Shaping the Marketing Offer - Essay Example

"This is a great bargain!" "It's so expensive, just not worth this price" "I'm not sure, maybe we could get it at a better price elsewhere" These arecomments one often hears while shopping. Most people who value their hard earned money are careful while spending it. They try to ensure that the money is well spent and they can make the most of it. It is this attribute of consumers that researchers refer to as "price sensitivity." However people are not always price sensitive. As Kirk L. Wakefield and J.

Jeffrey Inman in their study 'Situational price sensitivity: the role of consumption occasion, social context and income' state that the price sensitivity of people depends on various aspects like what they are shopping for, their budget constraints and the social context in which they are spending. Basically when one shops for necessities or functional items like vegetables, bread paper towels and so on, they are not likely to worry too much about the price. But when they buy some item, even a food item like ice cream, which is not a necessity, they become price conscious.

In a larger social group, among friends for instance they may not hesitate to spend on the ice cream. As Kirk L. Wakefield and J. Jeffrey Inman point out, most people do not like to be thought of as 'cheap' or miserly when in a group.Budget is another factor that affects price sensitivity. Low-income groups are likely to be extremely price conscious and will try to make the best out of their limited means.In this context it can be said that it is highly price sensitive people who will shop for value in a website like Price line.

As is mentioned in the article 'Markets, Pricing Models and Digital Economics Evolution of Markets', Price line uses what is called the Reverse Pricing Model. Here consumers can 'name their price' which is state the price they are willing to pay for the product. If the service provider, (airline, hotel, mortgage company etc) is agreeable to that price, they get it.The travel and mortgage business, which is highly price- sensitive, is the core focus of Price line. Referring to prices in the travel industry, the chapter titled, Transportation Elasticities -How Prices and Other Factors Affect Travel Behavior' in the TDM Encyclopedia published by the Victoria Transport Policy Institute, says that "When costs increase, mobility declines.

Price changes can have a variety of impacts on travel, affecting the number of trips people take, their destination, route, mode, travel time and which service they choose."The availability of low-cost airfares and accommodation will be of great interest to highly price sensitive people. "If price is your bottom line, Price line can't be beat. I have known friends and families who have saved a bundle of money using Price line," says Charlie Leocha in the article The Priceline.com is Right'.. As the internet offers various options at the touch of a key, people are likely to compare the options available to them and opt for what they feel is the best and the most reliable.

Price line because of its popularity is likely to be a reference point for consumers looking for travel and mortgage related services. However as Mark Kahler, mentions in the article, Name Your Price! Newer websites are likely to offer similar to that of Price line's including the 'name your price' service. While each of these may vary slightly from the other, they will all try to add some feature that will attract potential consumers to their site. When the market place gets crowded it may be schemes like Price line's 'lowest-cost loan guarantee ' that might attract the attention of the consumer.

It is likely that the consumer will check all the possible options before turning to Price line, but he/she is definitely likely to use the Price line rate as the reference point. Once the consumer is convinced about the value, he/she is likely to become a loyal customer. The guarantee offered by the company speaks of its confidence and if it lives up to its word, the price sensitive consumer will come back to the site to get the best value for his/her money.ReferencesKahler, M. mentions in the article, Name Your Price!

, Budget Travel. Retrieved on 24th Oct 2005 at http://budgettravel.about.com/cs/auctions/a/name_price_2.htmLeocha.C, (2002) The Priceline.com is Right, Ticked Retrieved on 24th Oct 2005 at http://www.ticked.com/cheapcharlie/2002/chpriceline.htm'Markets, Pricing Models and Digital Economics Evolution of Markets' Retrieved on 24th October 2005 from, http://www.udel.edu/alex/online/market3.htmlTransportation Elasticities -How Prices and Other Factors Affect Travel Behavior, TDM Encyclopedia, Retrieved on 24th Oct.

2005 from Victoria Transport Policy Institute website at http://www.vtpi.org/tdm/tdm11.htm#_Toc68662026Wakefield, K.L, & Inman, J.J. 'Situational price sensitivity: the role of consumption occasion, social context and income. Journal of Retailing, Volume- 79, Issue- 4, Published from Leonard N. Stern School of Business, New York University, edited at Babson College. Retrieved on 24th Oct 2005 from thehttp://www3.babson.edu/Publications/JR/PastIssues/Volume79Issue4/Volume79Issue4.cfm