A Detailed analysis of a firm/organization and its industry segment on Porsche AG.

Executive Summary

Porsche has enhanced engineering capabilities which has enabled it to introduce dynamic products that cater to diverse customer segments. Another key strength is the fact that Porsche has a loyal customer base. Porsche’s key competitive advantages continue to be with its research and development. The research conducted by the organization has often been used by other organizations. Its engineering capabilities have helped it to target niche markets in an efficient and effective manner. Porsche has also been able to maintain high levels of quality. The future for Porsche is bright but it needs to diversify its product line and penetrate new markets. This is because of the competitive nature of the global automobile industry. It needs to have clear and precise goals which can help it to attain a strategic edge over its competitors. .

Porsche’s future strategy is to penetrate the newly emerging economies like Brazil, India, China, and Russia. These markets have the highest levels of demand with respect to vehicles. Non-sports cars will be the main products that will be delivered by the organization in these markets. High performance cars with fuel efficiency are being developed as a means of ensuring efficiency and effectiveness. Porsche will continue to focus on its key competitive advantages as a means of ensuring that its key targets can be achieved within a short period of time. The development of a comprehensive strategy is critical for success in the long term.

Introduction

The global automobile industry has rapidly changed with new strategic priorities and business challenges. Automobile manufacturers have to respond to the challenge in an efficient and effective manner. They have to apply sound strategies that can be used for achieving success within a short period of time. Porsche SE is a famous manufacturer of luxury cars and sports cars in the world. The organization is based in Germany. It has a presence in major automobile markets of the world like the United States, Europe, and Asia. The success of the organization has been its ability to deliver quality and efficient products for the luxury customer. The organization has made significant investments in technology and innovation in order to achieve efficiency and effectiveness. Porsche’s key competitive advantage is with its small size and niche markets. However, external and internal environmental variables have transformed the business approach of the organization. This is because of the fact that globalization has deregulated foreign markets and enabled customers to have greater choices with respect to selecting automobiles. Rising fuel prices, environmental protection concerns, government regulation, and economic recession are major threats that need to be tackled by Porsche. This report will seek to develop a comprehensive analysis of the external and internal environments in which Porsche operates. It identifies the key strategic issues that plague the organization. Finally, the report will make a number of recommendations which can be used for achieving strategic edge and competitive advantage for the organization.

SWOT Analysis

Strengths

One of the key strengths of Porsche is that it is an outstanding brand because of its aggressive marketing strategies. Its products are known for being robust, elegant, and powerful. Porsche has enhanced engineering capabilities which has enabled it to introduce dynamic products that cater to diverse customer segments. Another key strength is the fact that Porsche has a loyal customer base (Bennett, 2003: p. 34).

Its product line is for premium customers who want high end luxury vehicles that are in accordance with their lifestyle. Porsche is agile when compared with its competitors as it has known to form partnerships with key industry players in order to improve its operational capabilities.

Weaknesses

Porsche is highly dependent upon the US market for its sales and revenues. This makes it vulnerable to the fluctuations in the American economy. Additionally, Porsche offers specific products that target niche markets. It does not have a diversified product portfolio that would help it to maintain a competitive advantage over its competitors. The size and revenues of the organization are significantly smaller when compared with its key competitors (Chris, 2005: p. 65).

Threats

Porsche faces significant competition from high-power brands like Ferrari. This has the potential of reducing its brand value. The demand for Porsche vehicles is declining in the core American market. Finally, the economic downturn has the potential to threaten the sales of the organization (Chris, 2005: p. 65).

Opportunities

Porsche can use its existing brand to create diversified product lines that can target new customer segments like singles, families, and students. Additionally, Porsche can target new markets like the Middle East and China. Porsche can also use its relationship with Audi and VW in order to achieve efficiency and effectiveness (Chris, 2005: p. 65).

