1. Only write some new content for internal forces and recommendation.
How to write each part is explained in “requirement” attachment.
2nd attachment “company” is the present work, write your work inside it. And DO NOT change any existing content there! Just continue to write it.
2. Write a 100 word essay on how any of the things covered in 3rd attachment, a slide, have changed/are likely to change how you continue to think about certain aspects from now on and/or how you do certain things in the future. Specifically, you should focus on one idea/concept and clearly and succinctly explain how it will change your thoughts/behavior from now on.Include a short headline that contains the main idea (e.g., IKEA Effect).
Introduction/background to the company:
this should cover, for example: the history/background, mission, vision, core strategy, unique value.
External Analysis: this includes evaluating external factors, e.g. industry analysis and macro/general environment analysis and any other relevant information. How do these issues influence your chosen company’s performance and competitive advantage?
Internal Analysis: this includes evaluating the companies various strategic activities, for example, their corporate strategy (diversification strategy, mergers, acquisitions, international strategy, etc.) and their competitive strategy (e.g. core strategy, source of competitive advantage, value proposition, etc.). How do these issues influence your chosen company’s performance and competitive advantage?
Recommendations: make recommendations for strategic decisions that the company should implement in the near future (1-3 years maximum)
Internal Analysis
The Company Diamond:
Amazon’s Company diamond begins at the bottom with its main priorities it has for the company as a whole. These include strong customer service and convenience for the customer. Their capabilities are the processes that the company provides to add more value to their main goals. Some of Amazon’s capabilities include their extremely fast delivery service and their constant NPS involvement in the business. Their fast delivery service is provided in a range of ways for all customers. For the specialty Amazon Prime customers, their subscription allows them to receive free two day delivery for most of the items on their site. In some cities, these customers also receive free same-day and one-day delivery on many items. For other non amazon prime customers, they have the opportunity to get their items fast and free. The company grants free and convenient shipping when customers meet a price requirement by adding filler items into their cart. They also allow customers to include pre purchase items into their cart to avoid extra fees. Their NPS involvement is how the company stays up to date on their customer satisfaction and loyalty throughout the value chain. After purchasing items and receiving items, customers have the opportunity to rate the service and the quality of handling the item once received. If customers are dissatisfied with any part of the process (i.e. it took way longer to arrive than normal, was received damaged, or did not show up at all) they are able to give Amazon a bad review. Amazon takes this and sends follow up emails asking for feedback and ways their customers believe the company can improve in these areas.
The next stage of the company diamond is the resources that Amazon uses to meet their priorities. These are any assets, attributes, information, and knowledge that the company uses to achieve its desired value. Some of the resources include their multiple 400,000-1,000,000 square foot warehouse centers where they handle all distributions, the many acquisitions that have with other companies, their 750,000 employees that all bring value to their business, and their strong database for products worldwide. Amazon’s strengths are the actual ways that give them a competitive advantage over their competitors in the industry. Some of their main strengths include fast shipping, a wide variety of items to choose from and the inclusion of 3rd party sellers to build profits. Throughout the entire company diamond, Amazon has made things happen and have strived to give their customers the best overall experiences with their company. Over the years, they have developed into one of the fastest growing companies that is worth over $124 billion and rising.
VRIO Analysis:
External Analysis
Porter’s Five Forces:
Porter’s Five Forces theory consists of five factors that are key when analyzing a market and when sketching strategies to be successful. Four of these factors apply pressure over the market and intensifies the rivalry within an industry. These factors are: Bargaining power of suppliers, bargaining power of customers, threat of new entrants and threat of substitute products or services. The sum of the ‘pressure’ applied by these four factors lead to the increase of the last and main factor: Rivalry among competitors.
