Price-sensitive customer segment

The a ressiveness of private label and national brands in choosing their respective pricing plans can be affected by the nature of customer preferences across products. Banks and Moorthy [3] describe a model in which there are two customer segments a brand-loyal segment with a search cost and a price-sensitive customer segment with no search costs. The branded product thus has to defend its brand by appropriate choice of price promotions. They show that as the search costs for the brand-loyal... 

The manufacturer produces at unit cost c, and wholesales at price pi, which is exogenous. Each of n identical retailers faces a stochastic primary demand in an isolated market, and purchases quantity Q from the manufacturer to sell at fixed price r. Value can only be recovered from overstocked product by opening a secondary market, which provides access to a different, more price-sensitive market segment. The manufacturer may view this market as an additional revenue source and then intervene by offering additional units for direct sales (of the amount by which initial production exceeds nQ). Transportation and handling costs required to move inventory from primary stores to secondary customers are ignored, so all units in the secondary market are treated equally. 

Pieztinka (2011) offers the Sony Walkman as an example of a product platform. Sony included customer segments as assets, and created three product platforms to build miniature Walkman, to create a new market for hi-fi enthusiasts, and to build models for price sensitive customers. Each of these platforms includes a shared set of modules - motor, tape, and drive. Sony added attributes such as radio, remote-control, and music-search to differentiate the products. 

In the early 1990s, some specialty chemical segments were price sensitive and cyclical, with international producers focusing more on customer service than on research and development. Some producers had not raised prices in years. By the mid-1990s some specialty chemical segments displayed the characteristics of mature commodity sectors. Slowly prices were raised, and some... 

Customer centric When strategy calls for targeting attractive segments Style-driven business requiring fast response Heterogeneous customer base with many segments Too many segments to serve Lack of scale in markets would cause loss of focus Price-sensitive market... 

Consumer goods can be divided into two categories durables and nondurables. Consumer durables include household appliances, power tools, lawn and garden equipment, recreational goods, toys, etc. This market segment is widely diversified, with some very profitable niche opportunities. The downside of business in consumer durables is that the product life cycles are often short and many applications are highly price sensitive. While most of this market is national, the great majority of end users purchase not only from suppliers in the three North American Free Trade Association (NAFTA) countries—the United States, Canada, and Mexico—but internationally, particularly China. Many processors and material suppliers have followed these users overseas in order to serve their customer more effectively than is possible from a firm sited only in the United States. 

---