INTERNATIONAL MARKETTING GROUP REPORT

UNIT OUTLINE Trimester 3a, 2018

Curtin Singapore

 

 

 

 

 

 

 

IM2250 – International Marketing

 

Colleges of Business and Technology WA Pty Ltd T/A Curtin College CRICOS Provider Code 02042G

 

 

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ESSENTIAL ADMINISTRATIVE INFORMATION Unit Code: IM2250

Unit Title: International Marketing 2250

Credit Value: 25 credits

Pre-Requisite: Discovering Marketing 1100

Co-Requisite: NIL Additional Requirements: NIL

Unit Status Note: if you fail this unit three times then you may be terminated as per Progress and Attendance Policy.

Ancillary Fees and Charges All fee information can be obtained through:

• the Curtin Singapore website or

• Curtin Brochure

Unit Website Moodle via the Student Portal is the unit’s website. Students can access the Student Portal via the College’s website: https://learning.curtin.edu.sg

Tuition Pattern 4 hour seminar each week with both lecture and lecturerial components

Study Load 4 contact hours per week plus preparation

Mobile Phones Mobile phones must be switched off when you are in a class.

 

TEACHING STAFF Lecturer’s Name: Jeffrey Quak

Email Address: [email protected]

Your lecturer will assist you with your learning and any problems or difficulties you may be experiencing while undertaking this unit. They will mark your assignments and provide feedback in relation to your progress in this unit. You will be able to contact your lecturer through the Student Portal. Your lecturer is also available for an extra hour per week for individual consultation. Please check with your lecturer for their availability. Consultation times are also listed on Moodle under the unit name.

UNIT COORDINATOR / PROGRAM COORDINATOR Every unit also has a person who is responsible for the overall administration of that unit. This person is the Unit Coordinator. If you cannot contact the person who is teaching you (named above) or if you have further queries about this unit, you may wish to contact the Unit Coordinator for this unit or the Program Coordinator for the Course. Their contact details are below: Unit Coordinator’s Name: Kristina Georgiou

Email Address: [email protected]

Program Coordinator’s Name: Pranavi Garg

Email Address: [email protected]

 

UNIT SYLLABUS Designed to provide students with knowledge of the international marketplace, the unit offers insights into global,

multinational and transnational corporations. The unit covers issues related to regional or world organisational trade,

trade blocks and counter trade in developed and less developed economies.

 

 

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INTRODUCTION Welcome to International Marketing 2250.

The aim of this unit is to provide an introduction to international marketing that extends learning acquired from basic

marketing principles. Specifically, the unit examines key issues involved in entering overseas markets and offers

practical marketing perspectives of international, multinational and global operations.

LEARNING OUTCOMES All graduates of Curtin College and Curtin University achieve a set of nine graduate attributes during their course of study. These tell an employer that, through your studies, you have acquired discipline knowledge and a range of other skills and attributes which employers say would be useful in a professional setting. Each unit in your course addresses the graduate attributes through a clearly identified set of learning outcomes. They form a vital part in the process referred to as assurance of learning. The learning outcomes tell you what you are expected to know, understand or be able to do in order to be successful in this unit. Each assessment for this unit is carefully designed to test your achievement of one or more of the unit learning outcomes. On successfully completing all of the assessments you will have achieved all of these learning outcomes.

LEARNING OUTCOMES

LO1 Demonstrate their awareness of local, regional and international issues that affect businesses.

LO2

Demonstrate knowledge of international marketing theory that will assist in research, analysis,

planning, implementation and evaluation of global operations.

LO3 Apply team-building skills that support collaborative work and problem-solving.

LO4 Interact effectively in multicultural environments.

Upon successful completion of this unit students will have developed the following graduate attributes:

GRADUATE ATTRIBUTES

A s s e s s m

e n

ts /

le a rn

in g

 

o u

tc o

m e s

D is

c ip

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in k in

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k il ls

 

In fo

rm a ti

o n

 

S k il ls

 

C o

m m

. S

k il ls

 

T e

c h

n o

lo g

y

S k il ls

 

L e

a rn

in g

t o

 

L e

a rn

 

In te

rn a ti

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a l

P e rs

p e

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C u

lt u

ra l

U n

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rs ta

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P ro

fe s s io

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LO1 āœ“ āœ“

LO2 āœ“ āœ“

LO3 āœ“ āœ“

LO4 āœ“ āœ“

 

 

 

 

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LEARNING ACTIVITIES Lectures introduce the topic for each week. Key theories related to the topics are presented and integrated with topical

issues that extend beyond the unit textbook. On occasion, guest speakers from the industry are invited to the lecture to

present their latest research findings and provide professional examples and scenarios of their business operations.

This hands-on approach puts learning into context for students.

Seminars have different activities every week: these include case studies, news articles and a presentation. Students

will review short case studies in class with questions that enable them to draw on their own learning, discuss and

solve problems. Students will discuss with the assistance of the lecturer contemporary news articles that relate to the

topic for the week and in doing so, integrate concepts learnt with current issues. Finally, set groups of students’

research and present their proposal for a feasibility study with observations from the class.

LEARNING RESOURCES

COURSE NOTES / MOODLE Course notes, assessment details such as due dates, weighting of assessments and other details relating to course material are accessed via the Moodle tab on your Student Portal which can be accessed via the Curtin College website – https://learning.curtin.edu.sg/user/login

Text

Essential Text You need to purchase the following textbook:

Fletcher, Richard and Heather Crawford (2017). International Marketing – An Asia-Pacific Perspective (7th Edition),

Pearson/Prentice-Hall.

ISBN: 9781488611162

Recommended Text Ask your lecturer for additional relevant publications if you would like further readings.

ATTENDANCE REQUIREMENT Curtin College requires you to attend ALL classes. There is a very close relationship between attendance and

academic performance. Students will be marked absent for half the session if they are more than 30 minutes late or

do not return after the break.

A medical certificate is required if you are absent due to medical reasons.

 

 

 

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ASSESSMENT DETAILS The assessment for this unit consists of the following items.

Assessment

Number

Assessment Tasks Weighting Week Due Assessed

Learning

Outcome(s)

Assessment 1 Current Issues Assessments

(Individual)

25% Weeks 3,5,6,7,8 in

class

 

Individual

assessment

graded after class

LO1, LO2

Assessment 2 Presentation – Progress

Report on Feasibility Study

(Group)

10% Week 9 in class

 

Group assessment

graded in class

LO1, LO2, LO3,

LO4

Assessment 3 Feasibility Study Report

(Group)

25% Week 11

Monday 14th

January 2019

before 4pm

*Submission via

Turn-It-In and Hard

Copy

 

Group assessment

graded after class

LO1, LO2, LO3,

LO4

Assessment 4 Final Examination 40% Exam weeks Centrally

administered and

graded

LO1, LO2, LO4

TOTAL 100%

Unless otherwise indicated, all assessments are to be completed as individual assessments, not as group assessments. Please save a copy of your marked online submissions as you may not have access to the marked documents after the exam week. Note: You may be required to present written assignment submissions orally to your lecturer or other

academic staff, present evidence such as sources, written notes and drafts and/or demonstrate relevant unit

skills used to produce your assignment.

 

Pass Requirements

Students must achieve a Final Mark of 50 or greater to pass this unit.

 

 

 

 

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Detailed information on assessment tasks:

Assessment One – Current Issues Assessments (Individual)

Due Date: Week 3,5,6,7, and 8 in class Weighting: 25% The following Australian comedies exercise is for Week 5 in class.

Australian TV comedies that have a strong national identity such as ā€˜Thank God You’re Here’

(http://www.youtube.com/watch?v=kF9jXZDYCxE) or a sub cultural identity such as ā€˜Kath and Kim’

(http://www.youtube.com/watch?v=QGZahivzvIg) enjoy varying success when exported to overseas markets such as

the UK, USA and Holland. Review the trailers on YouTube. Then, in the Week 5 lecturerial, identify and discuss what

cultural, political and legal issues the Australian producers considered in taking their TV programs overseas.

____________________________________________________________________________________

 

Students are encouraged to be aware of current marketing issues that are taking place both domestically and globally.

To ensure active learning, students must be able to understand theoretical concepts and apply them to relevant cross

cultural or cross national contexts. In Weeks 3,5,6,7, and 8, students are required to:

1. Identify and select one referenced news article that is related to the class topic of the week. The referenced news article should be no more than four months old and may be sourced from either print or online news publications. For example, the Week 2 class examines the impact the cultural and social environment has on international marketing – this Current issue topic is due in week 3. For the Week 2 class, students must select a news article that focuses on cultural and/or social issues.

 

2. Report on how the referenced news article relates to the class topic of the week. The report should not exceed 200 words.

 

3. Discuss the implications of the referenced news article at the class.

4. Submit the relevant referenced news article, 200-word report and the individual assessment form (refer to Moodle) to your lecturer at the end of each class in Weeks 3,5,6,7, and 8. For example, the referenced news article and 200-word report on cultural and/or social issues must be handed in at the end of the class for each of the previously stated weeks.

 

Only hard copies submitted at the end of each class will be accepted. Late or electronic entries will not be deemed as

acceptable submissions and a zero (0) mark will be recorded for the assessment that week.

Assessment Two – Presentation – Progress Report on Feasibility Study (Group)

Due Date: Week 9 in class Weighting: 10% Students are encouraged to develop critical thinking and communication skills by presenting a 15-minute summarised

report of their feasibility study (refer to Group Project). The presentation gives students the opportunity to obtain

feedback and fine tune their submission for the feasibility study. In Week 9, students are required to:

1. Identify and provide rationale for selecting a company and new overseas country for their feasibility study. This discussion may be based on the SWOT analysis of the company and country selected.

 

2. Outline at least three key findings from analysing each section in the feasibility study.

3. Discuss implications of the key findings identified in point (2) for the way the company will conduct its business in the country selected.

 

 

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Students are required to work in their allocated groups of three or four for this assignment. Groups are required to

provide information sources and references for relevant points raised in their presentation.

Groups are required to hand in a hard and soft copy of their powerpoint presentation (6 slides per page and double

sided) and the group assessment form (refer to Moodle) before commencing with the presentation. The unit’s

lecturer reserves the right to award individual participant marks to group members for this assessment.

 

Assessment Three – Feasibility Study Report (Group)

Due Date: Week 11 – Monday 14th January 2019 by 4pm Weighting: 25%

 

Students are encouraged to demonstrate their research and analytical skills. This involves collecting and synthesising

data so as to prepare a feasibility study for a company that assesses the company’s proposed entry into one new

overseas country. The nominated company will be outlined in the Planning for International Marketing lecture in Week

1. The study should cover:

1. An executive summary outlining the key points from all sections in the study.

2. A brief background description of the company.

3. The existing corporate vision, mission statement and corporate goals of the company. This section may be presented in point form.

 

4. An environmental analysis of the industry that examines the political, economic, cultural, technological, environmental and legal environments governing the country and a competitive audit.

 

5. A SWOT analysis and implications from the SWOT analysis.

6. The recommended marketing objectives of the company. This section may be presented in point form.

7. A recommended segmentation profile of the company’s target markets and customers according to geographics, demographics, psychographics and benefits (indicate breakdown by % where possible).

 

8. A recommended marketing mix strategy including the product, price, place/distribution and promotion strategies that may be utilised by the company.

 

9. Implementation and evaluation charts of the recommendations outlined in point eight (8) over the next twelve (12) months.

 

10. Group exercise worksheets (refer to the program calendar in the unit outline), references, appendices, peer group assessment forms and the group assessment form (refer to Moodle).

 

To assist students in preparing and submitting the feasibility study, students must work on group exercises at the weekly

class and receive feedback from the unit’s lecturer. Students should note that the result of the feasibility study does not

need to be positive. If the findings suggest that it is not feasible for the company to proceed, then justifications and

recommendations to the company are required. The submission should be presented in twenty-five (25) A4 pages

typed in 12 font, 1.5 line spacing (excluding references and appendices). There should be a balance of references from

texts, academic journals and websites.

Students are required to work in groups of three or four for this assessment. Each student is required to fill out a peer

group assessment form on the contribution of their group members. Marks may vary between group members for

the same assessment, depending upon feedback received on each individual’s input and contribution to the

project.

 

 

 

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Groups are required to submit a hard and soft copy of the group assessment to the unit’s lecturer in Week 11 (Local

lecturer to provide due date). If the group assessment is not handed in on the due date and time, ten (10) percent will

be deducted off the total marks available for every day the assessment is late. After more than seven (7) days, the

assessment will not be marked and a zero (0) mark will be recorded.

Assessment Four – Final Examination

Due Date: Exam Week Weighting: 40%

Detail of the format of the final exam will be provided to you by lecturer.

GUIDELINES FOR ASSESSMENT SUBMISSION Hardcopy Assessment Submission All hardcopy assessments must be accompanied by the Curtin Singapore Assessment Cover Sheet which can be obtained from the Student Central. All assessments must be submitted by the due date as specified by the lecturer. Electronic Assessment Submission Electronic submission of assessments needs to be made to the submission point on the Unit Moodle page. The submission time is indicated by the date and time that electronic submission is recorded in Moodle. If required to submit an electronic file it is the student’s responsibility to check that the electronic file(s) are:

a) Readable, b) Fully complete, c) In the required file format, d) Clearly identified using the required file-naming convention e.g. student ID number followed by the

assessment name; and e) A back-up copy of the assessment has been kept.