PEST Analysis

Political Factors

The global automobile industry has been affected by the rise in oil prices in recent years in the Persian Gulf region. The Middle East which remains the largest producer of oil in the world is an unstable area. Recent political turmoil in the region with demands for greater freedoms by the local population has raised concerns about the stability of oil producing states. Additionally, the potential conflict with Iran could also jeopardize world oil supplies  (Graham, 2005: p. 72). All of these factors have a negative impact upon the automobile industry. Fuel efficiency is thus a major concern for key automobile producers like Toyota, Honda, and others. Porsche continues to produce high-end luxury vehicles which do not focus on fuel efficiency. Another major concern is that governments have sought to impose environmental protection laws so that automobiles reduce their carbon footprint on the environment.

This has increased the costs for organizations like Porsche that are working in a competitive environment. Finally, there is an increasing focus on green and clean energy sources. There is a move towards the development of hybrid vehicles that use electric power as well as conventional fuel systems.

Economic Factors

The economic recession has created a significant impact upon the automobile sector. The average growth of the global economy was 3.8% in the year 2011 as compared to the estimated projection that the economy would grow at 5%. Growth in the US and Europe was significantly slower as compared with previous years. The downturn has curtailed customer spending while it has led to high levels of inflation and unemployment. The global automobile industry has witnessed a decline in sales with respect to high-end luxury vehicles. Customers are purchasing vehicles that are cost effective and fuel efficient. However, the global automobile industry did register significant growth in emerging economies like Russia, Brazil, India, and China.

Social Factors

The demand for luxury sports cars continues to increase with the rise in incomes of many customer segments. This is because upper class customers want powerful vehicles that are in accordance with their lifestyle and status. They want to have products that have fancy gadgets and applications. Porsche continues to target this niche market but this has impacted its profitability. The majority of automobile owners want vehicles that are cheap and fuel efficient. This is because of the rise in oil prices along with the economic downturn that has led to negative outcomes (Jobber, 2001: p. 82).

Technological Factors

Technology remains a critical element of productivity and output in the automobile industry. This is because technology helps to streamline and automate key processes. It eliminates wastage and increases quality of products. Finally, it helps in the development of agile, reliable, and scalable business structures.

Porter’s Five Forces

Threat of New Entrants

The threat of new entrants is small in the global automobile industry because they need to achieve economies of scale which can help new organizations to control the prices of products (McDonald, 2001: p. 102). Porsche does not have the economies of scale to design new technologies. Porsche’s has significant shares in Volkswagen AG which helps it to have access to resources that can increase its competitive edge and profitability.

Threat of Substitutes

The major substitute is used cars which compete with the luxury cars produced by Porsche. The recent economic downturn has forced customers to purchase used cars which are cheaper when compared with luxury cars. Porsche continues to focus on niche markets which help to have access to customer loyalty because of its commitment towards innovation and creativity (McDonald, 2001: p. 101).

Power of Buyers

The power of buyers is medium as Porsche offers innovative products along with after-sale service, reliability, and quality. This makes it a loyal brand for the various customer segments.

Power of Suppliers

Suppliers provide a number of components and spare parts for automobile manufacturers. They also help to transport the products to different customer segments. Porsche has strong relationships with its suppliers because of its strong brand image and robust relationships (McDonald, 2001: p. 92).

Competitive Rivalry

The competitive rivalry is very strong for Porsche as it has to face competition from American and Japanese automobile manufacturers.

