Answer to Question #255671 in Marketing for Donny

Question

Price sensitivity is an important aspect to consider when setting a price of a product or service. Indicate whether consumers would be more or less price sensitive given the following circumstances (1 mark each). Motivate your answer in each case (1 mark each). 1.3.1. Consumers perceive the services offered by The Sneaker Shack to customers as unique and value adding. (2) 1.3.2 Consumers know that competitors such as Levingers and Simply the best also clean shoes. (2) 1.3.3 Consumers like the fact that there is a “deep clean” option that also removes bacteria from the shoes. (2) 1.3.4. Consumers think that they can wash their sneakers by hand or in the washing machine. (2) 1.4.1 Assume that The Sneaker Shack is the only shoe cleaning service to offer the pick-up and delivery and the same day return of shoes, will the demand curve for The Sneaker Shack be elastic or inelastic (1 mark)? Motivate your answer by providing a specific example. (1 mark). (2)

Answer 1

Price sensitivity is an important aspect to consider when setting a price of a product or service. Indicate whether consumers would be more or less price sensitive given the following circumstances (1 mark each). Motivate your answer in each case (1 mark each).

1.3.1. Consumers perceive the services offered by The Sneaker Shack to customers as unique and value adding.

The customers will be less sensitive about the price, this is because the sneaker shack realized that the South Africans were joining the sneaker culture and spending a lot of money on branded or well-known sneakers. Since these sneakers cost a lot of money, people would rather pay to have them cleaned properly and fixed than buy a new pair.

 (2) 1.3.2 Consumers know that competitors such as Levingers and Simply the best also clean shoes.

In this case the consumers will be more price sensitive, this is because customers usually compare services and evaluate all the alternatives to choose the best service with high quality and a reasonable price. When seeking services, buyers always pay attention to the sum of money they are willing to pay for the quality of these services and the benefits they can bring. If the cost of services differs greatly from the approximate price clients have in mind, they won’t consider these services. As a result, their price sensitivity will be high.

(2) 1.3.3 Consumers like the fact that there is a “deep clean” option that also removes bacteria from the shoes.

The customers will be less price sensitive, this is because sneaker shack offers a unique service that is deep clean. This focuses on treating inset stains, the upper, mid sole, inner sole and laces. It removes bacteria and stains.

(2) 1.3.4. Consumers think that they can wash their sneakers by hand or in the washing machine.

The customers will be more price sensitive, this is because if they have the ideas needed to clean for themselves, they will prefer doing it rather than having to pay for the cleaning to be done for them.

(2) 1.4.1 Assume that The Sneaker Shack is the only shoe cleaning service to offer the pick-up and delivery and the same day return of shoes, will the demand curve for The Sneaker Shack be elastic or inelastic (1 mark)? Motivate your answer by providing a specific example. (1 mark). (2)

The demand curve will be inelastic this is because sneaker shack offers a unique service that their competitors don’t have (pick-up and delivery and the same day return of shoes), even if they increase the price for this service, the customers will tolerate it.