MARKETING MANAGEMENT INDIVIDUAL PROJECT (MMIP) ASSIGNMENT

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MMIPwk6.docx

PRICE AND DELIVER VALUE OFFERING

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Comment by Keith Starcher: The Running Head is to be on one line.

Pricing Strategies Comment by Keith Starcher: Fix the running head.

Amazon Prime pricing strategy can be summarized into two: penetration pricing and value-based pricing. Penetration pricing is evident when Amazon Prime was introduced at a cost of $79 per year in 2005, with services including unlimited 2-day shipping. The company then focused on enhancing services without increasing the annual subscription fee until 2014. In 2014, the company revised the annual subscription to $99, without any resistance from prime customers. Recently, Amazon prime increased the price to $120 annually with more enhanced features. The tolerance from customers indicate that Amazon Prime has created value for money for its customers and hence price increase tolerance is possible due to enhanced value (Cavallo, 2018). Comment by Keith Starcher: Work on the use of possessives. Comment by Keith Starcher: Into two what? Comment by Keith Starcher: How do you know this to be true? Cite a source. Comment by Keith Starcher: Good point

Pricing Tactics

For Amazon Prime, the recent increase in annual subscription could hinder customers from purchasing from the organization, especially those with lower income. Therefore, one tactic that Amazon Prime can utilize effectively for increased sales is focusing on improving customer experience through continued value-added services and products. Another pricing strategy that Amazon can utilize is the customer segmentation tactic by having services based on customer income and preference. Through price segmentation customers at all income levels will feel accommodate and could trigger increased annual subscription for the organization. Further, Amazon Prime can focus on price increase for services such as streaming which properly differentiated and reduce price for other services such as two-day shipping that have dipped in the last few years (Iyer, 2002). Comment by Keith Starcher: Can’t a buyer pay a monthly fee instead of the $120 annual fee? That would be a pricing tactic. Please confirm. Comment by Keith Starcher: Be sure to edit your submission for correct spelling. Thanks! Comment by Keith Starcher: You state “in the last few years” but cite a source from 2002. Please fix this.

Distribution Strategy Relevant to the Product/Service

Amazon has leveraged on dynamic distribution strategy to meet demands for global customers. Amazon has technologically equipped warehouses located in major cities across the world to ensure accessibility of products across the globe. Amazon has different ways to deliver products with differentiated ordering system such as free, Prime Now and two-day prime deliveries. Prime Now strategy delivers products within 2 hours. Amazon has also invested in technology especially automation for picking and packing deliveries which enhances delivery speeds and efficiency and at a lower cost in terms of labor and warehousing space. Lastly, Amazon has ventured into manufacturing their own products at lower costs instead of relying entirely on third-party sellers which enables Amazon to own the distribution channel from manufacturing to marketing (Hahn et al., 2018) Comment by Keith Starcher: I am confused. I thought your MMIP topic was Amazon Prime Video. Here is the title of your week 2 MMIP paper: DISCOVER MARKETING MANAGEMENT- AMAZON PRIME VIDEO Here is how you started your MMIP week 3 paper: Use Information to Drive Marketing Decisions (Chapters 4-7) MMIP Questions Amazon Prime Video Company Here is a statement from your MMIP week 5 paper: The efforts behind developing this company Amazon Prime Video will involve having a product plan and a marketing plan for it to be successful. However, this week you are not discussing Amazon Prime Video at all. You are discussing the shipping features of Amazon Prime. You need to rewrite these distribution sections focusing on Amazon Prime Video. I look forward to reading your revision in the final MMIP paper in week eight. Thank you. Comment by Keith Starcher: Numbers one through nine must be written out in word format (APA, 2019, section 6.33), with some exceptions (such as ages-see section 6.32). Numbers 10 and up must be written out in numerical format (section 6.32). Always write out in word format any number that begins a sentence (section 6.33).

Channels Used for Distribution

Amazon Prime utilizes different channels to distribute its products based on the distance of distribution and customer agency. The company utilizes both tradition and high technology distribution channels. The company uses drones to deliver products in cities for customers living within the drone enabled reach areas. Amazon also uses delivery vans and trucks, in addition to bikes across the world to deliver orders to customers. Amazon also uses other delivery channels in the market such as UPS and Fedex to deliver to increase delivery efficiency. Launch of air delivery through Prime Air also scaled up the possibility to deliver orders across the global within the shortest time possible (Burroughs & Burroughs, 2020).

Use of E-Channels, E-Retailing, or Other Non-Traditional Methods of Distribution

Amazon has revolutionized e-commerce and use of non-traditional distribution channels. The use of drones in distributing products to customer is new phenomenon that would cut on costs in the distribution channel. Amazon is one company that has leveraged e-commerce and have more than 10 online marketplaces globally which allow sellers to rely on Amazon brand name to sell to areas they would not sell individually. North America has Amazon.com, Amazon.com.mx and Amazon.ca while Europe has Amazon.co,uk, Amazon.es among other online marketplaces while Asia has Amazon.co.jp among others. The different e-commerce channels enable sellers to market their product using different native languages of the specific regions (Burroughs & Burroughs, 2020). Comment by Keith Starcher: Is the subject singular or plural? Is your verb choice correct? Comment by Keith Starcher: This is interesting.

References

Burroughs, B., & Burroughs, W. J. (2020). Digital logistics: Enchantment in distribution channels. Technology in Society62, 101277. Comment by Keith Starcher: None of your sources deal with Amazon Prime Video (your topic for the MMIP). Where are the practitioner sources suggested by the rubric (e.g., Wall Street Journal, Fortune, etc.)? The Liberty Library can help you learn how to use databases to find these sources. This is an important skill to master for research at your workplace.

Cavallo, A. (2018). More Amazon effects: online competition and pricing behaviors (No. w25138). National Bureau of Economic Research.

Hahn, Y., Kim, D., & Youn, M. K. (2018). A Brief Analysis of Amazon and Distribution Strategy. The Journal of Distribution Science16(4), 17-20.

Iyer, G. R., Miyazaki, A. D., Grewal, D., & Giordano, M. (2002). Linking Web‐based segmentation to pricing tactics. Journal of Product & Brand Management.