Amazon's Strategic Business Model: Prime, Kindle, Fire, and Content

This report provides an analysis of Amazon's strategic business decisions and their underlying logic. It examines the Amazon Prime program, highlighting its benefits in rewarding customer loyalty and capturing a greater share of wallet. The report then delves into the Kindle Fire, discussing its role as a cost-effective means of accessing digital content and its impact on the market. Next, the Fire Phone is assessed, considering its extension of Kindle Fire's logic and the competitive challenges it faced. Finally, the report explores Amazon's content development strategy, emphasizing the importance of unique content in attracting customers, the portfolio approach needed, and the potential for channel conflicts. The report uses the information provided in the assignment brief to provide a comprehensive overview of each topic.

Running head: MANAGEMENT
Management
Name of the Student:
Name of the University:
Author Note:

1MANAGEMENT
Table of Contents
Amazon Prime.................................................................................................................................1
a. Rewards Loyal Customers:..........................................................................................................1
b. Encourages more Loyalty to Capture Greater Share of Wallet...................................................2
c. Covers basic costs, like a Costco Membership Card...................................................................2
Kindle Fire.......................................................................................................................................2
a. Complement of Digital Download:..............................................................................................2
b. A Cost-effective Way for Consumers to Enjoy Digital Content compared to Apple iPad:........3
c. The Lower the Cost of Complement, the less it Competes for Consumer’s Dollar for buying
Digital Content.................................................................................................................................3
Fire Phone........................................................................................................................................3
a. An Extension of Kindle Fire Logic:.............................................................................................3
b. Tougher Competition:..................................................................................................................4
c. Tough to Compete with Phone Companies who Subsidizes hardware for Selling Phone
Services............................................................................................................................................4
Amazon Content Development........................................................................................................4
a. Unique, Popular Content Attracts New Customers:....................................................................4
b. Problem that it is a Hit Game:.....................................................................................................5
c. Also, a Channel Conflict Problem:..............................................................................................5
References:......................................................................................................................................6

2MANAGEMENT
Amazon Prime
a. Rewards Loyal Customers:
Amazon Prime was launched in the year 2005. It is one of the best customer loyalty
programs across the world. The customers can join the service for $79 and receive huge benefits
ranging from the free return and delivery along with access to the lending library of Kindle and
unlimited streaming of the music and the videos (amazon.com, 2019).
b. Encourages more Loyalty to Capture Greater Share of Wallet
Amazon launched Prime Now in December 2014 in New York and offered its members
close to 25,000 essentials on a day to day basis to be either delivered for free with the first two
hours or for an hour for a minimal charge of $7.99. The service was rolled to all the major cities
across the world. The deliveries were made by the independent drivers with the help of their own
vehicles. Besides, the acquisition of the Whole Foods by Amazon offered specialized discount to
the Prime members while shopping at the stores.
c. Covers basic costs, like a Costco Membership Card
Amazon Prime membership is available at a price of $119(Chen, 2018). The service
covers basic cost and offers the customer free shopping for the first two days even for a
minimum order of $35. It also offers movie and music streaming and access to its online lending
library.

3MANAGEMENT
Kindle Fire
a. Complement of Digital Download:
In the year November 2007, Amazon launched Kindle which acted as a device that
allowed the users in reading and downloading newspapers, magazines and books
(gadgets.ndtv.com, 2017). Kindle Fire was however a tablet version of Kindle intended for
competing with the Apple’s iPad. Amazon’s aim at building vertically integrated and seamless
experience led to the development of the device.
b. A Cost-effective Way for Consumers to Enjoy Digital Content compared to Apple iPad:
Amazon’s Kindle Fire is cost effective for enjoying the digital content since it is priced at
$199 in comparison to Apple’s iPad which is priced at a whopping $499. Besides, the device also
offered gaming, video and the internet capabilities. In the year 2014, Kindle Fire underwent an
up gradation to the higher dimensions with price remaining constant (Farber, 2013). Further, in
the year 2015, the price of the fire tablets had been reduced to $49.99 thereby resulting in the rise
of sales. This made it the most sought after item in Amazon. Com
c. The Lower the Cost of Complement, the less it Competes for Consumer’s Dollar for
buying Digital Content
The lower the cost of the complement higher is the increase in demand for the good
within the market place. This results in lesser competition for the consumer dollar in buying the
digital content. In this context it can be said that lower price of Kindle increased the demand for
the product which encouraged Amazon to sell it in a pack of six for an amount less than $250. In
the fourth quarter of 2014, the global sales for Kindle Fire accounted for 15.6 percent.

