Section I: Introduction to ProjectThe company we chose for this project was Amazon.com, which is one of largest online retail stores in the U.S. Amazon has successfully expanded into many product categories. It offers a variety of products from books to food, gadgets to video games, clothing to home and office accessories, music to pet supplies, and much more. Amazon is an internet mecca for online retail. They offer new and used products with the sellers ratings, and if the product does not meet expectations, they offer an easy way to return the product. In recent years, Amazon has started selling their own brand products. Some got the attention of consumers, while others failed and did not produce their expected results. The recently launched Fire Phone was made to compete with smartphones like Samsung Galaxy, Apple IPhone, and Windows Nokia but it failed. Sales for the smartphone were not high at all, and the few consumers who did purchase the device had complaints. Because of Amazons great commitment to the Fire Phone and the hit they took after its launch, they were forced to take a $170 million write-down charge. They reportedly still have $83 million worth of unsold inventory. In addition, the failure of the Fire Phone launch damaged Amazons brand loyalty and its consumers expectation for high quality products. According to Adam Hartung of Forbes, Fortune mercilessly blamed Fire Phones failure on CEO Jeff Bezos, who was MarketWatchs CEO of the Year in 2012. There were four facets to the fire phones features that accumulated to the downfall. The four features were: high price, weight (bulky/heavy), lack of differentiation, and fewer applications. At $650 without contract, the Amazon Fire Phone costs 63% more than the similarly equipped Google Nexus 5 ($399) and almost as much as the Samsung Galaxy S5 ($700) or the iPhone 5S ($750).[footnoteRef:1] Amazon tried to differentiate themselves in the smartphone market with the 3-D feature. This would lure potential Fire phone users with exclusive access to the Firefly app. The app, Firefly, was a bridge that connected the users of the fire phone to the Amazon website. Still, the Amazon app store was relatively small compared to competitors markets, like Apples app store and Googles play store. Amazons proprietary App Store has some 240,000 apps, mostly poorly-rated and usually not the latest ones compared to more than 1.2 million apps in Google Play or Apple's App Store.[footnoteRef:2] According to JP Mangalindan of Fortune, Reviewers called the device forgettable and mediocre, and Amazon all but admitted to underwhelming sales by drastically cutting the Fire phones price from $200 to 99 cents just one month after unveiling the device at a splashy press conference in Seattle.[footnoteRef:3] Still, from the beginning, Amazon stumbled on pricing. Selling the Fire for $200, the industry standard, ran contrary to Amazons long-held, company-wide strategy of undercutting the competition. [1: Hartung, Adam. "The Reason Why Google Glass, Amazon Fire Phone and Segway All Failed." Forbes. Forbes Magazine, 12 Feb. 2015. Web. 3 Mar. 2015. ] [2: Hartung, Adam. "The Reason Why Google Glass, Amazon Fire Phone and Segway All Failed." Forbes. Forbes Magazine, 12 Feb. 2015. Web. 3 Mar. 2015. ] [3: Mangalindan, JP. "Amazon Exec: We Priced the Fire Phonewrong." Fortune Amazon Exec We Priced the Fire Phonewrong Comments. Fortune, 30 Oct. 2014. Web. 3 Mar. 2015.]

The Fire phone is a major setback for Amazon as a whole. Amazon thought that the Fire phone would set them apart from the online retailer they are known as. According to Jean Baptiste Su of Forbes, statements like it was 7-years late its rumored to have been in development for 5-years! to I can already access all the Amazon services from my smartphone, and how is it really different shows that the Amazon Fire Phone was definitely lacking a wow factor. It failed to capture the imagination of the general public. The fact that someone can access the Amazon app through a non-Amazon smartphone is not good for business. Jean-Baptiste Su said, This product is, in the purest sense, an extension of their website and store. Mangalindan wrote, But in a crowded space dominated by Apple and Android devices, simply releasing something adequate isnt enough. To stand out, a smartphone like the Fire, which arrived seven years after the first iPhone and six years after the first Android device, requires breakthrough hardware and software.[footnoteRef:4] Mangalindan also said, It also didnt help that Amazons phone was the most brazen attempt yet by any major smartphone maker to lock its users into its own ecosystem of products.[footnoteRef:5] Amazon sold their Fire phone to thousands of retailers across the U.S. The lack of buyers for the phone left the phones sitting on the shelves of all those retailers. The Fire phone is now hard to find and is sold at a few select stores. [4: Su, Jean-Baptiste. "4 Reasons The Amazon Fire Phone Will Fail." Forbes. Forbes Magazine, 19 June 2014. Web. 3 Mar. 2015.] [5: Mangalindan, JP. "Amazon Exec: We Priced the Fire Phonewrong." Fortune Amazon Exec We Priced the Fire Phonewrong Comments. Fortune, 30 Oct. 2014. Web. 3 Mar. 2015. ]

