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Situation Analysis

Lauren Appelbaum
Paul Fruin
Meg Strange
Whitney Bodenstab
Megan Higgins
Lindsey Sherman
Table of Contents
Company Analysis
Market Analysis
Product Analysis
Competitive Analysis
Consumer Analysis
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COMPANY ANALYSIS
Company Culture
Barnes & Noble Incorporated has been in the bookselling industry as a publicly traded company
since 1993 (www.bn.com). The companys current business model is one that has been in
operation since 1990 when Barnes & Noble formed and implemented its new superstores (www.
bn.com). Today, this superstore model accounts for nearly all of Barnes & Noble across the
United States, and was the frst step toward creating the nations largest bookseller. Currently,
Barnes & Noble operates its business through two main segments: retail and online. These
two segments combined serve 40 million customers nationwide and account for the sale of 300
million books per year (www.bn.com).
Retail Stores
Barnes & Noble Inc. operates a total of 720 bookstores across the United States, combined with
637 Barnes & Noble College Bookstores that serve the textbook market for college students
(SEC K-10 Report).
Barnes & Noble superstores represent not only the frst stepping stone the company took to get
to their position as market leader in bookselling, but also serve as the original reason the Barnes
& Noble brand remains one of the most trusted and recognizable in the industry. Accounting
for 75% of all company sales, each contains up to 200,000 titles along with a large selection of
music, movie/DVD titles, and magazines (www.bn.com). For added customer satisfaction, each
store is equipped with lounge chairs, reading tables, and a caf that offers food and Starbucks
coffee.
According to a 2010 SEC report, Barnes & Noble operates each of its retail stores with 3
managerial positions, a community relations manager, and 50 full and part-time employees. The
Company prides itself on its expert booksellers that provide quality service to all customers. A
large percentage of the Companys personnel is hired from within the company and its operations
so as to maximize the growth and expertise of Barnes & Nobles business.
Online
Barnes & Noble maintains their presence in the digital market with their company website (www.
bn.com) along with their online library of eReader titles and their new eReader, the Nook.

The company website offers the largest selection of in-print book titles with access to one million
titles that are available for immediate delivery (www.bn.com). Regular customers to the Barnes &
Noble brand are encouraged to create a BN.com account of which there are currently 15 million
active accounts. Monthly, there are 7 million unique visitors to the Barnes & Noble website.
Barnes & Noble has entered into the market of digital reading by introducing an online library of
eBook titles, as well as the NOOK eReader that was introduced in 2009. The company maintains
the largest online library of over one million eBook titles that account for the 2 million plus Barnes
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& Noble eReader downloads on iTunes.
Barnes & Noble maintains its brand recognition in the bookselling industry not only by its sales,
but also by its community involvement and service in those communities where the company has
bookstores.
Community Involvement
A quote from the company website: Barnes & Noble is a company driven by the principle that
bookselling is important work. We believe a great bookstore is also a refection of its community
To grow as a positive corporate image in the communities where Barnes & Noble retail stores
are present, the Company sponsors and hosts nearly 200,000 community events every year (ex.
Summer reading programs, book drives, and book fairs that beneft Autism awareness and the
U.S. armed forces).
The New Digital Strategy
With the surge of eReaders and eBooks in the digital market, Barnes & Noble Inc. has made
the decision to reposition the company from a primarily store-based business model to one that
is centered on the sales that are generated from the company website and its own sales in the
digital reader market.
The Strategy
Use its infrastructure to deliver digital content to customers wirelessly and online.
Utilize the strong Barnes & Noble brand and retail footprint to attract customers to its multi-
channel platform.
Develop innovative technology.
Expand its distribution channels through strategic partnerships with world- class hardware
and software companies.
The company is confdent in its new interactive eCommerce platform with the worlds most
innovative eReader (the NOOK) at the forefront, and wants to create the most user-friendly
online shopping experience for its customers. The company believes that implementation of new
technologies and top-of-the-line software allow Barnes & Noble to be a sizeable competitor in the
digital and online market.
With this new model implemented successfully, Barnes & Noble can hope to maintain its status
as the market leader in the bookselling industry by maintaining control of both their physical
stores and their online store and digital products. This new strategy comes at a time when the
change could create positive developments for the company, but also at a time when internal
challenges that Barnes & Noble is facing could hinder them from seeing any sort of great
opportunity from their new ventures.
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Company Challenges
The Security and Exchange Commission has issued its latest K-10 report that states the details of
the current situation of Barnes & Noble Inc. in terms of information relating to the Company that
are based on the beliefs of the management of Barnes & Noble, Inc. (the Company) as well as
assumptions made by and information currently available to the management of the Company.
(SEC K-10 report). The report notes an array of risks that the company may face in the near
future that are notable as possible challenges that Barnes & Noble is facing or will face.
The internal challenges that Barnes & Noble faces that may prove as substantial risks for the
companys future success are: The decline in sales and effects of the economic downturn,
reposition into the digital market, and the recent sale of the company.
Economic Downturn and Sales Decline
2009 proved to be a fnancially diffcult year for both retailers and consumers alike. Barnes &
Noble is a company that depends entirely on the discretionary income of its customers in order to
turn a proft. The economic downturn brought consumer demand and income down with it, which
had an adverse impact on overall company sales in 2009.

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The largest decline in sales for the company was marked at 5.3% in stores and a 1.3%
contraction of the website. There was an additional closing of 20 Barnes & Noble stores that
caused a signifcant dip in company revenue (IBISWorld Industry Report: Book Stores in the
U.S.). As a result of the economic downturn, many more customers were taking to the Internet
rather than going to physical stores in order to fnd better-valued products.

Reposition into the Digital Market
The book selling industry as a whole is currently in a state of fux, and Barnes & Noble is currently
taking steps to keep up with the competition. The company has taken a large, and what may be a
risky step in repositioning its business structure from a store-based model to digital.
Currently, Barnes & Noble conducts only 9.9% of their sales on the company website and while
they show progression by entering the digital market, their lack of sales online in comparison to
those in their retail stores may keep them from becoming an effective competitor in the online and
digital market. The NOOK, along with other Barnes & Noble products, are manufactured by third-
party manufacturers outside the United States, which may cause lower production costs, but also
presents the opportunity for a reduction in control over production.
Expanding into the digital market brings risks that the Company may not be able to handle while
simultaneously conducting business in their stores as well. This new position may also introduce
new or more competitors that may pose threats and challenges to the Company (i.e. competitors
with greater fnancial resources or greater resources and experience in the digital realm). In
addition, the company also faces competition from the expanding market for eBooks and digital
sales of eBook content.
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Sale of the Company
As of August 2, 2010, Barnes & Noble has put itself up for sale due to declining shares sales.
Over the past year there has been a 45% drop in share prices, and the sale is being implemented
with the hopes of bringing those shares back up and creating revenue for the company. Still,
Barnes & Noble has only reached a $950 million market cap on the industry while one of its main
competitors, Amazon, has reached a cap of $55 billion (Wall Street Journal: Barnes & Noble on
Block).
Although Barnes & Noble is currently the market leader in the bookselling industry, they are
currently having that position threatened in the form of the uprising of competitors in the eBook
and eReader market. Efforts being made by Barnes & Noble to become a contender in the
digital market are costing them time and money in the form of start-up and operation costs for
the NOOK, and legal battles between the CEO of the company, Leonard Riggio, and one of the
companys largest shareholders, Ron Burkle.
The battle for ownership of the company is not only costing Barnes & Noble monetarily, but also in
the form of the loss of key managers or offcers in the company. The battle to make the company
public if sold could have a negative effect on boths its key managers or shareholders, as well as a
negative impact on the success of Barnes & Nobles current and future business practices. Their
plans of becoming a contender in the digital market and to remain a leader in the industry could
potentially be lost if the sale or legal battles do not go through effectively.
Industry Trends
After the effects of the economic downturn, declining book sales, and the increased convenience
of online buying, selling, and downloading, almost the entire bookselling industry is trending
toward the digital and online market in one way or another. The race is on to have the largest
library of eBook titles, and it seems that a new eReader shows up on the market every day. The
new and rising trends in both the bookselling and eReader industries directly affect Barnes &
Noble as a bookseller that is restructuring its business model and has a new eReader on the
market.
Bookseller Industry Trends

