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Is Amazon Enabling Addiction?

1/7/2017

19 Comments

 
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by David Hagenbuch, founder of Mindful Marketing & author of Honorable Influence

While scanning the news online, a headline from one of my favorite business sites grabbed my attention: “Amazon Wants to Get College Students Addicted to Prime.”  As a marketing professor who cares about college students and who has more than a casual interest in companies like Amazon, the title enticed me.  Could the nation’s biggest online retailer really be encouraging addiction on college campuses?  I had to read on.
 
The Bloomberg Business article described that Amazon has been making a concerted effort to get closer to college students, literally.  So, how could Amazon penetrate further a target market that’s already tremendously tech-savvy, internet connected, and predisposed to online shopping?  The answer involves a two-fold strategy comprised of a powerful pricing incentive and a physical presence on college campuses.
 
In terms of pricing, Amazon has cut in half for college students the cost of its Prime membership.  Prime gives Amazon users free two-day shipping on most things they buy, as well as several added benefits, including unlimited streaming of movies and TV shows, unlimited access to over 2 million songs, free video game content, and unlimited access to books and magazines on any device.  A Prime membership normally costs $99 a year, but current college students can have one for just $49.
 
Most of us are familiar with Prime, as we’ve been inundated with offers to try the program.  The other aspect of Amazon’s college strategy is even more unique: Amazon lockers on campuses.  These secure boxes allow students to pick-up their online orders, which can be quite large, at their convenience, without the worry of packages being left in the open where someone might take them.  You may have seen similar lockers at a mall or another public location near you.
 
Of course, like any business hoping to grow revenue and increase profits, Amazon wants to get closer to all of its customers.  But, why is the giant e-tailer redoubling its efforts to appeal to college students?  Although they’re a sizeable group, most of them have small or no incomes, as well as growing debt, which makes them very selective in their spending.

Well, like other consumers, college students will spend money on things they really want (e.g., movies, music, the latest technology) and that they really need (e.g., textbooks, toiletries, etc.).  Indeed, Amazon offers all of those things, but those current sales aren’t the only thing that’s driving Amazon’s college strategy.
 
The answer lies in the future.  College students may be cash-strapped now, but as they enter their careers and their incomes increase, they’ll be the leading spenders for the next 40+ years.  So, Amazon is following the same strategy that so many other retailers have taken—“Get ‘em while their young.” 

Businesses from banks to fast food take this tack, hoping that the brand choice people make in their youth will stay with them as they grow older and richer.  A Proverb even supports the same: “Train up a child in the way he should go: and when he is old, he will not depart from it” (Proverbs 22:6, KJV).
 
So, that’s the reason for the claim that Amazon is trying to addict college students.  Maybe Bloomberg meant the article title (“Amazon Wants to Get College Students Addicted to Prime”) as hyperbole; still, such a suggestion of addiction shouldn’t be taken lightly.  Psychology Today describes addiction as follows:
 
“Addiction is a condition that results when a person ingests a substance (e.g., alcohol, cocaine, nicotine) or engages in an activity (e.g., gambling, sex, shopping) that can be pleasurable but the continued use/act of which becomes compulsive and interferes with ordinary life responsibilities, such as work, relationships, or health. Users may not be aware that their behavior is out of control and causing problems for themselves and others.”
 
Since using Amazon constitutes shopping, the underlying behavior does hold potential for addiction.  However, it’s hard to support specifically that a subscription to Prime or use of Amazon lockers “interferes with ordinary life responsibilities, such as work, relationships, or health.”  Perhaps someone, somewhere has allowed those conveniences to become obsessions, but for the vast majority of people it’s doubtful that “their behavior is out of control and causing problems for themselves and others.”
 
What, then, is happening if college students and others are frequently using Amazon Prime and/or lockers?  Medical News Today sheds some light on this question by making a helpful distinction between addiction and habit:  While addictions involve behavior that people are “unable to control without help,” habits “are done by choice” and can be stopped whenever the person wants.

So, Amazon’s strategies may encourage habit-forming behavior, but it’s very doubtful that they’re addictive.  Furthermore, we all know that there are good habits and bad habits.  Getting the products one needs at low prices while spending less time, effort, and energy (including gasoline), seems like a good habit.
 
Still, isn’t Amazon through its tactics locking in these young consumers for life?  From my experience, college students are very economically-minded and adept at brand switching.  They search out new options like few others, and they don’t hesitate to pull the plug on products that underperform or otherwise fail to deliver adequate value.