The failure of the Fire phone may have left many users questioning Amazons products as a whole. Users were concerned that its products were not superior to other products in the marketplace. Specifically, consumers may have seen a drop in the functional, or economic, value of Amazon products. As a group, we established two different segments of Amazon users that would create our sample. One segment was heavy users of Amazon. The other segment was light users of Amazon. The rationale behind choosing these two segments was to see if our theory that the level of functionality of products according to consumers had dropped. The heavy users consist of consumers who go to Amazon on a daily basis. According to the questionnaire, these were the consumers who visited Amazon via cell phone app or computer almost every day. The heavy users mostly window-shopped, but they also bought expensive accessories on daily basis. Some of these accessories include cell phone cases, books, movies, and car components. We also found out that these heavy users were more likely to pay a monthly subscription fee for the Amazon services. The light users segment used Amazon on weekly or monthly basis, such as once every two weeks or a month. The Fire phone disappointed the consumers, but their purchases on other products Amazon offers werent affected. The conclusion proven here is that one bad product from a big or famous company wont take their loyal or regular consumers away from them. We have seen that in the case of Google Glass. A lot of anticipations rose from Google Glass, but it failed and didnt come up to the consumers expectations. Even after Google bared the loss of Google Glass, they didnt lose their share value or customer loyalty. Big companies like Google and Amazon.com can bear such a failure with one or two products since they are huge and can cover the losses with their other products. Section II: Research DesignA. Statement of PurposeWith a completed questionnaire, Amazon will be able to see if there was a decrease in customers, as well as where their total level of satisfaction stood. Within the two segments of heavy and light users, the questionnaire will determine peoples viewpoint on Amazon with respect to their background and lifestyle. The questions were divided into 8 different sections that were based on various aspects for the study. These sections were background, functional, social, conditional, epistemic, lifestyle and demographic. The questionnaire along with an analysis of the t-tests and cross tables created from the results will pinpoint what consumers are satisfied with and what areas Amazon.com should improve on to keep those consumers satisfied and attract others. B. Discussion of SampleThe sample size was a total of 125 people. These were people that varied in income, occupation, and lifestyle. Since the group conducting the questionnaire are all college students, a large percentage of the sample were college students and family members. However, the primary focus was on whether they were light or heavy Amazon users. The study could have led to different results had the sample been selected from a broad network of people, in turn providing a more diverse selection. However, our sample still worked as there was a sufficient amount of light users and heavy users and then proceed with the rest of the research. If the project were to go a different direction, there are several other segments that could have been chosen. One could have been Amazon.com vs EBay. These are two of the largest online shopping retailers. They have a wide variety of products, both fluctuating in quality and value. Nonetheless, Amazon.com was and still is the number one online retailing site, and largely preferred over competing sites. Along with their products, the ease of access and use contributes to its advantage. Thus, a sample falling within Amazon consumers was a better choice than the alternative of finding a sample across two online stores.Another set of segments that could have been chosen was Amazon.com and a retail store such as Walmart or Target. These are stores that bring in huge amounts of customers year after year. Their prices also varied and they offer several different products for everyone. However, in terms of price with these stores were not always better than Amazon. Therefore, those sites were not as popular. Also, the product quality could not always be guaranteed. When shopping online, more people preferred Amazon to a retail stores site such as Walmart.com. The final segments that could have been chosen was Amazon.com and In-store shopping. However, the problem with that is people either prefer online shopping or in-store shopping. The two are at opposite ends. Those who do not like online shopping will not be likely to shop at Amazon.com. It would not make sense to conduct a research with two different extremes. Overall, the focus was on Amazon, therefore dividing the users by heavy or light users would help find its strength as well as the areas that needed development.C. Discussion of questionnaire design There were eight total parts to the design of the survey. Those eight parts are a component to the buyers needs and values that make up the first part of the framework. The buyers needs and values are an important component of the framework because these characteristics help consumers make decisions about the products and services they use every day. In order to further understand a consumers opinions and decision making process, we needed to include qualifying questions that would help us uncover the underlying meaning of their customary or spontaneous purchases. Each of the eight parts were guides to mapping out the questions. The first part of the survey was the background. This section introduces the consumer to the company that is being researched. Here, general questions such as how often they visit Amazon, how many products they purchase within a year, and how they came to know the company, were asked. This part was not as significant as the others. However, it was a good indication as to where the rest of the survey was headed. Amazon is an online retailer and has much competition, especially with many consumers beginning to heavily rely on online shopping due to convenience or better prices. Amazon is realizing this trend is growing and has taken it upon themselves to expand upon their services. Some people may have used Amazon in the past and have now stopped, others may have never even visited the site and prefer others such as Overstock or EBay. This is what the purpose of this study revolves around. This research is meant to uncover the reasons behind those behaviors in hopes of finding a better solution forAmazon.The second part of the survey was on the functional value of Amazon.com. This section is used to measure the benefits and problems that consumers might distinguish in relation to a company or product. In this section of the survey, there werent any questions. Instead, a Likert scale was used, which asks the consumer to agree or disagree with a statement proposed. Statements such as Amazon is/has easy to use, cost effective, or outstanding customer service. These statements are geared to Amazons specific qualities and characteristics. This