Recommendations
One recommendation that would improve Amazon’s overall competitive advantage is to remain where their feet are and to not get ahead of themselves in the business. The senior management must make sure they are making the conscious and ethical decisions that will keep them moving forward. Because Amazon is so valuable and so many people are both physically and emotionally tied to this company, they must make sure they make every decision to the best of their ability. It takes years to grow a company to the heights that it is at its current state, but a company can be destroyed in seconds with the wrong moves. Lives ruined, jobs lost, and customers having to find new ways to buy products. Amazon’s senior management and board members must make sure they maintain the CSR stages of obligations to economics, legality, ethics, and philanthropy so they remain as one of the best companies in the world.
Grey Marketing &
Revenge
BUS-149: Week
6
Boris Maciejovsky
2
Grey Marketing & Revenge
Agenda
3
Agenda
Grey Marketing & Revenge
4
Psychology of Money
The Price of Free
5
Psychology of Money
The Price of Free
6
Psychology of Money
The Price of Free
Replicated at check-out
Hassle of paying is not an
explanation
7
Psychology of Money
The Price of Free
8
Psychology of Money
The Price of Free
9
Psychology of Money
The Price of Free
10
Psychology of Money
The Price of Free
11
Psychology of Money
The Price of Free
We only see the benefits, not
the costs, of things are FREE.
Seinfeld Parking
12
Psychology of Money
The Price of Free
Since FREE is special, we
could use it to incentivize
people.
13
Psychology of Money
The Price of Free
Also works for parts of
products.
14
Psychology of Money
The Price of Free
Also works for parts of
products.
15
Psychology of Money
The Price of Free
Also works for parts of
products.
16
Psychology of Money
The Price of Free
Also works for parts of
products.
?
17
Psychology of Money
The Price of Free
Going out for dinner
18
Psychology of Money
The Price of Free
Going out for dinner
Why is a single payer best?
For recipients:
Pain of paying is eliminated
They get a FREE meal
For the payer:
Warm, fuzzy feeling of giving
Pain of paying has diminishing
returns as price increases
19
Psychology of Money
The Price of Free
Going out for dinner
Why is a single payer best?
20
Psychology of Money
Micropayments
Micro-pricing breaks up the
cost of a purchase into smaller
components.
21
Psychology of Money
Micropayments
Micro-pricing breaks up the
cost of a purchase into smaller
components.
22
Psychology of Money
Micropayments
Micro-pricing breaks up the
cost of a purchase into smaller
components.
23
Psychology of Money
Micropayments
24
Psychology of Money
Micropayments
25
Psychology of Money
Micropayments
26
Psychology of Money
Micropayments
27
Psychology of Money
Micropayments
28
Psychology of Money
Micropayments
29
Psychology of Money
Micropayments
30
Psychology of Money
Micropayments
31
Psychology of Money
Micropayments
32
Psychology of Money
Micropayments
33
Psychology of Money
Micropayments
34
Psychology of Money
Micropayments
Keeping prices equal simplifies
the decision making process,
making us more likely to buy.
35
Psychology of Money
Micropayments
App-store
Consolidating multiple purchases
into one invoice reduces the pain
of paying.
Gift certificates and pre-payment
options reduce micropayments
and therefore the pain of paying.
Offering apps for FREE reduces
the number that be sold for a
profit.
36
Psychology of Money
Summary
The psychology of money is a
topic where our intuitions are
not always correct.
38
Grey Marketing & Revenge
The commercial cycle of
cheating
39
Grey Marketing & Revenge
The commercial cycle of
cheating
40
Grey Marketing & Revenge
The dark side of marketing
41
Grey Marketing & Revenge
The dark side of marketing
Grey marketing has always been
around, but it seems to have
become more popular and
salient.
42
Grey Marketing & Revenge
Grey marketing
Misleading advertising
Hidden fees of credit card loans
“Fine prints” on agreements &
promotional offers
Requirement for long-term
contracts for cellular services
43
Grey Marketing & Revenge
The dark side of marketing
Example
44
Grey Marketing & Revenge
The dark side of marketing
Example
45
Grey Marketing & Revenge
The dark side of marketing
Example
“Get your first month FREE on a
Comcast Digital Cable package
with HBO!”