Drop in Industry Sales
Overall sales in the bookselling industry have dropped 3.3% in the past fve years with
fgures dropping from $20.2 billion in 2005 to $17.1 billion in 2010 (IBISWorld Book Stores
in the U.S. Report). The main factors playing into this large decline in sales are the
recession and lower incomes, lower demand for books, consolidations and buy-outs of
retailers, and the uprising of online sales, Ebooks, and Ereaders. These factors, along
with the knowledge that sales are declining, are forcing the once-powerful retailers like
Barnes & Noble to reconsider their business plans and consider what additions they can
make to their companies to retain their customer base.
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Consolidation of Non-Book Specifc Retailers
As a result of dropping sales and the threat of proft loss due to the recession, many
bookstores in the industry have been forced to consolidate their business in order to
avoid having to close their doors. Over the past fve years, total enterprises have fallen by
3.8% annually due to a rise in competitor pricing and falling product margins that have
lowered overall proft for many companies. Although Barnes & Noble maintains its position
as the retail leader in the bookselling market, they have suffered a number of closings in
the past year and face an expected 3.9% of all bookstores in the country to close by the
years end.
Transition to Digital
The online and digital market has become an increasingly popular outlet for consumers
to purchase books, magazines, newspapers, music, movies and other products that are
found in retail bookstores. The popularity of the digitalmarket is mostly due to its effciency
and ease of use, as well as the unlimited amount of space on the internet which allows for
a far larger number of titles online than in retail stores. As far as sales go, overall online
sales are prevailing over those in storesin 2009, Amazon sold 19% of printed books
while Barnes & Noble came behind at 17% (IBISWorld Book Stores in the U.S. Report).
EReader Industry Trends:
Constant Technological Evolution
The digital age we now live in provides us with a multitude of new technologies each day.
The digital bookselling industry is not only seeing a trend in the surge of eReaders, but
also that of tablets that provide similar services that eReaders do.
Price Wars
Much like that of cellular phones, eReaders are experiencing drastic price cuts due to
rising popularity and the need to keep up with the competition. At the start, eReaders were
a high-priced commodity available from $300-$600 however currently, the majority of
eReaders are available from $140-$250.
A further cut in price of eReaders is expected to occur by 2011 to a possible low price of
$99.00 due to current and future competitor price projections, and because of a new
technological breakthrough that will cut entry levels of eReaders by $150.00 (www.
goodreader.com). The new Freescale Semi Conductor chips will not only reduce these
costs, but they can also lower battery consumption on eReaders, support color screens,
and provide quicker page turns. Freescale has already entered into partnerships with
Amazon and Sony, showing companies like Barnes & Noble and the NOOK that they need
to be watchful of the new technology and price trends that are rapidly evolving if they want
to become a contender in the digital reader market.
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SWOT Analysis Barnes & Noble
Strengths
Customers
A strength of Barnes & Noble, as previously mentioned, is their large and encouraging consumer
base of individuals who have grown up with the company. Barnes & Noble continues to appreciate
and satisfy their customers who have loyally been frequenting its retail locations and website over
the past decades. Barnes & Nobles continued respect and acknowledgement of customer-centric
business policies has helped it to create high brand equity.
1 Million eBook Titles
Not only does Barnes & Noble have one of the biggest traditional book libraries, they also
offer more eBooks than do competitors. By supporting the ePUB format, unlike Amazon and
Sony, Barnes & Noble has the ability to offer 1 million titles to its customers. This is a huge
differentiation point, and should be guarded as one of Barnes & Nobles key strengths.
Multi-platform
Barnes & Noble has done a great job creating a presence on multiple platforms during the
digitally focused transition. Not only does Barnes & Noble have a popular eReader, they have
an increasingly popular free NOOK application for leisure reading on other devices and a NOOK
Study application for those individuals wanting assistance organizing their many eTextbooks.
Barnes & Noble has been realistic in scoping out their next opportunities, and that most defnitely
includes the $12 billion college textbook and bookstore industry.
Brick and Mortar
Barnes & Nobles signature retail locations are a great asset to continue introducing consumers to
the brand and its offerings, as well as continuing to satisfy loyal customers desire to speak with
knowledgeable booksellers, peruse the aisles and touch their beloved traditional books.
NOOK Boutiques
Brick and Mortar stores continue to attach brand awareness and loyalty to Barnes & Noble as a
company, they also are creating a unique purchasing experience for those in the eReader market.
NOOK Boutiques create a separate space within the store dedicated to only the NOOK and its
accessories. Having the gadgets out for display, with solid information and booksellers available
to answer questions is not a new marketing technique, but in this industry Barnes & Noble is
the frst to create the environment for one specifc eReader. Best Buy has recently created an
eReader boutique within their stores, but the space will be more about competition than portraying
a lifestyle and experience. These Boutiques act as a stepping-stone in Barnes & Nobles
repositioning strategy from retail to digital and ecommerce.
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Weaknesses
Internal Confict with Shareholders
As expected during a time of industry change and readjustment, large publicly held companies
will face confict with their shareholders. This has been no different for Barnes & Noble. Although
there is not a whole lot the company can do, the uncertainty and media exposure of Barnes
& Nobles current ownership dilemma is a weakness. One of the more recent developments
included a letter from Chairman and CEO, discussing the goals of the company and urging
shareholders to have confdence in those individuals chosen to lead the company. The biggest
battle remains between current majority stockholder Leonard Riggio, also Barnes & Nobles
previous founder and chairperson, and investment group owner Ronald Burkle. Resolution
of these issues, and the reduced amount of internal dispute coverage will help to realign this
weakness.
Real Estate
Although the Barnes & Noble retail locations are a valuable strength in the continued development
of the brand, they are incredibly expensive to maintain when the company is repositioning to
become more digital. Money tied into leases and building ownership cuts a huge chunk into the
companys profts, especially since actual store purchases are consistently decreasing.
Risk of Leadership Change
Changes in Barnes & Nobles leadership or ownership wont most likely have an immediate effect
on consumers, but it could severely threaten the companys strategic progress made toward
digital and multi-platform repositioning. If the company were to be sold to an individual with only
short-term profts and goals in mind, the companys long-term success could be jeopardized. The
companys current leaders and shareholders need to be aware that the consumers currently loyal
to the brand can not only be persuaded to switch brands by Barnes & Noble competitors, but also
by Barnes & Noble itself.
Opportunities
Increase Share of eReader Market
With the eReader industry still in the rapid growth stage, it is very possible for Barnes & Noble to
continue to grow its market share. Embracing its new digital positioning will enable them to reach
out to potential consumers, especially during the upcoming holiday season, to ensure their current
leader status at least remains steady.
Mulitple Platforms for Products
Barnes & Noble has recognized the benefts of providing not only a technology, but also a service.
Providing consumers that service on different platforms and products is key to their continued
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growth. They are a leader in variety platforms offered, and should use that current advantage to
its fullest potential.
NOOK App
In accordance with the previous multi-platform opportunity, Barnes & Noble should continue
to update and develop their application available on smart phones and tablets. This is a great
outlet to capture new consumers who are not Barnes & Noble brand loyal, and the prospect of
increasing the number of loyal consumers should not be taken lightly.
NOOKStudy and College Bookstores
As seen throughout our presentation, the newly acquired college bookstore sector is doing a lot
in helping Barnes & Nobles numbers. Not only does this new portion of the company offer direct
involvement with a huge number of big spenders, it also steps into a generation that might have
falling interaction with the Barnes & Noble brand. These college students will soon be Barnes &
Nobles next generation of avid readers, and the opportunity to be front and center in resolving
some of their current problems encourages strong ties to the brand.