really helped in finding the weaknesses and strengths within the company and its procedures.The third part to the survey was on the social value of Amazon. This section measured the amount of stereotyping that has developed over time in relation to Amazons products but more specifically, its users. This is an underlying aspect to consumers thought processes, which they may not always notice when choosing where or what they buy. To learn who consumers thought were frequent Amazon users, the Likert scale was used again. However, this time the scale ranged from most likely to least likely. The list that surveyors could choose from included older people, college students, men, women, minorities, or families, just to name a few. Finding out who is shopping on Amazon's website is important, but knowing who consumers believe in their opinion are regular shoppers is critical to positioning marketing tactics. Amazon also needs to know if consumers will stop shopping just because they believe that a certain group of people they dont relate to is also shopping on the site. On the contrary, if there are large groups who have a considerable influence on others, Amazon will want to focus on those groups and market to those who would like to be a part of that group as well.Part four of the survey is based on conditional value. This section measured the switching behaviors of customers. Consumers are born into an environment where certain products and services become customary and then are carried on with them as they become independent in life. Sometimes those products or services are never changed and other times the consumer decides to try something new. It is the responsibility of each company to find out what those reasons are. Amazon may have loyal customers, but with this section provides conditions that would cause customers to want to look and shop somewhere else. Once again, the Likert scale was used, but this time with yes or no options. This section takes note on what circumstances would sway a consumer to change their behaviors. Perhaps an increase in pricing, poor customer service, or damaged goods could change a consumers behavior. Those types of scenarios where the ones placed in this section.In part five of the survey, consumers emotional responses to Amazon were measured. This section is fairly self-explanatory; it was geared to understanding the feelings consumers experienced while shopping and using Amazons products and services. Consumers dont always realize that emotions play a significant role when they are thinking about an item or service they need, or even how they end up choosing one. Maybe the consumer had a very good experience the first time they shopped there, or an item may remind them of a significant other. On the other hand, they may realize that they always have bad experiences or they dont feel positive emotions when choosing a product or service. It was important to find out what kind of emotions consumers got while shopping with Amazon in order to improve on those aspects, and not only retain those customers, but perhaps win back those who have left. In this section, scenarios were proposed and then surveyors were asked to choose yes or no. Questions such as, I feel confused when I shop at Amazon, I feel excited, or I feel anxious when I shop at Amazon helped unravel those negative emotions.Part six of the survey was about epistemic value. This section measured novelty and curiosity. This section focused on the unique styles and the amount of curiosity of a consumers actions. Again, statements were given and surveyors answered with a yes or no. Some statements were, I want to learn about online shopping, I want to try new products, or I am bored with physical retailers. This section helped map out those consumers who did not shop or have never shopped at Amazon before. The consumers answers could help us ultimately see if online shopping was something they enjoyed and wanted to continue pursuing.Part seven of the survey was on the lifestyle profile of the surveyors. In this section, a scale ranging from strongly agree to strongly. Finding out a consumers activities, interests, and opinions were helpful to the research because it would help Amazon understand which groups to market to. This section was a lead in to the demographic section of the survey which is section 8. In this final section, surveyors disclosed their gender, marital status, major, geographic location, income, and occupation. This is also a very critical section for any company to learn. What kind of people are buying Amazons products and what kind of people could we win over? For example, a consumers occupation and income level can determine how much that consumer is willing to spend on Amazon.D. Discussion of Data CollectionSo with questionnaire completed, the goal was to get as many people as possible. Each group member got 25 people to survey, totaling to 175 people. This provided a big group of people that we could work with. However, there are a few issues worth mentioning. First of all, we are all college students and of similar ages. In turn, we were prone to asking more people around our age who are also college students. Another issue we encountered was that the people that we asked to take the survey complained of it being too long. This could have affected the amount of attention that the person was showing in each section.E. Discussion of Data AnalysisIn order to organize all of our data, cross tab report analysis and t-tests analysis were used. A cross tab report shows the relationship between two or more survey questions. It provides you with a side-by-side comparison of how different groups of respondents answered a question. They place data in a multimedia format in order to answer related questions: do our surveys tell us there are more light users or heavy Amazon users? What kind of things are the most purchased? How often are people spending their time on the site? The data also allows you to pivot the information and possibly ask questions directly related to the persons demographic background as well as usage. Cross tabs don't work well with all sorts of data/information. Cross tabs work best with multidimensional and summary level data; not for detailed, non-dimensional data.Multidimensional entails that there were different aspects of the business being tested such as product, region, and metrics. When conducting survey analysis, cross tabulations (or cross-tabs) are a quantitative research method appropriate for analyzing the relationship between two or more variables. This method was used to organize data from sections 1, 7, and 8 of the survey. The other method used to organize data were T-tests. This table was used for parts 2-6 because they had a yes/no answers or agree/disagree and most likely/least likely options. T-tests are statistical examination of two population means. A two-sample t-test examines whether two samples are different and is commonly used when the variances of two normal distributions are unknown and the sample size is small.These two tests were very easy to use and assisted in completing our framework. In order to explain the problems about Amazon and present our solutions, we needed enough support from the consumers responses.

