Amazon Prime

Q1. Description of the product/service and a brief history of the firm.

The internet market was becoming quite popular in the 1990s. Jeff Bezos started Amazon in 1995 to exploit the numerous opportunities present on this platform. The venture was originally established as an online bookshop. Jeff’s objective was to receive orders and supply books in different markets across the United States. Within a year of operations, Amazon experienced significant growth. Its revenues increased from $15.7 million in 1996 to $148 million in 1997. This amount further increased to $610 million in 1998. Due to the rapid success of the company, Jeff Bezos was named as the Times Magazine Person of the Year in 1999. The success also motivated Bezos to diversify and explore other markets. By partnering with different stakeholders he managed to make Amazon an all-round shopping website that was popular across the globe (Hall, 2018). The company also offered an endless list of products to its customers.  In order to survive in any market, organizations should develop innovative ideas that can allow them to attract more clients, as well as boost their popularity. Due to this fact, Amazon introduced a new subscription plan referred to as Amazon Prime. In 2005, the paid membership fee was $79. However, the company added more benefits and services to the membership plan and thus, increased the subscription fee to $119.

Q2. Describe and discuss the original 4 P’s of marketing (product, place, promotion, and price).

Due to its position as the world’s largest e-commerce firm, Amazon Prime has managed to add numerous products to its subscription service, Amazon Prime. Some of the benefits that Amazon offers to its customers include unlimited video streaming of documentaries, movies, and TV shows, free delivery of items, as well as music streaming. As stated before, Amazon Prime’s yearly subscription is $119. However, it has a special discount plan of $59 for students. Today, Amazon Prime mainly promotes itself through third-party vendors, as well as on the internet platform. Today, the internet is one of the favorite places to conduct business transactions, as well as market products. The company’s primary website also helps in advertising the benefits offered in its subscription plan (Ferguson, 2017). Some of the advertising tactics that the company uses include direct marketing, public relations, and sales promotions. Another critical and effective promotion strategy for the company is word of mouth. This is mainly achieved through customer satisfaction. Amazon Prime is quite popular among its customers. Therefore, they are quite likely to convince their friends to subscribe to Amazon Prime.

The new 4 Ps (people, processes, programs, and performance) relating to the product

Amazon has established itself as a customer-centric organization. It focuses on satisfying the needs of its buyers, sellers, as well as consumers. Amazon’s vision is “to be Earth’s most customer-centric company, where customers can find and discover anything they might want to buy online, and endeavors to offer its customers the lowest possible prices” (Amazon, 2019). Amazon has managed to create a vast customer base by satisfying its customer’s needs. Some of the values of Amazon Prime are discipline, creativity, and good structure. This subscription service allows Amazon to keep up with market trends. The company has also managed to pay close attention to the interests, hobbies, and other desires of their customers. The firm has then focused on making these dreams a reality. This strategy has also allowed Amazon to grow from an online bookstore to an international e-commerce firm where customers can purchase anything including music, games, and movies. Innovation and creativity have also helped Amazon to keep up with the changes and remain relevant in the marketplace.


Q3. Explain the organization’s mission. Provide its mission statement or create one if necessary

Amazon Prime mainly specializes in video and music streaming services. Amazon’s vision is “to be Earth’s most customer-centric company, where customers can find and discover anything at” (Frue, 2019). The firm’s primary aim is to satisfy its customers’ needs by ensuring that its products are accessible in different areas across the globe. Amazon’s goal is to improve access to different products and services.

Q4.  SWOT (strengths, weaknesses, opportunities, threats) analysis for the organization


Amazon’s first strength arises from its low prices. The company has managed to deliver products and services to clients at a low cost. This success has, in turn, boosted the company’s growth. Secondly, Amazon is highly diversified. The firm deals with a wide range of products and services. This has been made possible by its strategic alliances with key partners. The diverse strategy has allowed the company to continue making profits despite certain fluctuations. Thirdly, Amazon has a strong brand name. It is quite easy for the company to introduce new products/services due to its popularity and dominance in the marketplace. Amazon’s customers are also quite loyal to its products. This has helped in improving the company’s competitive advantage. The fifth strength arises from the huge size of the firm. It is quite easy for Amazon to undertake different projects due to its size and financial strength. Lastly, Amazon has embraced a highly innovative and creative culture. This has enabled the firm to develop unique products that can satisfy the changing needs of the customers.



One of the company’s weaknesses is patent infringement. This has issue has influenced the firm’s goodwill negatively. Amazon has also found itself in a wave of bad acquisitions. Investing in areas with significant risks have pulled down the company’s profits. Depending too much on the online platform is also a huge weakness for Amazon. This is because Amazon Prime is losing a lot of good opportunities due to poor advertising and marketing. According to Hassan, Sistani, & Raju (2014), Amazon’s dependence on online platforms causes them to lose those customers that lack access to the internet.


