assignment 1

MKT340 - STRATEGIC MARKETING

MANAGEMENT

ASSIGNMENT 1

NAME: VO THI THAO NGUYEN

ID NUMBER: 114 06560

DUE DATE: 19/08/2010

LECTURER: MINH TRAN

Table of Contents

1 Introduction.........................................................................................................................1

1.1 Industry background....................................................................................................1

2 Industry analysis.................................................................................................................3

2.1 the Trends in the e-book market..................................................................................3

2.2 Structure in the E-reader market..................................................................................5

2.3 Market attractiveness...................................................................................................6

2.4 social & technological drivers.....................................................................................8

3 Competitor analysis..........................................................................................................10

3.1 Kogan Technology....................................................................................................10

3.1.1 Strategic Choices................................................................................................10

3.1.2 Market Segmentication......................................................................................11

3.2 BeBook Mini/Neo.....................................................................................................11

3.2.1 Customer needs and product differentiation......................................................11

3.2.2 Market Segmentation.........................................................................................12

3.2.3 iPad as a Segment rival......................................................................................12

3.2.4 Strategic Choices................................................................................................12

3.2.5 Strategic Positioning..........................................................................................13

3.2.6 Sources of Competitive Advantage....................................................................13

4 Conclusion........................................................................................................................14

5 Reference..........................................................................................................................16

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EXECUTIVE SUMMARY

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MKT340 - Strategic Marketing Management

ASSIGNMENT 1

1 INTRODUCTION

1.1 INDUSTRY BACKGROUND

In 1998 the world first e-book reader device was introduced to the public: dedicated readers or

hand-held devices and/or slates. The emergence of the e-book has resulted in many companies

manufacturing electronic reading devices used for displaying, reading and storing electronic

information. Palm Inc, NuvoMedia Inc., SoftBook Press Inc., EveryBook Inc. and Sony (Sanders,

2000) are examples of manufacturers of that.

O'Donnell (O’Donnell, 1998) stated that all these devices have one common function in that they

are dedicated to reading e-books only, and are not as sophisticated as handheld computers or

personal digital assistants (PDAs). This statement has no longer corrected, as since 2000 hybrid

devices (Wilson 2001) that contain address books, diary, calculator and PDA-associated functions

have also been used to read e-books. Additionally, these devices can be used for emailing, Internet

surfing, word processing and playing MP3s. An example is the Palm Pocket PC.

Another revolution on that industry was the introduced of all-in-one colour monitor handheld O2

xda few years ago, which allows users to access the Internet, make phone calls, send emails, use

Microsoft Word and Excel, read e-books, organise a diary, listen to music and play games. PDAs

and phone combined or smart phone are rapidly becoming a common technology at school

because they allow students and teachers to do essential tasks such as note taking, word

processing, graph drawing, emailing and browsing. Other examples are iphone, Sony Ericsson

P910 and X10, etc.

Other stream of development of dedicated readers was the introduction of tablet PC. The simple

definition of Tablet PC is a laptop PC equipped with a stylus or a touch screen. This form factor is

intended to offer a more mobile PC; Tablet PCs may be used where notebooks are impractical or

unwieldy, or do not provide the needed functionality. The term Tablet PC was made popular in a

product announced in 2001 by Microsoft, where it was defined as a pen-enabled computer

conforming to hardware specifications devised by Microsoft and running a licensed copy of

"Windows XP Tablet PC Edition" operating system or a derivative thereof.

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ID Number: 114 06560

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ASSIGNMENT 1

After twelve years staying in the market, the electronic reading devices, Smart Phone and Tablet

PC are still going very well. Consumer survey made on 2001(Anon,2001) revealed 28% of

respondents were willing to engage in recreational reading on an e-book device and 66% would

read a reference work on a computer. Despite this in year 2001, Maack (Maack, 2001) noted that

e-book manufacturers and e-publishers remain confident and reports that one study predicts 2.8

million device users by 2005. Also, recently, after Amazon released it owned dedicate device,

Kindle in year 2008, and Apple released an iPad, the combination between a smart phone, tablet

PC and dedicate reader early this year, these devices has made a boom in the e-book market.

Kindle was sold 500,000 devices in Australia since 2008 (Techwiredau, 2009) and Stuart

(Stuart,2010) has predicted that Apple could sell 40,000 iPad in the first month of release. In the

US market, IPAD was sold 28 million units in first 28 days.

Current players in the Australian domestic market are BeBook Mini/Neo, Amazon Kindle, Kobo

eReader, Kogan, Apple Ipad, Toshiba's Libretto, and other smart phone company like Nokia N97,

N900, Sony Ericsson X10, and Apple iPhone 4, Samsung Galaxy S and so on.