Section III: FrameworkA. Buyers NeedsThe 5 Values of Consumer Behavior:In parts two through six of the survey, questions were focused on the five values that drive market choice behavior. Descriptions of each of the five values and its relation to Amazon.com have been identified from the results of this questionnaire. Functional value is measured by the economic value and the beneficial attributes of a product. It represents the usefulness a product is observed to have noticed through its physical and functional purposes. For Amazon.com, flexibility, payment security, and product quality and variability were amongst its greatest functional values. Social value is the measurement of the stereotypes associated with a product or service. That product or service is then assessed by its social significance within demographic, socio-economic, and cultural-ethnic groups. Our surveyors indicated that Amazon likely had college students and the middle to upper class as the majority of their customers. The emotional value of a product is measured by the personal feelings produced by the product or service at hand. Most surveyors indicated a feeling of relaxation and independence while only a few felt depressed or anxious. As a whole, the results showed that Amazon tended to provoke positive emotional responses. Additionally, conditional value measures the switching behavior of customers. An increase in prices and subscription fee for general access were likely to cause a customer to switch to a similar site. However, limitations to US-only shipments and a lack of sales/clearance items were not probable reasons for switching. Lastly, epistemic value measures the satisfaction of novelty and knowledge needs associated with a product. Essentially, it is driven by the curiosity of customers. Loyalty promotions and programs were not a major factor for using Amazon. However, finding the best prices and learning more about online retailing triggered many surveyors to visit Amazon.com. Demographic and Lifestyle Profiles:Segmenting the public into various demographics can allow a company to assess the size of a potential market and see if its products or services are reaching its target consumers. The results of the questionnaire gives a description of the surveyors age, sex, economic status, and the level of employment, income, and education. To sum up the demographic profile of our heavy Amazon users: 59% are students, 64% have an income level of 25,000 or below, 53% reside in the city, 65% are female, 35% are male and 75% are single. Of our light users, 44% are students, 61% have an income level of 25,000 or lower, 49% reside in Chicago, 50% are female, 49% are male, and 71% are single. Though there isnt a significant gap between heavy and light users within this demographic profile, one can see that heavy users are mostly females, students, and city inhabitants relative to the light users. Now, the lifestyle profile does not take into account the demographic make-up of a person but rather the activities, interests, and opinions of the target population. In part seven of the survey, questions were geared to the interests and opinions of people as well as the activities they may take part in. When asked if one uses Amazon while at work, 56% of heavy users agree, while 19% of the light users agreed. When asked if one uses Amazon for school, 30.3% heavy users agreed. Approximately the same amount of light users 42.2% agreed as well. Finally, when asked if one uses Amazon as a hobby, 69.7% of heavy users agreed while only 28.4% of light users agreed.As for interests, questions were geared to what kind of products surveyors tend to buy. 60% of heavy users and 34% of light users agreed that they used Amazon to purchase entertainment products. Clothing was not a popular product as the majority of surveyors regardless of the level of usage did not use Amazon to purchase clothing. At 59%, the highest amount of heavy users agree that they use amazon to purchase electronics, while the majority of light users, 50.3%, were either indifferent or do not. Lastly, the availability of sale and/or deal items did not strongly prevail why both heavy and light users utilized Amazon. When questioning surveyors on their opinion of Amazon.com, 42% of heavy users agreed that everyone should use Amazon, while the majority of light users, 56%, were indifferent. Additionally, 73% of heavy users agreed or strongly agreed with the statement that Amazon is the best online retailer, while again 56% of light users remained indifferent. Lastly, the majority of heavy users, 82%, trust amazon products and around 73% of light users also do or were indifferent.Market Segmentation:To segment the market, the base will be the four Ps (Product, Promotion, Price, and Place) and the five values discussed above (Functional, Social, Emotional, Conditional, and Epistemic). Market Segmentation Grid:

