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Q1.

Today, everything on web 2.0 and social is a game, and we are moving away from the information-gathering, networking and status, sharing-focused web to a much more engaged experience which incorporates gaming and play. The digital generation responds to brands differently, and companies such as Foursquare, Amazon and Zynga are using traditional rewards (free shipping, badges etc) to keep customers engaged. (Hewitt, 2011)

Amazon

The company uses two smart solutions to customer’s psychological hurdles to buying online involving shipping costs.

1. Super Saver Shipping: for US shoppers sets $25 threshold to qualify free shipping

→ Stimulating unnecessary buys and extra items to reach threshold

1. Amazon Prime: paying upfront fee of 49 pounds give customers one day free shipping

→The consumer recognize Amazon the one store with free shipping and less likely to search for another store

→Cost of shipping no longer a barrier, so impulse shopping is less inhibited

→Sunk costs to the customer

Apple

→ Time lag issue with Apple sending receipts to consumers immediately causing a lag in allowing consumer’s to receive their invoice, which incurs reduction in “pain of paying”.

→ Apps are priced cheaply below willingness to pay price point of consumers

Groupon

→ Removes stigma of being cheap utilizing coupons

→ Playing with consumers feeling of regret of getting a good deal and limiting time period of deal available, consumers are more inclined to purchase

Zynga

→Playing with the idea that participants value highly their own creations which allowed them to create a game called Farmville that attract consumers to invest time and effort building a farm – the more complex the process the more consumers love and value their creations

→ Social element adds compulsion and introducing reciprocity as a powerful motivator such as FB giving gift virtually to friends