Comprehensive Analysis of Kobo Inc.- History, Market Position, Segmentation

Assignment Task

A. COMPANY BACKGROUND

History

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

The company was sold in 2012 to Rakuten Inc, the largest e-commerce company in Japan. Kobo's headquarters are in Toronto, ON (Euromonitor, 2012, p 1).

Kobo not only manufacturers their own brand of eReaders, but has also developed tablets and applications for the ipad and android platforms (Euromonitor, 2012, p 1). Kobo was named by using 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 of these users are based in Canada, it is estimated that 15% are based in the United States (kobocafe, 2013, "Kobo's bet to double down").

Kobo estimates that it has 45% share of the Canadian eReader market (Kozlowski, 2013, para 1) and 20% of the global eReader market (Hoffelder, 2013, para 2), (kobocafe, 2013, "Kobo brings the joy of ereading"). It is estimated that Kobo is responsible for close to 50% of digital ebook sales in Canada and close to 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 sales have been estimated at $93 million in 2011 (PrivCo, 2013). Kobo sales have been growing rapidly in the past year. Kobo reports that their Q1 2013 sales are up 145% vs. the same time 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 is interested in 'reading' functionality and applications and less concerned about other cutting edge technology. They want a wide range of reading material available that is easily accessible and easy to read. They want to be connected to other readers as part of their social life. 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 may be likely to lean towards a tablet, which offers greater functionality that may be more child-friendly and provide more interesting learning applications.

C. 4 P'S

Product (Kobo, 2013)

• Kobo offers a range of eReaders of different size, functionality 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 models of tablet - Kobo Arc and Kobo Vox. See the chart below for a brief description of each (Kobo, 2013, Technical Specs):
• Free Apps: To ensure that customers can purchase and read Kobo ebook offerings, Kobo offers 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 for the Kobo device such as skins, kobo covers and sleeves, and a variety of power sources (Kobo, 2013, Accessories)
• Warranty: Kobo provides a 1-year Standard Limited Warranty on all of its devices (Kobo, 2013, Help)
• To help customers understand the benefits of eReaders, Kobo's website provides information. and a video (Kobo, 2013, What is eReading?)
• Recycling: Kobo provides an eRecycling program for the safe disposal old Kobo eReaders and tablets (Kobo, 2013, eRecycling Program)
• Printing: E Ink print on paper reading environment simulates the experience of reading a paper copy of text (kobo, 2013, Kobo Touch overview)
  Storage: EReaders can carry over 1000 books on one device (Kobo, 2013, EReaders)
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Price

• Kobo offers a range of devices at varying price points reflecting their functionality (Best Buy, 2013)
• Kobo generally offers good value for the dollar vs. the competition (Euromonitor, 2012, p 2)
• Kobo provides a manufacturer's suggested retail price (the price that Kobo recommends that
• retailers sell for), but retailers can set their own prices and discounts (Kobo, 2013, eReaders)
• Kobo ebook prices range from free to $19.99 (Kobo, 2013, eBooks)
• Prices range from $39.99 for the more limited functionality of the Mini to $299 for the Arc tablet. See the table below for the prices of the Kobo, Kindle and Sony eReaders:

Place

• Kobo is distributed in over 17,600 retail outlets worldwide (kobocafe, 2013, "Kobo's bet to double down").
• North American retail outlets 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
• Kobo products (kobocafe, 2013, "Kobo Announces Family of Ereaders")
• Kobo's rapid global growth has been a result of its retail partnerships worldwide (kobocafe, 2013, "Kobo's bet to double down")
• Kobo distributes its eReaders online from the kobo.com website, selling 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 that encourages interaction between kobo readers (kobo, 2013, "A New World")
• Kobo Reading Life tracks what you have read, how long it has taken you to read it and assigns award points for reading achievements (kobo, 2013, "A New World")
• Television commercials launched in May 2013 focused on two target groups: mothers reading
  to their children at bedtime and those who are passionate readers.
• Kobo tripled their advertising spend to produce and air these new advertisements (Krashinisky, 2013, para 2)
• Kobo Writing Life scholarship awarding tuition for three aspiring writers to writing courses (kobocafe, 2013, "Kobo and Curtis Brown Creative")
• Kobo website provides excellent overview of all devices and ebooks as well an e-commerce functionality (kobo, 2013)
• Kobocafé is an updated website offered by Kobo to provide people with an easy way to access industry news and company information (kobocafe, 2013)
• Kobo's Affiliate program pays 5% commission on ebooks sold and 10% commission on devices and accessories sold (kobo, 2013, Affiliates)
• Kobo offers marketing programs for retailers through American Booksellers Association, including in-store displays, promotional material, contests (American Booksellers Association, 2013).
  • An example of the American Booksellers Association promotional program is a Mother's Day promotion offering a free ebook with the purchase of any Kobo device.
• Kobo has a YouTube channel which highlights the brand's commercials, interviews with authors,
• Kobo tutorials for their devices and detailed product information (The Kobo Channel, 2013)
• Kobo is Facebook's exclusive reading partner, providing readers with a forum to communicate and share (Kobo, 2013, Affiliates)
• Kobo uses Twitter to regularly update new book additions and customer reviews (kobo, 2013, 

D. COMPETITIVE ADVANTAGE

When Kobo initially launched in 2010, it was launched at a very low price point when compared to the competition (Grant, 2011, para 2). Kobo has focused on providing a range of eReaders, ebooks and applications that will allow customers to read anytime, anywhere and anything that they are interested in.

Kobo is not the innovator in the market. While their eReaders provide comparable functionality, they often incorporate the functionality after the competition but at a good price point.

Kobo's competitive advantage is being able to offer excellent value to a broad range of readers by providing good functionality at a reasonable price point. They also strive to connect passionate readers through social media networks to heighten 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") Far
• Partnership with Chapters in Canada and other major retailers worldwide
  (Koslowski, 2013, para 1)
• Ebooks are 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, kid's books, magazines and comic books ("Kobo Inc.", 2012).
• Acquisition by Rakuten provides greater financial resources (Euromonitor, 2012, p. 1)

Weaknesses

• Limited functionality versus tablets
• Rated lower than competitive eReaders by Consumer Reports (Consumer Reports, 2012, p 2)
• Low single digit market share in the U.S. market (Greenfield, 2013, p 1)
• 20% share of the global ebook market (Hoffelder, 2013, para 2)
• EReaders are only available in a dozen countries (Greenfield, 2013, p 3) slate.sheridancollege.ca

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