This report will examine that the marketing strategy plan of Starlight Enterprises for E-book

reader devices including its trends; its structure; its market attractiveness; its Social &

technological drivers and some main things for Competitor analysis such as identify competitors;

analyse their competitive position; resources and capabilities; and critical success factors

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2 INDUSTRY ANALYSIS

2.1 THE TRENDS IN THE E-BOOK MARKET

According to Edwards; Magee and Bassetti (2007), the trend in the market is to exist of prices that

keep rising or falling over time. An uptrend emerges when bulls are stronger than bears and

buying forces the price up and a downtrend occurs when the bears are stronger than the bulls and

selling forces the price down. In the marketing, the trend is really important because it helps

determine the longer term direction and support and resistance. Furthermore, it is great entry or

exit points and helps identify breakout point and also it can be wrong with timing but not trend.

There are three kinds of trend in the market. First primary is known medium term which has broad

support the entire market and last into a year or more. For example, in 2007 Amazon .com

launched the e-reader Kindle in the US market. And now It does not works well because it does

not support enough satisfied customer such as almost people who is teenager and about from 20 to

45 want to use E-book devices so they need and want to use the devices which include anything

features such as camera, and mobile features especially E-reader, 3G, and Wi-Fi . Therefore,

Starlight Enterprises can try now to launch the devices which include anything features but E-

book feature is main feature in the e-reader market with offered than other vendors and also it

launched E-reader devices stores to customers who read and download electric book content

through these stores.

Secondary trend is short term that changes in price direction in medium trend such as Amazon, in

2007 the first generation Kindle launched in the market with the price about $400.00(USD) and

now next the price of generations of Amazon’s Kindle goes down such as Kindle 2 is $189.00

(USD) and Kindle 3 is $139.00 (USD) due to Kindle is not satisfy for almost customers. Thus,

Starlight Enterprises (SE) must meet customer for E-book products with full features. Beside, SE

have to make market research as getting survey, experiments or observation from the customers

to make the price of devices to fix with the price in the market. Also, SE research and develop

other model to fix the features which is mistake of first generation.

Finally, secular trend is known as long term trend last 5 to 25 years and contain of all series of

sequential primary trends. Amazon Kindle, in 2007, when first generation came, it sold out in five

hours and a haft with $400.00 USD and now it went down because in E-book market, other

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vendors have appear with E-book readers models that are better than Kindle and cheaper. S E

does not go down, S E have to product E-book devices is better than other vendors for example for

SE’s devices’ operating system which customers can use Microsoft Windows, iOS, BlackBerry,

Mac OS X and Android. Moreover, S E’s devices can connect the internet anywhere with Wi-Fi

3G with its price is satisfied customers. Furthermore, the customers can search the information

internet and get software and E-books that they want with satisfied price.

Beside, a new technology matures so is the product or service that uses this technology. The

change that occurs during a technology life cycle has a unique reflection on the customers and so

on the product life cycle. In the early days of a new technology, early adopters and technology

enthusiasts drive a market since they demand just technology. This drive and demand is translated

as the introduction phase of a new product by many companies. As technology grows old,

customers become more conservative and demand quick solutions and convenience. In this case a

product usually enters in the realm of its growth and as time passes its maturity.

Fig. 2: Change in customers as technology matures (Source: Norman D.)

The “chasm” shown in the graph above depicts the difference between the early and late adopters.

Each needs different marketing strategies and each is translated to a product’s different phase of

its life cycle. One should note that the late adopters hold the greatest percentage of customers in a

market. This is why most products begin their life cycle as technology driven and change into

customer driven as time passes by.

A good example of this is the E-reader market. In one hand customers ask for ease of use,

convenience, short documentation and good design. On the other hand customers rush out to

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purchase anything new regardless of its complexity. This is why companies in the computer

industry withdraw their products long before they reach their maturity phase. This is the moment

that a product reaches its peak i.e. the time that both early and late adopters buy the product.

Therefore, S E has to get survey from the customer and fix mistake model devices with the

research and development new software, new function to product other generation devices.

2.2 STRUCTURE IN THE E-READER MARKET

Market structure is the pattern or form or manner in which its different constituents as sellers and

buyers are linked together. There are four main features of the market-structure containing:

The degree of seller’s concentration for example the number and size distribution of SE

producing a particular commodity or types of commodities in the market.

The degree of buyer’s concentration such as the number and size distribution of buyers for

the commodities in the market.

The degree of product differentiation as the difference in the products of different firm in

the market.