Before submitting any assessments for marking, work through the following checklist to assist with avoiding plagiarising. I HAVE:

āœ“ Provided in-text references for all information (including images, graphs, tables, etc.) taken from sources. āœ“ Included an end-text reference list of all sources cited in my assessment. āœ“ Shown the original wording of sources as quotations.

I HAVE NOT:

āœ“ Used any other student’s work in my assessment. āœ“ Used information or material from the internet, databases or other sources without referencing them. āœ“ Copied any information from any source and presented it as my own.

All forms of cheating, plagiarism or collusion are regarded seriously and could result in penalties including loss of marks, exclusion from the unit or cancellation of enrolment.

LATE SUBMISSION GUIDELINES Students will have 10% of the total assessment mark allocated for the assessment deducted for each calendar day (or part thereof) the assessment is late without prior negotiation with the lecturer concerned. For example, if an assessment item is worth 20 marks, 2 marks will be deducted from the student’s mark awarded for each calendar day (or part thereof) late. Assessments will not be marked if they are submitted more than 7 calendar days (or part thereof) after the due date or revised due date if an extension has been granted. Work submitted after this time (due date plus 7 calendar days or part thereof) may result in an F – NC (Fail – Not complete) grade being awarded for the unit. For information on the deferred assessment conditions, please refer to the Curtin College’s Late Submission Guideline which is located under Policies and Procedures on the College’s website at http://www.curtincollege.edu.au.

REQUEST FOR ASSESSMENT EXTENSIONS In order to receive approval for an Assessment Extension (ie approval to complete an assessment task or submit an assignment at a later date or sit an in-class test at a later date); the students application must satisfactorily

 

 

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demonstrate to their lecturer that there are exceptional circumstances outside of their control that prevented them from completing the assessment task in the prescribed timeframe. Applications for extensions, along with any evidence, need to be submitted via email to the lecturer on or prior to the due date for assessments; or within 2 calendar days for all in-class assessments, including tests. The lecturer will notify the student of the outcome of the request by email. Extensions /Applications for Deferred in-class tests will not be considered more than 2 calendar days after the test/submission due date.

• Extensions /deferred in-class tests will not be available after the submission due date in Week 13.

• Extensions / requests for deferred tests may be granted by the lecturer for: o Medical grounds supported by a medical certificate issued by a doctor or a dentist only. Certificate

issued by a pharmacist will NOT be accepted; o Counselling or an appropriate registered health professional; o Equity considerations as requested by a Counsellor (Disability) or Student Counsellor; o Requests for extensions must be supported by evidence e.g. medical certificate, letter from an

approved counsellor, police report. Exceptional circumstances will require supporting evidence and is subject to approval by the Academic Director or their nominee on a case by case basis. Extensions will not be granted in the situation where a student has lost a digital file or submits a corrupt digital file (marker cannot open the file). Students must take full responsibility for backing up files and submitting clean files. Holidays do not constitute grounds for assessment extensions. An extension, where granted, will be limited to a maximum of seven calendar days per assessment.

Students will be informed via email in Week 7 and 12 regarding the deferred in-class test room details. Students must ensure they check their Curtin College emails regularly for the details and their availability to complete assessments where an extension or deferred test has been offered, as no alternate time will be available unless circumstances arise that are beyond the student’s control. Arrangements for these situations will be confirmed by e-mail to the student by the College. For information on the deferred assessment conditions, please refer to the Curtin College’s Assessment and Moderation Policy which is located under Policies and Procedures on the College’s website: http://www.curtincollege.edu.au.

REFERENCING STYLE Students should use the CHICAGO 17th Edition referencing style when preparing assignments. More information can be found on this style from the Library web site at http://library.curtin.edu.au/

ASSESSMENT MARKING Students should allow 14 calendar days marking turnaround for assessments.

SUPPLEMENTARY ASSESSMENTS

Supplementary Assessment / Exam A supplementary assessment may be granted to a student by the Board of Examiners in order to provide an additional opportunity for a student to pass a unit. If a student passes a supplementary assessment their total mark will not change but their grade becomes a pass grade (PX – Pass with Supplementary). Students who have qualified for a supplementary assessment will be notified by e-mail following the Board of Examiners. Supplementary assessments will be conducted in the Orientation week of the next study period unless otherwise advised by the College and students must be available to sit the assessment at the specified time otherwise the offer will be withdrawn. It is the responsibility of students to be available to complete the requirements of a supplementary assessment. For more information please refer to the Curtin College’s Supplementary Assessment Policy which is located under Policies and Procedures on the College’s website at http://www.curtincollege.edu.au.

 

 

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Deferred Final Exam (if applicable) Within two calendar days following the missed Final Exam complete the ā€œAssessment Deferral Formā€ and attach a valid evidence, for example, a medical certificate/ or a letter from the counsellor, and a statement outlining the reasons for missing the final exam. Deferred Final Exams will be conducted in the Orientation week of the next study period unless otherwise advised by the College and students must be available to sit the assessment at the specified time. For information on the deferred assessment conditions, please refer to the Curtin College’s Assessment and Moderation Policy which is located under Policies and Procedures on the College’s website: http://www.curtincollege.edu.au.

ACADEMIC INTEGRITY AND PLAGIARISM Curtin College is committed to ensuring that all students behave with academic integrity. Therefore, it is essential that students understand the principles underlying academic integrity and behave in a manner according to these principles. It is expected that students act with integrity when they undertake all learning and assessment tasks. The following are examples of academic dishonesty: • Plagiarism, such as, the use of words, images and/or ideas of another person without acknowledging the source. Plagiarism is not permitted and considered an offence. Failure to acknowledge the sources students have used by using both in-text and end-text referencing will compromise the mark they receive and may result in a penalty. • Collusion occurs when students produce their work together, but submit the work under individual names, giving the impression that the work is wholly that of the individual. If students lend/borrow assessments and use ideas from another student’s assessment, this is also deemed to be collusion. This is a deliberate attempt to deceive the lecturer or lecturer. Collusion is not permitted and is considered plagiarism. ALL students involved will be penalised. Students may be required to collaborate in an assessment or an activity. Collaboration describes an activity in which students have been given permission to work together, such as a group report. It is the student’s responsibility to ensure that they are familiar with the rules covering plagiarism, collusion and collaboration. Failure to comply may result in serious penalties. For more information on academic integrity, please contact the lecturer or refer to the Curtin College Code of Conduct which is located under Policies and Procedures on the College’s website at http://www.curtincollege.edu.au.

Plagiarism Monitoring Some (or all) assessments in this unit may be monitored for plagiarism using the Turnitin plagiarism detection service (see http://turnitin.com). Students who do not want assignments retained in the Turnitin database, must lodge a special request prior to the submission date. Please advise your lecturer or Unit Coordinator if you do not wish to have your assignment retained.

EXPECTATIONS OF YOU AS A STUDENT Curtin College is committed to high standards of professional conduct in all activities, and holds its commitment and responsibilities to its students as being of prime importance. Similarly, it holds expectations about the responsibilities students have as they pursue their studies within the environment the College offers. As members of an academic environment both at Curtin College and through the College’s association with Curtin University, students are expected to:

• Treat all others with respect and courtesy;

• Treat others equitably irrespective of gender, sexual orientation, race, disability, medical condition, cultural background, religion, marital status, age, or political conviction;

• Respect the opinions and views of others;

• Avoid any conduct that might reasonably be perceived as sexual, racial, or gender-based harassment or otherwise intimidating;

• Attend classes, maintain consistent levels of study, and submit assessment pieces on time;

• Regularly check their student College e-mail account and conduct all e-mail correspondence with the College staff by using only this account

• Heed and utilise academic performance feedback from teaching staff;

 

 

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• Familiarise themselves with, and abide by, the Colleges policies and procedures;

• Maintain high standards and a professional approach to their study program.

• Ensure personal and general hygiene are paid attention to;

• Refrain from littering by using rubbish bins and leaving washrooms and other facilities as you found them;

• Not go to class under the influence of alcohol or any other anti-social behaviour altering substances. Students are expected to participate actively and positively in the teaching and learning environment. They must attend classes when and as required, strive to maintain steady progress within the subject, comply with workload expectations, and submit required work on time. If a significant assessment is not attempted the student may receive a Fail – NC (Not Complete) grade. For more information please refer to the Curtin College’s Code of Conduct Policy which is located under Policies and Procedures on the College’s website at http://www.curtincollege.edu.au.

STUDENTS’ RIGHTS AND RESPONSIBILITIES It is the responsibility of every student to be aware of all relevant legislation, policies and procedures relating to their rights and responsibilities as a student. These include:

• the College’s policy and statements on plagiarism and academic integrity and copyright, • the College’s policies on appropriate use of software and computer facilities, • appeals and complaints resolution, • student feedback, • other policies and procedures.

Students are to take special note of the College’s requirement that all students must regularly check their College e- mail accounts and must conduct e-mail correspondence with the College by only using this account. All students are deemed to be held responsible for checking their College e-mail accounts for important correspondence and consequently will be held solely responsible for failing to act upon any advice sent to this account.

For more information please refer to the Curtin College Policies which are located under Policies and Procedures on the College’s website: http://www.curtincollege.edu.au

IMPROVEMENTS AND STUDENT FEEDBACK From time to time students will be invited to participate in online surveys to provide feedback on the module and on the College. Curtin College values student feedback as one of the many ways to continuously inform improvements to the Unit. Recent unit changes to this unit include:

• The unit has been peer-reviewed and the structure of the units have been further clarified and a number of new class activities have been added.

 

ADDITIONAL INFORMATION If you have a query relating to administrative matters such as:-

• requests for deferment of study

• difficulties with accessing online study materials

• obtaining assessment results

• appealing internal or final marks

Please email [email protected] For all other administrative matters please contact Student Central or call 65938000

 

 

 

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UNIT STUDY CALENDAR If you have a printed copy of this document, you may like to tear off this final page and keep the Study Calendar handy as you work through the unit.

Week Week

Starting on: Learning

Outcome/Topic Seminar Activities Assessment Due

1 5/11/2018

Chapter 1 The Rationale for International Marketing (IM) & 12 Planning for Effective IM

Introduction to IM2250 Introduction to lecturer Introduction to class members Discuss the unit outline and assessments

 

2 12/11/2018 Chapter 4 Social & Cultural Environment

In Class Cultural Activity Group Exercise

 

3 19/11/2018

Chapter 3 Economic and Financial Environment

Case Study: Argentina uncorks Malbec pg.107 of text book. Group Exercise

Assessment 1: Submit Current Issues Assessment (Social/Cultural)

Due : In class

4 26/11/2018

Chapter 2 Political and Legal Environment

Case Study: Apple vs Samsung – taking the legal battle beyond markets and the boardroom pg. 69 of text book Group Exercise

 

5 3/12/2018

Chapter 2 Political and Legal Environment (cont’d)

Practical Exercise: Exporting Australian TV Comedies* Group Exercise

Assessment 1: Submit Current Issues Assessment (Economics/Finance)

Due : In class

6 10/12/2018

Chapter 5 Technological environment

Case Study: Shoes of Prey – a step ahead of the competition pg.197 of text book. Group Exercise

Assessment 1: Submit Current Issues Assessment (Politics/Legal)

Due : In class

7 17/12/2018

Chapter 13 Modifying products for international markets

Case Study: The Sweet Aroma of Success pg.478 Group Exercise

Assessment 1: Submit Current Issues Assessment (Technology) Due : In class

8 24/12/2018

Chapter 16 Effective distribution overseas

Case Study: Daiso: A new frontier of fun shopping comes of Australia pg.595 Group Exercise Lecturer consult for Presentation

Assessment 1:Submit Current Issues Assessment (Product)

Due : In class

9 31/12/2018

Chapter 14 International pricing for profit

Presentation – Progress Report on

Feasibility Study

Assessment 2: Presentation

Due : In class

10 7/01/2019

Chapter 15

Promotion in

international

marketing

Case Study: Rebuilding a brand: The

challenges ahead for Malaysia Airlines

after the twin airline disaster pg.557 of

text book.

Lecturer consult for Feasibility Study

Report

 

 

 

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11 14/01/2019 Chapter 11 Globalisation

Case Study: From a domestic market

focus to a global vision – Australian

banks’ pursuit of global opportunities

pg.411

Assessment 3: Submit Feasibility Study Report Due : Monday 14st January by 4pm *Submission via Turn-

it-In and Hard Copy

 

12 21/01/2019 Exam Revisions Exam Revisions Critical Comments – Feasibility Study

 

13 28/01/2019 Study Week

 
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Crystal Cosmetics Simulation

Assessment Event 2: Crystal Cosmetics Simulation

In this simulation, you will undertake a number of tasks associated with creating a persuasive copy for a cosmetics company, Crystal Cosmetics. The focus is on producing a website ad copy that will help the organisation to effectively communicate its brand message as required. This entails you to carry out the following actions:

Ā· review the Client Brief and understand client’s requirements

Ā· create a website ad copy that:

Ā­ is in line with the requirements stipulated in the Client Brief

Ā­ surpasses competitor’s copy

Ā­ conforms to the organisation’s copywriting policy and procedures.

Please ensure that you familiarise yourself with this set of requirements that underpin this simulation. This includes understanding the background of the simulation and the criteria you will be assessed on. These are located in the Appendix of this document.

Task 1: Analyse and Interpret Creative Brief

In this task, you will review the Client Brief, then conceptualise the creative context and lay the groundwork for copy production.

1.1 Analyse and confirm techniques for expressing central idea

R 1. Ā Summarise the central idea

R 2. Shortlist minimum two techniques to express the central idea

R 3. Ā Provide a rationale for each technique

R 4. Ā Word count is approximately 150 words in total.

