I am currently reading The Undercover Economist by Tim Harford….. In it he explores some of the tactics for targeting price insensitive & price sensitive customers. And I’ve always thought that organisations produced different products/services for the mass market and for the premium market and then charged accordingly. In this book however, Harford suggests that companies have a number of almost reverse selling strategies to deliberately target price insensitive customers. Here are some examples:
1. Train operators could improve standard carriages but they don’t so they can contiune to charge a premium for 1st class. Likwise, airport departure lounges.
2. Flight attendants some airlines who physically prevent economy passengers leaving until after 1st class. This sends a clear message to the 1st class passengers – keep paying for your expensive seats or next time you will be on the wrong side of the attendant.
3. Supermarkets deliberately make low cost/value lines look cheap and unappealing – not to keep costs down but to put people off buying them.
4. Software & hardware companies – who develop premimum products and then switch off certain functionality (at more expense) so they create a mass market version.
Do you consider yourself typically to be price sensitive or price insensitive? What about the people around you? What does it say about us? Have you come across other examples of this?