Define Price sensitivity and how
it applies at Priceline.com
Answer the following questions
based on the write-up below:
1. Define price sensitivity.
Provide relevant examples.
2. What can you say about the
price sensitivity of Priceline.com customers?
3. What effect would
Priceline.com’s prices be likely to have on the reference prices customers bear
in mind for travel and mortgage services?
4. How does the company’s
lowest-cost loan guarantee affect a customer’s perception of the product’s
value?
The online market for travel
services will reach $63 billion within a few years, and Priceline.com aims to capture
a significant share; already, it is high on the top-ten list of travel Web
sites. After a brief period of diversification into name-your-price sales of
groceries and gasoline, the company has refocused on its core travel and
financial services offerings, including airline tickets, hotel rooms, rental
cars, and mortgage loans. The company guarantees that a Priceline.com mortgage
is the “lowest-cost loan on the market” and backs this up by paying
$300 to any customer who finds a better price.Visit the Cybrary and other
Internet sources, to see how the Priceline system works. At the Priceline.com
website, follow the link marked “How it works” to read about the
name-your-price process. Then return to the home page and follow several of the
links promoting discounted offerings.
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