Analysing the Assignment:Ā Often assignment sheets contain key words that offer clues about what your instructor is looking for. This is always a good place to start in deciding what you should focus on in a final draft. Re-read the assignment sheet or your notes about the assignment, looking for words like “compare/contrast,” “discuss,” “analyze,” “define,” “synthesize,” etc. These words tell you what kind of assignment the teacher is looking for. Then, look for other key terms relating to subject matter. For example, if the assignment asks you to “Contrast Freud’s and Erikson’s stage theories of personality,” your main idea needs to include Freud, Erikson, and “stage theories of personality.”

Backwards Outline:Ā Once you’ve determined that you’re meeting the requirements of the assignment, you’ll want to get even more specific about what your essay says exactly. One way to do this is to create a “backwards outline.” (It’s “backwards” because it is written after rather than before the draft itself.) To do this, simply read your essay paragraph by paragraph. After each paragraph, determine the main idea of that section, and write the main idea in the margin of your draft. If you find more than one significant idea in a paragraph, write them both down. When you’re finished, read over your marginal notes (or “outline”) and look for connections – is there one central idea that each paragraph supports? If so, that’s your main idea. If not, you’ll probably want to look for an idea that most of the paragraphs support and consider dropping or rewriting paragraphs that don’t support your focus.

1.2 Identify and check content and supporting information for accuracy and completeness

R 1. Ā summarise the accuracy and completeness of the Client Brief:

Ā· list two issues with its content and supporting information

Ā· explain how these issues may impact your copy production

Ā· explain how each of these issues would be addressed in your copy production

R 2. word count is approximately 50 words per issue.

The client brief requires the copy to appeal to emotion, however, it does not specify which emotions in particular. Also it does not provide direct or indirect influences explicitly. These are crucial to select the right key words or phrases to create and emphasis on consumers perception of the product. This copy will primarily focus on exclusivity and need for a healthy skin.

1.3 Confirm schedule and budgetary requirements for creating copy

R 1. using an appropriate tool, create a timesheet including the following fields:

Date:

day a task to be executed

Task:

activity undertaken throughout the copywriting process

Hourly Rate:

hourly rate agreed

Estimated Duration:

time estimated to complete a task

Estimated Cost:

cost estimated to complete a task

Actual Duration:

actual time taken to complete a task

Actual Cost:

actual cost to complete a task

Variance:

the difference between the estimated and actual cost

R 2. populate the timesheet:

Ā· fill date, task, hourly rate, estimated cost, and estimated duration fields

Ā· list a minimum of three parent tasks each with a minimum of three subtasks

Ā· data must be in accordance to the Client Brief requirements

Ā· work breakdown structure must be coherent

R 3. attach a screenshot of your timesheet to your Student Assessment Workbook.

1.4 Identify legal and ethical constraints impacting copy to be developed

R 1. review the organisation’s policy and conduct a desk research:

Ā· list five legal constraints referencing corresponding legislation, standards or codes

Ā· list five ethical constraints

Ā· explain how each will have an impact on the copy to be developed

R 2. word count is approximately 25 words per constraint.

Task 2: Evaluate Creative Options

In this task, you will overview the design and copy options provided in the Client Brief, and then select suitable elements for designing and developing the website copy ad.

Evaluate creative options and select suitable design and copy elements accordingly

R 1. evaluate copy options and made appropriate selections:

Ā· list seven copy options

Ā· these options must be appropriate to communicate the brand message

Ā· these options must be suitable for the copy design and production

Ā· these options must be achievable within time and budgetary requirements

R 2. list two possible uses for each chosen option

R 3. word count is not critical.

Task 3: Prepare Persuasive Copy

In this task, you will create the website ad copy in accordance to the client and organisational requirements, surpassing the competitor’s promotional material. This will require you to submit the draft to the Creative Director (your Assessor) for review and gain feedback on the necessary refinements to finalise the copywriting process.

3.1 Create the website ad copy

R 1. create the draft copy in accordance to:

Ā· the requirements of the Client Brief

Ā· Copywriting Policy and Procedures

Ā· legal and ethical requirements

Ā· time and budget constraints

Ā· the performance criteria listed in the ā€˜Creative Copy Check Sheet’ in Appendix B

R 2. attach your draft copy to your Student Assessment Workbook

R 3. email the draft copy to the Creative Director for review.

3.2 Confirm schedule and budgetary requirements for creating copy

R 1. update the timesheet:

Ā· populate ā€˜Actual Duration’ and ā€˜Actual Cost’

Ā· calculate ā€˜Variance’

Ā· calculate total actual cost

R 2. summarise variances:

Ā· list the tasks with variances

Ā· explain the reasons for each variance

Ā· provide a way to improve in future projects.

Ā· word count is not critical

R 3. attach a screenshot of your final timesheet to your Student Assessment Workbook.

3.3 Revise and finalise the website ad copy

R 1. refine your copy in accordance to the Creative Director’s feedback

R 2. copy must meet all the criteria listed in the ā€˜Creative Copy Check Sheet’

R 3. attach your final copy to your Student Assessment Workbook

R 4. attach the email exchange including the feedback to your Student Assessment Workbook.

Appendix A: Crystal Cosmetics Simulation

Simulation Background

DigiGeek is an innovative full-service marketing agency specialises in strategic thinking, marketing, branding, interactive solutions, and visual communication across a whole spectrum of media. Its team manages marketing projects from start to finish, beginning with ideation and digital strategy, all the way through to UX, website design and development.

In this simulation, DigiGeek has been approached by a client, Crystal Cosmetics, an Australian green beauty brand and one of the nation’s largest seller of organic cosmetics products including colour cosmetics, skincare, towelettes, fragrance, bodycare, and haircare items. The motivation is to create a website ad copy in order to maximise a particular product’s return on investment.

You will be the copywriter of DigiGeek, responsible for designing and producing the creative copy in accordance to the client, legal, ethical, and DigiGeek’s requirements. For detailed information on the simulation, refer to the ā€˜Client Brief’ document provided.

Simulation Phases

This simulation is divided into the following phases:

Phase 1:

you will lay the necessary groundwork for the design and production of the creative copy.

Phase 2:

you will design and produce the creative copy within the given time and budget.

Phase 1:

Phase 1 occurs from Tasks 1.1 to Task 2. In Phase 1, your main duties in the organisation are as the Copywriter are as follows:

Ā· review the Client Brief and understand client’s requirements

Ā· determine techniques to reflect the central idea

Ā· create a timesheet to monitor time and budget

Ā· identify legal and ethical requirements for copy production

Ā· select appropriate creative options to create an effective copy.

Phase 2:

Phase 2 occurs in Task 3. In Phase 2, you will perform the following:

Ā· using appropriate desktop publishing and graphics software, create a website ad copy that:

Ā­ is in line with the requirements stipulated in the Client Brief

Ā­ surpasses competitor’s copy

Ā­ conforms to the organisation’s copywriting policy and procedures

Ā­ meets time and budget requirements

Ā· proofread the copy

Ā· send the copy to the Creative Director (the Assessor) for their review

Ā· refine the copy in accordance to the feedback provided by the Creative Director.

Simulation Setup

The simulation chosen is to give you the opportunity to provide evidence that demonstrates your ability to undertake data mining activities within a marketing context. We have tried to make this simulation as real as possible within a classroom setting through providing templates and additional support documents used for data mining in real-workplaces as well as bringing an actor to interact with you. To carry out their role in this simulation will require you to follow these steps:

Step 1.

At the commencement of the unit, your Assessor will overview the assessment with you. You will then sign the declaration of your understanding located in the Student Assessment Workbook (Pre-Assessment Checklist).

Step 2.

Prior to the commencement of this assessment:

Ā· Your Assessor will provide you with the following resources:

Ā­ Client Brief

Ā­ Competitor’s promotional material

Ā­ Artwork Folder

Ā­ Copywriting Policy and Procedures.

Ā· With you Assessor, you will review all of the sources listed above in addition the following:

Ā­ Simulation Background

Ā­ tasks

Ā­ the student’s role in the simulation.

You will confirm your understanding with your Assessor before you undertake your assessment.

Step 3.

As soon as you confirm your understanding with the Assessor, you will be given the deadlines for the submission of your first draft copy and your final assessment.

Step 4.

Before you commence on your copy production, your Assessor will arrange the equipment and facility needs required for you to undertake the simulation. This will include the following:

Ā· quite room

Ā· computer

Ā· Internet

Ā· word-processing software (to document their responses)

Ā· desktop publishing software (to design and produce the copy).

In case you have other requirements, you must communicate these with your Assessor prior to undertaking the simulation activities.

Step 5.

You will complete all the simulation tasks within the deadline specified by your Assessor. Note that in Task 3.1, you will design and produce the creative copy, then send your draft to your Assessor (as the Creative Director) for review. Your Assessor will respond to you providing their feedback which then you will make the necessary refinements and finalise your copy (Task 3.3). Once you submit your final copy to your Assessor, your copy will be assessed on its quality based on the requirements set out in the ā€˜Creative Copy Check Sheet’ provided to you in Appendix B. You must familiarise yourself with these requirements prior to undertaking Task 3.

Step 6.

You will document and attach all your findings to your Student Assessment Workbook.

Step 7.

You will submit your Student Assessment Workbook to your Assessor by the deadline.

Assessment Conditions for the Observation

The information in this section outlines the assessment conditions for the simulation.

Before the simulation:

Ā· you must ensure that you understand all the resources required to undertake the simulation tasks

Ā· your Assessor will provide you the resources required to undertake the simulation tasks

Ā· you must ensure that you have read and understood all performance requirements listed under each task

Ā· where you are unclear with the points above, you must clarify these with your Assessor

Ā· your Assessor will inform you of the deadline for your first draft of copy and final submission of your assessments prior undertaking each simulation phase.

During the simulation:

Ā· you will type your responses to the simulation tasks in your ā€˜Student Assessment Workbook’

Ā· where you are unclear with a simulation task, you must clarify these with your Assessor

Ā· you will be undertaking each task individually, by yourself, without giving or receiving assistance from your peers

Ā· you must satisfactorily demonstrate all the requirements under each task to achieve a satisfactory result for this assessment.

After the simulation:

Ā· if you are successful, your Assessor will summarise your performance during the simulation

Ā· if you are unsuccessful, your Assessor will:

Ā­ provide written feedback on Task Outcome Sheets explaining their justification in detail

Ā­ communicate this feedback to you

Ā­ arrange another suitable time to assess your second attempt.

Assessment Information

Welcome to your Student Assessment Workbook for BSBWRT501 Write Persuasive Copy.

This Workbook is where you will write all your responses for the knowledge questions and simulation tasks. Please refer to the Student Assessment Guide for more information.

This assessment has the following two events:

Assessment Event 1 – Knowledge Questions
There are five questions that will provide us with the evidence of your general knowledge of concepts relevant to persuasive copywriting.
 
Assessment Event 2 – Simulation: Crystal Cosmetics
You will complete a number of tasks in preparing and producing a creative copy based on the requirements provided in a client brief. These tasks will be based on your role of a Copywriter for a simulated organisation named Crystal Cosmetics, an Australian green beauty brand selling organic cosmetics products.

To complete the Simulation, you will need to refer to the following resources:

Client Brief

Provides you with the requirements of the website ad copy. You will use this document throughout Assessment Event 2 to create the website ad copy in alignment with these specifications such as organisational goals, techniques, language, writing style, timelines, budget, etc.
   
Competitor Copy The competitor’s persuasive copy. You will refer to this document in Task 3 when creating your website ad copy to surpass the competitor’s promotional activity.
   
Artwork Folder Contains the creative work that are essential to develop the website ad copy including the product image, brand logo, and product symbol. You will use the files when creating your website ad copy in Task 3.
   
Copywriting Policy and Procedures Organisational policies and procedures relating to process of copywriting. You will abide by these organisational requirements during the lifecycle of your copywriting task.
   

Please note that your responses for both assessment events can (where appropriate) use dot point format. See below for an example of a dot point response and a full sentence response:

Dot point format Presentation Plan includes the following:

Ā·Ā outcomes

Ā·Ā needs of the audience

Ā·Ā context.

   
Full sentence format When you are preparing for a Presentation, there are a number of tasks that must be carried out. These are; listing the outcomes that you want to achieve, followed by the identification of the needs of your audience. Etc.

To Achieve Competence

To be deemed competent for this unit, you will need to meet the following requirements:

Ā· complete all of the questions and tasks listed in this Student Assessment Workbook

Ā· meet all the requirements listed in the Student Assessment Guide

Ā· your responses to the questions and tasks must be relevant, accurate and specific

Ā· submit your completed Student Assessment Workbook to your Assessor within the set timeframes

Ā· your work must be in your own words

Ā· where you use an external source of information, you must provide citation.

Pre-assessment Checklist

Your assessor will go through the assessment for this unit, BSBWRT501 Write Persuasive Copy. It is important that you understand this assessment before taking on the questions and tasks. To confirm that you have been given this overview, we ask you to complete the following Pre-Assessment Checklist.

You are required to carefully read each checklist item provided below and tick either ā€˜Y’ to confirm your understanding or ā€˜N’ if you disagree. In case you disagree with an item, please provide your reason under the ā€˜Comments’ column.

When you have done this, we ask you to sign this Pre-Assessment Checklist. This acknowledges that your Trainer/Assessor has discussed all of the information with you prior to undertaking this assessment.

