Targeted customer segments of Amazon Prime
Discuss About The Journal Of Destination Marketing Management.
As second mover in Streaming video on demand (SVOD), Amazon Prime made an ideal strategic decision by targeting young mothers and the college students, as they seem to be higher frequency purchasers(Wayne, 2018). For the young mothers it is the infant and the baby necessities and for the college students it is the frequency of buying the required textbooks. However, the purchase is done for availing the benefits of shipping. Convenience seems to be a major factor for this segment in determining the product valuation. They also emphasize on the desire for the on demand and staying at home service. Nevertheless, the extensive experience of this customer segment with Amazon allows them to try out new offerings put forward by the company. The newer Amazon Prime offers rental services for e books and instant video facilities. Once satisfied this customer segment not only acts as product ambassadors but also brands thereby undertaking the advocacy through the word of mouth with peer groups.
By being product ambassadors, this segment of customers enables humanizing the brand (Rehmet & Dinnie, 2013). These customers also represent one of the many faces of the organization who undertook duties of the marketing team and the sales representative without receiving any payment from the concerned brand. They even help in increasing the social reach and helps in protecting the online reputation thereby protecting it from any kind of negative publicity. In addition, they also helped in increasing the traffic of the website. This segment of customers also undertakes positive word of mouth that acts a credible in increasing the web traffic of the brand. This implies that this segment of customers targeted by Amazon prime possess the capability of turning the people into the potential customers.
The classification of the consumers based on the adoption categories relates to the willingness of taking risk and switching the purchase behavior based on specific categories of the product. However, the standardized adoption categories of the consumers include the innovators, early adopters, early majority, late majority and the laggards (Lim & Park, 2013). However, the segment of consumers chosen targeted by Amazon Prime falls under the category of innovator and the early adopters. Given their experience with the brand these segment of customers, do not shy away from trying newer offering of Amazon that includes e-book rental and instant video services. Consumers falling under the innovator category place lesser reliance on the word of mouth and the persuasion of the others (Kim & Martinez, 2013). These consumers are willing to take risk and are more adventurous. These categories of consumers have higher knowledge level, interest and confidence in a particular product. The early adopters have certain characteristics similar to the innovators but they place more reliance on the word of mouth and reassurance from the other people in making a purchase that enables in reducing the risk of their purchase. The early adopters usually influenced by people who have already made a purchase also known as the innovators. Nevertheless, the early adopters also perform their own research in addition to the discussion of the word of mouth along with having interest in the respective product categories. Early adopters also known as the opinion leaders and are considered experts by consumers. They also have enhanced social connections as well as networks and act as the foundation for gaining extensive adoption of the newer product (Reinhardt & Gurtner, 2015). This consumer adoption category is increasingly concerned about the maintenance of the reputation and the coolness factor that helps in moving them ahead of the curve. Therefore, the shift of product cycle from introduction to growth phase depends on the transition that takes place from the purchase by the innovators to the purchases made by the early adopters.
Customer adoption categories
Another category of audience who believes in one stop solution would be more beneficial for capturing a greater market share. This is because Amazon is preparing to bundle the streaming video on demand (SVOD) products with features that would eliminate the necessity of the consumers in acquiring different services from different vendors and provide a perception of delivering greater value to the customers(Pandit & Poojari, 2014). The recent offering of Amazon helps in saving time through the eliminations of interfacing with the additional vendors for duplicating the services thereby promoting the idea of one stop solution. There are additional conveniences offered by Amazon which includes the usage of a single annual fee instead of monthly practices for billing. Amazon prime also allows its customers in enjoying the benefits with a one time payment instead of managing the SVOD account on regular basis. The subscription structure put forward by Amazon not only locks the customer for a specific time period but also prevent switching of brands.
This segment would include the mainstream customers consisting of the young, middle aged and the old. The adopter categories include the early majority and the late majority. The early majority influenced by early adopters that moves the product to mainstream consumer (Laukkanen, 2016). They rely heavily on the positive word of mouth as they represent the cautious purchasers who seek social influence in justifying a decision in selection of a particular brand. This is a stage of market development where there is a shift towards the stabilization of the market share since the word of mouth recommends or suggests specific preferences of a particular brand. The late majority however consists of the consumers who remain reluctant to change purchase behaviors but they step out of such norm when others seem to do it (Stålsby & Tamhankar, 2014). They only start or decide buying products when they see it in widespread amongst retailers and in the possession of the other people. The late majority represent the adopter category that support purchases in decline phase of the product cycle and determines the growth in the later stage of growth phase. Some of the customers in this adopter category forcefully adopt the newer product as the existing solutions remain withdrawn from market.
These include (Armstrong et al., 2014):
- Keeping Pace with Changing Taste of the Consumers: The changing marketing strategy will enable Amazon in constantly keeping up with the services and products as per the customer demand. This will enable Amazon prime in capturing a greater market share.
- Countering Competitive Strategies: The changing marketing strategy will help Amazon in counter attacking Netflix thereby creating a position and ensure an increased market share.
- To Ensure a Stable Product Cycle: The four stages of product life cycle that includes introduction, growth, maturity and decline. The sales figure often remain stronger during introduction and the growth stages which eventually gets slower in maturity stage. Hence, it becomes difficult in maintaining the sales growth in the maturity stage. A change in strategy will enable the company in maintaining substantial sale through capturing users.
These include (Baker, 2014):
- Involves Additional Cost: Bringing a change in the market campaign involves some amount of cost. For instance, marketing though advertisements in radio, television and the local space for advertising is expensive, as there is immense competition in capturing the user attention.
- Effort and Time might Not Yield Return: Change in the marketing campaign might result in a lower return on the investment. It might be the case that in spite of spending months in creating a specific strategy it might not help the bottom line of the business.
- Might Lead to Confusion: As no one has the surety of the result, change might be scary. Therefore, with a change in the marketing strategy people not only become frustrated but also confused.
References:
Armstrong, G., Adam, S., Denize, S., & Kotler, P. (2014). Principles of marketing. Pearson Australia.
Baker, M. J. (2014). Marketing strategy and management. Macmillan International Higher Education.
Kim, S., & Martinez, B. (2013). Fashion consumer groups and online shopping at private sale sites. International Journal of Consumer Studies, 37(4), 367-372.
Laukkanen, T. (2016). Consumer adoption versus rejection decisions in seemingly similar service innovations: The case of the Internet and mobile banking. Journal of Business Research, 69(7), 2432-2439.
Lim, H., & Park, J. S. (2013). The effects of national culture and cosmopolitanism on consumers’ adoption of innovation: A cross-cultural comparison. Journal of International Consumer Marketing, 25(1), 16-28.
Pandit, V., & Poojari, A. (2014). A study on amazon prime air for feasibility and profitability: A graphical data analysis. IOSR Journal of Business and Management, 16(11), 06-11.
Rehmet, J., & Dinnie, K. (2013). Citizen brand ambassadors: Motivations and perceived effects. Journal of Destination Marketing & Management, 2(1), 31-38.
Reinhardt, R., & Gurtner, S. (2015). Differences between early adopters of disruptive and sustaining innovations. Journal of Business Research, 68(1), 137-145.
Stålsby Lundborg, C., & Tamhankar, A. J. (2014). Understanding and changing human behaviour—antibiotic mainstreaming as an approach to facilitate modification of provider and consumer behaviour. Upsala journal of medical sciences, 119(2), 125-133.
Wayne, M. L. (2018). Netflix, Amazon, and branded television content in subscription video on-demand portals. Media, Culture & Society, 40(5), 725-741.
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