Reference no: EM1365908

Question about price sensitivity

1. You are considering purchasing a personal computer. What factors would affect your price sensitivity in making the decision? How would those same factors affect the price sensitivity of some personal computer buyers differently?

2. What can a company do to decrease its customer's price sensitivity? Would all of the customers be likely to react in the same way?

3. Many local rental car agencies rent late model cars at substantially lower prices than national companies such as Hertz or Avis. Despite their higher prices, the national companies still retain most of the market. Explain why most renters patronize the national car rental companies despite their higher prices. How have the national companies encouraged this price insensitivity?

4. A company can gain a substantial market share advantage with lower prices in a price sensitive market. Why then would any company in such a market choose to price cooperatively?

5. The gasoline service stations in Rochester, New York convinced the City Council to ban signs displaying gasoline prices. Why would they want to do this? What effect do you think this law had on gasoline prices? Why?

6. Despite the fact that rental rates for commercial space and labor costs are generally higher in big cities than small towns; the prices of many products ââ?¬" such as electronics and clothing ââ?¬" are higher in small towns than in large cities. Can you explain this?

7. At what point should a company ââ?¬Å"walk away from the business? Should a company always strive to win every bid and avoid losing business?

8. What are some techniques a company can employ if a customer is hung up on price?

9. While airlines use segmented pricing strategies to charge business travelers more, most hotels actually give "corporate discounts" to business guests. Can you explain this anomaly?

10. Steinway, a tiny but well regarded New York piano maker in the 1850 s grew quickly after Doretta Steinway, the founder's daughter, got the idea of offering free piano lessons with the sale of each piano. Can you explain this as a segmented pricing tactic? What are the segments and why would their price sensitivities be different?