional efforts => low Price => cheap
Amazon’s CE Products
Fire Phone
The 5 forces of PORTER on the smartphone segment
Intensity of rivalry-Fast industry growth rate
- High margins- Brand identity
- Low product differentiation
Bargaining power of suppliers- Large number of substitutes
- High competition- Volume is critical
Threat of substitute products
- Low buyer incitation
- High switching costs
- High performance
Bargaining power of customers- Increasing buyer volume
- Increased price sensitivity- Low dependency on distributors
Threat of new competitors- Strong distribution network
required- Strong brand name is important
- High entry barriers
Smartphone Sector
• 1300 million units
• $400 billion
Smartphones Comparison
Fire Tablet
Tablets Porter Analysis
Intensity of rivalry- Growth rate is
decreasing- Aggressive competition
Bargaining power of suppliers- Owner of their manufacturing
companies- Low price
- Exclusive contracts
Threat of substitute products
Strong competition due to constant innovation
Bargaining power of customers
- Regular customers- Large number of customer
- Market dominated by 2 companies
Threat of new competitors- Economy of scales
- Cooperation needed to enter the market
Tablet Market
• 229,8 millions units sold in 2014
• $90 Billions
The decline of the tablet market
• Expected growth : - 9%
Reasons : • A lack of innovation• An increased competition• Renewal cycle is longer than
expected
Products Comparison
Kindle E-book Reader
E-book Readers Porter Analysis
Intensity of rivalry-Prices are quite the same
- The regular tablets are taking market shares
Bargaining power of suppliers
Switching cost is insignificant : a company could change easily of
supplier
Threat of substitute products
E-book can be read on almost every electronic device
Bargaining power of customers
The buyer choose wich e-book reader he wants to purchase
Threat of new competitors
- Difficult is to obtain deal with publishers.
- Market is unatractive
E-book readers Market Shares
E-book Reader Market
Expected growth?
Products Comparison
Fire TV
Streaming Media Devices Porter Analysis
Intensity of rivalryFast industry growth rate (37.5%).
In growth phase --> not much competition
Bargaining power of suppliers
Suppliers can decide to give novel content
Threat of substitute products
The product is still in the growth phase
Bargaining power of customers
More and more customers
Threat of new competitors
A good distribution network is needed
Streaming TV Devices Sector
The set-top box sector:
Expected growth : 37,5%
Product comparison
Developing a flagship product?
Concentrate all the efforts on one product Try to dominate the market and create a notoriety for this type of
product Expand the notoriety to the other products
McKinsey Matrix
Fire TV
Kindle Fire
Fire Phone
High
Medium
Low
High Medium Low
Mar
ket
attr
acti
vene
ss
Strength of Products
Fire TV’s advantages :
Amazon owns content (streaming service works best on Amazon’s own hardware)
Exclusive deals with several content providers (HBO) High degree of investment (more than $100M) Low cost of the Amazon TV device
Amazon’s Funds
Using existing distribution networks
Pros :✓ Distributors support the cost✓ Better “transformation in purchase” rate in stores
Cons :✘ Low Margins✘ Non exclusivity of products in store (our products are beside the
concurrents)
Online Sales
Pros :✓ Good experience ✓ Touch more people✓ Easier to retain clients
Cons :✘ Don’t test the product✘ Complicated customer service and service after purchase✘ Expensive advertisement
Amazon’ stores
Pros :✓ Closer to customers (Reduce the delivery time)✓ Experience for customers (client service ,touch the product,
possibility of exchange)✓ Transportation cost for customers
Cons :✘ Costly (rents, salaries for sellers) ✘ Less visibility
Which Location?
Cities Number of residents
GDP CPI (Consumer Price Index)
Rent per m² per year
Penetration rate* (8%)
New York 8.4 million 1000 Billion 100 13796€ 224 000
Tokyo 13 million 1479 Billion 76.34 8520€ 346 670
Paris 10 million 564 Billion 84.50 7264€ 266 670
Beijing 19 million 166 Billion 51.19 1789€ 506 670
Mumbai 18 million 209 Billion 30.27 6485€ 480 000
Sao Paulo 11 million 388 Billion 54.60 1300€ 293 330
Online stores Physical stores
PricePrice offered on the website (original price)
Original price plus margin (the objective is to sell it online)
Place
On every place, the platform is active.
NYC, Beijing, Tokyo, Mumbai, Paris
PromotionFocused on baby boomers (39-59 years old)
Focused on baby boomers
Recommandations
Amazon’s flagship product on the CE segment should … Be sold in an amazon’s store in Asia and South America (Beijing, Tokyo,
Sao Paulo) and USA (NYC) and France in complementation of the online store.
Generate sufficiently profits to invest on other hardware products Which products to follow ?
Kindle and Fire phone through investment A product to drop out?
The Kindle fire can be deleted to free up some cash or to stop to invest on it
Thank You for reading!Contact:
- Mail: [email protected] Twitter: @MalSelmani- Linkedin: Malik Selmani