Barnes & Nobles new NOOKStudy application is the next push for its eReader. This application
aims to ease students online reading frustrations, put a little bit of money back into the
consumers pockets and lessen the weight of their bookbags. The long-term effects of a
successful college campaign are exponentially important to this company.
Threats
Declining Market for Books
Even though Barnes & Noble are repositioning their focus from traditional book retailing, it still
makes up a large chunk of the companys profts. The book industry total worth has been steadily
declining, and when a company has a large percentage of market share they can sometimes feel
the loss the hardest. Barnes & Noble cannot forget their roots, for the time being they need to
continue efforts towards maintaining trade book market share.
Digital Book Competition
The highly competitive eReader industry sits right alongside the complementary, highly
competitive digital book industry. eBook libraries, multi-platform text books centers and
established ecommerce sites are all vying for a share of the market. Taking into consideration
Barnes & Nobles other threats and weaknesses, and the fact that this is essentially a venture into
a new realm, it needs to pay close attention and detail to developing and expanding their trade,
text and eBook libraries.
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SWOT Analysis - NOOK
Strengths
Barnes & Noble Brand Equity
The NOOKs strengths lie more so in the connectivity and solid brand foundation Barnes & Noble
has created for the eReader, than product features and attributes. The strongest competence the
NOOK has is the Barnes & Noble brand name. Barnes & Noble has been building its reputable
bookstore image since its inception in 1917, and even more so since its acquisition by Leonard
Riggio in 1971. The brand is extremely recognizable in the United States and has a broad and
loyal consumer base. Like previously mentioned, Barnes & Noble has over 40 million customers,
and 15 million customer accounts on their successful ecommerce website. This positive brand
image of responsibility, accountability and familiarity transfer directly to the NOOK and its
offerings.
Barnes & Noble Brick and Mortar
One reason Barnes & Noble has been successful is because of their prime retail locations and
knowledgeable booksellers. The 700 plus Barnes & Noble stores are located strategically within
the prime shopping areas for their primary customers, and inside, are comfortable, relaxing and
convenient. These brick and mortar retail locations give the NOOK a signifcant advantage over
their top competitors. Amazon does not have a retail location dedicated solely to their Kindle,
neither does Sony to their Reader. Barnes & Noble locations now have in store boutiques
dedicated to the NOOK, as well as extensive in store advertising and promotions to increase
interest at the point of purchase. Consumers interested in owning a eReader are able to visit
a familiar retailer, use the NOOK in store, inquire and discuss the product with knowledgeable
booksellers and take their newly purchased eReader home with them that day. After purchase,
the booksellers will always be there to answer questions and offer advice on the product. No
competitors have a comparable retail presence, thus, this is another important strength of the
NOOK.
In Store Promotions
Another positive component to Barnes & Nobles brick and mortar locations is the in store
promotions NOOK owners can receive if they bring in their eReader and connect to the free wif.
Barnes & Noble offers the Read in Store program which allows owners to browse the contents
of many eBooks for free, as well as, weekly free downloads and the occasional coupon for a
free beverage at their cafe. Competitors could not offer these sorts of promotions with their retail
providers, thus the in store options offer a signifcant advantage and strength to the NOOK.
Book Lending
Another distinguishable strength by Barnes & Nobles NOOK is the allowance of book lending
with family and friends. The NOOK is the only eReader, and Barnes & Noble the only eBookstore,
to allow a fle purchased by one individual to be lent to another. Majority of leisure readers enjoy
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discussing the adventures of shared publications with family and friends, and that interaction is
not impaired when a consumer owns the NOOK. This option allows readers to have a similar
experience as they do with traditional paper books, a nostalgic tradition that cannot continue with
competing eReaders and eBookstores.
Android
An infuential technical strength the NOOK possesses is its android platform. Running the
eReader off of the Android platform allows for a successful transition from reading books on the
NOOK to reading them through the NOOKApp on a different device. Led by Google, Android was
formed as an open source project to create real world applications for device customizations. In
addition to the presence of an Android based application for a consumers other gadgets, Barnes
& Noble has also forged a positive, forward looking partnership with Google.
ePUB
The other technical strength of the NOOK is also a visionary attribute. The support of ePUB
fles allows NOOK users to have access to over a million titles that are not currently supported
by other eReaders, but very well could be in the near future. Currently, each eLibrary uses a
specifc fle type that is only supported by their respective eReader, but publishers are pushing the
ePUB format to be the standard fle used for every eBook. Experts say eventually all eReaders
will use the standard fle and books will be able to be read on all devices. The NOOK and its
corresponding apps and eBookstore will have the frst mover advantage in the ePUB category.
Weaknesses
First Generation
Although the NOOK holds a big share of the eReader market, it does have its defnite
weaknesses. The NOOK currently on the market, is still in its frst generation. There are updates
available to the 1.0 software, but compared to the competition they are lagging behind in the
technical developments aspect. This weakness is only compounded by the many negative
reviews of the software speed and ease of use. Amazon is already rumored to be preparing for
the third generation Kindle, which on many levels sounds more advanced and prosperous.
Dual Screen Complications
One weakness worth examining, especially upon development of a second generation of the
NOOK, would be the complicated and hard to use dual screen technology. Some of the most
common complaints about the NOOK refer to its unnatural, confusing and slow connection
between the color LCD navigation screen and black and grey eInk reading screen. The
disconnect and confusion was witnessed frst hand when eReader expert Roger Fidler was
becoming confused on which screen to touch and which screen to view when navigating through
an eBook.
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Lack of International Capability
Barnes & Noble is strictly a national retailer, with stores and ecommerce site reaching out only to
those in the United States. This is a stark contrast to many of the NOOKs competitors parent
companies. NOOK owners are not able to connect to wireless internet when outside of the US,
which means travelers must purchase and download every title they might like to read on the
trip, before leaving the country. This is a weakness of a product that boasts its ease of use during
travel.
Opportunities
Growing Industry, Increase Market Share, Technological Advances
The NOOK has many opportunities being a frst mover eReader in a quickly growing industry. By
using the NOOKs strengths, and trying to solve or combat its weaknesses, it has a great chance
of continuing to capture market share. Using the Barnes & Noble brand and retail locations while
addressing the eReaders technical lapses could be the formula for continued NOOK purchases
and success. Barnes & Noble certainly has new targets to focus efforts on, and much room for
improvement on the technical front.
Threats
Competition
In addition to its weaknesses, the NOOK also has a few key threats. The primary threat to Barnes
& Nobles eReader is the intense competition. Every company and gadget is racing to gain
increased market share in such a young industry, which creates a big challenge for a product and
company who have no background in technology. As explained earlier, each eReader is searching
for their one distinguishable feature that will carry them to the top. At any point could a new
technological development or new marketing strategy create a complete disruption of the current,
unstable market share balance?
eInk vs. LCD gadgets
Not only are other eReaders competing with the NOOK, but interactive tablets are also becoming
a popular player. Although currently only a secondary competitor, as heard earlier, because of
their differences in primary purpose, these LCD screened gadgets could take a huge chunk out of
the NOOKs market share. Consumers will continually have to be shown the benefts of the eInk
technology if companies wish to keep them away from tablet computers.
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MARKET ANALYSIS
2010 has been a memorable year in bookselling history. With booms in book digitization, the
marketplace for books and other written works has opened up and expanded to unprecedented
levels. Because of its brand name, market share, and large product line, Barnes and Noble will
undoubtedly be one of the biggest players in the digital book market over the coming years.
The markets that Barnes and Noble compete in are huge. If you take a look at the graph below,
you can see how Barnes and Noble stacks up overall in the book market.

