Assignment Task

A. COMPANY BACKGROUND

History

Kobo was founded in 2009 and initially owned 58% by Indigo Books and Music. The first Kobo eReader was sold in 2010 (Euromonitor, 2012, p 1).

In 2012, Kobo was acquired by Rakuten Inc., the largest e-commerce company in Japan. Kobo`s headquarters are in Toronto, ON (Euromonitor, 2012, p 1).

Kobo manufactures its own brand of eReaders and has also developed tablets and applications for iPad and Android platforms (Euromonitor, 2012, p 1). The name "Kobo" is an anagram for the word `book` (Creative Keys, 2013).

Size and Growth

Kobo currently has 14.5 million registered users ("Kobo bucks softening", 2013, para 2). While most users are based in Canada, about 15% are in the United States (kobocafe, 2013, "Kobo`s bet to double down").

Kobo estimates a 45% share of the Canadian eReader market (Kozlowski, 2013, para 1) and a 20% share of the global eReader market (Hoffelder, 2013, para 2), (kobocafe, 2013, "Kobo brings the joy of ereading"). Kobo is responsible for nearly 50% of digital ebook sales in Canada and about 20% in other markets (kobocafe, 2013, "Kobo`s bet to double down").

The eReader market is estimated to be worth $250 billion globally (kobocafe, 2013, "Kobo`s bet to double down"). Kobo`s sales were estimated at $93 million in 2011 (PrivCo, 2013). Sales have been rapidly growing, with Q1 2013 sales up 145% compared to the same period in 2012 (kobocafe, 2013, "Kobo`s bet to double down").

B. SEGMENTATION CHART

The primary segment for Kobo is the Passionate Reader. This group values `reading` functionality and applications over other cutting-edge technologies. They seek a wide range of accessible and easy-to-read material and value connection with other readers. Reading is a serious hobby for them, and they spend a lot of time doing it (World Newsmedia Network, 2012, p 85).

The Parental Educators segment may prefer a tablet, offering greater functionality, child-friendly features, and interesting learning applications.

C. 4 P`S

Product (Kobo, 2013)

Kobo offers a variety of eReaders with different sizes, functionalities, and prices (Purewal, 2013, para 1). See the chart below for a brief description of each device ("E-Book Readers", 2013), (Kobo, 2013, "Technical Specs"):

• Kobo sells two tablet models: Kobo Arc and Kobo Vox. See the chart below for a brief description of each (Kobo, 2013, Technical Specs).
• Free Apps: Kobo provides free applications for Apple products, Android, Blackberry, and PC/Mac devices to enable the reading of Kobo ebooks (Kobo, 2013, Free Apps).
• Huge Selection of Books: Over 3 million Ebooks are available for Kobo (Kobocafe, 2013, "Kobo brings the joy of reading").
• Accessories: Kobo sells accessories such as skins, covers, sleeves, and a variety of power sources (Kobo, 2013, Accessories).
• Warranty: Kobo provides a 1-year Standard Limited Warranty on all devices (Kobo, 2013, Help).
• Information and Support: Kobo`s website offers educational content and a video on the benefits of eReaders (Kobo, 2013, What is eReading?).
• Recycling: Kobo has an eRecycling program for the safe disposal of old eReaders and tablets (Kobo, 2013, eRecycling Program).
• Printing: E Ink print on paper reading environment simulates the experience of reading a physical book (Kobo, 2013, Kobo Touch overview).
• Storage: Kobo eReaders can carry over 1000 books on one device (Kobo, 2013, EReaders).

Price

Kobo offers a range of devices at various price points reflecting their functionality (Best Buy, 2013). Kobo generally offers good value compared to the competition (Euromonitor, 2012, p 2).

• Kobo provides a manufacturer`s suggested retail price, but retailers can set their own prices and discounts (Kobo, 2013, eReaders).
• Ebook prices range from free to $19.99 (Kobo, 2013, eBooks).
• Device prices range from $39.99 for the more limited functionality of the Mini to $299 for the Arc tablet.