Fortunately, there are a lot of opportunities that can be exploited by Amazon Prime. Firstly, there is still a huge number of customers that have not been identified by the company. Amazon can use its expertise and online platforms to target these individuals and thus, increase the company’s expansion rate. Amazon also has the opportunity to introduce new services to its existing customers. The firm can attract new clients by offering a wide range of services. There are also numerous opportunities that Amazon can exploit in emerging markets. The company can enter and dominate new markets in countries such as China and India. It can then proceed to introduce itself in other international markets such as those in Africa.


One of the biggest threats that Amazon faces is competition. The company is at risk of been outdone by its closest rivals who offer services at more affordable rates. Some of its biggest competitors include iTunes and Netflix. Secondly, the costs associated with Amazon Prime are also continuing to increase rapidly. The firm must, therefore, take into account volatile prices. This can affect its profit margins negatively. It is also easy for customers to switch their preference from one company to another. This can happen when the firm decides to increase its prices. Finally, the threat of fraudulent activities is also quite significant. Since Amazon Prime is based on the internet, the risk of it been attacked by hackers is quite high.

Q5. Describe and discuss demographic trends that affect the sale of the product/service.

The term demographics refers to the statistical data that relate to a particular population, as well as to the groups associated with it. Demographics is essential because it assists advertisers in dividing the market into smaller manageable segments which can be based on location, sex, and age. Segmentation is vital because it allows businesses to identify specific target markets for their service or product.

Amazon Prime is a service that transcends age cohort, but it should come as no surprise that the younger age bracket comprises the highest percentage of Amazon Prime subscribers. The total number of households in the United States with an Amazon Prime subscription has grown consistently over time. According to the Census Bureau, there were approximately 118,826,000 households in the U.S. (Census Bureau, n.d., Families & Living Arrangements) and over 78% of households – or almost 93 million – had broadband internet, a requirement for accessing Amazon, whether you’re a subscriber to Prime or not (Census Bureau, n.d., Computers and Internet Use).

In 2018, there were a total of 58.7 million households that had a subscription to Amazon Prime, and; projections estimate that 63.9 million homes will have Amazon Prime in 2019 ( n.d., Households with Amazon Prime, para. 1). That means that over 63% of households in the U.S. that have access to broadband internet are Amazon Prime members. Of those subscribers, the largest age cohort is 18-34 years which comprises 39% – or almost 23 million – of the Amazon Prime memberships in the U.S. (Statista, n. d., Amazon Prime User Age, para. 2). 35-54 year age group accounted for 34% of Amazon Prime subscribers, while 26% of Prime subscribers are 55 years old or older ( n.d., Households with Amazon Prime, para. 1).

These demographics are not surprising because it is typical for the younger portion of the population to be more closely tied to technology and to readily implement new technologies, in some part because young people seem to adapt to change easier and quicker than older people (Harris, 2018). These distributions are also not surprising because, “Millennials are on the cusp of surpassing Baby Boomers as the nation’s largest living adult generation,” (Fry, 2018).

As discussed, Amazon Prime is Amazon’s premium yearly subscription service that entitles subscribers to certain perks, such as quick delivery and access to hundreds of shows and movies, among others. Amazon itself is an e-commerce website, a digital marketplace that is open for public use for anyone with an internet connection and an email address. Amazon is not the only e-commerce site, but it is the dominant player in North America.

E-commerce is online retail sales; it’s utilizing a website, “to transact or facilitate the sale of products and services online,” (Keller & Kotler, Page 514). “Retail encompasses the sale of goods to end users for use and consumption by the purchaser, rather than resale,” (Forrester, n.d.). Online retail sales transactions can usually be categorized as B-to-B, B-to-C, or B-to-G: Business to business; business to consumer, and; business to government. Amazon is a B-to-C. The products sold Amazon span the spectrum of retail products: clothing, electronics, books, movies, furniture and furnishings, shoes, and just about any other type of product can be purchased on Amazon.

E-commerce as a whole accounted for 10% of total U.S. retail sales in 2017 – $500 billion — and; projections indicate that 17% of total U.S. retail sales – $850 billion– will be conducted digitally (Bruno, Kumar, &Wu, 2017). “The e-commerce market size keeps expanding and online shopping is experiencing significant growth,” (Langley, Jr., page 44). Fashion, “the second-largest retail category after grocery,” is an example of this expansive growth. A quarter of all global fashion (clothing, accessories, and footwear [that’s not athletic]) retail purchases are made online, and; e-Commerce will account for 36% of global fashion retail sales by 2022,” (Meena, 2018).