Pre – assessment Checklist Comments
Y N I, the student, understand the purpose of the assessment.  
Y N I understand when and where the assessment will occur, who will assess and in what format the assessment will be submitted.  
Y N I understand the methods of assessment.  
Y N I understand what resources are required to complete this assessment.  
Y N I understand the performance level required for each assessment event.  
Y N I understand that it must be my own work. I have been explained and understand the serious consequences in case this work is found plagiarised.  
Y N I understand the process if I am deemed not yet competent.  
Y N I understand the feedback process and the appeals process.  
Y N The assessor has discussed with me if I have any special needs and if so what arrangements have been made.  

 

Student Full Name   Student ID   Student Signature   Date

 

 

Assessment Event 1 – Knowledge Questions

The information contained in this assessment event lists the questions that you will need to develop a written response. These questions are theoretical and provide evidence of your understanding of concepts relevant to persuasive copywriting.

Note you must answer these questions in your own words. Remember, you must get a satisfactory result with each question to be deemed satisfactory for the whole of Assessment Event 1.

Question 1

Using the table below, discuss ethical requirements which may impact production and delivery of creative copy.

Insert your responses into the table below:

Ethical Requirement Rationale
Honesty The copy should be accurate and truthful when describing the B5 Pro’s and benfits.
Appropiate language The copy should not incorporate insulting and disrespectful language the cause anyone to feel resentful or humiliated.
Decent content The copy aims to promote a skincare product which is more inclined for use.
Advocacy The copy should only provide information that is objective and neutral raim proffery.
Subliminal promotion The copy should not have hidden messages that will push consumed irrationally.

Question 2

Using the tables below, explain relevant legislation, standards and codes of practice affecting production and delivery of copy.

Insert your responses into the tables below:

Legislation/Standards

Key Provisions
Privacy Act 1988 A copywriter should never:

– Collect sensitive information from a client

– Never disclose a client’s information without having their written consent

– Provide access about a client’s information to an external party.

 

Copyright Act 1968 An asset in a copy may refer to certain creative works including text, artistic work, databases, journals, music, computer programs, media broadcasts, etc.
Competition and Consumer Act 1968 A copywriter should not engage in unfair commercial practices when communicating the brand message.
– Age discrimination act 2004

– Disability discrimination Act 1992

– Racial discrimination act 1975

– Sex discrimination act 1984

– Australian Human Rigths Commission Act 1986

 

A copywriter should not include any information in their copy that may encourage discrimination amongst social groups on the grounds of: age, disability, race, colour,nation, descent, ethnic origin, inmigrants status, re,igion, beliefs, cultural backround, gender, sexual orientation, intersex status, marital or relationship status.

 

 

 

 

Broadcasting Services Act 1992 (linked with Children’s Television Standards 2009) Some of the primary objectives of this Act include:

 

– Protecting for children from exposure to unsuitable internet content

– Broadcasting content that is harmful to children by any media channel.

 

 

Codes of practice Key Provisions
AANA Code of Ethics Copywriters must ensure that their company and copywriting practices are: legal, decent and ethical, they have been undertaken with a sense of obligation to the consumer and society, show fairness and responsibility to competitors, avoid strong or obscene language.

 

 

AANA Code of Advertising and Marketing Communications to Children Copywriters must ensure that their copy must: not mislead or deceive children, be clear for the children to understand, accurately represented, not be discriminatory, not employ sexual appeal.
FreeTv Commercial Television Industry Code of Practice Copywriters can not include any content in their broadcast copy that: cannot be classified MA15+ or any lower television classification, provoke intense dislike, serious contempt or severe ridicule in society based on age, colour, gender, national or ethnic origin,disanility, race, religion or sexual preference.
The Weigth Management Indusry Code of Practice The code enforces that copywriters must ensure that their copy represent only truthful and accurate information without misleading consumers or having any direct or indirect ill-intent, particularly about the price and the benefits of the value offer (the weight management products or services).
Commercial Radio Australia- Commercial Radio Code of Practice Copywriters cannot include any content in their radio copy that: encourages violence, are misleading, support misusing alcoholic beverages, support using illegal drugs, narcotics or Tabaco, is not in good faith, will violate social norms, among others.

 

 

 

Question 3

Using the table below, outline constraints to be considered during preparation, analysis, and evaluation of copy.

Insert your responses into the table below:

Phases Constraints Impacts Way to Overcome
Preparation 1. Unclarity in clients requirements Possible project failure Setting standard operating procedures for gathering client requirements such as using a client brief to define the project scope and implementing a stakeholder communication plan.
  2. No thoroughly understanding competitor’s copy Developing a similar copy to a competitor’s will limit the brands ability to stand out in the market.

 

Copy may not reach high impact and surpass the competitor’s promotional material.

 

Prior to the design process, conduct comprehensive market research and engage with external agencies (if required) to develop a sound understanding on competitor’s copy strategy.
Analysis 1. Analysis of copy is subjective and non-measurable People will differ in views on the copy making it difficult to accurately analyse its strengths or weaknesses.

 

May lead to invalid and unreliable evaluation.

Ensure the analysis process is objective, data-driven, fact-based, measurable, and observable to facilitate in informed evaluation.
  2. Setting inaccurate metrics for performance measurement Cannot measure whether the copy is reaching out to the right audience.

 

Induce ineffectual and unproductive results for decision making.

Ensure makings are closely aligned with the copy objectives and success scenarios, and defined at the very early stage of the copy preparation process.
Evaluation 1. Copy evaluation process does not involve target audience insights Without listening what the actual audience thinks, it’s difficult to make accurate decisions on future strategies.

 

 

Incorporate target consumer’s perspective into the evaluation process as independent input rather than solely relying on the marketing communications team’s assessment.
  2. Evaluation is not backed with data Evaluation without data will yield judgement-based outcomes which may be dubious.

 

 

Implement data collection and processing mechanisms to mine data on the copy’s performances and make data-driven decisions, e.g. surveys and market intelligence gadgets.

Question 4

Using the table below, describe persuasive writing techniques used in copywriting.

Insert your responses into the table below:

Techniques Reason
Emotive Appeals This persuasive writing technique is based on talking directly to the consumer by using words such as ā€œyouā€ or appealing to their emotional need and desires.
Colloquial language It’s important that the language displayed in copy in simply to understand.
Testimonials Testimonials are perceived as ā€œliveā€ evidences that establish brand confidence in the eye of recipients.
Repetition of words It is known as ā€œattention economyā€ that means people will only pay attention to creative copy for a certain amount of time.
Storytelling This technique has the ability to distract recipient from the key message of ā€œbuying somethingā€ and automatically shift their attention to the unique selling preposition (USP) of the value offer.

 

Question 5

Using the table below, explain the structure of a persuasive copy.

Insert your responses into the table below:

Element Motivation
Unique Selling proposition (USP) This element is where the copy will state the unique selling point of the product, service or brand.
Evidence The proof aims to back up the USP with evidence to make it credible and reliable. This can come in the form of a scientific finding, expert opinion, statistical evidence, testimonials, etc.
Call to action The call to action aims to get the consumer to respond to the copy by ā€œdoing somethingā€ such as buying the product, subscribing to an email list, sharing the copy with others to increase awareness, etc.
Brand logo The brand logo is vital as it increases brand recognition and recall. It is the visual manifestation of a company’s brand with its target consumers.

 

Assessment Event 2: Crystal Cosmetics Simulation

In this simulation, you will undertake a number of tasks associated with creating a persuasive copy for a cosmetics company, Crystal Cosmetics. The focus is on producing a website ad copy that will help the organisation to effectively communicate its brand message as required.

Task 1: Analyse and Interpret Creative Brief

In this task, you will review the Client Brief, then conceptualise the creative context and lay the groundwork for copy production.

1.1 Analyse and confirm techniques for expressing central idea

Insert your response here:

Analysing the Assignment:Ā Often assignment sheets contain key words that offer clues about what your instructor is looking for. This is always a good place to start in deciding what you should focus on in a final draft. Re-read the assignment sheet or your notes about the assignment, looking for words like “compare/contrast,” “discuss,” “analyze,” “define,” “synthesize,” etc. These words tell you what kind of assignment the teacher is looking for. Then, look for other key terms relating to subject matter. For example, if the assignment asks you to “Contrast Freud’s and Erikson’s stage theories of personality,” your main idea needs to include Freud, Erikson, and “stage theories of personality.”

Backwards Outline:Ā Once you’ve determined that you’re meeting the requirements of the assignment, you’ll want to get even more specific about what your essay says exactly. One way to do this is to create a “backwards outline.” (It’s “backwards” because it is written after rather than before the draft itself.) To do this, simply read your essay paragraph by paragraph. After each paragraph, determine the main idea of that section, and write the main idea in the margin of your draft. If you find more than one significant idea in a paragraph, write them both down. When you’re finished, read over your marginal notes (or “outline”) and look for connections – is there one central idea that each paragraph supports? If so, that’s your main idea. If not, you’ll probably want to look for an idea that most of the paragraphs support and consider dropping or rewriting paragraphs that don’t support your focus.

1.2 Identify and check content and supporting information for accuracy and completeness

Insert your response here:

The client brief requires the copy to appeal to emotion, however, it does not specify which emotions in particular. Also it does not provide direct or indirect influences explicitly. These are crucial to select the right key words or phrases to create and emphasis on consumers perception of the product. This copy will primarily focus on exclusivity and need for a healthy skin.

1.3 Confirm schedule and budgetary requirements for creating copy

Attach the screenshot of your timesheet here:

Date: 1/8/2019
Task: activity undertaken throughout the copywriting process
Hourly Rate: hourly rate agreed
Estimated Duration: time estimated to complete a task
Estimated Cost: cost estimated to complete a task
Actual Duration: actual time taken to complete a task
Actual Cost: actual cost to complete a task
Variance: the difference between the estimated and actual cost

 

1.4 Identify legal and ethical constraints impacting copy to be developed

Insert your response here:

Task 2: Evaluate Creative Options

In this task, you will overview the design and copy options provided in the Client Brief, and then select suitable elements for designing and developing the website copy ad.

Evaluate creative options and select suitable design and copy elements accordingly

Insert your response here:

Company LogoĀ Product Icon

B5 Pro Product

Task 3: Prepare Persuasive Copy

In this task, you will create the website ad copy in accordance to the client and organisational requirements, surpassing the competitor’s promotional material. This will require you to submit the draft to the Creative Director (your Assessor) for review and gain feedback on the necessary refinements to finalise the copywriting process.

3.1 Create the website ad copy

Create your draft website copy and attach to your Student Assessment Workbook.

See your Student Assessment Guide for detailed instructions.

3.2 Confirm schedule and budgetary requirements for creating copy

Attach the screenshot of your final timesheet here:

 

 

 

 

3.3 Revise and finalise the website ad copy

Revise your draft copy in accordance to the feedback received.

Attach the final version to your Student Assessment Workbook.

Attach the email exchange with your Assessor including their comments to your Student Assessment Workbook.

 

 

Appendix: Crystal Cosmetics Simulation

Simulation Background

DigiGeek is an innovative full-service marketing agency specialises in strategic thinking, marketing, branding, interactive solutions, and visual communication across a whole spectrum of media. Its team manages marketing projects from start to finish, beginning with ideation and digital strategy, all the way through to UX, website design and development.

In this simulation, DigiGeek has been approached by a client, Crystal Cosmetics, an Australian green beauty brand and one of the nation’s largest seller of organic cosmetics products including colour cosmetics, skincare, towelettes, fragrance, bodycare, and haircare items. The motivation is to create a website ad copy in order to maximise a particular product’s return on investment.

The student will be the copywriter of DigiGeek, responsible for designing and producing the creative copy in accordance to the client, legal, ethical, and DigiGeek’s requirements. For detailed information on the simulation, refer to the ā€˜Client Brief’ document provided.

Simulation Phases

This simulation is divided into the following phases:

Phase 1:

the student will lay the necessary groundwork for the design and production of the creative copy.
   
Phase 2: the student will design and produce the creative copy within the given time and budget.

Phase 1:

Phase 1 occurs from Tasks 1.1 to Task 2. In Phase 1, the student performs the following:

Ā·Ā review the Client Brief and understand client’s requirements

Ā· determine techniques to reflect the central idea

Ā· create a timesheet to monitor time and budget

Ā· identify legal and ethical requirements for copy production

Ā· select appropriate creative options to create an effective copy.

Phase 2:

Phase 2 occurs in Task 3. In Phase 2, the student performs the following:

Ā· using appropriate desktop publishing and graphics software, create a website ad copy that:

Ā· is in line with the requirements stipulated in the Client Brief

Ā· surpasses competitor’s copy

Ā· conforms to the organisation’s copywriting policy and procedures

Ā· meets time and budget requirements

Ā· proofread and finalise the copy.

Note that in Task 3.1, the student will email their draft copy to you for your review as their Creative Director. You will review their draft and email back to the student providing them with your feedback on their work. Your feedback must be high-level giving sufficient guidance to the student on what to improve, however, it must not be too specific instructing them how to make the necessary changes in a step-by-step manner.

 

 

For Assessor Use Only  
     

Appendix B: Creative Copy Check Sheet

The criteria below are the performance requirements that the student must demonstrate in their copy. Assessors, tick ā€˜S’ if the student demonstrates a particular performance requirement to a satisfactory level and ā€˜NYS’ if the student does not meet these performance requirements. Also, you are required to write comments on the quality of this evidence under the ā€˜Comments’ column. For the student’s overall performance in this task, tick ā€˜Satisfactory’ if the student satisfies all the criteria in the Creative Copy Check Sheet and ā€˜Not-Yet-Satisfactory’ if they do not.