Place

Kobo is distributed in over 17,600 retail outlets worldwide (kobocafe, 2013, "Kobo`s bet to double down"). North American retailers include Best Buy, Indigo-Chapters, Toys R Us, Target, Walmart, Future Shop, Staples, and The Source (kobocafe, 2013, "Kobo Announces Family of Ereaders").

• Kobo has a partnership with the American Booksellers Association and its membership sellers (kobocafe, 2013, "Kobo Announces Family of Ereaders").
• Kobo`s rapid global growth is driven by retail partnerships worldwide (kobocafe, 2013, "Kobo`s bet to double down").
• Kobo eReaders are sold online from kobo.com to Canada and the United States (kobocafe, 2013, "Kobo Announces Family of Ereaders").
• Ebooks are sold in over 190 countries (kobocafe, 2013, "Kobo`s bet to double down").
• EReaders are sold in Canada, France, Austria, Belgium, Italy, Germany, Spain, Portugal, UK, Netherlands, New Zealand, Australia, Japan, Brazil, and South Africa (kobo, 2013, Where to buy).

Promotion

Kobo Pulse is a social eReader application encouraging interaction among Kobo readers (kobo, 2013, "A New World"). Kobo Reading Life tracks reading habits and assigns award points for achievements (kobo, 2013, "A New World").

• Television commercials launched in May 2013 targeted mothers reading to their children and passionate readers. Kobo tripled their advertising spend for these new advertisements (Krashinisky, 2013, para 2).
• Kobo Writing Life scholarship awards tuition for three aspiring writers to writing courses (kobocafe, 2013, "Kobo and Curtis Brown Creative").
• Kobo’s website provides an excellent overview of all devices and ebooks, along with e-commerce functionality (kobo, 2013).
• Kobocafé, an updated website by Kobo, provides easy access to industry news and company information (kobocafe, 2013).
• Kobo`s Affiliate program offers 5% commission on ebooks sold and 10% commission on devices and accessories sold (kobo, 2013, Affiliates).
• Kobo offers marketing programs for retailers through the American Booksellers Association, including in-store displays, promotional material, and contests (American Booksellers Association, 2013).
• Examples of the American Booksellers Association promotional program include a Mother`s Day promotion offering a free ebook with the purchase of any Kobo device.
• Kobo’s YouTube channel highlights commercials, author interviews, tutorials, and product information (The Kobo Channel, 2013).
• Kobo is Facebook`s exclusive reading partner, providing a forum for readers to communicate and share (Kobo, 2013, Affiliates).
• Kobo uses Twitter to update followers on new book additions and customer reviews (kobo, 2013).

D. COMPETITIVE ADVANTAGE

When Kobo launched in 2010, it entered the market at a very low price point compared to competitors (Grant, 2011, para 2). Kobo focuses on offering a range of eReaders, ebooks, and applications allowing customers to read anytime, anywhere, and anything they are interested in.

Kobo is not the market innovator. While their eReaders offer comparable functionality, they often incorporate these features after competitors but at a more competitive price.

Kobo`s competitive advantage lies in offering excellent value to a broad range of readers by providing good functionality at reasonable prices. They also connect passionate readers through social media networks to enhance the reading experience.

E. SWOT

Strengths

• Kobo Pulse integration with social media (Velazco, 2011).
• Named the best eReader by the Wall Street Journal (kobocafe, 2013, "Kobo`s bet to double down").
• Over 3.5 million ebooks available (Kobo, 2013, About Us).
• Broad range of content across age ranges (kobocafe, 2013, "Kobo`s bet to double down").
• Partnership with Chapters in Canada and other major retailers worldwide (Koslowski, 2013, para 1).
• Ebooks available in 190 countries across 68 languages (kobocafe, 2013, "Kobo`s bet to double down").
• Kobo Writing Life platform for independent authors to self-publish their work (kobocafe, 2013, "Introducing the Kobo Writing Life").
• Strong independent bookseller network (Freeman, 2012, para 1).
• Attractive pricing with comparable functionality (Euromonitor, 2012, p 2).
• Aquafadas acquisition to provide more rich multimedia content, including academic books, kids` books,