As the above graph illustrates, the trade book market currently accounts for $23 billion and
Barnes and Noble is the market leader with a 17% share. By 2014, the market is expected to
grow 17% and become a $27 billion market. In addition to being the market leader for trade
books, Barnes and Noble is also the market leader in the $12 billion textbook industry. In the $22
Billion newsstand market, the company ranks second in sales even though it holds only a 1%
market share.
Barnes and Nobles recent commitment to the digital book market offers the company tremendous
upside. The graph shows that the digital book market is expected to account for $15 billion by
2013. Of this $15 billion, Barnes and Noble expects its market share to be $4 billion, or 25%. A
quarter of the market share in the digital book market would outpace Barnes and Nobles current
market share in trade books, textbooks, and newsstands.
High growth stemming from the digital book market will allow Barnes and Noble to distinguish
itself in a number of digital book categories, but the most noticeable gains could come from under
penetrated categories. For example, B&N owns just 2% of the market share for romance books
in the physical books market. However, in the digital market it owns 20% of the market share for
Romance books and that number is expected to increase in the coming years. By honing in on
underrepresented categories such as that of romance books, Barnes and Noble is showing the
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potential it has in the future digital book market.
Digital expands trade books, textbooks and newsstand marketplaces for Barnes and Noble
and offers it a large amount of competitive advantages over its competitors. The competitive
advantages spur from its extensive arm of customer reach, its retail store locations, its exclusive
relationship with Universities, its publisher relationships and scale and its brand awareness
among consumers. Approximately 50% of the bookselling market has no digital strategy, giving
Barnes and Noble high leverage over half of the competition.
Barnes and Noble expects the digital market for trade books, textbooks and newsstands to reach
15 billion by 2013. If Barnes and Noble successfully capitalizes upon its competitive advantages,
they expect to own 25% of the digital market in 2013. This is a much larger percentage of market
share than those they already hold in trade books, textbooks and newsstands.
While its digital market share increases, Barnes and Nobles retail market share will also increase.
This will bring its overall consumer book market share from 17% to 20-25% in 2013 based on
forecasts from Veronis Suhler Stevenson. To a certain extent, eBook sales do replace bookstore
sales, but surveys coming from some of Barnes and Nobles most loyal customers show that they
have increased their combined digital and physical book spending by 17% since purchasing a
NOOK.
Less is more for Barnes & Noble
Consolidation is inevitable in the rapidly changing consumer book market. With few bookstores
across the United States in the future, Barnes and Noble will beneft through consolidation. While
store numbers will drop, it will still remain a top destination for readers wanting to check out
eBooks, readers looking for a large selection, customers looking for convenience and immediate
satisfaction, families with children, and bookseller interaction. To compensate for the decrease
in store number, Barnes and Noble will bring new departments into their existing bookstores to
promote customer satisfaction and ultimately increase sales.
2010 Sales Data
Below is a look at the 2010 Sales Data for Barnes and Noble. These numbers will illustrate how
Barnes and Nobles 2010 sales have compared to sales from previous years.
In 2010, BN made sales of $5.8 Billion. This is the highest sales it has ever recorded.
In 2008, the company had sales of $5.1 Billion and in 2007 they were $5.3 Billion.
While 2010 in-store sales are expected to be the lowest since 2005, total sales are higher
than ever because of the success of the companys online store. This online success can
be attributed to the Nook.
2010 website sales are expected to be $572 million. In 2008, they were just $466 million.
The 2010 introduction of the Barnes and Noble College gave the company $836 million in
sales it previously never had.
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2011 Barnes and Noble Fiscal Forecast
Below is a look at some upcoming fscal projections for Barnes and Noble. Notice how much
money Barnes and Noble is dumping into investments for its digital strategy.
Sales will increase 20-25% to over $7 billion.
EBITDA declines 2-16% to $235-275 million.
Barnes and Noble will make $140 million in investments to propel its digital strategy.
Future eReader Sales Projections
A comprehensive analysis of the future eReader market was done by the Yankee Group, a
Massachussetts based market-research consultancy, in January of 2010. The study predicts
that six million eReaders will be sold in 2010 alone. Sales are expected to increase throughout
the eReader market in 2011, up to 8.5 million eReaders sold. By 2012, sales will reach around
12.8 million units and they will be up to 19 million units in 2013. The study also reports that a price
reduction could be the ultimate way to bring in buyers who are not already avid readers. Keep
in mind that these numbers are rough estimates and cannot possibly factor in price changes or
technological advances within the industry. The eReader industry seemingly changes weekly
and existing eReaders have been retooled and new eReaders introduced since the report came
out in January. With that in mind, the Yankee Group does deliver a broad picture of how popular
eReaders are expected to be in the future.
Amazon digital sales ballooning
To paint a picture of how well Barnes and Nobles competitors are doing with their digital industry,
take a look at these numbers. In mid-July, Amazon reported that its sales of Kindle eBooks had
overtaken its hardcover book sales. According to Amazon, for every 143 eBooks sold, there are
100 hardcover books sold. While these numbers are for Kindle eBooks and not the Kindle device
itself, the data still shows how popular the Kindle has become and how big of a force it will be in
its competition with the NOOK.
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PRODUCT ANALYSIS
The Marketing Mix for the Barnes & Noble NOOK:
1) Product
The NOOK is a part of the eReader product category.
The defnition of an eReader includes any portable electronic device specifcally designed for
the purpose of displaying digital versions of books, newspapers, magazines, and other printed
materials.
The NOOK, along with most other eReaders, features black-and-white text on an e-ink screen
that simulates the look of printed paper.
EReaders allow users to store a library of books in digital format within the device, make notes,
highlight text, and bookmark pages. Users are also able to control the size and style of the font on
the display.

The NOOK is offered in two versions, which are identical in all features except the offering of 3G
coverage in the more expensive version. Some of the notable features of the NOOK include:
E Ink Vizplex electronic paper display
6 diagonal display screen
Color LCD screen with touch control and navigation
Wi-Fi capabilities with free Wi-Fi in all Barnes and Noble stores and AT&T hotspots.
2GB internal memory storage with an expansion slot. The NOOK is capable of holding
up to 1,500 books.
More than a million eBook offerings with 500,000 free eBooks available.
Newspaper and magazine offerings.
Built in Merriam-Websters collegiate dictionary.
Lend-me technology that allows owners to share their content with others. The NOOK is
the only eReader that allows for this.
An Android operating system, the frst eReader to deliver Android technology.
Contains games such as sudoku and chess
Replaceable and rechargeable battery that lasts up to weeks on a full charge.
Speakers and headphone jack that allow you to use the device like an MP3 player.