It is important that you keep accurate records of the student’s work. In particular, you must keep the original of the completed Creative Copy Check Sheet and give a copy to the student to attach to the ā€˜Student Assessment Workbook’. This is essential as some students may lose the completed version of this check sheet, which means there will be no records of this assessment evidence.

Performance Requirements:

S NYS Comments
1.Ā Communicates the central idea
Ā· conveys the main theme clearly and accurately      
Ā· addresses macro and micro goals      
Ā· effectively applies the techniques chosen (in Task 1.1)      
Ā· shows an awareness of target consumer profile      
Ā· differentiates from the competitor’s copy      
2.Ā Communicates the product and brand image
2.1.Ā Brand image is displayed as:  
Ā· green conscious      
Ā· high quality      
Ā· trustworthy      
Ā· values its consumers      
2.2.Ā Product image is displayed as:  
Ā· premium quality      
Ā· unique      
Ā· worth buying      
Ā· environmental      
3.Ā Content
3.1.Ā Communicates the product’s main features and benefits:  
Ā· organic ingredients      
Ā· nature friendly      
Ā· free from harmful chemicals      
Ā· hydrating      
Ā· recovering      
Ā· rejuvenating      
Ā· anti-aging      
Ā· packed with revitalising ingredients      
Ā· suitable for all skin types      
3.2.Ā Includes the mandatory information and artwork:  
Ā· logo      
Ā· product tub      
Ā· brand symbol      
Ā· product features and benefits      
Ā· credible social proof      
3.3.Ā Layout, visual and textual elements:  
Ā· give simple and uncomplicated outlook      
Ā· have clear and consistent focus on the main idea      
Ā· grab viewer attention in a purposeful manner      
Ā· have logical links with each other      
Ā· show good foreground and background contrast      
Ā· show unity (overall harmony amongst all elements)      
Ā· maintain good proportion of space and margins      
Ā· do not look cluttered, balancing whitespace and elements      
Ā· are not distracting but informative      
Ā· incorporate font and choice of colour that match the tone      
Ā· have fonts that vary in size to differentiate the main points      
Ā· ensure scannability using skimmable text      
Ā· use variety in text (e.g. bold, italics, etc.) to create emphasis      
Ā· use typography that is readable and legible      
3.4.Ā Language and writing style:  
Ā· are aligned to target audience (formal)      
Ā· convey the message clearly and concisely      
Ā· are built of simple and short sentences and paragraphs      
Ā· incorporate vocabulary that is engaging and support the main idea      
Ā· provide subordinate ideas that support the main idea      
Ā· use plain English that ensures the copy is easy to understand      
Ā· avoid redundancy and verbosity      
Ā· avoid jargon      
Ā· stress the product’s unique selling proposition      
Ā· establish credibility injecting technical information      
Ā· avoid clichĆ©s, gimmicks and forced messages      
Ā· use words that connect with consumers      
Ā· use active voice      
Ā· free of typos, punctuation errors and grammar issues      
4.Ā Format and structure
Ā· employs professional and formal tone      
Ā· avoids subtlety      
Ā· resonates with the audience      
Ā· is broken down into coherent chunks      
Ā· includes a body copy that creates emotional appeals      
Ā· calls for action (learning more about the product and visiting store)      
5.Ā Legal and ethical requirements
5.1.Ā The copy is free from:  
Ā· false claims or misleading statements      
Ā· plagiarism      
Ā· discriminatory language      
Ā· inappropriate language      
Ā· obscenity in images      
Ā· therapeutic claims      
5.2.Ā The copy:  
Ā· includes truthful and accurate content      
Ā· does not use offensive language      
Ā· incorporates decent content      
Ā· avoids puffery      
Ā· shows fairness and responsibility to the competitor      
Ā· does not violate social integrity      
The student’s overall performance is Satisfactory Not-Yet-Satisfactory
Assessor Signature: Date:

 

 

 

  For Assessor Use Only  
     

 

Task Outcome Sheets

The Outcome Sheet below is the assessment questions and tasks for each of the assessment events that the student is required to complete. Assessors, tick ā€˜S’ if the student achieved a satisfactory outcome for an assessment task and ā€˜NYS’ if the student does not meet these requirements. Also, you are required to write comments on the quality of this evidence under the ā€˜Comments’ column. For your judgement on the student’s overall performance, tick ā€˜Satisfactory’ if the student achieves a satisfactory outcome for all of the tasks or ā€˜Not-Yet-Satisfactory’.

Assessment Event 1 – Knowledge Questions

Assessment Event 1 Knowledge Questions S NYS Comments
Question 1      
Question 2      
Question 3      
Question 4      
Question 5      
The student’s performance for Assessment Event 1 is Satisfactory Not-Yet-Satisfactory
Assessor Signature: Date:  

 

Assessment Event 2 – Simulation

Assessment Event 2 S NYS Comments
Task 1:

Analyse and Interpret Creative Brief

Sub Task 1.1      
  Sub Task 1.2      
  Sub Task 1.3      
  Sub Task 1.4      
Task 2:

Evaluate Creative Options

     
Task 3:

Prepare Persuasive Copy

Sub Task 3.1      
  Sub Task 3.2      
  Sub Task 3.3      
The student’s overall performance is Satisfactory Not-Yet-Satisfactory
Assessor Signature: Date:  

 

BSBWRT501 Student Assessment Workbook | Student ID: Page 15

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Strategic Marketing Plan

1) Ā Word count no limit but should not be less than 1000 words

2) References:Ā Chicago format

2)Ā Ā Search for Journal articles (2010 and above) Should not contain 2010 and below(refer to slide 13 for the references from those category)

3) Use “Strategic Marketing Group Assignment” Word docĀ to do point number 3 Market Analysis, Overall Market, Target Market Segmentation, Size & Growth Rate & Ā Unmet Needs of Target Market(include those highlighted) ( Those under the name Evon only)

4) Refer to “BUS350 – TMA 2019 UILG” printed Page 12 – 14 on the guide read carefully what is required

5) Refer to the slides read carefully as wellĀ especially Slide 9 & 10Ā thoseĀ word inĀ redĀ is a must to have

6) Follow the marking guide in “BUS350 – TMA 2019 UILG” and the slides

7) Have clear referencing and clear in-text citation(not in number kind)

8) There is a sample group assignment for you to reference

9) Take note of the language use

10) Ā Urkund Score cannot exceed 10%

 
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KINDLE FIRE CASE STUDY AND SWOT ANALYSIS — GRAD LEVEL

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Ā©2014 by the Kellogg School of Management at Northwestern University. This case was developed with support from the June 2010 graduates of the Executive MBA Program (EMP-78). This case was prepared by Professor Mohanbir Sawhney and Joseph R. Owens, PhD, and Pallavi Goodman. Cases are developed solely as the basis for class discussion. Some facts in the case have been altered for classroom discussion purposes. Cases are not intended to serve as endorsements, sources of primary data, or illustrations of effective or ineffective management. To order copies or request permission to reproduce materials, call 847.491.5400 or e-mail [email protected]. No part of this publication may be reproduced, stored in a retrieval system, used in a spreadsheet, or transmitted in any form or by any means—electronic, mechanical, photocopying, recording, or otherwise—without the permission of Kellogg Case Publishing.

REVISED APRIL 25, 2014

MOHANBIR SAWHNEY, JOSEPH R. OWENS, AND PALLAVI GOODMAN 5-413-751

Kindle Fire: Amazon’s Heated Battle for the Tablet Market

In January 2012, as Jeff Bezos reflected on the early sales success of Amazon’s Kindle Fire device, he was oddly troubled. In a little over three months, Amazon had sold nearly 5 million Kindle Fires and had captured half of the non-Apple tablet market share. Worldwide sales of e- books since the introduction of the Kindle product line had grown from less than 1 percent of all books sold to 15 percent in 2012. But Bezos was not ready to call it a success yet.

As he anticipated Apple’s imminent announcement of the third-generation iPad and its entry into the textbook market, Bezos knew he would have to refine his strategy for the Kindle Fire. In addition to Apple, new entrants such as Samsung, Motorola, and Google were beginning to enter the tablet market. Furthermore, Amazon’s long-time competitor in the E Ink1–based e-readers, Barnes & Noble, was now selling a device nearly identical to the Kindle Fire called the Nook. Bezos had told investors that the Kindle Fire was the key to Amazon’s future in the hardware space. The markets seemed to agree. Amazon stock had dropped $40 since the launch of the Kindle Fire. Analysts were concerned about the Kindle product line’s economics because Amazon was selling the hardware at cost, betting that content and commerce revenues would make up for the hardware price subsidy.

Bezos was wrestling with several issues with the Kindle Fire strategy. How should Amazon modify the positioning of the device in response to the new entrants in the tablet market since its launch? What was the most promising target market for the Kindle Fire, and how should it be positioned against competing products? How could Amazon turn the sales success of the Kindle Fire into business success? Would revenues and profits from commerce and content justify selling the hardware at cost? What were the likely responses of the competition?

History of Amazon

In 1999 Amazon accomplished its founding mission of becoming the world’s largest online bookstore. Two years later it turned its first profit. By 2011, just fifteen years after the company

 

1 E Ink was a specific proprietary type of electronic paper manufactured by E Ink Corporation and commonly used in mobile devices such as e-readers.

 

 

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started out of Jeff Bezos’s 400-square-foot garage, Amazon had 25 million square feet of warehouse space, reported $50 billion in revenues, and controlled 10 percent of the North American e-commerce market (Exhibit 1 and Exhibit 2). Competitors struggled to transition from brick-and-mortar–based businesses, but Amazon had repeatedly been at the forefront in the e-commerce market. From its pioneering use of user-based reviews for product comparisons to its development of 1-ClickĀ® ordering on its website, Amazon had continued to innovate. The company’s marketplace for third-party vendors, introduced in 1999, helped grow its selection rapidly.

Bezos’s 2010 annual letter to shareholders touted that ā€œinvention is in [Amazon’s] DNAā€ and that the long-term interests of its shareholders were perfectly aligned with the needs and wants of its customers. This focus on the long-term, however, with repeated innovation and thrusts into new markets, had created tension with the short-term interests of investors. The $45 fall in stock value between Q3 2011 and mid-Q1 2012 illustrated this tension between Amazon’s visionary investments and public market investors (Exhibit 3). Investors were doubtful of the margins Amazon would attain on the new streams of revenue that it was betting would flow through its new devices.

When Amazon began offering its spare server computing power and storage space as a service in 2006, the cloud-based information technology services field was still nascent. Under the rapidly expanding Amazon Web Services (AWS) division, Amazon rolled out its Elastic Compute Cloud (EC2) platform and the Simple Storage Service (S3). AWS was expected to make up just 3 percent of Amazon’s revenues by 2012, but AWS revenues were expected to almost triple in the following three years. Amazon called its ā€œservice-oriented architectureā€ the ā€œfundamental building abstractionā€ for all Amazon technologies.2

This focus on internal technology development had led to significant benefits for customers. Through the widely popular Amazon Prime express shipping subscription service, the company had built a customer base that was motivated to always shop at Amazon.com first before they went elsewhere. This service, which for an annual fee of $79 provided two-day express shipping on most items sold directly by Amazon, was made possible by the company’s logistics innovations. Through its marketplace partners, Amazon had outsourced its long-tail3 offerings while lowering its overhead. Without the technical advancements that made the logistical infrastructure run smoothly, customers would not have embraced these partners as a seamless extension of the Amazon brand. Additionally, the advanced algorithms driving the popular product recommendations that were integrated into every product page relied on sophisticated management of the underlying data infrastructure.

Amazon, since its founding, had a strong history of investing in emerging opportunities years ahead of revenues or profitability. It took the company six years to become profitable primarily because of its commitment to innovation. It was this commitment to innovation that drove Bezos to found the Lab126 hardware development group, which developed, in extreme secrecy, the future of e-commerce: the first successful e-reader, the Kindle.

 

2 Amazon.com, 2010 Letter to Shareholders. 3 Long tail, a term popularized by Chris Anderson in The Long Tail: Why the Future of Business Is Selling Less of More (New York: Hyperion, 2006), describes the retail strategy of selling a large number of unique items in relatively small quantities while selling fewer popular items in large quantities. Underpinning this strategy is the belief that the sum of many small markets is worth as much, if not more, than a few large markets.

 

 

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The Emergence of E-Readers

Although the attractive prospect of reading long-form texts digitally had led to many e- readers coming to market over the years, e-books had remained a niche curiosity. The original ā€œkiller app,ā€ the paper book, remained largely unchallenged until the advent of E Ink technology in 1997, which made reading possible in any light condition and with minimal power usage. The new crop of e-readers was born.

In 2007 the market leader was the Sony Reader. It could hold a library of up to one hundred books and was sold for $299–$399, depending on the accessory bundle. More than 10,000 titles were available for purchase at 75 to 85 percent of the retail price of a physical book. However, the Sony Reader was clunky to use and difficult to load content onto. Even the simple act of page-turning was slow and difficult to manage one-handed.

For more than a decade, various competitors offered iterations on this basic business model, and had sold a combined 400,000 units by the end of 2007. The Iliad by iRex, larger than the Sony Reader, was sold for $799 and could adequately display full-sized PDF files but had similar drawbacks in content acquisition for customers. Many early adopters also used the tiny screens of a variety of personal digital assistant devices such as the Palm III and V, as well as early- generation iPhones, to read e-books. Critics cited the slow and clunky operation and general poor usability of early e-readers as book replacements as well as the inadequate e-book distribution and promotion model as reasons that the e-book had yet to jump the chasm on the innovation curve.