Industry Structural Analysis

The global automobile industry has been affected by the ongoing economic recession but it has displayed a remarkable resilience as evident in the fact that over 70 million motor vehicles were produced in the year 2011 (Hines, 2011: p. 67). Asian countries like Japan, India, and China have witnessed a 9% increase in production. The United States remains the major market for automobiles as evident in the fact that 16 million vehicles were sold in the country in the year 2011 (Hines, 2011: p. 67). European automobile companies have started to make forays into the global automobile industry with Germany and Italy becoming major players in the industry. The structure of the global automobile industry has changed since the 1990s with Japanese manufacturers focusing on fuel efficient and cost effective vehicles (Hines, 2011: p. 67). On the other hand, organizations like Porsche, BMW, Lamborghini, Ferrari, and others have concentrated on luxury vehicles. Globalization has rapidly transformed the global automobile industry as deregulation has helped organizations to penetrate foreign markets. Customers now have access to wide variety of models based upon competitive prices due to the phenomenon of globalization. Another major concern among global automobile manufacturers is the desire to experiment on alternative energy sources. Hybrid vehicles which run on electricity as well as conventional fuels are being designed and developed. These vehicles offer comfort, convenience, and fuel efficiency. They are in accordance with the demands of customers to have fuel efficient vehicles that do not have an impact upon the environment. Porsche has been successful in the year 2011 because it delivered an estimated 118,868 vehicles to its target markets (Williams, 2012: p. 49).

This was a record for the organization as it had traditionally delivered 100,000 vehicles annually due to its small size (Williams, 2012: p. 23). The success was attributed to the new Cayenne model which is the next generation luxury car for its customer segments. This model offers sleekness, elegance, comfort, and power which is according to the demands of the customer segments. The American market continues to be targeted by the organization as over 15% of its deliveries were for this market. Europe is the next largest market where Porsche enjoys a competitive advantage. Porsche’s key competitive advantages continue to be with its research and development (Hoffman & Kaplinsky, 2010: p. 81). The research conducted by the organization has often been used by other organizations. Its engineering capabilities have helped it to target niche markets in an efficient and effective manner. Porsche has also been able to maintain high levels of quality. The future for Porsche is bright but it needs to diversify its product line and penetrate new markets. This is because of the competitive nature of the global automobile industry. It needs to have clear and precise goals which can help it to attain a strategic edge over its competitors. Moreover, the organization needs to have a comprehensive framework for success which is based upon efficiency and effectiveness.

Strategic Group Analysis

Porsche’s strategic advantage is with its engine assembly line that is based upon the organization’s expertise and talented engineers. The engine assembly line has been responsible for key innovations like engine design, safety, driving performance, styling, comfort, and luxury. The new engine assembly line has the capacity to adjust the height of work trolleys. This helps in the development of ergonomic working methods that enable the worker to have greater levels of precision and freedom when performing work activities. Porsche’s new engine assembly is based upon careful planning and coordination so that it achieves the critical objectives in an efficient manner.  A key competitive advantage of Porsche is the fact that it has always focused on exporting its models to different markets (Humphrey, 2011: p. 91).  For instance, Porsche continues to directly export its models to China which is a very large market. This strategy is based upon achieving economies of scale. Porsche does not want to make significant investments in any new market. Unlike other competitors, Porsche does not manufacture its products in China as a means of reducing its risks and costs. It offers direct dealerships to a large number of Chinese organizations as a means of ensuring efficiency and effectiveness. Porsche which was once known for its unique design and corporate structure is now transforming itself into a mass producing automobile manufacturer. This is evident with its 911 and Cayenne model. It has also developed the Panamera which is a four seater vehicle while it has offered Boxter and Cayman which are small sports cars that are relatively cheaper. Product diversification is one of the future goals of the organization as it seeks to compete in an industry that is characterized by significant fluctuations (Humphrey, 2011: p. 91).

Porsche has also sought to move towards diesel and hybrid models as a means of responding to new trends in the automobile industry. This has been a result of the investments made in innovative technologies that enhance car performance and engine efficiency. Porsche’s success has been because of its different marketing and sales strategies in different markets. For instance, the organization enhances customer driving experiences through race tracks within the United Kingdom. This helps to give the customer an idea about the benefits of the organization’s new products. Porsche’s future strategy is to penetrate the newly emerging economies like Brazil, India, China, and Russia (Schmitt, 2011: p. 34). These markets have the highest levels of demand with respect to vehicles. Non-sports cars will be the main products that will be delivered by the organization in these markets. High performance cars with fuel efficiency are being developed as a means of ensuring efficiency and effectiveness. Porsche will continue to focus on its key competitive advantages as a means of ensuring that its key targets can be achieved within a short period of time. The development of a comprehensive strategy is critical for success in the long term.

