236-A Fast Growing Market Begins Developing Reliability and Convenience Innovations
In a fast growing market, new Functions and lower Price drive more share gains than do Reliability and Convenience (see Customer Buying Hierarchy descriptions on StrategyStreet.com in the Perspective, “How Customers Buy” and in “Video 25: Short Explanation of Customer Buying Hierarchy”). After a while, though, market growth begins to slow and Function innovations become less important than innovations in Reliability and Convenience. We can see this developing in the wireless applications market.
This market has been on a tear for the last few years. Recently, Amazon announced that it was planning to enter the market for phone applications by creating an online store selling apps for smart phones running Google’s Android software. Amazon will then compete with Google’s web site offering apps that work on the Android system.
Amazon’s entrance shows developments in both Reliability and Convenience. Amazon offers Reliability innovations in at least two ways. First, Amazon encourages the reviews from its customers of the products it sells. These customer reviews are important sources of Reliability information about a product. Second, Amazon insists that any app it sells will not sell for a lower price anywhere else. This Reliability innovation assures a customer that Amazon will have prices that are competitive with anyone.
Amazon also brings great Convenience to this market. There are so many apps today that the market is becoming chaotic. Amazon will organize these applications in ways that fit with its customer base. Amazon has a long history of doing this very thing with other products. Just as importantly, Amazon already has a working payment arrangement with millions of customers. It is particularly adept at the “one click” payment system, which enables a customer to pay for purchases very quickly.
Amazon’s entry is a good example of a natural evolution in a fast growing market.
Because Google and Amazon are direct competitors for shopping search revenues, both companies have restricted the availability and usefulness of android apps on Amazon.
Amazon remains a fringe competitor in the android app business. Amazon makes only android apps available in its App Store. Since 2014, Google has restricted the Amazon app in its Google Play Store. As a result, Amazon offers less than 800,000 android apps in its store. In contrast, the Google Play Store offers more than 3.5 million android apps for download. The two companies continued to spar over the control of revenues associated with apps downloaded from their stores. This has no doubt caused some failure with each company’s customers but the control of revenues seems to be worth that cost. See HERE for more perspective on diagnosing customer needs and how the company can meet them.
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