Marketing in Action Case Real Choices at Amazon In marketing, yesterday\'s succe
ID: 392063 • Letter: M
Question
Marketing in Action Case Real Choices at Amazon In marketing, yesterday's success quickly becomes old news. In addition, periodically on select items sold by Amazon offers How should one of the world's largest retailers plan to build on 0 percent APR financing with 12 equal monthly payments. One its' previous achievements? In the retail marketplace, it is beof the key benefits to Amazon is that compared to the use of coming harder for companies to differentiate themselves from traditional cards like Visa, MasterCard, or AmEx, transaction the competition beyond simply price. Amazon is now faced procssing costs for its Prime Store Card are lower. with this challenge and must develop offerings to protect and grow its customer base. One of its primary offerings to meet stores have maintained over online retailers is the ability to this task has been the creation of Amazon Prime. The service provde customers with instant gratification. Amazon aims was created in 2005 offering free two-day shipping within the todecrease that advantage through its services. Recently U.S. on qualified purchases. The initial annual membership fee introduced in select cities is Prime Now. a service that allows was $79 and also allowed discounted one-day shipping rates customers to receive their order within one hour for a fee of on those same purchases. In 2014, the fee was increase to $99 $7.99, or within two hours for no additional fee. Currently and more services were added to increase customer value One of the best benefits that brick-and-mortar retail the products available for Prime Now delivery are limited to Prime Instant Video allows customers to stream movies 15,000 to 40,000 available items, which may seem like a lot and TV shows to their web browsers or multiple Amazon video but Prime members currently have access to millions of items compatible devices. The current library of tens of thousands of to select from for two-day shipping. Prime Now is definitely an titles provides a wide array of choice to lure potential custom- innovative service, but in some markets it is faced with other ers. Subscribers can also purchase online video subscriptions competitors for on-demand delivery offerings, like Google from premium content providers like Showtime, Starz, and Express and UberRush. other streaming entertainment channels. The objective of the add-on services is to attract new customers to Amazon Prime in Prime umbrella. Prime Pantry is an option by which members a crowded competitive environment. As of 2016, Netflix is the can fil a virtual box with groceries and household products world's largest provider of streaming video content with more and have them delivered for $5.99 per box. Prime Music offers than 75 million subscribers. In addition, Hulu is a joint venture ad-free access to playlists and a catalog of more than1 mil- of Walt Disney, 21st Century Fox, and Comcast's NBCUniversallion songs and albums. Prime Photo provides unlimited photo that similarly provides streaming services. Amazon continues to establish more services under the storage on the Amazon Cloud. This wide variety of associated One of Amazon's latest additions to its Prime service is the services draws the attention of numerous varied competitors Prime Store Card. The card rewards subscribers with 5 percent and the key question as Amazon move forward is: How will cash back on all Amazon purchases. Or, in lieu of the 5 percent the company successfully manage such a large portfolio of of cash back, members can choose a tiered financing option for ferings? For success to be sustained over time, Amazon must purchases more than $149. In this plan, when customers reachcarefully consider what long-term strategies are necessary to cost thresholds they can avoid paying interest if the outstand continue to make Amazon Prime a profitable winner in a com- ing balance is paid within 6, 12, or 24 months, as applicable.petitive marketplaceExplanation / Answer
3.30 The primary decision problem at Amazon is to think about ways and long-term strategy in which Amazon Prime can become a profitable winner for the company. Also the company needs to think about innovative ways in which its business can maintain its distinctiveness in future.
3.31 The factors which may affect the success or failure of Amazon Prime are:
3.32 The various alternatives that Amazon may explore to make Amazon Prime profitable and a hit among consumers, are:
3.33 In my views, the company can plan to reduce the subscription fee for Amazon Prime. Price becomes the most initial and one of the major roadblocks due to which consumers are hesitant to adopt Amazon Prime. The reduction in subscription fee would not have a major impact on the business of the company. This is so because when the consumers will become Prime members, they can resort to impulsive buying so as to capitalize on the benefits offered by the Prime program. The increase in revenues will be manifold and thus the reduction of subscription fee would not have any major business impact.
3.34 My recommendation is quite easy to implement. The strategy team at Amazon can conduct a survey to understand the roadblocks in consumers buying Prime membership. Subscription fee may get the majority votes. The company can plan a reduction in the same, after discussing with the primary stakeholders as well as the Board members.