Business Strategy and Competitive Advantage

Porsche’s business strategy is based upon deciding the suitability of its existing or prospective ventures. This is because the strategy is aligned with the mission and organizational capabilities. Another objective is to evaluate the economic viability of new approaches. Specific evaluation tools are employed in order to determine the key strengths and weaknesses of the organization. Feasibility is another objective where the goal is to ensure that adequate resources can be allocated for achieving competitive advantage. Cash flow analysis and forecasting is used as a tool so that the financial viability of new ventures can be determined by the organization. Acceptability is another objective for the management because they need to devise corporate strategies which meet the stakeholders’ expectations (Williams, 2012: p. 53). The future financial and non-financial outcomes are elucidated in an efficient manner in order to ensure success in the long term. Porsche’s competitive advantage is with its ability to provide high levels of safety, quality, performance, experience, and luxury to its customer segments. Its products are designed on innovation in technological applications which help to ensure efficiency and effectiveness. The profitability of the organization is based upon slow and gradual expansion. The current competitive advantage of the organization is the fact that Porsche targets niche markets. Its small size helps it to reduce its overheads and ensures that efficiency can be attained within a short period of time (Williams, 2012: p. 53).

Major Strategic Issues

The following are the major strategic issues which Porsche faces:

  • Porsche remains dependent upon the American market for its sales and revenues. This is a major problem as fluctuations in the American market seem to inhibit the ability of the organization to increase its sales and profits. Porsche’s market penetration in key markets like China, India, Russia, Brazil, and Middle East remain small. Hence the new strategy should focus on penetrating these markets in an aggressive manner
  • Product diversification is another major problem that is faced by Porsche. The image of the organization remains that of a luxury vehicle manufacturer. It needs to make investments so that it can become a mass producer of normal vehicles. This can help it to target new markets and respond to external variables like economic recession, rising fuel prices, and changing customers’ preferences
  • Porsche’s small size and market niche makes it highly vulnerable to political, social, and economic variables. The organization must have the ability to restructure its core strategies as a means of overcoming weaknesses
  • Porsche also faces significant costs in the development of new technologies with respect to engine safety, engine design, vehicle comfort and luxury. Porsche has to outsource these activities in order to maintain its profitability
  • Porsche continues to face competition from Japanese and American manufacturers. Japanese manufacturers are known for their innovation, cost effectiveness, and fuel efficiency. Porsche has to focus on reducing its process and emphasize on fuel efficiency so that it can target the mainstream markets.

 

Recommendations

The following are the recommendations for the organization:

  • Global economic recession is a major threat for luxury car manufacturers like Porsche. The organization needs to counteract this threat by forming collaborations with other organizations. It should leverage its key strengths as a means of overcoming weaknesses through strategic partnerships, mergers, and acquisitions with other organizations. This can help the organization to achieve efficiency and effectiveness.
  • A diversified product portfolio can help Porsche in the long term. It should not focus on mass producing cars but focus on specific niche markets where its products can deliver the desired financial and non-financial outcomes.
  • Porsche needs to penetrate Asian and Middle Eastern markets in an aggressive manner. This means that it should reduce its dependency upon the American market. Specific products should be tailored with the customers’ expectations and industry trends in diverse markets like India, China, Russia, and Middle East.
  • A comprehensive strategy should exist so that Porsche’s products can be fuel efficient without compromising on quality and innovation.
  • Investments in hybrid and diesel models can pay dividends as it will help to increase the reputation of the organization
  • Loyal customers should be rewarded with discounts on maintenance and after-sales support. This helps to ensure that the highest profitable segments can derive benefits from the organization

 