The condition of entry to the market: this shows the relative ease with which new firms as

SE which is new firm can join the category of sellers as firms in the market.

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2.3 MARKET ATTRACTIVENESS

Market attractiveness replaces market growth as the dimension of the industry attractive and it

includes a broader range of factors other than just the market growth rate that can determine the

attractive of an industry. With many tools such as BCG matrix, five key force and McKinney

matrix are available to assess market attractiveness prior to entering a new product and market

development cycle. However, McKinney matrix is the best tools to determine the attractive of an

industry.

Business Strength

Fig 2: McKinsey Matrix - Market Attractiveness-Competitive-Position Portfolio

Strategies

The McKinsey Matrix is divided into nine cells - nine alternatives for positioning of strategic

Business unit strength (SBU). Based on the strength of the business and its market attractiveness

each product offering will have a different position in the matrix. Further, the market size and the

current sales will distinguish each SBU. Beside, Industry attractiveness and SBU strength are

calculated by first identifying the criteria for each, determining the value of each parameter in the

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criteria, and multiplying that value by a weighting factor. The result is a quantitative measure of

industry attractiveness and the SBU’s relative performance in that industry. The industry

attractiveness index is made up of such factors as market size, market growth, industry profit

margin, amount of competition, the degree of seasonal and cyclical fluctuations in demand, and

industry cost structure. The industry attractiveness index consists of factors like relative market

share, price, competitiveness, product quality, customer and market knowledge, sales

effectiveness, and geographic advantages. The nine cells in the matrix can be grouped into three

major segments:

This is the best segment. Competition in the Australian E-Reader device industry

is massive. According to Louisa (Lousia, 2010), “The e-book market has shifted

dramatically since the Kindle first arrived here last year, with new devices being launched at

almost every conceivable price point.” And US researcher Forrester predicts that the next five

years will "see an explosion of the E-Reader textbook market". And from what we’ve already

discussed there is large amount of competitors emerged since the deregulation of E-Reader device

industry in Australia. Although with high set up, highly competition as well as the price-war

between competitors but with great in return as Australian is the niche market, is the reasons

explain why it is hard for them to exist the market. Thus, SE has to be strong to attract in the

market. SE should allocate resources in this business and focus on growing the business and

increase market share.

According to a result of Australian newspaper, monopoly brand as Apple’s

product is highly demand. As a result in the newspaper’s research shows that

in year 2010 that 93% of phones accessing into the internet in Australia was Apple phone and

providing wide range of stocks from difference suppliers are way of creating a bargain with the

suppliers (Gloria, 2010). For example, Optus are now providing many types of products such as

Apple Iphone, Ipad, many models of Nokia, Samsung, Sony Ericsson, Asus, HP, HTC, and

Blackberry. Therefore, if SE brand is not strong enough pursuing potential opportunities because

the market is strong. Decision makers should make judgment on how to further deal with these

SBUs. Some of them may consume too many resources and are not promising while others may

need additional resources and better strategy for growth.

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Invest/grow

Selectivity/earning

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ASSIGNMENT 1

This is the worst segment. With many reason such as the substitutes as laptop,

net-book, online books or even the original printed books can use as E-book

reader devices and other reason for example, customer who has low bargaining power. Australian

E-book Reader device industry is characterized by large amount of international and domestic

manufacturers and service providers. Customer in industry are very large in number, therefore the

cost of losing one customer are marginal. Customers in this industry are also subject to price and

value sensitive. The online booking system also has allowed customers to compare and contrast

the plans, device according to price, battery times and number of functions etc. If SE is weak, its

market is not attractive. Decision makers should consider either repositioning these SBUs into a

different market segment, develop better cost-effective offering, or get rid of these SBUs and

invest the resources into more promising and attractive SBUs.

2.4 SOCIAL & TECHNOLOGICAL DRIVERS

The Australian E-book reader devices industry has been operating in turbulent times. The first

devices were introduced to the market in 1998, just after the financial crisis in Asia Pacific region

in 1997 We also had the September 11th terrorism; severe acute respiratory syndrome (SARS),

H1N1 outbreaks in Asia followed by the Fijian political crisis in late 2005, World Financial Crisis

since 2007 and Australian Economic also facing the downturn with the high inflation rate as well

as high un-employment rate. Before 2002, the domestic market of e-book reader devices were

dominated by only a few players such as Nuvo Media Rocket eBook, RCA REB 1100 and 1200,

Microsoft IPM-NET My friend, Cytale Cybook, Palm Pilot PDA, etc, with new entrants Palm OS

