Question

Why Amazon company with their kindle touch using different princing strategies?

Answer 1

Pricing strategies: Pricing strategies are used to maximise profitability, defend an existing market from new entrants, to increase the market share or enter a new market. The pricing strategies play an important role in impacting the customers decision on whether they should purchase the product or not.

The Kindle e-reader was Amazon’s first hardware product, and very successful too, as it offers exclusive functionality, and it is competitively priced. Amazon’s first Kindles cost several hundred dollars, prices quickly dropped, especially as Amazon began selling the devices at, near, or even below cost.

Amazon certainly wants to increase its market share in the digital content in the face of growing competition from other companies like Apple and sony (the two have been in a price war to increase their sales) by not only reducing its prices but also improving its services.

In order to serve to the scattered base of readers, Amazon has introduced varieties in Kindle like;
•Kindle Paper white
•Kindle Oasis
•Kindle Touch
•Kindle Keyboard

The varied versions come with varied pricing.

Amazon has a reputation as a low cost retailer.The prices are so low that Amazon’s prices often cut into its own costs, providing a notoriously low profit margin that is pushing retailers out of the market.

Amazon's strategy is simple -- it wanted to make money when people used its products, not when they bought them.

Amazon uses following price strategies:
1.Market-oriented pricing strategy - it makes selling prices more competitive, affordable and attractive to target consumers.
2.Price discrimination strategy - It involves setting different prices for the same product through its different websites. For instance, the company’s prices for the same products are different between the United States and the United Kingdom. It enables the company to adjust its prices based on national market conditions, perceived value of products, and consumer preferences and expectations.
3.Value-based pricing strategy - It involves price levels based on product value, considering consumers’ perception of value.

Thus, the company’s marketing mix reflects flexibility in adjusting to current market prices. And it helps it to keep its prices competitive on real time basis.