2) Price

There are two versions of the Nook on the market. The principle difference between the two
versions is its offering of 3G coverage.
The Nook with Wif costs $149
The Nook with Wif + 3G costs $199

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3) Promotion

Barnes & Noble has gone through a large series of promotions to promote the NOOK. Heavy
promotion of the NOOK has been critical in driving its sales because it was a latecomer in the
eReader market. Promotions by Barnes and Noble have included:
Giveaways, such as $50 gift cards to Barnes & Noble with the purchase of a NOOK. This
strategy was developed in order to jump-start the buyers eBook collection upon purchase
of the product.
Free eBook downloads each week from the Barnes & Noble classics collection.
Free coffee at the Barnes & Noble Caf with the download of the eReader application.
NOOK Wi-f users can also receive free connection to all AT&T hotspots.
Barnes and Noble promotes designer covers for the NOOK, with lines from Lilly Pulitzer
and Kate Spade, among others.

The largest promotional advantage that the NOOK has over its competitors is its in-store boutique
offerings. Boutiques inside each Barnes and Noble store allow customers to test out the NOOK
and ask questions about the product to well-versed employees. While Amazon has partnered
with Target and Best Buy to sell the Kindle, these stores do not sell the Kindle exclusively.
Additionally, their employees arent trained to tell customers about the product nor do they have
the experience with the products to answer all of their questions thoroughly.

In order to continue to draw users into the store after the purchase of their NOOK, customers who
bring their NOOK into a Barnes & Noble store receive exclusive content and special discounts.
This all comes in addition to NOOK owners being given the chance to read any eBook for an hour
at no charge before they decide on purchasing the content.

4) Place

The NOOK can be purchased at any Barnes & Noble retailer store, any Best Buy retailer store,
and on barnesandnoble.com.


Packaging
Along with the NOOK, a USB cable, QuickStart Guide, and rechargeable battery are
included with initial purchase.
The screen isE Ink Vizplex, an electronic paper display that reads like a printed page
Color touchscreen LCD display at bottom
2GB storage, with expandable microSD slot
- Can hold around 1500 ebooks or 26 hours of audio
It is roughly the same size and weight as a paperback book
- Wif Only: white panel, 11.6oz
- Wif + 3G: grey panel, 12.1oz
Built-in mono speaker
Universal 3.5mm stereo headphone jack
Micro USB connector
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Brand Equity and Positioning
Barnes & Noble uses its history and brand awareness to position the NOOK. Because
Barnes and Noble has been around for so long and it has been the market leader in
books for much of its existence, the company believes it has an opportunity in targeting its
already loyal customers. The aim for their latest advertising campaign My Story
showcases this by chronicling a woman reading in various stages of her life. The
commercial persuades consumers in saying, experience the only eBook reader from the
bookstore youve grown up with (http://youtube/r2wLu-rEy4A).
Barnes and Nobles current positioning involves meshing the company as a hybrid
between a brick-and-mortar store and an e-retailer. The company is in good position for
emerging in the the eReader market because unlike Amazon and some other eBook
providers, Barnes & Noble is able to promote the fact that they have established stores
available for answering any questions or concerns customers may have.
Barnes & Noble has also positioned its product as one of versatility. In addition to the
NOOK eReader, there is the NOOK application which can be accessed across a variety
of platforms (through a PC, Mac, Blackberry, iPad, Android, etc.)


Key Advantages/Disadvantages of the NOOK

Advantages
The NOOK features a color LCD touch screen where users can scroll through their library
and navigate the menu in order to access games, download books and get on the web.
Both NOOK versions come with Wi-Fi access and the new model also comes with 3G
anywhere plus the ability to connect to any AT&T hotspot.
The NOOK includes games such as chess and sudoku.
The NOOK has the ability to lend books from one user to another.
The memory expansion slot gives consumers the ability to expand their library to
hold a virtually unlimited number of books. The removable memory card also allows
for better organization of books (for instance, consumers could have one card specifcally
for textbooks and one for pleasure reading).
Replaceable and rechargeable battery
NOOK users can browse and access any eBook for free when inside a Barnes & Noble
for up to an hour, in order to read to determine whether or not they would like to purchase
the book.
The in-store NOOK boutiques allow customers to handle the NOOK before they decide to
purchase, along with valuable customer support through trained employees that can
answer any questions or help with any problems a consumer would have.
The NOOKs EPUB (electronic publication- a free and open eBook standard by the
International Digital Publishing Forum) format compatibility lets you read loaner eBooks
from your local library and free public domain eBooks.
Since the NOOK can be accessed on multiple platforms, users can choose to stop
reading on the NOOK device and resume on another device that contains the Barnes &
Noble NOOK application.

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Users can load photos onto the NOOK to serve as screensavers.
The Android platform allows the potential for installing apps to the NOOK. Currently there
are none available, though Barnes & Noble will be looking towards that opportunity in the
future.
Disadvantages
Since the entire display is not a touch screen, it is harder to organize content directly on
the eReader.
Users have stated that there is a feeling of disconnect, due to the fact tht there are two
separate screens.
The touch screen keyboard on the NOOK is small in comparison to the Kindles keyboard,
sometimes making it diffcult to navigate.
The NOOK doesnt have the same international wireless coverage that the Kindle does.
The Kindle allows you to move content onto your computer and Amazon keeps copies of
the books you purchase from them, so if youve removed a book you can download it
again for free. The NOOK does not have that option.
There are many stipulations that come along with the lending a book advantage. For
example, when the book is being lent it cannot be accessed by the original owner.
Additionally, the book can only be lent for two weeks and once a specifc book is lent it
cannot be lent again, even to a different user.
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CONSUMER ANALYSIS
eReader Consumer Profle
Even though the eReader category is very new to the marketplace, customers are defnitely
starting to notice this new piece of technology. In the second quarter of 2010, approximately
2.1 million eReaders were sold worldwide. Among these current consumers, some common
characteristics can be seen.
Demographics