Segments:

B. Product/Positioning1. The attributes of Amazon.com equate to the functional value of this company. These attributes include security, flexibility, price, variety, and its easy use.2. Amazon has both direct and indirect competitors. Some direct competitors include EBay, Outlook, and Craigslist. Some indirect competitors include major brick and mortar stores like Target and Wal-Mart. Within specific departments, Amazon competes with various retail stores. In the electronics segment, it competes with Best Buy and Radio Shack. Within the entertainment and media department, many of its competitors include Netflix, Apple with its iTunes store, and Google with its Play Store. Many of these competitors are both direct and indirect in that they have an online and store presence. For one, Wal-Mart is a retail chain that operates globally. It has many department stores as well as an online site to reach out to its customers.3. Positioning Map

C. Seller/Marketing Strategy1. Product: While initially Amazon.com had an imitative approach with their service, its evolving nature has made it more innovative. It started within the book industry, and eventually expanded beyond books to now selling a variety of products and things like its Kindle, making it more of an innovative company.2. Promotion: Amazon.com incorporates a pull strategy through advertising across multi-medias.3. Price: Amazon.com embodies a skimming price strategy. Like Wal-Mart, its prices are relatively low and continues to stay low. 4. Place: Amazon.com sells its products exclusively online, as it is an online retail store.Section IV: Data InterpretationA cross tab is a type of table in a matrix format that displays the (multivariate) frequency distribution of the variables.[footnoteRef:6] A cross tab is also known as a contingency table or cross tabulation. The table presents the collaboration of two variables and reveals possible correlations between them. The Chi-square statistic is used to test the significance of the cross-tabulation table. It tests the independence of the two variables. The phi coefficient determines the degree of association between the two variables, which is defined by the following equation: [6: "Chi Square Statistic Definition | Investopedia." Investopedia. 26 Feb. 2010. Web. 3 Mar. 2015. .]