Q6. Describe and discuss current economic trends that affect the sale of the product/service.

Retail sales are driven by consumer spending, and consumer spending is driven by consumer confidence. Consumer confidence is how the consumer feels about the state of the economy now, and in the future (Maverick, 2018). Positive economic growth, or when the economy is doing well and growing, consumers are more confident. The opposite is true when the economy is not growing or it is receding. “Regardless of their current financial situation, consumers are more likely to purchase greater amounts of consumer goods when they feel confident about both the overall condition of the economy and about their financial future,” (Maverick, 2018)

There are many factors at play when measuring consumer confidence, one example being wage growth. Wage growth affects consumer confidence positively: the more money people make the more money they have to spend. Alternatively, unemployment, another factor contributing to consumer confidence, affects consumer confidence negatively: as unemployment grows, consumer confidence goes down because fewer people are working, less money being made, as well as spent.

Positive wage growth throughout 2018 and accelerating into 2019 has led to robust consumer spending (Nienaber & Jensen, 2018). 2018’s Black Friday (the day after Thanksgiving, third Friday of November) is a great example. There was a 23.6% jump in online Black Friday sales from 2017 to 2018, as well as; unprecedented Cyber Monday sales (Thomas, 2018). All of these online retail sales weren’t necessarily made on Amazon, but 51% of consumers said that they planned to do all of their holiday shopping on Amazon, indicating that a large majority of online retail sales were made on Amazon (Jaramillo, 2018).

Recent statistics show that the U.S. labor market is decreasing the employment rate and increasing wages. The number of jobs in the U.S. economy has also experienced steady growth in 2018. The current wage growth is the fastest the U.S. has ever experienced since the recession.

Q7. Describe and discuss social factors that have affected the sale of the product/service.

A number of social factors influence consumers’ purchasing behavior. They include family, reference groups, and social roles


According to Keller & Kotler (2016), family is one of the most influential reference groups. This is one of the reasons why Amazon Prime usually targets the family audience. The company offers benefits such as shared accounts at no extra costs. Furthermore, there are family-rated movies, TV shows, and dash buttons included in the package.  Dash buttons can be placed in several areas in the house to assist in home management. For instance, when the household supply is low, a person can order different items just by a simple press on these buttons (Jackson, 2017). Targeting a family audience is beneficial to Amazon Prime because it convinces other individuals to purchase the subscription.

Reference Groups

The role of reference groups is to expose a person to new lifestyles, behaviors, attitudes, and new concepts. Research shows that individuals are easily influenced by their peers. This means that reference groups will be of huge advantage to Amazon Prime. Amazon regularly uses celebrities in its advertisements. For instance, it used celebrities such as Anthony Hopkins, Cardi B, and Rebel Wilson to advertise its virtual assistant, Alexa. These celebrities acted as reference groups and managed to influence customers to buy the product.

Role and Status

People of different statuses and roles can use Amazon Prime. Amazon Prime is cheap and allows customers to save money due to its free shipping offer, as well as competitive prices. Amazon appeals to diverse households due to the wide range of products/services that it offers. For instance, customers can choose different genres of music to listen to or shows to watch.

Q8. Describe and discuss personal factors that affect the sale of the product/service. (Ch. 3)

Personal factors such as economic status, age, tastes, and preferences have an influence when it comes to deciding whether to subscribe to Amazon Prime or not. According to Keller & Kotler (2016), Amazon Prime attracts individuals of all ages due to its numerous movies and TV shows. Today, Amazon hosts more than a million products which can be purchased by its customers. Amazon Prime’s subscription fees are also quite affordable for the majority of Americans. The Consumer Intelligence Research Partners estimates that 21% of adults or 54 million individuals have subscribed to Amazon Prime (Amazon Prime Growth, 2016).

Q9. Outline a marketing research process to be used to gather information on present or potential customers. (Ch. 4)

The first step in any market research process is to determine the key objectives. Researchers should identify the things that they wish to find out about their customers. The second stage involves developing a plan on how to reach out to customers. This step is crucial because it assists in the identification of the best data collection method. Some of the common techniques used today include behavioral research, observation, and surveys (Romano, 2018). Amazon Prime can also use the browsing history of their customers to make certain assumptions. For instance, this information can help to predict what they are likely to purchase in the future. Conducting fieldwork can also allow the company to collect crucial information as regards to its products and services. Data analysis is also essential in the marketing research process. It is vital for researchers to use consistent and reliable data during this phase.





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