Pricing Strategy of Amazon - Assignment Example

Services Marketing ___________________ of Service Firm: Amazon.com, Inc. Encounter: 27.03 Type of Service: Online Journal Access Time of Encounter: 16:00 (GMT -5) 1) What circumstances lead to you going to this kind of service (why?- needs recognized, all- be complete): I needed access to several journals for use as references in my research project. I did not want to buy hard copies as these would be expensive yet I did not have anything else to do with them in future. I needed access to 10 journals for a few hours on 3 different dates. The local library had either issued some of them while I could also borrow 2 at a time. This would require several days yet I wanted to use them in 3 days. My need could be satisfied by Amazon.com that is an online seller and lender of people’s publications on their behalf. 2) Why did you choose this particular company or brand (why not competitors- be thoughtful- why is this brand important to you)? Who are the other competitors? I chose Amazon.com because the company has maintained a strong reputation in service delivery. In 2012, the company was listed 3rd by Forbes among 10 world’s most innovative companies. This is an indication of good quality services, which is an aspect associated with innovativeness. The rating also reflects consumer satisfaction as it is based on customer feedback data among other parameters. Barnes & Noble Inc. is the major competitor with 1,300 book stores in the US and also sells products online. However, I did not choose the company because the company experienced losses recently in its digital business, which does not give a customer the desired motivation and confidence to engage in Barnes & Noble’s online business (hoovers.com). 3) List your general expectations for this service (be complete, ideal vs. minimum, etc.): I expected to download the journals in my computer immediately after making the payment. I also expected to get the correct copies as I had ordered without any missing pages. There was a 25% discount for every third item purchased by the same customer and therefore I anticipated the discount on three journals. Overall, I expected the best service due to the fact that I was purchasing 10 items at once. 4a) Look at the advertisements and web pages (all promotions you can find) for this service. Describe them. Are they targeting the correct markets? How do these ads and promotions impact your expectations for the service? Do they overpromise? How would you change them? (make recommendations—don’t say “I’d leave them the same”) Amazon.com advertises products in a strategic manner that attracts customers’ attention. For every journal, there was a review of the contents and a background of the authors. This information was helpful in making a purchase decision since it highlighted what to expect and therefore I carefully chose those with the required information thereby avoiding unnecessary costs. The advertisements are targeted at a variety of market segments. Customers visiting the company’s website have the freedom to choose the products that match their needs. They can retrieve more information by clicking on the various links that have been provided and therefore are able to make an informed purchase decision (Amazon.com). In my view, the advertisements are not overpromising as the information they contain represents what the product contains. 4b) Describe the Physical Evidence and/or Servicescape of the location (physical cues, the products sold, promotional materials, etc.)- I expect detail here- and analysis, why, how does it fit positioning, use marketing thought here! Amazon.com is an e-commerce company headquartered in Seattle, US. The company has global operations and applies innovative techniques to generate value for customers. Its business strategy depicts a shift from the conventional methods of buying and selling by providing a virtual interphase for vendors and customers to meet with ease. Book publishers do not have to engage in the hassle of finding interested readers of their work. Customers on the other hand need not have to wait for bookshop doors to open for them to buy. Amazon.com provides a link that puts products at a strategic position to satisfy customers in a unique way compared to competitors who have not perfected their online marketing platform. Customers can purchase products from Amazon.com 24hr of the day. There are links for social media such as Facebook, twitter and LinkedIn whereby customers can share with friends about Amazon if they are satisfied with the services offered, which is an important referral marketing strategy (Amazon.com). 5) What were the key elements of Pricing?- be specific and Exact- how does this compare to competitors? Use pricing terms- comparisons- be detailed here!! How much did you pay? Was this what you expected? Was it worth the value? Pricing was based on the publishers’ costs in addition to the cost of shipment if the books and journals were to be delivered as hard copies. I paid $22 per journal, which was less by 25% of the total cost because I needed the documents as soft copies. I felt that this amount was equal to the value of the product. Barnes & Noble had only hard copies of the journals that were sold at $27 per journal. Amazon focuses on a small profit margin from every publisher but the total profits could be bigger because it targets many publishers with a variety of products. The company’s pricing strategy is focused on accomplishing long term profitability by selling many units at a small profit. It encourages customers to buy more as the cost is low, which also motivates publishers to bring more products and hence the company’s inventory is maintained through constant replenishment with innovative products (NetMBA.com). 