The Amazon Kindle

In a highly successful product launch, Amazon introduced its own e-reader, the Kindle, in November 2007. The Kindle featured a QWERTY keyboard, an onboard dictionary, and access to Wikipedia. It had memory sufficient for two hundred titles, which was expandable via an SD card. Its grayscale, passively lit screen sipped battery and thus could last for more than a week. The stark white, 10.3-ounce device with a 6-inch E Ink screen was, at first glance, similar to competitors’ offerings. Under the hood, though, lay Whispernet, an EVDO cellular antenna with prepaid Sprint service that enabled wireless content delivery. At several points during the Kindle’s development, Bezos sent engineers back to the drawing board to make Whispernet work seamlessly. Bezos knew the key differentiator for the Kindle would be the capability for customers to discover, purchase, and sync content quickly and easily wherever they happened to be—sans computer.

The first-generation Kindle was priced competitively at $399. In addition to the more than 100,000 e-books offered by Amazon, customers could purchase subscriptions to nineteen newspapers (for $5 to $14 per month), sixteen magazines (for $1.25 to $3.49 per month), and hundreds of blogs (for $0.99 per month) that would self-update wirelessly. Customers were also provided with an e-mail address specific to their device that could be used to load and convert DOC and PDF file formats for viewing on the Kindle. This service cost 15 cents per megabyte.

Prior to the Kindle’s release, Amazon sent its representatives to knock on doors and cajole the major book publishers to digitize their offerings for its new e-reader. By bringing the publishers onboard, Amazon hoped to simplify the digital rights management (DRM) issues that

 

 

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were slowing the move toward electronic distribution of books. The company succeeded in convincing all of the ā€œBig Sixā€ publishers to rapidly accelerate their e-book development and to offer their content through the Amazon e-bookstore. Amazon subsequently shocked these publishers by subsidizing the price of new titles, many of which were offered at $9.99. This aggressive content pricing model, co-announced with the product launch, helped the first- generation Kindle sell out in the first three hours.

When Amazon started the development of its first-generation Kindle in 2006, the entire e- book market was only $3 million and less than 1 percent of all book sales in the United States. But both e-book reader device sales and revenues for e-book readers were projected to grow substantially in the ensuing years (Exhibit 4). Five years later, Amazon’s revenues from e-books were estimated to have topped $1 billion. Amazon had likely (it does not publicly release these metrics) sold a cumulative 30 million Kindle units.

As the Kindle product line evolved, Amazon continued to enhance the user experience, mostly by improving navigational features such as page-turn speed, battery life, and screen resolution, and by reducing the device’s weight and width (Exhibit 5). To expand the use cases for the Kindle product line, Amazon developed a larger version of the device. The $549 Kindle DX featured a 10-inch screen, making it the ideal e-reader for displaying figures and tables from textbooks or business documents.

As the e-reader market matured, price pressure on the devices slowly grew. Prior competitors such as Sony, iRex, and Hanlin released updated, cheaper devices, but importantly Barnes & Noble (B&N) jumped into the field as well (Exhibit 6). Each generation of the Kindle had focused on improving the user experience, lowering the cost, and growing the general adoption of Amazon e-books and other Amazon content. However, the newer entrants forced Amazon to begin to discount its devices considerably (Exhibit 7).

Amazon used its installed base4 of Kindle owners to push higher volumes of e-books, which had significantly lower distribution costs compared to physical books. The company’s profit per title fell from $13 for a new-release hardcover to a mere $3, but the increase in volume compensated for this loss. Given that the gross margin on each Kindle device was barely 5 percent and that the margin for each e-book was 20 to 30 percent, the Kindle devices were arguably a tool for getting the Amazon ecosystem of content into the hands of the customer.

With each e-book purchased from Amazon, customers were further committing themselves to the Amazon ecosystem, a completely unheard-of benefit in the traditional print space, where customers had complete independence in choosing a retailer. Bezos shrewdly knew that this lucrative customer base needed to be locked in before a competitor, such as B&N, could do the same.

 

4 Installed base refers to the total number of operating systems or products actually in use (i.e., that customers have installed), as opposed to market share, which only measures units sold. Analysts view the installed base as a more reliable measure of a platform’s popularity. See http://en.wikipedia.org/wiki/Installed_base (accessed January 16, 2014).

 

 

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E-Book Ecosystems

The advent of e-books meant that the traditional methods of book publishing and selling had to adapt to the digital platform. Book distributors began to develop entire ecosystems around the content, publication, and delivery of e-books. E-booksellers had to forge relationships with major publishers to make e-books available and added to their online portfolios. They developed proprietary platforms to adapt to this digital transition, which meant that competing platforms and ecosystems were controlled by the major players—primarily Amazon, followed by Apple and to a lesser extent, Google eBookstore and Barnes & Noble. However, the existence of competing e- book formats meant that digital books did not gain broad popularity until Amazon launched the Kindle e-reader. E-books could be purchased on the Amazon website or directly through the Kindle device via a 3G or Wi-Fi connection for e-book delivery. Amazon’s proprietary system was developed initially for its Kindle devices but was later adapted to the world of applications (apps) to encourage a cross-platform reading experience. Not only could books be read on the Kindle but e-books purchased on Amazon could now be read on different platforms, for instance, on iPads and iPhones, personal computers, and Android devices. (By contrast, books purchased from Apple could only be read on Apple devices.) To protect its ecosystem, however, Amazon made it difficult for books purchased outside of Amazon to be accessed on the Kindle device or through Kindle apps.

When Amazon started selling $9.99 e-books in 2007, the major book publishers were not happy to see the erosion of the agency-based pricing model they had enjoyed for more than a century. When approached by B&N in 2008 and Apple in 2009 to develop e-books for their new tablets, book publishers were eager to reassert their favored agency-based pricing model. B&N and Apple, as new entrants into the e-book market, were willing to cede pricing control back to the publishers in order to rapidly gain access to large content libraries for their devices. This move later forced Amazon to follow suit for e-book pricing in late 2009, though these actions launched several anti-trust, price-fixing lawsuits against the publishers and Apple. Consumer expectation of e-book pricing had shifted, however. For most popular titles, e-book prices remained at $9.99 ($13.99 for new releases), a far cry from the old $26 price of a hardcover book.

An area of contention among e-booksellers was competition for content sales through apps on smartphones, third-party e-readers, and computers. Amazon, Sony, Google, and B&N sold e- books through their own branded apps on all the major platforms (Exhibit 8). These apps reduced the switching costs for customers by making the DRM-protected content they purchased from a given retailer available on all their mobile devices and computers.

In July 2011 Apple announced that it would remove all applications from its App Store that did not use Apple’s ā€œin-app purchaseā€ platform. Critically, this platform directed a 30 percent cut of all sales to Apple. Apple’s change in policy set the stage for its announcement of its cross- platform iBooks App bundled with the iOS 5 release in October 2011. Apple’s counter-stroke was an attempt to lock out sales by competitors on its devices and to simultaneously offer its own partners’ content in their place.

Barnes & Noble E-Readers

In October 2009 B&N launched its Nook product line. The Nook, an E Ink e-reader similar to the Kindle, was B&N’s attempt to capitalize on Amazon’s success in e-books. The Nook featured

 

 

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a 6-inch E Ink screen, a seven-day battery life, Google’s Android operating system, native PDF support, and wireless access to the B&N e-bookstore through prepaid AT&T cellular service.

B&N tried to undercut the Amazon Kindle 2 (then priced at $359) by pricing the Nook at $259. A price war ensued. Second-generation Kindles fell from $359 in early 2009 to $259 after the Nook’s launch. As the two largest U.S. booksellers vied for the leading position, e-reader prices fell to less than $200 in 2010 and then to less than $100 in 2011 (for the simplest low-end devices from each product line). During this three-year period, sales of e-readers grew from less than 1 million units per year to more than 8 million in the United States. Both B&N and Amazon were focused on getting their customers to build their digital libraries as quickly as possible.

In contrast to Sony and other early Kindle competitors, B&N copied Amazon’s entire e- reader/e-book business model. B&N saw the writing on the wall and knew that its traditional book retailer business model was in major decline. It secured e-book deals with its publisher business partners, outsourced the development of the Nook’s hardware and firmware, and began a major push to drive Nook sales to the forefront of its physical as well as online stores. Employee retention and compensation metrics were amended to focus on Nook sales per shift, and company profits were divided into two categories: digital (profitable and growing for 2011) and traditional (unprofitable for 2011).

B&N provided one truly unique feature for all Nooks: customers had free Wi-Fi access to read the entire B&N library of e-books in its stores—a popular pastime given the Starbucks coffee shops located in each store. Subsequent versions of the Nook added touch support, more memory, a Wi-Fi–based Internet browser, and a ā€œbook-lendingā€ capability compatible with other Nook devices. With the launch of the Nook Color (November 2010) and the follow-on Nook Tablet (November 2011), B&N sought to differentiate as the bargain color e-reader. These devices featured access to third-party apps in the B&N Marketplace and support for multimedia content.

Apple Introduces the iPad

Apple ported its iPhone operating system (iOS) to the tablet form factor5 in April 2010 with the iPad. Its beautiful 11-inch touchscreen immediately drew in customers. The iPad was basically a larger version of the popular third-generation iPod Touch, except Apple had painstakingly removed the time lag between a touch and an onscreen response. The responsive, pointer-less operating system allowed for numerous use cases that far exceeded those offered on the tiny screen of an iPod or iPhone and put the Apple experience comfortably in the lap of the high-end customer.

The iPad immediately became one of the most sought-after devices of 2010. The $499 base model had 16GB of storage, which could be doubled for $100. An optional cellular antenna could be purchased for $139 with an a la carte monthly data service plan from AT&T Wireless. Most Apple stores sold out of all models the first day. Apple sold roughly 1 million units the first week, and users continued to wait in lines for new shipments for weeks after its launch. The iPad broke open the long-underserved tablet market, with 15 million sold by 2010 year-end. Critics were apt

 

5 In computing, ā€œform factorā€ refers to the specifications of the motherboard (e.g., the dimensions, they type of power supply, the location of mounting holes, etc.).

 

 

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to list a litany of features—such as a camera, USB port, and more—that the iPad ā€œlacked,ā€ but it became clear from the sales numbers alone that Apple had found the sweet spot for what consumers wanted in a device that sat squarely between smartphone and laptop.

In March 2011 Apple released the iPad 2, which upped the ante on its competitors. The iPad 2 had twice the processor speed (dual-core A5) of the original iPad. It was 15 percent lighter and 33 percent thinner and featured high-resolution front- and back-facing cameras to facilitate Apple’s new videoconferencing app, FaceTime. Apple had succeeded in creating a thriving tablet market, selling a total of 55 million iPads since the initial launch.

Tim Cook, Apple’s new CEO, became known for his fondness for pushing the idea that Apple’s slew of ā€œiDevicesā€ were ushering in the ā€œpost-PC eraā€ that the late Steve Jobs had envisioned. Bezos likely knew, as March 2012 approached, that Apple would soon update the iPad product line and further raise the bar on the premium tablet space. What likely most concerned him, though, was whether Apple would release an ā€œiPad miniā€ device at a lower price point to compete with the Kindle Fire. An iPad for less than $300 would definitely change the market environment for e-readers.

Google Android Tablets

The Open Handset Alliance was founded in 2006 to support the development of a unified mobile operating system experience for smartphones. Original equipment manufacturers (OEMs) Samsung, Motorola, LG, QUALCOMM, Broadcom, and HTC partnered with carriers T-Mobile and Sprint Nextel under Google’s leadership to develop the Android OS. These OEMs brought a slew of slick, touchscreen-based smartphones to market.

Apple’s success with porting the iPhone user experience (the iOS) to the tablet form factor attracted the Android OEMs. Android tablets such as Samsung’s line of Galaxy tablets and Motorola’s Xoom tablets came in several screen sizes (7-inch to 11-inch), packed sophisticated chipsets and graphics, came with high-resolution cameras, and had integrated Wi-Fi and even cellular antennae in some models. These tablets were sold through wireless carriers as well as via traditional electronics outlets at prices ranging from $499 to $799 depending on the feature set.

At the Consumer Electronics Show in January 2011, no less than twenty-one different tablets were introduced. This deluge, along with the release of the iPad 2, led to 2011 being dubbed the ā€œyear of the tablet.ā€6 Android tablet OEMs faced rapid commoditization of their devices, and competition for enhanced hardware specifications quickly led to shortened product life cycles, decreased profitability, and lower-than-predicted sales. Apple’s sale of 15 million (67 percent market share) iPads in Q4 2011 alone suggests that 2011 turned out to be the year of the iPad (Exhibit 9).

 

6 Nicholas Deleon, ā€œDeloitte: 2011 Will Be the Year of the Tablet (Say Goodbye to Your Laptop),ā€ TechCrunch, January 20, 2011.

 

 

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Introduction of the Kindle Fire

On September 28, 2011, Amazon previewed the Kindle Fire to the technical press in Seattle, Washington. The new tablet came equipped with a 7-inch, color LCD touchscreen, a Wi-Fi radio, a powerful dual-core processor, a fixed 8 GB of internal storage, and free cloud storage for content purchased from Amazon (Exhibit 10). The Kindle Fire came preloaded with a modified version of the Google Android mobile OS.

