Marketing Options and Price Sensitivity

Marketing Options and Price
Sensitivity

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.

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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?

include several different research
sources throughout your paper to support your the questions you are trying to
answer.

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