Actually, I’m more concerned for Amazon: I wonder how many of these customers it can retain once they graduate, no longer need textbooks, start to repay college loans, and see their Prime membership double in price.
 
Amazon offers college students good value, including low costs and convenience, through its discounted Prime membership and campus lockers.  There’s good reason to believe that the vast majority of college students currently make the right choices about using Amazon and will continue to do so post-commencement.  While Bloomberg deserves a ‘D’ for its suggestion of addicted college students, Amazon earns an ‘A’ for “Mindful Marketing.”


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19 Comments
Audrey Liberati
1/7/2017 10:38:29 pm

I'm not surprised that Amazon is trying to reach college students. I have used their textbook rental services many times and I have noticed their cheaper prime membership. However I think that once I get out of college Amazon will still be a habit. Sure, they may not have thought through the whole membership doubling and other services that won't be useful but I think Amazon has added plenty of services to keep customers coming back. Now they have the grocery delivery and the dash buttons so you can supply up on your family's groceries and toiletries. I definitely wouldn't say it is an addiction but I agree that they continue to have Mindful Marketing. They are very intentional with how they are reaching their customers.

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Mary Roberts
1/8/2017 12:25:08 am

The way Amazon reaches out to college students is interesting. Rather than pay for Prime at half cost I was given it free for 6 months. I am not a frequent shopper so it's not something that excites me, however I do see how it can entice students. Having easy access to cheap products, free shipping, and two-day delivery is pretty convenient when you are crunched for money. I also am a little confused on how this membership for college students could be beneficial because I do not see myself frequently using it after commencement. Yes it helps tremendously when purchasing textbooks but that is primarily what I use Amazon for. Why wait for your simple toiletries to deliver when you can just drive a few minutes and purchase them immediately? However, in the end I do agree that Amazon has mindful marketing because of its low costs and convenient shipping.

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Natalie Robinson
1/8/2017 03:46:07 pm

I most definitely agree that Amazon is practicing mindful marketing with its concentration on college students for Amazon Prime. Not only do students get 6 months free, they also get a cheaper overall price there after, this is very helpful and persuasive. I can see how using Amazon Prime for normal products could be a waste of time for some, but due to the fact that a lot of American colleges, like Messiah, are secluded, without a car you don't have the opportunity to just pop to the shops. In this way, for me personally, it has been very helpful during my first semester and because of the convenience and special price I am highly considering getting Amazon Prime permanently.

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Abby McMinn
1/8/2017 04:20:48 pm

Amazon's marketing techniques are quite admirable. Being a college student myself, I too fall into the grasp of their unmatched offers. It seems contradictory to target a market segment with empty wallets, but their strategy is one that will undoubtedly pay off in the future. Humans are creatures of habit, so since we all already have accounts set up and are familiar with the site, it is likely that us college students will continue to use amazon as we grow older for even larger purchases. In addition to the loyalty development, it is strategic to target college students with good deals because we still buy stuff. We may be broke, but we still need books and we want things for our dorms. Since we must be frugal, we look for the cheapest and easiest way of attaining these things. For a lot of the stuff that I want, these cheap and easy options can be found on Amazon. So it is actually better for Amazon that we don't have thick financial means because then we are more intentional about finding cheaper options. Sometimes I will see something in a store that I want and I won't purchase it because I know I can find it cheaper on Amazon. People with financial stability would probably just buy it when they see it.

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Levi Greenly
1/8/2017 06:02:18 pm

This strategy that Amazon is using to try to get more college aged students to buy from them will pay out dividends in the future. Like any business, Amazon thrives on repeat customers, more than the acquisition of new customers, so getting more loyal customers at a younger age will yield higher profitability in the future. The college age students might not have much spending money, but when they do, Amazon will have a large consumer base ready to buy their products. Amazon also knows their consumer base well. In an article done by Time Magazine, they found that millennials tend to impulse buy more often than other generations, and they can capitalize on this pattern by giving them the fast service that they desire, which benefits both parties. As a whole, Amazon is not trying to get their consumers addicted. They are only trying to fulfill their needs both in the consumer's college years, as well as their prime money making years, which is when the investment starts to pay off for Amazon. I use Amazon when I purchase things online, and my family has Amazon Prime which I can use, so whenever I am financially stable enough to make more purchases on Amazon, I already know that my money would be well spent.