6) Were there any Technologies used in the service? Describe them: if none- describe who did the service and how they did it… be particularly aware of SST’s- look for hidden ones, don’t be vague or dismissive! You may need to ask employees. The company’s value chain has been strengthened by technological advancements that have enhanced customer satisfaction. This was demonstrated by the promptness with which the online switchboard operator was able to assist me to get the services I needed. Immediately I entered the website, the operator recognized that I was a potential customer based on the key search words I used. He engaged me in an online chat where I explained my needs. In 15 minutes, I had started downloading the documents. The operator assisted me through the entire process and made sure that I was satisfied. I paid using my credit card and there were no delays or issues that could generate fear or doubt. 7) Describe your contacts with employees- how many times did you interact- what were their roles- what did they say/do- be specific? Evaluate the contacts- key Moments of Truth. Apart from the operator who demonstrated knowledge and concern about my satisfaction, I also received an e-mail from the country manager in the US who congratulated me for purchasing the company’s products. He encouraged me to seek more information through e-mail and also check the website regularly for promotions, discounts as well as new products. He also informed me that the company deals with several product lines including electronics, videos and fashion design products among other consumer goods and services. The following day a customer service employee called me to ask if I was contented with the service purchased from the company. She asked me to rate the service on a scale of 1 to 5, whereby 1 was poor and 5 was excellent. I rated it at 5 due to the level of satisfaction that I experienced. All the contacts increased my confidence in the company and motivated me to visit the website once again to peruse other products. 8) Describe the firm’s target market in detail- Demographics, Psychographics, Usage- do the other customers you see reflect the target market? What is customer’s role in the servicescape? (this is an important element—put thought into this) The company’s target market is segmented in to; researchers and students, libraries, retail bookshops and organizations for reading materials. Other product lines are targeted at youth, travellers and sports people for electronics, games and sportswear among others. Customers’ buying behaviors are significantly influenced by the ability to effectively peruse through the products on the website and compare prices with those of competitor products in physical stores. The online business operations also fascinate customers who are adventurous and prefer the company’s products motivated by the desire for new experience. Other customers purchase whenever need arise and the online platform allows them to acquire products any time of day. The customers reflect the target market through their desire for flexibility in business. 9) How would you describe your level of overall satisfaction with the encounter? What exactly made you feel this way? What elements of the Encounter were you particularly dissatisfied with? Did your role/mood have an impact upon your dissatisfaction? My experience with the company for the first time was the best among all other online businesses I have been involved in. My satisfaction was 100% as all my expectations were met. I felt satisfied because of the high level of convenience offered by the company and the promptness in which the service was delivered. I also appreciated the role of innovation in the modern business environment whereby customers and sellers can meet on virtual platforms and engage in business in a better way than physical business dealings. Customers can enjoy conducting business at the comfort of their homes. I played a role in my satisfaction due to my extensive skills in computer and internet applications, which enabled me to effectively peruse the services offered on the website. 12) How likely is it that you will go back to this service firm? When? Why? How often? What would you do or buy differently next time? I will continue seeking services from this firm whenever I need to purchase reading materials. This is because satisfaction is guaranteed and also for the convenience of buying them anywhere any time. I also consider buying movies and other products from the same company. I expect new products to be posted on the website often and therefore I will continue visiting it to find out if there is any innovation that can serve my needs. 13) If Dissatisfied, where will you go instead? (be specific, and give reasons why another firm may be better). What competitors do you go to or avoid (give details). If I am dissatisfied, I would ensure that the Amazon administration understands my dissatisfaction through making a complaint on the website. If the complaint is not addressed, I would consider Wal-Mart.com LLC, which is also an online retail company competing with Amazon and offering a wide range of products. Wal-Mart is ranked at number 2 from Amazon in this business category. I would still avoid Barnes & Noble Inc. due to its lower reputation with regards to online business (hoovers.com). References “About Amazon”, amazon.com. Amazon.com, Inc. 2014. Web. 24. March.2014. “Amazon.com, Inc. Competition”, hoovers.com. Hoovers Inc, 2014. Web. 24. March. 2014. “Pricing Strategy”, NetMBA.com. Internet Center for Management and Business Administration, Inc. 2014. Web. 24. March. 2014. Read More