46
Grey Marketing & Revenge
The dark side of marketing
Example
47
Grey Marketing & Revenge
The dark side of marketing
People stopped believing
marketing claims
48
Grey Marketing & Revenge
The dark side of marketing
What do you think happens?
49
Grey Marketing & Revenge
The dark side of marketing
Free money?
50
Grey Marketing & Revenge
The dark side of marketing
Free money?
51
Grey Marketing & Revenge
The dark side of marketing
Free money?
People are suspicious! Cynical!
Magnitude of suspicion seems to
be very high
52
Grey Marketing & Revenge
(Un)ambiguous statements
Endorsed by No-one
Commercial company (P&G)
Political party (Republicans)
Political party (Democrats)
53
Grey Marketing & Revenge
(Un)ambiguous statements
Correct level would be 0.50
Above 0.50: too trustworthy
Below 0.50: too distrusting
54
Grey Marketing & Revenge
(Un)ambiguous statements
If endorsed, reaction time
increased -> subjects tried to
determine how strong to discount
the statements
55
Grey Marketing & Revenge
Source and judgment
Discounting of marketing claims
56
Grey Marketing & Revenge
Source and judgment
57
Grey Marketing & Revenge
Source and judgment
58
Grey Marketing & Revenge
Revenge
Exposure over years to un-met
marketing claims (grey
marketing) leads to revenge…
59
Grey Marketing & Revenge
The commercial cycle of
cheating
60
Grey Marketing & Revenge
The commercial cycle of
cheating
United breaks guitars
David Pogue – Revenge Song
61
Grey Marketing & Revenge
The commercial cycle of
cheating
Also applies to employees
(Ryan Air)
62
Grey Marketing & Revenge
Revenge
A real case…
63
Grey Marketing & Revenge
Revenge
A real case…
64
Grey Marketing & Revenge
Revenge
A real case…
65
Grey Marketing & Revenge
Revenge
A real case…
66
Grey Marketing & Revenge
Revenge
A real case…
67
Grey Marketing & Revenge
Revenge
A real case…
68
Grey Marketing & Revenge
Revenge
A real case…
69
Grey Marketing & Revenge
Revenge
A real case…
70
Grey Marketing & Revenge
Revenge
A real case…
71
Grey Marketing & Revenge
Revenge
A real case…
72
Grey Marketing & Revenge
Revenge
A real case…
73
Grey Marketing & Revenge
Revenge
A real case…
74
Grey Marketing & Revenge
Revenge
A real case…
75
Grey Marketing & Revenge
Revenge
A real case…
76
Grey Marketing & Revenge
Revenge
A real case…
77
Grey Marketing & Revenge
TASK
Revenge vs. Avoidance
When do you expect them?
For what customers/services?
How do they evolve over time?
78
Grey Marketing & Revenge
Marketing fact
Customer satisfaction begets
loyalty
Loyalty begets profits
Why then infuriate customers?
Confused & ill-informed
customers are profitable (at least
it seems)
79
Grey Marketing & Revenge
Sources for discontent
1. Cell phone service industry
Customers choose a pricing bucket
Predict usage
Both over-usage and under-usage
are beneficial to service providers
Customer complaints
(verizarape.org)
High customer churn
T-Mobile: no more contracts
80
Grey Marketing & Revenge
Sources for discontent
2. Retail-banking industry
Minimum balance -> interest rate
Fall below: penalties & service
charges
Are above: interest rate does not
adjust
“Courtesy” overdraft provisions
ING Direct
81
Grey Marketing & Revenge
Sources for discontent
3. Health club industry
Short-term offers -> long-term
contracts
NYC council:
41% did not explain fees
81% no contract to read for
home
96% did not inform about
cancellation options
82
Grey Marketing & Revenge
Is Revenge Adaptable?