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Alyssa Ebersole
1/8/2017 08:55:42 pm

I believe that Amazon is trying to entice college students with their Prime memberships. I was given six months free of Prime to try before having to pay which enticed me because I love that I can get free two day shipping. I don't know if I would say that an addiction forms, but I am definitely more likely to use Amazon than I was before. The easiness of online shopping and the free shipping allowed me to easily order Christmas presents this year. This feature also allowed me to find cheaper prices online and then I could in stores and not have to leave campus to do it. This targeting at college students may not cause an addiction per say but is effective in getting college students to use Amazon's services to shop.

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Matt Sechrist
1/8/2017 09:03:17 pm

I believe that what Amazon is doing will be very beneficial to them in the future. Even though students don't need prime to use Amazon, it has a lot of benefits that can pay for itself in ways. From the free shipping, music and movies that are available, it is really nice for a student to have because it can help cut costs when it comes to entertainment. As long as the individual is content with the service, they are likely to pay for it even after they are no longer students. The students will most likely use Amazon if they have prime which will be very profitable for them. If students can have their purchases delivered to them without having to drive to a brick and mortar store, they will do it nine out of ten times. I would say that Amazon is being mindful. They are creating shareholder value and upholding societal values.

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Brady Steinour
1/9/2017 10:12:05 am

I agree that Bloomberg Business has a twisted image of what an addiction truly is. Certainly, there can be people with severe habitual shopping routines. However, that does not compare to a life altering addiction that becomes pleasurable and compulsive. I agree with the author that Amazon is trying to capture young students into become lifelong customers. However, I am unsure of how students will react to a price increase upon commencement when student loans are due paid. Amazon may be planning to capture new customers and five years from now drop the overall price of a prime membership to $49 for every customer. I feel that a price jump will decrease the amount of customers Amazon has. However, Amazon is most likely not worried about losing customers, but rather providing enough content to attract customers and keep them long term. Amazon is quickly becoming one of the most powerful companies in the world. I feel that their marketing approach is mindful and does not affect core values and beliefs. The future will tell how Amazon retains their college audience.

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Scott Bertolette
1/9/2017 10:26:18 am

I believe what Amazon is doing for college students is a mindful way to market to that demographic. As someone who uses Amazon on a semi regular basis, trying out the extended free trial for Amazon Prime is something that has helped me decide to consider getting a discounted membership. The two day shipping deal is also a major selling point for me. However, as said above, I am not sure if I will be able to keep a Prime membership after college when the price doubles and there is a little less need for it. While it may not necessarily be the case for me, I feel as though it still is a good strategy for people who use it more frequently. This was a good idea from the higher ups that would help them have loyal customers in the future.

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Gabby Kurtz
1/9/2017 10:52:10 am

I find it hard to believe that a true addiction could be formed to an online shopping model such as Amazon. I think if the world ever got to a point where people did have legitimate addictions to something like Amazon, there would be a real need for change in the minds of consumers. But I do find it interesting, however, that Bloomberg would bring up such a topic as addiction in connection with consumerism, as I do think people tend to develop unhealthy mindsets of online shopping and a poor understanding of want and need. Because of the immediacy companies like Amazon provide for consumers, what is to stop us from utilizing it to the fullest extent? I think by continually lowering expenses, Amazon ropes in members of a difficult-to-reach group as college students tend to try to scrape by with the bare minimum, not purchasing memberships or other things that would add additional expenses. At the same time, I think most college students would be unwise to not take this offer. Amazon offers lower prices on almost every textbook there is and in addition, has the best rental plans as well and makes the returning process as easy as possible. All the perks that come associated with the Prime membership only make the overall costs lower and the process simpler. I would say Amazon is doing all they can to allow their stakeholders to benefit and it is not their fault if people form "addictive" habits. I am interested to see where Amazon is in five years, because I feel like there will be significant advances in the near future for the company.

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Jireh Bagyendera
1/9/2017 10:56:28 am

I agree with the editor that Bloomberg’s use of ‘addiction’ is rather extreme. Amazon, like all other firms, is trying to create brand loyalty using the ‘get them while they are young’ approach. The idea of unlimited streaming of music and movies for $49 a year virtually blows my mind; considering that I pay about $16 a month for the same luxury. I will definitely look into other benefits of Amazon Prime versus Netflix, You Tube Music, and shipping payments. There, I believe I just made my decision!