Data from Mediamark Research & Intelligence found that the current eReader user is skewed
towards men, with 56.3% of users being male and 43.7% being female. The highest percentage
of users are between the ages of 25-54, with a large amount of these users being over the age
of 35. Consumers between the ages of 35-54 are considered the prime target for eReaders since
research found that they are 20% more likely than the average adult to own an eReader.
These consumers are married and either do not have children or do not have children who live
at home. They are also well educated, as research shows that consumers are 111% more likely
to have either a bachelor or post-graduate degree than the average adult. Wealth and material
things are very important to these consumers, and they have the income to support such a
lifestyle; they are 87% more likely than the average American adult to earn an annual household
income of over $80,000.
Tech-Savvy
Technology is important in the lives of eReader consumers. They use technology as an
organizational tool for their everyday lives, and use it frequently throughout the day. When
compared to the average American adult, MRI data found that eReader users use the Internet
more often. Current eReader users are 154% more likely to have used a cell phone or other
mobile device to access the Internet and nearly 200% more likely to have accessed the Internet
outside the home through WiFi or some type of wireless connection.
Out of their group of friends, eReader users see themselves as the frst to adopt new technology.
Since they are more tech-savvy, they do not turn to others to learn about new technology
or electronics. MRI data shows that they would rather turn to reviews for information. Male
consumers fnd reading about new technology products much more enjoyable than female
consumers, and the men are more likely to share their knowledge and discuss this new
technology with others.
Avid Readers
A common characteristic of eReader consumers is the fact that they are looking for an isolated,
uninterrupted reading experience. Consumers are not looking for all the features that a
multifunction tablet computer offers; they are simply looking for a device that can provide them
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with their favorite reading materials. Current eReader consumers read many different newspapers
and magazines, as well as varying genres of books. Research shows that male eReader
consumers are more likely to use their eReader to read newspapers or magazines, while female
eReader consumers more likely to use it to read books. Overall, eReader users read more books
than the average American adult, with 26% of eReader users reading 21 or more books a year
compared to 19% of average Americans.
NOOK Consumer Profle
After examining the profles of the NOOK consumer and the overall eReader consumer, it appears
there are many similarities. The most common traits exist in the demographics and reading habits
of the eReader consumer. Though there are similarities, there are two distinguishing factors of the
NOOK consumer; women make up a higher number than men in total consumers, and users have
a strong brand loyalty to Barnes & Noble.
Demographics
As mentioned before, there are many similarities in demographics between the NOOK consumer
and the eReader consumer. NOOK consumers are primarily between the ages of 35 and 54 and
are well educated, with consumers having a bachelor or some type of post-graduate degree.
These consumers are also married and either do not have children or do not have children living
at home. NOOK consumers are just as wealthy as eReader users, earning an annual household
income in the range of $75,000- $100,000.
Unique to the NOOK is the fact that women make up a higher percentage than men in total
consumers. Research examining Barnes & Noble websites shows that women visit the
sites almost 20% more often than men. Women also seem to be more of a target due to the
personalization options available to NOOK users, such as the stylish designer cases available
and the fact that one can add personal photos to their NOOK.
Tech-Savvy
Like the typical eReader consumer, these female NOOK consumers consider themselves
tech-savvy, but not technology fanatics. They also use the Internet very frequently, using it for
everything from listening to the radio to paying their bills. These consumers see their current
technological devices, such as their laptop computer or mobile phone, as extensions of
themselves and cannot imagine a day without them. NOOK users are also very involved in social
networking and greatly appreciate the sense of community that it provides.
Loyal to Barnes & Noble
Through current advertising campaigns and purchase incentives, it is obvious that the NOOK
consumer is very loyal to the Barnes & Noble brand. NOOK users have been Barnes & Noble
customers for years and turn to the company to meet all of their reading needs. They trust that
Barnes & Noble will always have what they are looking for and have therefore developed
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a relationship with the overall brand. Books have always played a large role in their lives, and
Barnes & Noble has been a partner in that journey.
NOOK consumers feel like they are greatly valued by the company, especially through the
rewards that Barnes & Noble provides through its loyalty program and online membership
program. These consumers feel a sense of community when they frequent Barnes & Noble,
whether it is to pick up the newest best seller or to grab a cup of coffee at the in-store caf.
Avid Book Readers
NOOK consumers are just as devoted to reading as eReader users. They read more books than
the average American and read more often overall. Unlike the eReader user, NOOK consumers
tend to use their NOOK primarily to read books, rather than newspapers or magazines. This
corresponds with the MRI statistic that women are more likely to use their eReader to read books.
This trait can also be attributed to the fact that the NOOK consumer loves books, both electronic
and in print. In this strong love for books, NOOK users appreciate the expansive eBook library
that Barnes & Noble offers, and they see the NOOK as an innovative, convenient way to have all
of their favorite books at their fngertips.
eReader Consumer Buying Process
Before entering into the eReader buying phase, consumers must frst decide that they even want
an eReader. Many people are fond of reading books the old-fashioned way and do not have
any interest in reading them digitally. Furthermore, people who may be on the fence about buying
an eReader may eventually be turned away by their complexity upon using them. But, once a
consumer has decided that they do indeed intend to purchase an eReader, their options open up
widely.
The frst thing that consumers generally do while beginning the eReader buying process is online
research. Consumers will look at company websites, online reviews and consumer reports to
compare products. Company websites, including Barnes and Nobles, offer extensive coverage
of their eReader products. Company websites contain links to eReader descriptions, features,
accessories, customer support information, reviews, and even their own consumer blogs. In
addition to checking out the companys website, consumers will look at online reviews and
published consumer reports written by experienced eReader users. Many websites offer written
content and videos comparing specifc eReaders on their features, functionality, design, and
the extent of their available library content. Online blogs also compare eReaders and deliver
advice on which is best for fulflling certain needs. Also, consumers may talk to friends, family or
colleagues who own eReaders to see if they are satisfed with their product.
Consumers must decide how much they are willing to spend on an eReader because money has
a large effect on their choices. The NOOK, Kindle, and Sony Reader are much cheaper than the
iPad, for example. Additionally, consumers must decide what they want to use the product
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for. If they want it solely for the purpose of reading content, then they should probably buy a
less expensive eReader, like the NOOK or Kindle. If they want to read content, surf the web,
listen to music, and watch movies on the device, then they should probably buy an iPad or other
comparable device. Location also comes into effect when purchasing an eReader, especially for
the NOOK. Since Barnes and Noble offers so many incentives for people to purchase a NOOK,
including free content only available in-store and discounts, people may be more inclined to buy
the NOOK if there is a Barnes and Noble store nearby their home or offce.
Once all information and product comparison data is gathered, a consumer will likely do one of
two things: They will either buy the product they like best or they will visit retail stores to test the
products out for themselves. Barnes and Noble gains a clear advantage over its competition
when consumers enter into their retail stores to test the NOOK. Barnes and Noble committed
a lot of money towards their in-store sales boutiques, so the display of the NOOK is pretty
appealing and the salesmen are well-versed in their knowledge of the product. Consumers who
visit Barnes and Noble stores are likely to fnd out everything they need to know about the product
and will have the opportunity to use the NOOK for themselves.
After testing the various devices, whether its at Barnes and Noble for the NOOK or Best Buy for
comparing all of the most popular eReaders, a consumer will fnally decide which product is best
for them. Hopefully for Barnes and Noble, the NOOK is the selection.
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COMPETITIVE ANALYSIS
Before diving into the NOOKs competition we need to think about the process of a regular book
consumer. First the consumer needs to decide if they want to read from an actual book or an
eReader. If they choose the eReader, it opens many opportunities that dont only include different
brands, but different sizes, lightings, Internet capabilities, and etc. Thats where these direct and
indirect competitors make each of their differentiating points.
When comparing eBook readers, these are some of the most critical considerations:
Content
An eReader is of little to no good if you cant, well, use it to read what you want. In this
regard, its important to pay attention to the specs of any eBook reader you are interested
in. Many eReaders can display the ePub open e-book format, while some eReaders
(including the Amazon Kindle cant). Instead, the Kindle has a proprietary format, but has a
vast content library compatible with the device as well as support for PDFs and Word
DOCs. Its also important to consider how much content costs.
Display
How big is the devices display? What display technology does the device use? While a
small screen may make a device that much more convenient, it may -- of couse -- make it
more diffcult to read. Displays using e-ink technology make text look just like it would on
paper, and is often the preferred technology for eReaders.
Performance
For your basic eReader, performance is important -- but not hugely important. In the
eBook reader world, performance often boils down to how fast a screen can refresh
(effectively, how fast a page can turn and how quickly you can access menus) and how
long it takes to power up. For eReaders built into more advanced devices like the iPad,
performance becomes important in the sense that it is important to computers.
Wireless
Many eReaders offer 3G connectivity for downloading content wherever you are,
and some eBook readers are also equipped with WiFi. Wireless connectivity is important
for eReaders as it is a convenient way to get content on your device. The Amazon
Kindle and B&N Nook, for example, offer free 3G wireless -- allowing users to download
books, newspapers, blogs and more form virtually anywhere.

