When selling online, it may be quite beneficial to have a thorough grasp of how and why people make decisions. One of the many factors contributing to Amazon’s success is its thorough understanding of its consumers, which is shown in the layout of its website and the numerous innovations it has brought to online retail. Amazon also employs the behavioral economics concept of price anchoring, which holds that individuals make choices based on the first piece of information they are presented with (Farah and Ramadan, 2017). Therefore, even if the product is still expensive, the intermediate pricing choice appears to be a good deal if Amazon presents three price options: the pricey, the one they want to sell at, and then a cheap one. Amazon can easily stop this sort of offer to its advantage because it has the ability to change its pricing millions of times every day.
Even if the price comparison is not totally correct, price anchoring involves stating a price in contrast to what you would pay at another shop. For instance, Amazon displays this camera at a discount across the overall, albeit not necessarily lowest, market prices. Amazon has developed a brilliant customer loyalty program with Amazon Prime, the gem in its marketing crown. First, the business’s loyalty program is the portion that delivers clients precisely what they want: cost-free, quick shipment with top-notch customer support. Amazon gives the impression that it is giving away something worthwhile by providing a free 30-day trial for Prime.
Amazon Prime is based on the reciprocity principle of behavioral economics, which states that you feel bound to repay a favor if it is extended to you. Customers are more likely to enroll when Amazon goes above and above to grant them access to its exclusive program (Huang et al., 2020). Similar to this, Amazon charges people to be members of Amazon Prime. This gives the impression that Prime must be distinguished and deserving if you have to pay a premium for it. Customers subscribe to Prime because they believe that what they get is worthwhile, and the idea is further supported by the availability of special Prime bargains.
The Pain of Paying theory is now more relevant to the psychology of internet buying. According to this theory, paying something causes pain-related brain activity. A brain pain center is affected differently by various payment options (Culpepper and Thelen, 2020). For instance, using cash instead of a credit card has been proved to be more uncomfortable. Amazon appears to have won thanks to cashless, digital purchases. After all, the cost has become far less painful than it was. Neuromarketing strategies are employed to minimize friction and increase sales, but they go deeper than the thin shell of digital transactions.
Moreover, utilizing a product’s scarcity to increase sales is the concept of scarcity that Amazon uses. Although it could be an effective strategy to artificially boost sales, there should be clarity regarding the products’ availability. Customers will regard an item’s worth as being higher if they are aware of its scarcity. It implies that the product is desirable and gives the buyer an incentive to make a quick decision (Brick et al., 2022). In order to convey stock levels and the quantity of products still available, Amazon employs scarcity. Amazon’s marketing plan is aware that its target market consists of wealthy customers who either lack the time to shop or prefer the convenience of Amazon.com. Amazon’s consumers become familiar with its website and service offerings by sending them personalized emails at each point of the buyer’s journey, which encourages them to make further purchases.
References
Brick, D. J., Wight, K. G., & Fitzsimons, G. J. (2022). Secret consumer behaviors in close relationships. Journal of Consumer Psychology.
Culpepper, P. D., & Thelen, K. (2020). Are we all Amazon primed? Consumers and the politics of platform power. Comparative Political Studies, 53(2), 288-318. Web.
Farah, M. F., & Ramadan, Z. B. (2017). Disruptions versus more disruptions: How the Amazon dash button is altering consumer buying patterns. Journal of Retailing and Consumer Services, 39, 54-61. Web.
Huang, Y., Liu, H., Li, W., Wang, Z., Hu, X., & Wang, W. (2020). Lifestyles in Amazon: Evidence from online reviews enhanced recommender system. International Journal of Market Research, 62(6), 689-706. Web.