Conclusion

Porsche has been successful because of its emphasis on efficiency and effectiveness. The organization has sought to focus on quality and excellence. The competitive advantage of Porsche is because of its R&D along with its engineering capabilities. Its small size makes it able to target niche markets. The success of the organization has been because of its aggressive branding and marketing strategies. It has a visible brand image along with a loyal customer base. Porsche needs to make strategic changes in the future in order to achieve efficiency and effectiveness. firstly, it needs to expand into international markets that offer considerable growth. Secondly, it needs to offer product diversification so that it can target specific niche markets. Thirdly, it needs to reduce its dependency upon the US market as a means of ensuring efficiency. Finally, investments in hybrid and diesel models can pay dividends as it will help to increase the reputation of the organization. Loyal customers should be rewarded with discounts on maintenance and after-sales support. This helps to ensure that the highest profitable segments can derive benefits from the organization

 

Bibliography

Bennett, R. (2003). International Marketing Strategy, Planning, Market Entry & Implementation. London: Kogan Page Limited.

Chris Phillips, I. D. a. R. L. (2005). International Marketing Strategy Analysis, Development and Implementation. London and New York: Routledge.

Graham, P. R. C. J. L. (2005). International Marketing (twelfth ed.). New York

Jobber, David. (2001), Principles & Practice of Marketing, 3rd ed. London: McGraw-Hill.

McDonald, Malcolm. (2002), Marketing Plans: How to Prepare Them. How to Use Them, 5th ed. Oxford: Butterworth-Heinemann.

Hines P (2011) Creating World Class Suppliers: Unlocking Mutual Competitive

Advantage, London: Pitman Publishing.

Hoffman K and Kaplinsky R (2010) Driving Force: The Global Restructuring of

Technology, Labor and Investment in the Automobile and Components Industries, Boulder, Colorado: Westview Press.

Humphrey J et al (2011) Globalisation, Foreign Direct Investment and the Restructuring of Supplier Networks: The Motor Industry in Brazil and India, in Kagami M, Humphrey J and Piore M (eds) Learning, Liberalisation and Economic Adjustment, IDE: Japan.

Schmitt, B (2011). International Automobile Industry: Strategic Report. Research Markets

Williams, R (2012). Porsche Company Report. Sage Publications

How Many Books Will I Sell During My Book Launch? Top 10 Most Frequently Asked Questions by Authors

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As a book promotion expert, I receive a LOT of requests for consultations from authors who are preparing to publish their books. Some are experienced authors who have published in the past, either self-published or through a royalty publisher. Others are first-time (and usually self-published) authors. During our initial consultation, I tend to hear many of the same questions again and again. As these questions are so key to authors before they decide whether or not to do a full-blown "bestseller launch" for their book, I thought it might be a good idea to pull together my "Top 10 Most Frequently Asked Questions" I am asked by authors on almost a daily basis.

Q1: How many books will I sell during my online book launch?

First of all, let's define "the launch" as a 24-48 hour period of time in which we will be driving traffic to buy your book. Asking how many books you will sell during that time is really like asking "How long is a piece of string?" It depends upon so many factors that we can only, at best, give a very broad figure. I have had clients who sell as few as 50 books during a launch and others who have sold around 1000. The average self-published author tends to sell between 300 and 500 books during a launch. Those with major publishers may sell twice that amount, not necessarily because the publisher helps with your promotion, but more because people recognize the "brand identity" of the publisher and are more willing to take a chance on the title. And of course, if you are not a first-time author you will probably sell more books if people know your name already. The key to selling more books is to devote a fair amount of time well before your launch to cultivate and grow your audience. That's why I spend the first two months of working with my clients developing strategies and systems to build their platform and mailing list before anything else.

Q2: How do I become an Amazon bestseller?

If your book sales are among the top 100 in any category on Amazon, you are technically a "bestseller." You do not have to be in the Top 100 of all books. There are dozens of categories and sub-categories on Amazon, and if you achieve a sales ranking in the Top 100 in any of these, you can say you are a bestseller. Of course, it is always nice to hit the "Top 20" or the "Top 5" or (best of all) the # 1 sales rank in one or more categories.

Q3: How many books do I need to sell to be an Amazon bestseller?

