Advertising-Support Enable Cheaper Product Launch

- September 7, 2012

Digital Friday/Price

Hello, I’m Jim Glover, That Branding Guy for Once a Day Marketing.  Before we begin our blog I would like to encourage you to join our Once a Day Marketing LinkedIn group or Facebook site or follow us on twitter.  We would love to have your input and comments, for you to re-tweet and share with your friends.

Today we are taking a look at a very interesting pricing strategy that a major company is employing to penetrate the electronic device market which includes e-books, smart phones and tablets.

As I am sure you are very aware, Apple is a major player in the electronic device market.  It is said that they have 70% of the tablet sales, are soon introducing yet another iPhone and are thinking about shrinking down the iPad even more.  So how does a company like Amazon, which might only have 20% of the market, penetrate the market?

In yesterday’s blog we talked about performing SWOT analysis on your competition, and in particular using the 7Ps.  Let’s imagine that Amazon did that.  They looked at the Apple products and determined that Apple charges a premium price.  There are many people who have the discretionary income to purchase an iPad, however, there are also many who do not.

Amazon decided to introduce their Kindle Fire at a much lower price point.  They are able to accomplish that with advertising subsidies.  The new Kindle Fire sells for a lower price, however, in return an advertisement is displayed to the user every time the Kindle Fire is activated.  The question is, will consumers embrace this model or not?

The strategy that Amazon is deploying is not new.  Advertising subsidies have been around a long time.  Case in point is broadcast television.  We’ve been watching free television for years because we are willing to tolerate advertising and commercials.  The Kindle Fire is in the same situation.  It remains to be seen if consumers will accept it or not.  I suspect that many consumers will accept the advertising in exchange for a lower price.

That concludes Digital Friday.  Join us next week for Smart Monday.  To discuss an online or face to face service engagement and enhance the marketing and branding for your organization, contact James Glover: (505) 501-1330 or  I’m Jim Glover, That Branding Guy, for Once a Day Marketing and we’ll see you next time.

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