Shaping the Market Offering

PART I - PRICELINE

The Web defines price sensitivity as the extent to which price is an important criterion in the customer 's decision- making process thus a price sensitive customer is likely to notice a price rise and switch to a cheaper brand or supplier (Information retrieved on May 8 , 2006 from HYPERLINK "http /www .google .com .ph /url ?sa X start 0 oi define q http /wps .pearso ned .co .uk /wps /media /objects /1452 /1487687 /glossary /glossary .html wps .pearsoned .co .uk /wps /media /objects /1452 /1487687 /glossary /glossary .htm

l ) Miller (2006 ) defines sensitivity as the awareness of the consumer to what they perceive to be the window of cost within which they will buy a particular product or service

Price sensitivity then is the customers ' awareness of the prices of the products or services they are buying . For a price sensitive customer the price of a certain product or service is a great factor in his or her decision to purchase the product . Price sensitivity however is not just about charging high prices to maximize revenue . It might also make sense to cut prices - sometimes dramatically - to encourage people who may otherwise not be part of the market to use the services or goods being provided (Information retrieved on May 8 , 2006 from HYPERLINK "http /www .bized .ac .uk /current /mind /2005_6 /141105 .htm http /www .bized .ac .uk /current /mind /2005_6 /141105 .htm . Example of price sensitivity is the strategy used by Priceline

Priceline 's customers are very price sensitive . Priceline provides its customers a variety of offers and deals they can choose from . This is a marketing strategy that Priceline uses to encourage price sensitive customers to patronize their products . Priceline capitalizes on the price sensitive customers who expect better deals for their money Priceline makes use of the name-your-price or reverse-action model (Varian , 2000 . This strategy is actually like other marketing strategies wherein customers are given the choice to be more flexible with their time and brand in exchange for a lower cost

The effect of this of course is for customers to always look for a better bargain using the Priceline 's prices as the reference prices or basis in their decision making . Price sensitive customer tries to find other good deals from other airlines just to compare the apparent savings they will be making if they choose Priceline . According to Kottler (2003 , customers are more price sensitive to products and services that are considered to be more expensive and frequently used by the customers . Travel is considered to be an expensive activity so customers are very price sensitive and tries to get the best deal taking into consideration price and quality

Customers are very sensitive to interest rates . The home loan products offered by Priceline actually produce a positive effect . The lowest loan guarantee encourages more customers considering the big savings they will be getting from it . But some customers are skeptical especially those who have negative experiences when it comes...