Again, this is not a question I can answer definitively because being an "Amazon bestseller" is a relative title, and it depends upon: 1) how well other books in your categories are selling on your launch day and 2) how competitive your categories are. Some categories like "Religion and Spirituality" or "Business and Investing" are extremely competitive with thousands of titles up against many famous authors for the top position on the list. Other categories, such as "channeling" or "alternative medicine" are less competitive.

Q4: How can I choose the category I will be in on Amazon?

If you were to ask this question of some of the top publishers (I have), the common answer you will receive is this: "You can not." However, I have found this not to be 100% true. Let me explain.

First of all, when you submit a book for publication through Lightning Source (for example), you choose 2 "BIC" ( Book Industry Communication) categories, which are standard categories that are used by all publishers and distributors. Now the problem lies in how retailers interpret these categories. Think of the last time you went to look for a book in the shops. Sometimes it might be in the "self help" category, while other times it might be in the "spirituality" section, etc.

Amazon "interpretations" your BIC categories according to their "virtual" bookshelf. To make things even MORE confusing, Amazon UK, Canada and US may not interpret your book at all in the same way. Even major publishers have told me they have no real control over this. Some authors find their books placed in very strange categories. BUT here's the big secret I have found: If your book is not ranking in the right category, you CAN get Amazon to change it via Author Central in the US and the UK. Just write to them and ask them to recategorise your book. One of my recent books was placed in a totally irrelevant category, but when I wrote to Author Central, they very quickly and painlessly put the book into the categories I requested.

If you are unsure of what categories to choose, your best bet to get your book in the RIGHT category is to do some market research to find out which categories other titles appear that you feel are the closest in content or message to your own book. Do not go for a "top level" category like "Business and Finance" or "Health and Wellness." Go for a sub, or even sub-sub category. increase your likelihood of reaching the top of the ranks (as it will be less competitive) bit it will also increase the likelihood of people who are looking for your book and will find it, because Amazon's system will group it together with similar books.

Then, make triple sure you get placed correctly, do two more things: 1) make sure your title, subtitle, back cover copy and description use keywords that help point the folks at Amazon in the right direction AND 2) start putting some TAGS on your book page that help people find your book.

PLEASE NOTE: All of the above is mainly with respect to PRINT books. For Kindle, you can actually SPECIFY two categories via Kindle Direct. These bypass the BIC settings altogether, as Kindle is an Amazon proprietary format.

Q5: Why do not I see my book listed in a category on my Amazon listing?

You will not see your book listed in a category other than it is in the Top 100 of that category. Until that time, all you will see is its overall sales rank, which changes every hour. Amazon US and Canada tend change just past the top of the hour, while Amazon UK offers to change at 40 minutes past the hour.

Q6: How can I find out in which categories Amazon will place my book?

It's not always 100% reliable, but the best way to "guess" which categories you will appear is to scroll all the way down to the bottom of the screen until you see the words, "Look for Similar Items by Category." There you will see several suggested categories that are likely to be where your book will be placed when ranked. If these categories look range or irrelevant, refer to Q4 above.

Q7: How can I track my rankings?

So far, Amazon does not have any legacy tracking system for rankings, which means you basically have to watch the rankings yourself like a hawk during the launch, as they change every hour. Typically, my clients and I stay up for the full 24 hour period in shifts, in constant communication on Skype, to watch the rankings. The only way I have found so far to "log" your success is to take screen shots. I use the program "Jing Pro" for this. There is a free version, but the Pro version is very reasonable, and has many worthy features. You can download it at http://www.techsmith.com/jing/ . DO take screenshots of EVERY stage of your rankings. They make great images to add to your promotions when you are sharing the success of your book with readers, media and event managers. To track your rankings for OVERALL book sales, see question 8.

Q8: How can I track my actual sales?