Treo smart phone was entered in early 2002 and the first Blackberry in the same year, emerging in

niche markets. But major structural changes have occurred in the E-book reader device industry

with the first iPhone was released in 2007 and immediately created a shock where hundreds of

people were reported to have queued outside Optus retail stores days before the devices launch.

iPhone first generation was sold up to 6,124,000 units during it life cycle. It has created a new

revolution for the smart phone which should have touch screen; less indicate keypad, running

many applications, running multi tasks, and so on. Sophisticated technologies such as new and

improved iPhone 3G, 3Gs, and 4G as well as its rivalry like Nokia N97, Samsung Omina, HTC

Diamonds, Palm Pre, and Amazon Kindle, Kobo, Nook and iLiad eBook reader devices, iPad

Tablet PC were also introduced in the industry. Nevertheless, due to technical and other issues

some had failed in the market. In addition, Samsung's Q1 eventually found their way to the

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Harvest/ divert

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market, but they were a bust, offering terrible battery life and costing more than $1,000, or

Microsoft Tablet XP Edition with the technology still hadn't caught up with the vision.

E-book reader device industry is also highly depending on the supply of the e-book titles as well

as the tax regulation as most of the devices are not produced in Australia. Moreover, pricing is

another problem with the industry. Most of the E-book reading devices are cost more than $200,

but only has one function of reading book. In accordance with international trend, there is the

demand on the hybrid technology which requires the devices are not only function as book reader

but also has combine PDA and tablet functions as faster processor, larger memory, better

resolution, touch screen, dialling function, SMS, MMS, Web surfing, Bluetooth connection

functions as well. Therefore, the hybrid technology will be the new trend of the industry with the

success of iPad is an example. Research shows that 93% of phone access to Internet is iPhone and

iPad. (Gloria, 2010)

Lastly, the social culture has changed also create a great impact into the industry. ABS 2009

shows that more than 72% of Australian can access to the internet. Another research shows that

43% of online Australians now own a Smartphone, over one quarter of social networkers (26%)

participated in mobile social networking in the past year and 66 % of mobile social networkers are

under 35 years of age (Heidiallen,2010).

Therefore, with the new trend in the industry, the producer needs to find ways to satisfy different

needs.

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3 COMPETITOR ANALYSIS

3.1 KOGAN TECHNOLOGY

After the success of Amazon Kindle on the hybrid technology ebook reader device industry,

Kogan Technology, a Melbourne based company has launched it product, Kogan 6 this year. To

gain the competitive advantage, Kogan also provides preloaded 1500 title free.

3.1.1 STRATEGIC CHOICES

3.1.1.1 Low cost strategy:As the newest manufacture operates in the Australian ebook reader device industry, Kogan

Technology Australia has both opportunities and threats from its rivals as well as the strength and

the weakness from itself.

Kogan Technology Australia inherited the cultural experience from local customers, Tiger, and

wants to increase the total market size (number of customers), control operating costs of the

manufacturer. It will keep cost low by providing the basic function of the device, no internet

connection; therefore customers have to use usb to upload the books into device.

(Louisa,2010).Besides, by providing the basic functions of the device and not tie-up with any local

book retailers, Kogan can provide competitive price with it rivalry.

3.1.1.2 Customer servicesNot only trying to reduce the operation cost, Kogan Australia also provides the high quality

customer services. For example, online stores, 1 year warranty, 7 days money back guarantee, free

postages, provide high quality product with long battery, slim and light weight, multi file format

supported, memory expandable, extra gift, give customers more choices such as color, title to

preloaded, delivery services, extra warranty. (Kogan Australia, 2010)

3.1.1.3 MarketingHowever, with the limit of capital, Kogan Australia does not choose mass media as its main

marketing tool, but by focusing on customer referral to improve the image of the company at the

same time maintaining the low cost model. (Kogan, 2010)

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3.1.2 MARKET SEGMENTICATION

Kogan Australia has a difference customer target. It focuses on the low-price strategy with the

basic function provided in the device. Kogan is one of the cheapest ebook reader device 100

percent made in Australia, therefore, it has the major market share in the product under $190.

Overall, Kogan Australia will be the strong rival of Amazon Kindle and BeBook Mini/Neo as well

as the new comers Toshiba's Libretto, Samsung's e-reader device and Sony e-ink device on the

ebook reader device industry.

3.2 BEBOOK MINI/NEO

BeBook came to Australia in early 2010 are in strong strategic position compare to other ebook

reader device industry in Australia.

