Consumers are always looking for the best price for the products they are looking for, but they also think about which purchase is convenient. Amazon offers consumers the unique opportunity to purchase a multitude of products from the comfort of home, often offering an extremely competitive price. Variations in pricing, sales strategy, and behavioral economics have helped Amazon create a dominant presence in the world of e-commerce. These key areas have helped the company not only succeed in its own right, but have also left competitors scratching their heads wondering how to keep up. Say no to plagiarism. Get a tailor-made essay on "Why Violent Video Games Shouldn't Be Banned"? Get an Original Essay Amazon Pricing Strategy: Amazon has very competitive prices. Shoppers, just like me, believe that Amazon has the best prices possible (or very close to the best). An analysis performed by Boomerang Commerce, a pricing firm founded by a former Amazon employee, found that Amazon offers the biggest discounts on its most popular products and accepts lower profits on less popular products. One example Boomerang Commerce found was on a $350 Samsung television. Amazon dropped the price of the TV to $250 on Black Friday. That discounted price placed them at a better price than the competition, but Amazon was quite profitable with its pricing as it increased the price of an HDMI cable that consumers would want to purchase with the television (D'Onfro). This is a very smart way to sell products. Consumers will watch television and believe they are getting a lot because they have a higher demand for the most popular product (television) at the lowest price and would be more willing to pay a premium price for the least popular product (television). HDMI cable). Amazon undercut competitors' prices with this strategy because it maintained a higher profit by selling the less popular product at a higher price. Amazon uses various products to match its unique pricing strategy. The company has put an Asus Dual-Band wireless router on sale for 20% less than the price of its competitor Walmart. Despite offering this 20% discount to consumers, Amazon listed a less popular model at a price 29% higher than Walmart's list price (D'Onfro). Amazon's pricing strategy can be called dynamic as it approaches selling items differently than its competitors. During the holiday season, Amazon changes the prices of approximately 80 million products in a single day. In 2013, Internet Retailer Magazine reported that Amazon changed prices on its website for approximately 40 million products in one day (Loeb). An HP printer was on sale in April 2013 at Sears for about $160, but Amazon had it listed for $120. At 9 a.m. on the day of the sale, Sears raised the price to $190, then lowered it to $155, before raising it once again to $190. By this time, Amazon had raised its price list to $130. Office Depot and other competitors kept prices constant, but Sears and Amazon changed them several times. At the end of the day, the seller with the lowest price was Amazon at $105 (Loeb). Amazon has changed the list prices of its products to stay one step ahead of its competitors. This puts competitors in a very difficult position. Retail stores selling products online can't seem to keep up with the price changes Amazon is implementing. This places profit and inventory as a major concern forcompetitors like Sears. Amazon could eliminate competition from stores like Sears with how they address these price changes at their amplified pace. The image above shows how often Amazon changes the prices of its products compared to its competitors. Even though competitors offer products at lower costs, Amazon's new products outperform the competition every day. Even with large competitors like Walmart and Target, Amazon makes more than triple the amount of changes Walmart makes on Black Friday and in the weeks following Black Friday. Black Friday, being a prime time for online shopping for most consumers, offers Amazon the opportunity to make large amounts of sales and beat competitors in terms of pricing opportunities. As we have already seen, Amazon has an advantage over retail stores. Combine this advantage with competitive superiority with online pricing strategy and you have a winning recipe for Amazon. What Makes Amazon Successful In 2016, CEO Jeff Bezos discussed Type 1 and Type 2 decisions in a letter to shareholders. Type 1 decisions cannot be reversed, while Type 2 decisions can be reversed and should be made quickly. Following the Type 2 decision path has allowed Amazon to create lasting success, according to Scott Galloway, clinical professor of marketing at NYU Stern School of Business (Lebowitz). Galloway says Amazon doesn't hesitate to eliminate investments that aren't profitable so the company has money to invest elsewhere. With this strategy of eliminating investments that don't work, Amazon has created some big winning investments. For example, Amazon Prime and Amazon Web Services. Amazon is extremely careful not to fully commit to a project until it is completely sure that the project will work. Galloway also points out that most CEOs “will not take risks that have less than a 50% chance of success, no matter how large the potential profit. Amazon CEO Jeff Bezos said in 1997: “Given a 10% chance of winning a hundred times, you should take that bet every time. "(Lebowitz). Having access to capital gives Amazon the opportunity to invest in areas it wants to see work in. Being able to walk away from one investment and move on to the next one allows the company to not waste time on projects that don't maximize profit and to try to find a better scenario. Furthermore, having a CEO, just like Jeff Bezos, willing to take risks to make the company expand should be highly appreciated better situations for the company. It is clear that Bezos can take risks, accept flaws, and try to create profit-maximizing projects based only on his 1997 quote. Behavioral Economics and Decision Making Behavioral economics has been labeled as the science of decision making. Marketers believe behavioral economics is extremely valuable because it can explain how emotional or rational consumer decision making is, how much information consumers can absorb, and how fast consumer decision making is (Saunders). Daniel Kahneman, known as the father of behavioral economics, believed that our brain is made up of two systems; divided into System 1 and System 2. System 1 includes perception and intuition. This part of the brain helps you sense when something is wrong. System 2 represents reflective thinking and in this system you are aware of what you are thinking. System 2 is also about how we make deliberate decisions. The mode of.