Price Sensitivity and Shaping the Market Offering The online market for travel services will reach $

Price Sensitivity and Shaping the Market Offering

The online market for travel services will reach $63 billion
within a few years, and Pricelinecom 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 Pricelinecom mortgage is the “lowest-cost loan
on the market” and backs this up by paying $300 to any customer who finds
a better price

Use the Internet sources, to see how the Priceline system
works At the Priceline 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

1 Define price sensitivity PROVIDE RELEVANT EXAMPLES

2 What can you say about the price sensitivity of
Priceline’s customers?

3 What effect would Priceline’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?