However, the second I graduate, I will abandon Amazon Prime! $49 is convenient in college, while $100 is inconvenient at every stage. This simply means that Amazon is not really building loyalty; college students just want the best deals.

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Rachael Kelley
1/9/2017 11:08:01 am

Amazon is one of those companies that someone hears and immediately knows. Many friends, colleagues, family, and fellow college students have exclaimed, "I love Amazon" whenever it is mentioned. However, with being involved as a mental health advocate, I know how quickly habits can become addictions. I think it is safe to say too, that to some degree Amazon has already become the addiction of many. Even so with this strategy to become even more appealing to college students, Amazon has the right idea. I think many college students already love Amazon for what it is and by offering even more benefits it draws in larger attention. Many people worry about things being taken, especially in college so by offering a safe place for the package to be stored, it gives students a peace of mind. Dr. Hagenbuch made the statement of "I wonder how many customers can Amazon retain after they graduate" but I believe the key thing to keep in mind is that Amazon is more than just small items and textbooks. Once, graduated, students will be looking for apartments, items to fill their new homes, start families, and buy products for such life events. If Amazon can lock in these customers young, show that the items sold are at the best value, and give the best customer service, I don't believe Amazon will have too much of a problem. My concern lies with how the online shopping with eventually impact the life of the student. As a current student, in the moment of procrastination and online shopping, I personally don't think of "Oh I better not buy this, in a few years I'll have to pay back student loans". Instead I think of "I really like this, it's at a reasonable price, I'm going to get it". I feel like if that continues over a period of time Amazon begins to get the slippery slope effect of people just continuing to buy things because of it being fairly priced. People get addicted to those kinds of things; thinking you get a good deal, feeling good about it and continuing to buy more. So, maybe Amazon's single-minded approach isn't meant to come out addicting but rather habit forming with the danger of becoming an addiction.

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Morgan Reifsteck
1/22/2017 10:58:03 pm

I agree that Bloomberg had it a little twisted when they said Amazon was trying to addict people to their website and shopping. I think it is very smart for Amazon to target college students and offer a lower prime price because more are most likely willing to join if it is only half the price considering they are college aged student with little to no income during school. I also agree that online shopping can become a bad habit but I don't think one can necessarily become truly addicted to it. I also agree that it is mindful for Amazon to be targeting college aged students because they do purchase textbooks and other items for cheap which greatly helps when they don't have much money to spend on those types of things. I do not see anything wrong ethically and it is definitely creating more stakeholder value for Amazon.

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Anna Evanek
1/25/2017 09:22:45 am

As a college student who currently utilizes Amazon Prime for a variety of reasons, including free, two-day shipping and free movies, I do not at all feel like I am becoming addicted, as the article suggested. I think Amazon offers excellent services to its customers, especially college students, at cheap enough prices. Amazon is both upholding societal values and creating tremendous stakeholder value for its customers. In my opinion, Amazon should surely fall under the category of Mindful Marketing.

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Kamuela Makue
3/28/2017 02:09:21 am

I use Amazon Prime and am glad to use it. Regardless if they had a college discount, I would still use Prime because of the necessity to buy books and items without shipping prices. For that reason alone I prefer Amazon. Since they are the largest online retailer, they can have control over that part of the market. I believe many college students will also use Amazon afterwards because of their usefulness. Many people may stop buying as much technology or gadgets, but those that do will probably remain. I think it is a good tactic by Amazon because it could set a niche for themselves with the college generation. Amazon would need to adapt to this generation as they get older though. Perhaps using the option for longer processing for the good to come in. Amazon, however, has many offers through Prime, whether it be Audible, twitch.tv, music, and all sorts of options. If done correctly, Amazon could take over video streaming, music, and other sections of online entertainment.

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E
10/24/2017 01:05:21 am

I do also find Amazon's efforts to engage student consumers less of an attempt to create an addiction and more of one to make a "habit" (as mentioned in the article). Like any wise company Amazon wants to be the first place (website) that their consumers think of to buy something at. The incentives with Prime are great and thus help fulfill that goal. College students do need to be wise in their spending. But by purchasing through Amazon, which often presents cheap options, they may actually be acting responsibly. So while students do need to keep their shopping in check, further evidence may be needed to prove that free shipping will form an addiction.

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