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Storage space
The storage space, or capacity for content on an eBook reader, is important for obvious
reasons. Of course, storage space determines how many eBooks you can store on your
eReader simultaneously. It also determines capacity for other fles, including music,
pictures, and even in some cases (e.g. Apple iPad), movies.
Multimedia
As just alluded to, many eBook readers can display multimedia content beyond just
eBooks. Many higher-end eReaders offer a built-in digital music player, and some even
offer external speakers in addition to a standard headphone jack. Some eBook readers
even offer the ability to store and display pictures, while the iPad (and surely other tablet
computers) offer video playback.
Advanced features
Of course, every eReader can display eBooks. Yet, there are a number of other features
that some eReaders do offer. Some eBook readers, including the Kindle, offer a basic,
built-in web browsers that allows users to browse the web for free over the 3G network.
Other advanced features includes music players, the ability to digitally lend books to
friends, text-to-speech capabilities and more.
Battery life

Another important factor to consider when buying and eBook reader is the battery life of
the device. Thanks to e-ink display technology that only consumer battery life when
changing whats displayed on the screen (e.g. turning a page), many eReaders can
provide up to an incredible 2 weeks of reading. In most ways, battery life depends on
whether wireless is on or off, as well as display technology.
Price
Price is the most obvious factor when considering an eReader. Of course, price is
directly related to features offer and the brand recognition of any given device. For a device
with advanced features (like the Apple iPad that is more closely related to a computer than
an eReader), buyers can expect to pay proportionally more.
(direct quote from ereaderleader.com)
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SWOT Analysis- Direct competitors
Amazon Kindle
Strengths
Market Leader
In a study done in 2009, the Kindle sales accounted for 45% of the whole eReader market.
Simple Design
Amazon uses a book-like style layout that helps the consumer learn how to use the Kindle
fast. The consumer can use a keyboard to easily navigate through their library.
Large Library
The Kindle has access to Amazons large library online and can download and purchase
these eBooks wirelessly.
Low Price
The price is set at a mere $139 for the simplest version and will continue to decrease the
price as a reaction to their competition.
Wif and 3G Capabilities
These extras allow the consumer to access their online libraries. Consumers can also post
comments about their reads to facebook as well as other social sites.
Long Battery Life
The Kindle includes the long battery life, which is expected to last more than two weeks.
The batterys longevity comes as a result of the screen not needing power once a book or
article is already being displayed.
Weaknesses
Lack of Brick and Mortar
Amazon sells most of their Kindle eReaders online through Amazon.com. Recently they
added displays in various Target stores, but many consumers may not tie the two together.
Inexperienced Sales Associates
The sales associates who sell the Kindle in Target stores wouldnt have an interest in
the product, because Target doesnt have a special interest in the Kindle. It would be a
product among many others that the sales associates sell..
Opportunities
Best Buy
Within the next month the Kindle will be available at Best Buy among the other leading
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eReaders. This will be important because employees of Best Buy pride themselves on
being experts of all the products they sell.
Threats
High Income Customers
The Kindle may have the upper hand when it comes to the market, but studies show that
they appeal to higher income consumers. This leaves out a wide variety of consumers that
the other eReaders will be able to use to their advantage.
New Consumers
With the continuous price drop in the eReader market, the range of consumers will only
increase in terms of those with lower incomes. The question is, will the Kindle be able to
expand enough to capture those consumers before the other eReaders?
Sony Reader
Strengths
First eReader
Sony was the frst company to start the eReader trend with their Sony reader in Japan in
2005. This initial offering could have served as an advantage over the other products, but
they never exactly took the initiative to do so.
Large Library
In order to build their eBook library, they partnered with Borders Online because they are a
technology company and dont sell books like Amazon or Barnes & Noble.
Low Price
A selling point for Sony is their low price. The $119 price tag for the pocket version of their
readers is perfect for those who are curious about eReaders, but dont want to spend too
much money.
Weaknesses
Dim Screen
Reviews of the Sony eReaders have said the newer eInk screen is quite dim, therefore
harder to read than the other eReaders.
Short Battery Life
The Sony eReaders also have a battery life of a mere 4-5 days, where as eReaders like
the Kindle and NOOK usually last a couple of weeks.
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Opportunities
Wireless
Just recently, Sony came out with their frst wireless eReader, giving consumers the
opportunity to purchase content without connecting to a computer. Although most
eReaders already have this technology, the wireless addition by Sony will bring its up to
speed technologically with its competition.
Touch Screen
Additionally, with the Sony eReaders, you can now move the page with just a fnger swipe
instead of pushing buttons to get through your reading.
Threats
The Kindle
The Kindle is a threat to the Sony Reader because it came out on the market just after the
Sony launched its line. This gave consumers only two options for a while, and many feel
that Amazon offered a superior initial product.
Established Bookstores
New entrants such as the NOOK, which is one of many eReaders that includes a strong
library behind itself, can also jump ahead of the Sony Reader.
Samsung Reader
Strengths
Large Library
The Samsung Reader is partnered with Barnes & Noble for their extensive online library.
Free Books
The reader receives free books from Google when purchased.
Text to Speech
It also has the ability to do text to speech for those who dont want to stare at a screen for
too long.
Weaknesses
Retro
The eReaders are seen as a thing of the future, but Samsungs eReader looks like one of
the past. It looks and feels like a palm pilot which, from a consumers point of view, is very
retro.
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Lacks 3G
This reader also lacks 3G capabilities that most of the other eReaders already offer.
Opportunities
Abroad
Samsung has a broader audience than most other eReaders, including customers in Korea
and the UK. This can help them jump start their device before it hits in the US and can be
very benefcial for working out the kinks earlier.
Threats
High Price
At $399, consumers may not even give Samsung a thought because most eReaders
are declining below the $200 range. The price of the Samsung Reader seems too high for its
capabilities and will be cut from the list of consumer thought because of it.
Ectaco Jetbooks
Strengths
Variety
These Jetbooks have a large variety of readers to choose from. They offer colors in red,
black, grey, and white. Most other eReaders only have one or two colors to select from,
which gives Ectaco a big advantage.
LCD Screen
Also the Jetbook has an LCD screen that consumers have found appealing to read from
that proves faster than formats used by other eReaders.
Formats
The Ectaco Jetbook uses a wide range of fle formats including .txt, .pdf, .fb2, .jpg, .gif,
.png, .bmp, and MP3.
Library
Their large eBook selection comes from the Barnes & Noble library.
Weaknesses
Codes for Books
When downloading books onto the Ectaco Jetbook consumers express a frustration, which
involves having to type in a purchase code when they open each new book.
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Small Defects
The highlighting functions dont work on this device effciently. Small defects, such as the
highlighting, could help establish competitors in this product market above Ectaco.
Opportunities
Multilingual
Since Ectaco is known as a language translator, they have an opportunity to capture a
wider audience with their eReaders. They use this ability to offer a wide range of
languages on their eReaders.
Threats
Unknown
Most consumers dont think of this company when thinking about reading. Consumers may
think that these Jetbooks are language translators as opposed to eReaders.
iRex iLiad eReader
Strengths
Write Notes
The iRex iLiad eReader offers the ability to draw or write notes on it like you would on a
regular book. Consumers fnd this really appealing because it refects an experience that
they would have with a regular book.
Large Library
Along with a few other eReaders, the iLiad also partnered with Barnes & Nobles library in
order to have a wide selection of books.
Touch Screen
It also has touch screen capabilities to turn the pages like a real book.
Weaknesses
High Price
There are several great capabilities with the iLiad, but that comes with a high price more
specifcally a price of $699. Once consumers see other prices that range from $99 to $200
they may decide that the quality isnt worth the price. Also the iPad is cheaper than this
and has more functionality than the iLiad.
Opportunities
Quality
A point that they could sell on is that it is a great purchase for casual readers who want
great quality.
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Threats
Tablets
