Terms and Definitions of Harford Ch. 2

Terms and Definitions of Harford Chapter 2

Term	Price Sensitive & Insensitive	Unique Target Strategy	Group Target Strategy	Self-incrimination Strategy	Leaks
Definition	Price Sensitive: Someone who is always aware of prices and is frugal Price Insensitive: someone who is not as concerned about price and is willing to spend money for nicer things	Evaluating each customer as an individual and charge them what you think they are willing to pay	Places offer different prices to different groups of people	A strategy companies use that force people into admitting they are not sensitive to price, companies do this by selling things slightly different form one another or putting things in different locations	Holes on marketing schemes that have two potential problems: persuading price-insensitive customers from buying cheaper options, and products leaking from one group to the other if using group targeting
Example from Chapter	Starbucks products basically cost the same, but they are able to add frills and quantities to some items, which makes the price rise, thus finding out who their price-insensitive customers are.	Amazon tailors prices of certain things based on the customers past purchases. This causes prices to rise if they know a customer will definitely buy something.	Walt Disney World offers discounted prices on tickets to locals so that they come more often. They keep the prices for visitors high though because they know that chances are visitors will come only once even if the ticket prices were low.	Starbucks offering things like fair-trade coffee and whipped cream to customers shows who is really price sensitive	Stores have their own "value" options that they provide, but intentionally make them look cheap and undesirable, designed to make people buy the more expensive option
Your Own Example?	I am very much a price-sensitive shopper. It takes lot to persuade me to buy more expensive options at places like a food store. I tend to buy only Wegman's brand for a majority of things, but I am willing to pay a little extra money on things like the bakery area of Wegman's because I know I'm getting quality food from friendly, helpful people.	When my family and I were in the process of making our own personal home gym, we went to get all of the materials we needed at Dick's. The salesman there asked us a lot of questions regarding what we like to do and what our goals are, and kept providing us with more and more items to buy because he was trying to persuade us into thinking that without certain items, we couldn't get a good workout	Cinemopolis offers student discounts for every movie they have, so it encourages students to come more frequently tot heir theater than to Regal which is almost $5 more expensive per movie	At Panera they often ask customrs after they place their order if they would like to spend $1 to buy a freshly baked cookie or brownie. Since $1 doesn't seem that much, I say yes most of the time.	My friends and I don't have HBO (we're not willing to pay a lot of money since we're college students), so we find our favorite HBO shows that have been leaked online so we can watch them for free.