In this equation, x2 is determined by Pearsons chi-squared test, and N is the total number of observations. The phi coefficient can range from no association between the variables0, to complete association or complete inverse association1,-1, respectively.In particular, our questionnaire resulted in a cross tabulation that portrayed the percentage of heavy and light users that gave an answer for each question. The percentages for every answer found within Parts 1, 7, and 8 are shown in the crosstab table in Appendix 1. Our cross tabulation represents the background information, lifestyle, and demographic profile of our surveyors. This information includes usage frequency, product purchases, usage and ranking of competitors, products searched, marketing awareness, willingness to pay for a monthly subscription of general access, price satisfaction, location of usage, purpose for usage, and personal demographic characteristics of Amazon consumers.To highlight the results found in the cross tabulation, it is important to notice the most significant answers. Results show that about 44 % of heavy users use Amazon every two weeks, while only about 6% of light users use it every two weeks. This is an important distinction because this separates our two market segments. About 41% of heavy users also purchased 15 or more products at a time, compared to only about 4% of light users who did the same. Amazon also proved to be the most popular among competitors such as eBay, Alibaba, Craigslist, and Overstock. Seventy-seven percent of heavy users and 70% of light users ranked Amazon as their most preferred among competitors. Also, the results concluded that none of the heavy and light users were very unhappy about Amazons pricing. This recognition illuminated Amazons strong pricing strategy. About 60% of both heavy and light users preferred to shop at a physical retailer over an online retailer. Recently, Amazon opened its first physical retailer in order to satisfy the physical segment of the retail market it wasnt reaching before. A t-test is a statistical examination of two population means.[footnoteRef:7] T-tests are types of hypothesis tests that are used to determine a probability that is then utilized to determine differences in the population mean. A t-test determines the likelihood of correlations between two variables being a coincidence or actually having significance in a sample selection. A t-test helps compare differing average values. A difference between two groups averages is more likely to be significant and actual if the difference between the averages is large, the sample size is large, and responses are consistently close to the average values and not widely spread out (the standard deviation is low).[footnoteRef:8] The t-value represents the differences between means of the two groups. [7: "T-Test Definition | Investopedia." Investopedia. 28 Sept. 2010. Web. 3 Mar. 2015. .] [8: "Statwing T-Tests." Statwing T-Tests. Web. 3 Mar. 2015. .]

In particular, our questionnaire resulted in a variety of important information that is used to create the marketing solutions to Amazons problems. Thirty questions were specifically chosen based on the significance of the t-values and means each question resulted with. The three groups listed are questions that resulted in the greatest t-values, greatest means, and the lowest means. The results seen below show the differences between the means of heavy and light users. They also show the t-value and 2 tail probability of each question. The higher the t-value the larger the difference is between the means, and the lower the probability value, the more significant the results aremeaning the difference between the means is not due to a random occurrence.To highlight our results, its important to notice the questions that yielded the most significant results. The largest differences between heavy and light user means were demonstrated from the epistemic and emotional values of consumers needs. Fifty-eight percent of heavy users shop at Amazon.com out of curiosity, while only 42% of light users feel the same way. Similarly, 94% of Heavy Users feel relaxed when shopping at Amazon.com and 73% of light users also have a relaxed shopping experience. The most consistent consumer responses stem from functional and emotional buyers needs. One hundred percent of heavy user surveyors found Amazon to have quality products and feel safe when shopping at Amazon.com. Similarly, 94% and 93% of light users believe Amazon.com to have product quality satisfaction and experience a safe shopping environment. A very small amount of surveyors felt overwhelmed or anxious, results that derived from questions on the emotional value of Amazon.Overall, the biggest differences in consumers needs between the two segments were found from the emotional necessity. Results illuminate that both heavy and light users agreed on all of the conditional needs that might cause a switch because these responses have the lowest t-values. The most popular needs met across both users were the idea of Amazon having product quality satisfaction and believing it to be safe when shopping at Amazon.com, both stemming from functional needs. There was not a high average number of users that agreed upon epistemic needs. The smallest responses came from emotional feelings such as feeling overwhelmed, anxious, and depressed while shopping at Amazon.com.Section V: ConclusionAmazon has been dealing with decreasing/stunted growth in the stock markets. Amazon shocked shareholders when it reported a $437 million net loss for the quarter (last October), its biggest in 14 years.[footnoteRef:9] Its issue of decreasing market value can be solved taking a few different routes. The three alternative solutions that should be highly analyzed and considered are the following; opening a physical retail store, keeping prices at their relatively low rate, and/or improving the Fire phone to increase App related sales. [9: Carr, Austin. The REAL STORY BEHIND JEFF BEZOS'S FIRE PHONE DEBACLE AND WHAT IT MEANS FOR AMAZON'S FUTURE Fast Company Magazine. 6 January 2015. Web. March 2015. ]