The iPad is a threat to the iLiad, because of the iLiads price. With more capabilities than
book reading and a lower price, many consumers would rather purchase the iPad and
other tablets.
Borders Kobo
Strengths
Large Library
The Kobo is sold at Borders, able to access the Borders online library. It can also access
the Kobo International store, which offers over 2 millions titles.
Low Price
Along with the selection of books to choose from, the Kobo is now one of the cheapest
eReaders to select from with a price of $99.99.
Weaknesses
Lacks 3G
Simplicity is the Kobos goal, but without a 3G connection consumers will have to load
books through a USB or Bluetooth connection. This may draw the Kobo away from a
consumers mind because there are plenty of other simple eReaders that offer far more.
Opportunities
Abroad
The Kobo was originally sold in Canada and now in the US, targets casual readers who
want a good price on their readers.
Simple Target
They are going for the casual readers will suit their best interest with their low price.
Threats
Simple eReaders
The kindle and NOOK are simple eReaders as well as the Kobo, but include the wif and
3G capabilities.
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SWOT Analysis - Indirect Competitors
Apple Ipad
Strengths
Leader in Technology
When it comes to innovation and the younger generation, most people think of Apple Inc.
Apple is a leader in technology and consumers trust their products. This translates over
into the release of the iPad and why consumers want it so bad.
Male Consumers
Also it seems that the iPad has captured the male population from a study showing that
65% of iPad consumers are male.
Weaknesses
Lighting
The newest Kindle commercial pokes fun at the iPads main weakness, the lighting. Since
the iPad has a backlit screen, it is much harder for consumers to read outdoors and
Amazon is trying to play on that weakness to attract readers to purchase the eReaders
over the tablets.
Opportunities
Apps
Many stores, such as Amazon and Barnes & Noble, created apps for the iPad so they
can move their library from one device to the other. This could help increase purchases
for both products because consumers will be able to read on their casual reader and have
their technology toy as well.
Threats
Samsung Galaxy
Samsung just came out with a tablet called the Samsung Galaxy, which has many of the
same capabilities as the iPad. It may take away from some of the iPads market especially
when it comes to those who are brand loyal to Samsung and now have the choice of
purchasing a tablet from them.
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Asus Color eReader
Strengths
Two Touch Screens
Asus has claimed they are coming out with an eReader that has two touch screens
and folds open like a book so the consumer can fip pages from one screen to another.
Multitask
With these two screens, the consumer can surf the web on one page and read on the other
at the same time.
Color eInk
Also the current reader they have out uses a new eInk screen that shows some color other
than the typical black and white.
Weaknesses
False Promises
Asus has been talking about a two-screen color eReader, but we have yet to see it appear
on the market. This has been going on for over a year now and may eliminate those
thinking about purchasing the product because there isnt any evidence backing up what
they are saying is true.
Opportunities
Tablet Category
Since the Asus eReader has many capabilities that reach further than typical eReaders,
they are more ft in the tablet market. They are targeting the eReader market, but have
most of the same abilities as the tablets. They could make themselves a medium between
the two categories and differentiate themselves that way.
Threats
eReaders and Tablets
The Asus eReader fts in both eReader and tablet categories, but that means more
competition for them. They have to worry about keeping up with iPad technology as well
as with technology that normal eReaders have. They are fairly new to these markets so
this could hurt them because of their lack of experience.
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Books
Strengths
Physical
Books are a physical product that the consumer likes to hold on to.
Emotional Connection
They also have been around the longest and create an emotional connection with their
consumers.
Share
You can share books with friends and write notes in them to make it your own.
Weaknesses
Space & Time
Books take up a lot of space and not everyone has time to visit a bookstore.
Environmentally Unfriendly
With society becoming more environmentally aware, buying paper books are looked down
upon.
Opportunities
eBook Switch
The best way to have great sale is to switch the book itself to an eBook. There are more
opportunities for sales here because of how fast it is growing. Consumers will still be able
to read the book, but will be able to electronically.
Threats
Electronic World
The main threat would be the eReaders and eBooks, but to avoid these threats, regular
book should conform and beneft from the change in this industry. The threats seem
inevitable for the book industry and we will see physical books deteriorate over the next
few years.
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Basic Comparisons Among Them All
Prices
Most eReaders used to be priced anywhere between $200 and $400, but that soon changed with
competition and the introduction of the iPad. Right now the Kobo, with a price of $99.99, has the
rest of the eReaders beat. The market price is expected to lower in the next few months for the
holidays, not to mention to keep up the competition.
An interesting topic Roger Fidler, an eReader expert, brought up when our group met with him
was how Barnes & Noble should use price to get the NOOK out there. He suggested that the
NOOK should be priced at little to nothing so more content purchases would occur. Once you buy
the eReader, you have to buy from their content.
IPad release increasing eReader sales?
Before the iPad was released, the eReader market scrambled to try to fnd features they could
advertise above it. This was a poor choice because consumers kept asking the question: what
does the iPad have to do with the eReader market? When it comes to technological advances,
the iPad is on a different playing feld than these eReaders. It has more functionality and appeals
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to those who have much to do on the go. On the other hand, eReaders typically appeal to a
consumer who loves reading and thats all.
The iPad may be an indirect competitor of the eReader market, but has also helped with the
sales of eReaders following its release this past year. Consumers have become more aware of
eReaders through this tablet launch and in result of that, more purchases have been made. Also
Amazon, Barnes & Noble, and Borders all have apps that can transfer your library from your
eReader to your iPad. This gives the consumer the incentive to have both, or at least buy an app
from these companies if casual reading on an eReader isnt their thing.
Is Barnes & Noble attempting to get ahead of Amazon with their content sales rather than
their eReader sales?
When listing the advantages of each direct competitor above, we discovered something quite
unique. Barnes & Noble is partnered with four of their direct competitors for library content.
Amazon hasnt done this yet and holds their library specifcally for the Kindle. You would think
that Barnes & Noble would want to keep their content only for their eReader, the NOOK, to
increase their eReader sales. However, what they are doing is a very smart way to receive future
sales through many eBook purchases, not just through selling their one eReader.
This brings us to the original question of: is the NOOK is the main concern of Barnes & Noble
or is the content? This would be an opening for their competition made from technological
companies, who dont have libraries. Barnes & Noble may not be focusing on the NOOK entirely
because of that. However, this probably isnt a big problem since we see other companies like
Borders doing the same thing. This might be a whole new advantage that Barnes & Noble and
Borders will have over Amazon.
Best Buy the answer to consumer purchasing problems?
Many of the eReaders are currently sold in Best Buy stores. This will revolutionize the way
consumers compare each of the eReaders. By having each of the readers by one another, the
consumer will be able to compare technology and prices in person. In opinion, having all of the
eReaders in one place will help eliminate some of the competition.
Advertisements for Competitors
Sony had commercials in 2009 where there was a panel of experts to answer questions
concerning the eReader. This helped establish awareness of what an eReader was and what it
could do for those unfamiliar with the product. This differs a lot from the recent Kindle and NOOK
commercials because the eReader wasnt quite established as a product yet.
Then Amazon ran a campaign with snapshots of different people using the Kindle, showing
that the eReader market was past telling consumers the specifcs and benefts. More recently
Amazon made a commercial differentiating itself from the Ipad. In the commercial it showed how
you can read from the Kindle in daylight, where as the Ipad has a glare.
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Works Cited
Securities and Exchange Commission K-10 Report 2010
IBISWorld Industry Report: Book Stores in the U.S.
The Wall Street Journal article: Barnes & Noble on Block
CNNMoney.com: Barnes & Noble Puts Itself Up for Sale
Goodereader.com article: An eReader Price War is HappeningTrends and Forecasts
BN.com: Our Company
Digitaltrends.com: Apple Tablet May Revolutionize
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Shareholders
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