Bezos, in his announcement, referred to the Kindle Fire as ā€œthe culmination of the many things we’ve been doing for 15 years.ā€ He went on to say, ā€œWe asked ourselves, ā€˜Is there some way we can bring all of these things together [Amazon Web Services, Prime, Kindle, instant video streaming, and the app store] into a remarkable product offering customers would love?’ Yes, the answer is Amazon Kindle Fire.ā€7 By leveraging its considerable cloud-based resources, Amazon packed numerous unique features and services into its new product. The Kindle Fire featured Amazon Silk, a cloud-accelerated web browser. By handling much of the computation necessary to render webpages in the cloud, Amazon hoped that Amazon Silk would be a differentiator for the Kindle Fire.

The Kindle Fire came with tens of thousands of preapproved apps and games available for purchase and download through the Amazon app market. Amazon provided 18 million movies, TV shows, songs, and magazines available for streaming or download. Amazon Prime subscribers received streaming access to more than 13,000 movies and TV shows for free. All new Kindle Fires came with a free one-month subscription to Amazon Prime to encourage customer integration into the Amazon ecosystem of content, goods, and services.

The $199 Kindle Fire was rumored to have reached 50,000 preorders per day during the two- week preorder period. According to Anthony DiClemente from Barclays, Amazon sold 3– 5 million units of the Kindle Fire in Q4 2011, likely generating revenues in excess of $1 billion. The Kindle Fire was widely rumored to be sold at cost or even at a loss, given the relatively sophisticated specifications at such a discounted price. Amazon, true to form, simply stated in the Q4 2011 earnings report that the Kindle Fire was the bestselling, most wished for, and most gifted device of the holiday season.

Apple would be responding soon with its update of the iPad product line, and Bezos feared a ā€œmini-iPadā€ at a competitive price might strike hard at his initial success. The unproven Kindle Fire, despite its strong sales numbers, faced numerous challenges. Initial criticisms of the device focused on its sometimes lagging display, shorter-than-advertised battery life, and a number of smaller feature-set complaints. Although a firmware update would resolve the first two of these problems, the feature-set complaints would have to wait until a new version of the Kindle Fire was released.

Customer Segments for the Kindle Fire

The initial Kindle Fire launch had broad aims in an effort to probe the market and learn which use cases and customer segments would respond most favorably to the new product. Although

 

7 Steven Levy, ā€œJeff Bezos Owns the Web in More Ways Than You Think,ā€ Wired, November 13, 2011; Shara Tibken, ā€œAmazon Challenges iPad With ā€˜Fire,ā€™ā€ Wall Street Journal, September 29, 2011.

 

 

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this ā€œprobe-and-learnā€ process was acceptable at the start, the time had come for Amazon to be more focused in defining its target audience. There were several possible target segments the company could consider.

MEDIA JUNKIES

Amazon already attracted the most avid consumers of media because of its bargain prices for content and its huge selection. The ā€œmedia junkieā€ market had evolved in the digital age to rabidly consume multimedia content from numerous channels, often simultaneously. Indeed, one of the primary use cases for tablets, according to Nielsen, was in front of the TV.8 As all content transitioned to digital, the case for targeting these most avid of users grew stronger. U.S. consumers were expected to purchase more music digitally than on CD by 2012. Additionally, DVD sales had fallen more than 20 percent in 2011, whereas streaming had risen by 33 percent. Subscription streaming services such as Hulu and Netflix for video and Spotify for audio were attracting millions of customers. Amazon was primed to offer an alternative to these, but only if they could get users to switch.

Media junkies were quite price conscious because of the scale of their purchasing. Amazon fit this niche well because of its extremely competitive pricing on its music, video, and reading content. The Kindle Fire platform was ideally suited for downloading popular content through the Prime Instant streaming feature and for purchasing the more obscure titles that the long tail demanded through the massive Amazon store.

For customers who desired having tens of thousands of books, magazines, music, and movies available in one affordable handheld device, the Kindle Fire would be ideal. But would the demanding tastes of these customers mean that they would take a pass on the Kindle Fire’s smaller screen? For most media junkies, an ideal tablet would need to have a high-resolution screen and a superior graphics chipset. Would these price-sensitive customers gorge on the free content through the Prime Instant service and pass up purchasing Amazon content? Additionally, would Kindle Fire customers increase their content consumption after purchasing a Kindle, or were they at their limit already?

CHILDREN AND MOBILE GAMERS

Children were a relatively untapped market for tablets. Handheld gaming devices had been around for decades, but few computers or devices had been created specifically to appeal to children. Although children were not favorable targets for the commerce aspects of Amazon, nor were they able to purchase apps on their own, they did heavily influence the purchasing behavior of their parents. U.S. parents reported that almost 30 percent of the apps on their tablets and smartphones were downloaded for their children. Nielsen reported that in 70 percent of U.S. households that owned tablets, children under the age of 12 used them frequently, and the primary children’s use was to play games.9

Handheld gaming on tablets and smartphones represented the fastest-growing gaming market for 2009–2011. At more than $20 billion in the United States and $57 billion globally in 2009, the

 

8 Nielsen Newswire, ā€œIn the U.S., Tablets Are TV Buddies While eReaders Make Great Bedfellows,ā€ May 19, 2011, http://www.nielsen.com/us/en/newswire/2011/in-the-u-s-tablets-are-tv-buddies-while-ereaders-make-great-bedfellows.html. 9 Nielsen Newswire, ā€œAmerican Families See Tablets As Playmate, Teacher and Babysitter,ā€ February 16, 2012, http://www.nielsen.com/us/en/newswire/2012/american-families-see-tablets-as-playmate-teacher-and-babysitter.html.

 

 

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gaming market was a high-value prize and an untapped market for Amazon. By the end of 2011, there were 15 billion apps downloaded from the Apple App Store and 10 billion from the Android Market, later known as Google Play. Games made up more than 25 percent of all available apps and occupied 30 percent of the top one hundred apps in both stores. Many parents, however, still balked at giving children their own $600 iPad or even a low-end $500 Android tablet that they could lose or break.

At less than $200, the Kindle Fire was considerably cheaper than other tablets. The screen was made of Gorilla GlassĀ® and its smaller size made it more rugged than the iPad and some of the larger Android tablets. This combination made it an attractive tablet for children. The addition of a long-lasting battery and a small, hand-friendly, tactile rubberized coating was enough to push the product to the top of many 2011 Christmas lists.

However, the Kindle Fire’s slower processor, smaller screen, and limited memory capacity might weaken its perception as a gaming platform. Third-party developers might be hesitant to create special versions of their games expressly for the Kindle Fire. These developers would need to be managed to ensure adequate availability of hit titles in the Amazon App Marketplace.

HIGHER EDUCATION

The higher education industry made an attractive market for transition to digital books. Amazon had served the education market for years through its new and used textbook businesses but had failed to transition these customers to digital. Amazon’s first attempt, the 10-inch-screen Kindle DX, had failed to catch on broadly, likely because of its high price point ($459) and its grayscale screen. By 2012, the more than $10 billion new-textbook market had remained relatively untapped by digital alternatives, despite these customers being the largest consumers of Amazon’s core service: books.

To succeed in this market, Amazon would need to create a complex set of business-to- business partnerships with colleges, universities, and their bookstores to manage the timely distribution and updating of e-texts. Because students tended to be tech-savvy, adoption of the devices was likely, if adequate content could be made available. And the value proposition of reduced-price textbooks was compelling for students, who craved bargains on their expensive yearly book bills.

Textbooks were exceedingly expensive compared to trade books. Publishers traditionally faced inflated costs as a result of limited-run productions for many texts, and these additional costs were usually passed on to customers. These books also tended to be considerably larger and contained more glossy photos, figures, and equations than the average book. The high costs, in addition to the price sensitivity of students for textbooks, had led to the explosion of the online secondary market, from which Amazon had profited greatly.

College students faced with heavy backpacks and steep prices for their textbooks were very interested in reducing the load both physically and financially. Amazon was the largest online seller of new textbooks and thus had a large customer base to advertise to. This made the textbook market very attractive to Amazon, which could leverage its national brand and partnerships with publishers to bring e-textbooks to the entire U.S. market quickly if the use case could be proven.

By 2011, B&N had partnered with several universities to offer its Nook Color™ e-reader to students through campus bookstores. Titles on the Nook were 30 to 50 percent cheaper than their

 

 

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paper alternatives. These titles were also not transferable, which avoided the growing problem— for publishers, at least—of the secondary used market for textbooks. This limited trial by B&N represented a considerable threat to Amazon in this emerging market.

However, bringing textbooks to the Kindle Fire would mean updating its file formats significantly. Digital textbooks meant Amazon had to develop the capability to handle large figure and graph display, robust highlighting and annotation features, and complex equation display (which was unavailable in the current MOBI format). The smaller screen was also a significant hindrance to publishers; their offerings would need to be redesigned for the Kindle Fire. Some publishers had shown willingness to do this with B&N Nook and on the iPad’s iTextbook platform, but Amazon had yet to finalize such deals. The iTextbook platform, though still nascent, showed what the premium product in the market might look like. Amazon had yet to figure out how to move a bargain product into this space.

Positioning the Kindle Fire

Multiple new entrants had converged on the tablet and e-reader markets at which the Kindle Fire was targeted. These direct competitors were touted by analysts as direct responses to Kindle’s explosive growth in the e-book and periodical market and to the growing reading and web-surfing habits of the U.S. population in general. By Q4 2011, nearly 25 percent of U.S. Internet users were estimated to have some sort of tablet device (Exhibit 11). Analysts wondered if the Kindle Fire could be a credible low-cost entrant into the tablet market. Steven Levy of Wired magazine wrote that ā€œthe long-awaited Amazon tablet . . . represents [Bezos’s] most ambitious leap into the hearts, minds, and wallets of millions of consumers.ā€10

Amazon faced competition on numerous fronts. One of its most promising businesses, selling e-books to Kindle users, was now being attacked head-on by Apple’s iBooks and Newsstand apps, in addition to the stiff e-book competition it had received from B&N for the past three years. B&N’s Nook tablet was also beginning to push into the education market at universities and colleges in the United States. The mobile gaming market was in renaissance, with gesture- and gravity-based short-play games thriving on tablets and smartphones. And media junkies had a plethora of choices in buying and consuming content. For Amazon content alone, they could now find, purchase, and consume content on nearly three hundred devices.

POSITIONING THE KINDLE FIRE VERSUS THE iPAD

The tablet market was dominated by the first-mover iPad (2010) and subsequent iPad 2 (2011) offerings from Apple. These feature-rich devices succeeded where other tablets had failed by expertly walking the tight line between smartphone and laptop. Apple’s strategy was to teach its customer base to use the iOS on the iPhone and iPod Touch and then graduate them to a larger-screen device that was more fun and convenient to browse and play on. The couch (70 percent) and the bed (57 percent) were the most popular places for tablet use, according to Nielsen Research.11 Analysts, of course, began comparing the Kindle Fire to the iPad even before

 

10 Levy, ā€œJeff Bezos Owns the Web in More Ways Than You Think.ā€ 11 Nielsen Newswire, ā€œIn the U.S., Tablets Are TV Buddies.ā€

 

 

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it was announced. Would the Kindle Fire be an ā€œiPad killer?ā€ Or, as one headline read, ā€œHelp! Santa can’t afford the iPad. Will the Kindle Fire do?ā€12

On specifications, the iPad was a multipurpose, Swiss army knife–type device. Importantly, however, it was three to four times as expensive as a Kindle Fire, as well as quite a bit larger and heavier. Amazon had specifically created the Kindle Fire to be an affordable consumption device. Would the minimum viable product13 beat out the feature-packed iPad? Or would consumers become frustrated by its slower speed, smaller memory, and more limited selection of apps? Both devices were exceptional at consuming streaming video, web surfing, and general reading. So would customers be satisfied with these uses, or would the Kindle Fire’s limitations irk them over time and lead them to opt for the iPad?

A battlefield on which Amazon was better equipped to fight was providing a wide and deep content catalog. Both Apple and Amazon were maneuvering to rapidly cement partnerships with content providers in the hopes of attracting customers by having the largest catalog of media. Early in 2012, Amazon had inked a deal with Viacom to provide a large number of videos through its Prime Instant Video service. This deal, combined with existing partnerships with the major networks, made the Amazon TV offerings significantly richer than those available on competing products.

POSITIONING THE KINDLE F IRE VERSUS THE NOOK TABLET

The Nook and the Kindle Fire were extremely similar (from the hardware point of view) and were following the same pricing strategy as the earlier e-readers. Bezos worried that another price war might ensue. B&N had pursued the additional strategy of offering subsidies for Nooks at the point of sale if subscriptions were purchased with the device. For example, a $19.99 per month subscription to the New York Times netted the customer a $100 subsidy on the purchase of any Nook product, which made the Nook tablet only $99. Bezos knew he could make this play as well but remained hesitant to give the appearance that Amazon was willing to ā€œgive awayā€ its Kindles. He also knew that while B&N had posted a $6.6 million loss ($0.17 per share) for Q2 2011, it had increased its recently consolidated Nook business revenue 85 percent to $220 million in the same quarter.

Although the devices could not differentiate on hardware specifications, they did offer very different user experiences. Amazon’s focus was on its own content and services, whereas B&N focused on providing its own text-based content and allowing third parties to deliver the rest. The Hulu and Netflix apps came preinstalled on the Nook, along with the Google media store, Google Play. However, Amazon differentiated with its Silk web browser, which enhanced the experience of browsing on a limited device. Amazon also had numerous cloud-based services such as the WhispersyncĀ® feature, which kept the user’s place in a given book or video across all Amazon apps.