3.2.1 CUSTOMER NEEDS AND PRODUCT DIFFERENTIATION

BeBook provides high quality products, high quality services and provide a multi-function ebook

reader device. The BeBook Neo features a 6-inch e-Ink display offering eight shades of grey, and

is roughly the same dimensions and weight as Amazon's 6-inch Kindle. The e-Ink display only

chews through power when you turn the page, so the Neo's battery life is measured in days, as

opposed to hours for an LCD-based device such as Apple's iPad.

The Neo lacks the Kindle's built-in keyboard, instead relying on a five-way silver navigation

rocker which is surrounded by another four-way button. The outer ring features Prev and Next

buttons on the left and right, making it easy to hold the Neo in either hand and turn pages with

your thumb. The button makes a soft click which is far less distracting the Kindle's loud click.

Turning a page takes less than one second, during which the screen image inverts so it flashes

black. The Neo also utilises an onscreen keyboard operated with a stylus, which slips into the top

of the reader just like a PDA. Pressing the rocker's Go button while reading a book lets you enter a

page number and skip to it.

The Neo has a few key advantages over the Kindle. For starters it features built-in wifi, with a web

browser and the ability to download eBooks via the web. It also supports a wider range of formats

than the Kindle, including TXT, HTML, RTF and MOBI as well as DRM-protected ePub and

PDF files. The ability to adjust the font size on PDFs is particularly useful. The Neo also features

an SD card slot and USB port, which is handy because downloading books via the web is

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cumbersome using the Neo and you're probably better off transferring them from your computer

(something I'll get back to later). You can use Adobe Digital Editions to transfer eBooks from

your computer to your eBook, or just drag and drop them.

While a stylus may seem passé, the Neo features Wacom tablet technology which allows you to

use the eBook reader as a note taker and sketchpad. It's not an iPad-esque touch screen which

works with your finger, you need to call upon the stylus. You can even write on an eBook book

using the stylus, which is useful if you're studying. The ability to listen to MP3 while you read is

also handy. To top things off, the Neo comes with a great leather case so you can easily slip it into

your bag without fear of scratching the screen.

3.2.2 MARKET SEGMENTATION

BeBook has focused on the customers who only demand on an ebook reader device only, not the

hybrid devices, however, their expectation of this level are very high with the carefully design,

light and easy to handle, larger screen with longer battery and glossy screen so the customers can

read at any aspect. This strategy allowed BeBook an opportunity to only focus on it range of

customer needs and wants, by offering high quality products and stylus .

3.2.3 IPAD AS A SEGMENT RIVAL

BeBook have introduced in Australia in early 2010 to counter the rise of iPad and other tablet PC

as Microsoft Tablet PC windows 7 Edition in domestic market. iPad was targeting customers who

after a hybrid, stylus, fashion, and highly functional demanded device. It gains competitive

advantage by the quality products, the number of application available, multi functions as well as

the customer services. Therefore, iPad has created a significant impact on the market as well as the

industry with 40,000 unit sold within the first month. (Stuart, 2010)

3.2.4 STRATEGIC CHOICES

BeBook, and other comers as Toshiba, Microsoft PC windows 7 Tablet edition device which

target the same market segment forced iPad to respond either by reducing prices to compete with

Kogan, Kindle, BeBook mini ( low-price focus) and other low cost product or by increasing costs

to compete with BeBook, Toshiba and Sony in the same market segmentation or giving up the

market and focus on the smart phone market share. This strategy, using two brands to target

different markets, aimed to close the gap at the lower end of the market and also to reduce the risk

of "cannibalization" of the industry

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3.2.5 STRATEGIC POSITIONING

BeBook mini is a product range of BeBook. It has the advantage of guidance and financial support

from BeBook, including manufacturing, design, parts, labours and finance.

3.2.6 SOURCES OF COMPETITIVE ADVANTAGE

Their investments in Innovation have led to increased Efficiency. Their new technology of

producing processors, parts, assembly lines will allow them a significant reduction in labour,

operation cost. Also by selling products by internet, BeBook can avoid the middle cost as well as

the faster customers respond. This will give BeBook cost advantage over competitors.

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4 CONCLUSION

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Recommendation

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5 REFERENCE Kim, W. Chan and Mauborgne, Renee; “Charting Your Company’s Future”; Harvard Business

Review; June 2002.

McKinley. Retrieve from 29/08/2010:

http://www.valuebasedmanagement.net/methods_ge_mckinsey.html

GE matrix. Retrieve from 29/08/2010: http://www.mrdashboard.com/GE_Matrix.html

Technical Analysis of Stock Trends, R.Edwards, J. McGee, WHC Bessetti, CRC Press, 2007, p.17

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assignment 1

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