Tracking sales is another matter alike. Of course, the most reliable method is when you receive your royalty report and payment from your publisher or printer. However, these can some to you months after your launch. There are two ways I have discovered that can give you a ball-park figure of your sales during a launch. Once is to use your Amazon Associates link on your purchase page, in which case you will see the sales appear within a few days in your Associates account. Another is to use an online tracker such as Novel Rank at http://novelrank.com , which can show sales on a daily and monthly basis. They also show, in numbers and in graph format, your overall sales rankings (not category rankings) over a given period. Bear in mind, to get the best from this service, you need to start tracking your book on their site several weeks in advance of your launch.

Another option is to sign up for Amazon Advantage, although as far as I can tell, you can only sign up for this if you will be directly supplying Amazon with inventory. If a company such as Lightning Source will be printing your books on demand or you will be using a subsidiary publisher, you will need to speak to them about whether or not you can use Amazon Advantage, as they will be fulfilling the sales and sending you the payments and sales reports (of course they will also have some sort of reporting system for your sales as well, which will tell you your overall sales, not just to Amazon).

Kindle sales are updated once a week in Kindle Direct.

Q9: How much money will I make on book sales during my launch?

This depends completely upon:

  1. How many books you sell
  2. The retail price of your book
  3. The cost of printing your book
  4. What your royalty arrangement is with your publisher (if you have one)
  5. Whether or not you use your associates account for sales.

Let's say you have a 250 page book that sells for $ 15 and you sell 500 books on your launch day. That is a gross intake of $ 7500. Amazon pays you according to whatever wholesale "discount" you have agreed to sell your books to them. Let's say you have agreed to sell your book to them for a 55% discount off the retail price (a fairly common figure, although this can vary). That means they will pay your publisher 45% of gross, which is $ 3375. If you are the publisher, you will receive that money from Amazon.

From that amount, you need to deduct your printing costs. The cost of printing a 250 page book through a company like Lightning Source is around $ 4.15 ($ 0.90 per unit and then $ 0.013 per page), which means 500 books would cost $ 2075. Deduct that from what Amazon will pay you, and that leaves a net profit of around $ 1300.

If you are going 100% self-published, you will make the whole $ 1300. But if you are receiving a percentage of net from your publisher, you would take the percentage from this amount. Many subsidiary presses take 50% of net, which means you would make $ 650on 500 books. If you are working with a royalty publisher who pays you a given percentage of retail or net, you will have to calculate it accordingly.

If you use your Amazon Associates link during your launch, you can earn between 4% and 7% of your retail sales as a commission. In other words, if Amazon were to sell 500 books at $ 15 (although they will tend to sell it at a lower price), you would make an extra $ 0.60 – $ 1.05 per unit. You ALSO make a commission if your buyers come to buy other products at the same time. It all adds up, so it's worth making sure your links are in place during a launch.

Please note that these figures were accurate on July 26th, 2011.

Q10: What's the real benefit of doing an Amazon bestseller launch?

I'll be honest with you: it costs a heck of a lot more to run a bestseller launch than you will receive in immediate monetary returns. I think you have probably already deducted that doing an Amazon bestseller launch is NOT going to make you lots of money selling books. So it does not beg the question why people bother to do them at all, and why people like me are continuously booked months in advance to do these launches.

So here are some of the real advantages of doing an Amazon launch:

  1. It builds your online platform significantly, which absolutely leads to more business for you
  2. It establishes long-term relationships with dozens of networking partners
  3. It raises your credit as a professional, which has an impact upon your income
  4. It establishes you as a leading expert in your field, making you a thoughtful-after media guest and keynote speaker
  5. It just plain feels) author to say you're a bestselling (especially a # 1 selling) author

Deciding to do a bestseller campaign should not be an impulsive decision, nor should it be entered with rose-colored glasses. My most successful clients are those who entered our work relationship with this level of understanding. They did not have unrealistic expectations, and they took the "kudos" of their bestseller status to build stronger and more viable businesses that could only have come about as a result of their Amazon bestseller campaign. I think most of these would tell you their decision to do a launch made a positive difference in their business.

I hope this article is useful to any of you who are currently preparing to publish a book in the coming year. Please do leave comments below and feel free to contact me if you have any questions about this content.

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