POSITIONING THE KINDLE FIRE VERSUS KINDLE E-READER

The traditional Kindle e-reader still maintained strong appeal with avid readers for its ability to wirelessly purchase new books and magazines and its eye-pleasing E Ink screen, as well as its

 

12 Marguerite Reardon, ā€œHelp! Santa Can’t Afford the iPad. Will the Kindle Fire Do?ā€ CNET, November 25, 2011. 13 Coined by Frank Robinson and popularized by Eric Reis, a ā€œminimum viable productā€ refers to an iterative process that allows a product to be launched with basic features.

 

 

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long battery life. But for these same users the Kindle faced stiff competition from newer tablets to be customers’ ā€œthird deviceā€ (the first and second being a laptop and a smartphone). For avid readers, the new Kindle Touch ($99 for the option with advertising ā€œoffersā€ on its lock screen) was an optimum device, but these same users might consider consolidating their devices if a strong reading experience was offered on one of the competing tablets and if they could get the battery life they wanted. The youngest and often most tech-savvy student customers were already reading more and more online, eschewing traditional reference sources in favor of wikis and blogs. A web-enabled tablet offered a strong use case for these customers, as did an electronic medium for their books for class.

Would the Kindle Fire cut into the business of selling Kindles? Bezos believed that customers should want to buy both.14 His optimism that both the Kindle Fire and the Kindle would find places in his customers’ lives seemed to signal that these devices might continue to get cheaper and cheaper. Given the tough competition for e-readers from tablets and larger-screen smartphones, the future profitability of dedicated e-readers was uncertain at best. Bezos was betting that the integration of the Kindle e-book ecosystem via the Kindle family of apps would maintain value for these special-purpose devices.

Pricing and Business Model Decisions

The Kindle Fire was no exception to Amazon’s traditional one-two punch of low margins combined with large-scale delivery. This model had succeeded for the company in market after market. Bezos wondered, however, whether the revenue streams from the Kindle Fire would be sufficient to meet the considerable costs of serving up the bevy of content that users desired. Particularly important and difficult to find was the sweet spot between the breadth of content sufficient to attract customers and a bloated library with excessive licensing costs. The success of the Kindle Fire business model would hinge on the demand for digital content, incremental online commerce sales, and price sensitivity for hardware. Bezos was betting that the integration of Amazon content, cloud-based storage, and the convenience of Amazon Prime all at a bargain price would prove to be a compelling proposition and profitable business model.

HARDWARE REVENUES

At $199, the Kindle Fire was well positioned to undercut the tablets currently on the market. For the first run of production, the components and labor were slated to be near $200. This meant that Amazon was selling the Kindle Fire at cost as a loss leader for content sales. Many analysts wondered if Amazon should have gone even lower with the Kindle Fire’s hardware price in order to emphasize the ā€œrazor-razorbladeā€ model15 that Amazon was betting on. They pointed to the cellphone market, in which devices such as the iPhone (which cost more than $600) were subsidized heavily by wireless carriers in return for a long-term subscription contract. Was it possible for Amazon to offer the Kindle Fire for $149, $99, or even free, in return for customers signing up for an enhanced version of its Amazon Prime subscription service that would require them to commit to purchasing a minimum amount of content and products over a two-year

 

14 Lance Ulanoff, ā€œAmazon CEO Jeff Bezos: Why Is This Man Smiling?ā€ Mashable, September 24, 2013, http://mashable.com/ 2013/09/25/jeff-bezos-interview. 15 In this model, dependent goods are sold at different prices. One product is sold at a discount, while another is sold at a considerably higher price to make up for the loss.

 

 

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period? Other experts felt that Amazon was leaving money on the table because the Kindle Fire was already priced so far below the iPad.

CONTENT REVENUES

As more and more music, movies, and books were consumed in digital form, online content revenues were expected to be a key driver of revenues from Kindle Fire customers.

ABI Research estimated that an average Kindle Fire customer would buy about $10 per month in content (music and movies), which would increase 10 percent annually over the expected two-year life of the Kindle Fire. Amazon netted a gross margin of 30 percent on content sales. An RBC Capital survey of Kindle owners found that the average customer purchased three e-books per quarter, at an average selling price of $10 per book. Amazon’s gross margin for e- books was 20 percent. Amazon expected a 10 percent increase in e-book purchases on an annual basis.

COMMERCE REVENUES

Amazon had boasted to its investors that Kindle owners purchased 3.3 times as many e-books than print books once they switched to digital. Bezos hoped that the Kindle Fire would have a similar effect on sales of physical products sold on its website. Customers in the post-PC era would increasingly be making their purchases based on convenience. The Kindle Fire offered a pleasing color video–capable device ideally suited to shopping from the couch. The dedicated Amazon device, combined with the convenience of Amazon Prime, would likely motivate customers to increase the proportion of online purchases they made through Amazon. The average Kindle Fire customer was expected to purchase about $50 per month in incremental products and services from Amazon, at an average gross margin of 20 percent. Amazon estimated that these commerce purchases would increase by 5 percent per year.

ADVERTISING REVENUES Amazon had built advertising for its retail goods and services into the pricing model for the

newest generation of Kindle e-readers. The Kindle device became an omnipresent billboard for Amazon to serve ads to its customers. Millennial Media, the second-largest mobile ad network in the United States, reported at the end of 2011 that the Kindle Fire was seeing a daily increase of 19 percent in overall ad impressions on its network. That translated to a monthly rate of about 300 million advertising impressions. Amazon could expect an average CPM (revenue per thousand impressions) of about $10. However, users could pay $30 to permanently dismiss all the ads on the Kindle Fire. An estimated 20 percent of owners were expected to choose this option. Advertising impressions would decrease in subsequent years, but the downward pressure on CPM would offset the increase in installed base so that advertising revenues would essentially remain flat in subsequent years.

APPLICATION MARKETPLACE REVENUES

The Amazon App Marketplace, a curated version of the Android Market, ensured an optimum experience for its customers. App purchases promised to be a significant source of revenue for Amazon. In a span of just eighteen months, the Amazon AppStore had grown to 50,000 apps after it debuted in March 2011 with just 4,000. Amazon took a 30 percent cut of the sales price (the same percentage Google and Apple took from their own app stores). It was estimated that the Amazon AppStore had logged about 180 million downloads over the first

 

 

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eighteen months. Research also indicated that about 10 percent of apps were paid apps, and the average paid app generated $1.29 in the Amazon AppStore. App revenue was estimated to increase by 20 percent each year.

Conclusion

Amazon was betting that the end-to-end Kindle Fire experience was superior to buying from Amazon on the iPad. Apple, on the other hand, was betting that the Kindle Fire was not quite good enough. As Bezos considered the myriad announcements by competitors likely to come in the following few weeks, he still wondered whether his gamble on the tablet market would be a success. By reaching further into the hardware market, he had exposed Amazon to the grueling product cycles and often-fickle whims of technology customers. Would these customers appreciate the Kindle Fire’s value proposition? Who should be the core target for the product? Would the Kindle Fire deliver on the various revenue streams laid out for it? Or would customers just load up on the free content and drain Amazon’s servers on subsidized hardware? As the embodiment of the Amazon experience, the Kindle Fire was particularly well-situated to signal to investors the future growth prospects of Amazon’s businesses.

 

 

 

 

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Exhibit 1: Amazon Financials Year Ended December 31, 2011 2010 2009 NET SALES ($ in millions)

North America Media 7,959 6,881 5,964 Electronics and other general merchandise 17,315 10,998 6,314 Othera 1,431 828 550

Total North America 26,705 18,707 12,828 International

Media 9,820 8,007 6,810 Electronics and other general merchandise 11,397 7,365 4,768 Othera 155 125 103

Total international 21,372 15,497 11,681 Consolidated

Media 17,779 14,888 12,774 Electronics and other general merchandise 28,712 18,363 11,082 Othera 1,586 953 653

Total consolidated 48,077 34,204 24,509 YEAR-OVER-YEAR PERCENTAGE GROWTH (%)

North America Media 16 15 11 Electronics and other general merchandise 57 74 43 Other 73 50 23

Total North America 43 46 25 International

Media 23 18 19 Electronics and other general merchandise 55 54 53 Other 24 22 9

Total international 38 33 31 Consolidated

Media 19 17 15 Electronics and other general merchandise 56 66 47 Other 66 46 20

Total consolidated 41 40 28 YEAR-OVER-YEAR PERCENTAGE GROWTH EXCLUDING THE EFFECT OF EXCHANGE RATES (%)

International Media 16 18 20 Electronics and other general merchandise 47 57 56 Other 18 24 19

Total international 31 34 33 Consolidated

Media 16 16 16 Electronics and other general merchandise 53 67 48 Other 66 46 22

Total consolidated 37 40 29 . . . . . .

 

 

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Exhibit 1 (continued) Year Ended December 31, 2011 2010 2009 CONSOLIDATED NET SALES MIX (%)

Media 37 43 52 Electronics and other general merchandise 60 54 45 Other 3 3 3

Total consolidated 100 100 100 a Includes non-retail activities, such as Amazon Web Services, miscellaneous marketing and promotional activities, other seller sites, and Amazon’s co-branded credit card agreements.

 

 

 

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AMAZON.COM ANNOUNCES FOURTH QUARTER SALES UP 35% TO $17.43 BILLION; KINDLE DEVICE SALES NEARLY TRIPLE DURING THE HOLIDAYS

SEATTLE—(BUSINESS WIRE)—January 31, 2012—Amazon.com, Inc. (NASDAQ: AMZN) today announced financial results for its fourth quarter ended December 31, 2011. Operating cash flow increased 12% to $3.90 billion for the trailing twelve months, compared with $3.50 billion for the trailing twelve months ended December 31, 2010. Free cash flow decreased 17% to $2.09 billion for the trailing twelve months, compared with $2.52 billion for the trailing twelve months ended December 31, 2010. Common shares outstanding plus shares underlying stock-based awards totaled 468 million on December 31, 2011, compared with 465 million a year ago. Net sales increased 35% to $17.43 billion in the fourth quarter, compared with $12.95 billion in fourth quarter 2010. Excluding the $101 million favorable impact from year-over-year changes in foreign exchange rates throughout the quarter, net sales would have grown 34% compared with fourth quarter 2010. Operating income was $260 million in the fourth quarter, compared with $474 million in fourth quarter 2010. The favorable impact from year-over-year changes in foreign exchange rates throughout the quarter on operating income was $5 million. Net income decreased 58% to $177 million in the fourth quarter, or $0.38 per diluted share, compared with net income of $416 million, or $0.91 per diluted share, in fourth quarter 2010. ā€œWe are grateful to the millions of customers who purchased the Kindle Fire and Kindle e-reader devices this holiday season, making Kindle our bestselling product across both the U.S. and Europe,ā€ said Jeff Bezos, founder and CEO of Amazon.com. ā€œOur millions of third-party sellers had a tremendous holiday season with 65% unit growth and now represent 36% of total units sold.ā€ Full Year 2011 Net sales increased 41% to $48.08 billion, compared with $34.20 billion in 2010. Excluding the $1.09 billion favorable impact from year-over-year changes in foreign exchange rates throughout the year, net sales would have grown 37% compared with 2010. Operating income decreased 39% to $862 million, compared with $1.41 billion in 2010. The favorable impact from year-over-year changes in foreign exchange rates throughout the year on operating income was $53 million. Net income decreased 45% to $631 million in 2011, or $1.37 per diluted share, compared with net income of $1.15 billion, or $2.53 per diluted share, in 2010.

Exhibit 2: Amazon Earnings Report

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Source: ā€œAmazon.com Announces Fourth Quarter Sales Up 35% to $17.43 Billion; Kindle Device Sales Nearly Triple During the Holidays,ā€ Amazon.com press release, December 31, 2011.

 

 

 

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Exhibit 3: Amazon Stock Price Following the Kindle Fire Announcement

 

 

 

 

 

 

 

 

 

Exhibit 4: E-Book Market Growth and Projection

 

 

 

 

 

 

 

 

 

 

 

 

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Exhibit 5: The Evolution of Amazon’s Kindle Product Line

 

 

 

 

 

 

 

 

 

 

Exhibit 6: E-Book Universe (circa 2009)

 

 

 

 

 

 

 

 

 

 

 

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Exhibit 7: Kindle Price History

 

 

Exhibit 8: Amazon Kindle Cross-Platform Ecosystem

 

 

 

 

 

 

Kindleļæ½6ā€ļæ½Eļæ½Readerļæ½Priceļæ½Overļæ½Time

 

 

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Exhibit 9: Global Top Five Media Tablet Brands, Q4 2011 (Ranking by Global Unit Shipments)

Q4 ’11 Rank

2011 Rank Brand

Q4 ’11 Shipments (in millions)

Q4 ’11 Share

(%)

Q3 ’11 Shipments (in millions)

Q3 ’11 Share

(%)

Q3–Q4 Change

(%)

2011 Shipments (in millions)

2011 Share

(%) 1 1 Apple 15,430 57 11,123 64 39 40,493 62 2 3 Amazon 3,885 14 0 0 NA 3,885 6 3 2 Samsung 2,140 8 1,850 11 16 6,110 9 4 4 B&N 1,920 7 750 4 156 3,250 5 5 5 Asus 612 2 801 5 -24 2,063 3 Others 3,122 12 2,917 17 7 9,389 14 Total 27,109 100 17,441 100 194 65,190 100

 

Exhibit 10: Nook, Fire, and iPad Compared

 

 

 

 

 

 

 

 

 

 

 

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Exhibit 11: U.S. Tablet Sales and Forecast, 2011–2016

 

 

 

 

 

 

 

 

 

 

 

 

 

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