One of the options for Amazon is to experiment with expanding into physical retail space. This would allow customers to come into a store and see the products in person instead of taking the gamble of ordering a product online and not necessarily knowing exactly what they are getting. A customer that comes into the store will have face to face customer service which would make getting advice or help with products or returning an item much easier. It is expected that more e-commerce stores will open physical retail store fronts as 2015 continues; Why? For one thing, the majority of overall retail sales are still taking place offline, and ecommerce sites have realized that they need to set up physical shops if they want to gain significant market share. Additionally, the need to provide seamless online to in-store experiences continues to grow, and successfully pulling this off requires both a digital and physical presence.[footnoteRef:10] Market share would also increase potentially due to customers being more likely to buy a product they can see/touch/experiment with in person. The negative aspect for Amazon opening up a physical retail space would include the obvious increase in cost of hiring store clerks and managers. Online retailing efficiently gets the product to a customer without all the extra cost of more employees/rent/utility bills/etc. Amazon, as a physical retail space, would also be drastically limited in the inventory it would be allowed offer and have stocked. The online store not only has Amazon products, but also sells products from other dealers as well. The store front location would have limited accessibility, mainly only to those that live in the area. Given our survey conveyed that 60.6% and 62.2% of heavy and light users prefer to shop at a physical retail location, so this idea is still validated as a potential way to increase market value. [10: Vend University. 12 Retail Trends and Predictions for 2015 Vend HQ. Web. March 2015. ]

The next alternative solution for Amazon to increase market shares would be for them to aggressively maintain their pricing strategies, offer lower prices whenever possible, and continue to monitor competitors pricing. The survey results indicated that 62.1% and 59.6% of heavy and light users were happy with Amazons current prices. The survey also indicated that 95% and 97% of these customers would switch their online retailer if Amazon raised prices. This could potentially result in a further dip in the value of market shares. Keeping the pricing strategy on target with offering low prices would result in an increase in customer purchases (a customer happy with low prices would have more money to spend on multiple items, instead of just one), it would result in an increase of customer loyalty as well as an increase in positive public response towards the company. Of course, there would potentially be downsides as well to this course of action, such as, an increase in labor cost could cause a decrease in profit margins. Another downside would be that with consistently low prices this would decrease the possibility for sale events and customer discounts. Finally, low prices could damage the perceived product quality and could damage brand image. If a person is confronted with consistently inexpensive items, one might begin to wonder if the product is perhaps cheap, not durable, and not worth the risk of purchasing. The last option for a solution to Amazons drop in market value would be to rework the Fire phone and rerelease it with the idea of it increasing the Amazon App usage and thus overall purchases. Amazon has proven itself in the past with their success with the Kindle and then Kindle Fire tablets to prove they are capable of making a successfully well reviewed/received product. Amazon has the resources to do this again with the Fire Phone, it just needs to take a step back and analyze the critical feedback given by reviewers during the release of the first Fire phone. The survey that was handed out stated that only 12.1% and 21% of heavy and light users ordered products from amazon off their mobile App. This shows that there is a lot of potential room for improvement. When consumers have their Fire phones they have Amazon at their fingertips basically 24 hours a day, they can order or price compare any item throughout the day. This would result in sales for Amazon increasing because user access to the site would also increase. A successful launch of a Fire phone 2.0 would help to erase the debacle that was the first Fire phone from consumers memories, and would regain consumers trust and high expectations in Amazons digital products. The cons of a launching the Fire phone once more would definitely involve having to overcome past consumer expectations. The first Fire phone was a huge disappointment to many for a lot of reasons. It basically made the idea of an Amazon phone into a joke. A consumer is not quick to forget unless something extremely impressive comes out to take its place. In a world where Apple and Samsung have the edge in the phone industry, Amazon research and development has their work cut out for them. They must come out with a phone that is on par with the latest Apple/Samsung smartphones, if not also somehow superior. The major complaints about the phone included; limited Apps, short battery life, problems connecting to WI-FI, small screen, overpriced, overheating/freezing/crashing, and no back button.[footnoteRef:11] The costs of R&D to come out with an improved version of the phone must also be considered before pursuing this course of action. [11: Hill, Simon. 8 Fire Phone problems and how to fix them Digital Trends. 6 August 2014. Web. March 2015. ]

The final solution that was chosen was solution number three. Launching the Fire phone again seems to be the best course of action for increasing market shares. The sale of the phone itself would increase market value as well as increasing the mobile App usage. Consumers would once again view Amazon as an innovator and on level with Apple and Samsung devices. This would improve brand image, increase profits, and pave the way for Amazons next new innovative device.

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Vend University. 12 Retail Trends and Predictions for 2015 Vend HQ. Web. March 2015.

Sheet15 Values4 P's Product QualityGood valueCollege StudentsMiddle ClassEasy to UseConvenienceFlexibleProductVarietySecureAdsPromotionSocial Media

< 10Price10 - 25> 25

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