4MANAGEMENT
Fire Phone
a. An Extension of Kindle Fire Logic:
The Fire Phone represented 3D-enabled Smartphone launched by Amazon (Seetharaman,
2014). The Fire Phone was an extension following success of Kindle Fire and Amazon’s first
intervention into the smart phone market. It was launched in the year 2014 and it represented one
of the lower priced Smartphone introduced by Amazon. It was however received poorly in the
market place due to dominance of the Smartphone market by Apple and Samsung.
b. Tougher Competition:
Fire Phone faced tough competition from Apple and Samsung although it represented an
adequate device comprising of features comparable to the others in market place in relation to
camera, memory and screen. However, within the crowded space dominated by Apple and
Samsung, launching something adequate is not enough. For the Fire Phone to stand out in the
largely competitive market it should have had a breakthrough hardware as well as software.
c. Tough to Compete with Phone Companies who Subsidizes hardware for Selling Phone
Services
Amazon’s Fire Phone finds it tough in competing with the phone companies since it does
not subsidize the hardware for selling the phone services. This is because Amazon’s phone runs
on an in- house software known as Fire OS which is android covered by the heavy layers of the
Amazon having quad core 2.2 GHz processor slightly gunned by Samsung(Arthur, 2014).

5MANAGEMENT
Amazon Content Development
a. Unique, Popular Content Attracts New Customers:
Amazon makes investment in the creation of original content for the video on demand
service. The popular and unique content works at its advantage.
b. Problem that it is a Hit Game:
Amazon needs to adopt portfolio of initiatives since it would ensure strengthening the
core business. The new initiatives will allow Amazon in offering new solutions and platforms.
c. Also, a Channel Conflict Problem:
Although Amazon is competing various content suppliers but they cannot afford to drop
Amazon Channel since the digital revolution has changed the landscape of sales for branded
manufacturers. In other words, Amazon represents a platform for higher sales opportunity.

6MANAGEMENT
References:
amazon.com. (2019). Retrieved from https://www.amazon.com/amazonprime?
_encoding=UTF8&%2AVersion%2A=1&%2Aentries%2A=0
Arthur, C. (2014). Amazon 'Fire' phone's success may not be easily won. Retrieved from
https://www.theguardian.com/technology/2014/jun/18/amazons-smartphone-jeff-bezos-
mobile
Chen, C. (2018). Amazon Prime benefits to know that go beyond free 2-day shipping. Retrieved
from https://www.businessinsider.com/29-useful-Amazon-Prime-benefits-to-know-that-
go-beyond-free-2-day-shipping/articleshow/66561407.cms
Farber, D. ( 2013). Amazon's Jeff Bezos admits Kindles are sold at cost. Retrieved from
https://www.cnet.com/news/amazons-jeff-bezos-admits-kindles-are-sold-at-cost/
gadgets.ndtv.com. (2017). Retrieved from https://gadgets.ndtv.com/amazon-fire-hd-10-2017-
4417
Seetharaman, D. (2014). Amazon unveils 3D 'Fire' phone .Retrieved from
https://www.reuters.com/article/us-amazon-com-mobilephone/amazon-unveils-3d-fire-
phone-idUSKBN0ET2FG20140619