The trust game
A B
83
Grey Marketing & Revenge
Is Revenge Adaptable?
The trust game
$10
A B
84
Grey Marketing & Revenge
Is Revenge Adaptable?
The trust game
$10
A B
85
Grey Marketing & Revenge
Is Revenge Adaptable?
The trust game
$40
A B
86
Grey Marketing & Revenge
Is Revenge Adaptable?
The trust game
$40
A B
87
Grey Marketing & Revenge
Is Revenge Adaptable?
The trust game
$20
A B
$20
88
Grey Marketing & Revenge
Is Revenge Adaptable?
The trust game
Let’s pause: What would you do?
A B
89
Grey Marketing & Revenge
Is Revenge Adaptable?
The trust game
Let’s pause: What is the rational
thing to do?
A B
Backward induction
Starting with player B
90
Grey Marketing & Revenge
Is Revenge Adaptable?
The trust game + Revenge
$40
A B
91
Grey Marketing & Revenge
Let’s play it
A B
Student ID ends in EVEN -> A
Keep Money
Send Money
Student ID ends in ODD -> B
Keep Money
Return Money
92
Grey Marketing & Revenge
Is Revenge Adaptable?
The trust game + Revenge
$1
A BBoris
$1 $2
93
Grey Marketing & Revenge
Is Revenge Adaptable?
The trust game + Revenge
Would you be willing to do it?
-$1
A BBoris
$1 -$2
94
Grey Marketing & Revenge
Is Revenge Adaptable?
The trust game + Revenge
Subcortical region: Striatum is
activated
That region is associated with
rewards
Reward and revenge are two sides
of the same coin
Revenge is an enforcement
mechanism
95
Grey Marketing & Revenge
Case Study
Car manufacturer “Atida”
Proud 70 year history
Better reputation for innovation &
styling than for service
But new changes
Comprehensive warranty
Red Carpet loyalty program
Call center in Bangalore
New model: Andromeda XL
96
Grey Marketing & Revenge
Case Study
Escalated customer message 1
(Jessica)
Replaced Andromeda XL
3 months ago & new repairs
needed
Break pads needed replacing
Called customers service –
90min
Local dealership won’t
reimburse
97
Grey Marketing & Revenge
Case Study
Escalated customer message 2
(Tom)
5th Atida
Breakdown on way back from LV
Bad motel & taxi to LA in the
morning
No reimbursement
Unhelpful customer service line
Legal help & Lemon Law
Thinks of slick & nasty film for
Youtube
98
Grey Marketing & Revenge
Case Study
How should Atida deal with its
unhappy customers?
99
Grey Marketing & Revenge
Case Study
How should Atida deal with its
unhappy customers?
Realize they are a service provider
(not a manufacturer)
Most people don’t even complain
They just stop buying & spread
negative WOM
Feedback is important
100
Grey Marketing & Revenge
Case Study
How should Atida deal with its
unhappy customers?
Indirect word-of-mouth effect
(WOM)
Classify customers according to
historical and future value (recency,
frequency, value)
Helps figuring out prioritization
Endorse reality of decentralized,
peer-to-peer communications
Online dialogue
101
Grey Marketing & Revenge
Case Study
How should Atida deal with its
unhappy customers?
Call center in Bangalore
Reduces costs, but too distant?
Customers evaluate experiences
according to fairness
Distributive: evaluation of the
outcome of an exchange
Procedural: refers to processes
used to reach desired outcome
Interactive: treated with respect
& empathy
102
Grey Marketing & Revenge
Summary
Grey Marketing
Revenge
Marketing activities
create/strengthen expectations on
part of consumers
If these expectations are violated,
customers might be skeptical about
products/services & might even
retaliate
Companies need to understand
these mechanisms and mitigate
them
103
Wednesday
Midterm 2
Please bring a blue-book for
backup & ID
Next week: No class
Next regular class on Wednesday
(2/19)
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