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"segmenting customers by behavior and price sensitivity" I like to sail when I go to an island. I can go to the resort that offers free sailboats and wait my t

by larrys 14y ago

"segmenting customers by behavior and price sensitivity" I like to sail when I go to an island. I can go to the resort that offers free sailboats and wait my turn. Or I can go to the resort that charges $x to use the sailboat. I like the $x because that way I'm not competing with others wanting the same limited resource. Actually the last place I was at charged for internet access. That was good I had plenty of bandwidth the $10 day charge kept people off the wifi.

tptacek 14y ago
Text messages are not a limited resource; the misapprehension that they're priced as if they were is behind a lot of contempt for carrier pricing. A good way to think about it is that people who send lots of text messages are simultaneously subsidizing the accounts of people who don't send text messages.
- chc 14y ago
  Except that would entail prices for non-text services go down proportionately as texting gets more popular, which is not borne out by reality AFAIK (my bill certainly hasn't dropped despite being a very light texter). So while that way of looking at it is good for your blood pressure, I don't think it's good for modeling reality.
  - larrys 14y ago
    "Except that would entail prices non-text services go down proportionately as texting gets more popular" Things like this sometimes only work in one direction in businesses which have locked in customers and depending on their competition and what they do. Now a bank that all the sudden loses income in one area will try and make it up in other areas (as was shown recently) by increasing costs. But a bank which makes extra money in an area won't (unless they have to for competitive reasons) lower the costs of their other services. They will keep that money and report more profit! Because it's not that easy to switch your banking arrangement. It's not like buying a Western digital hard drive instead of a Seagate. So this has to do with competition as well as the ease of someone switching their provider or vendor. And exactly how much competition they have or what their competitors are doing and what they are charging. Every situation is of course different.

by larrys 14y ago

tptacek 14y ago

Text messages are not a limited resource; the misapprehension that they're priced as if they were is behind a lot of contempt for carrier pricing. A good way to think about it is that people who send lots of text messages are simultaneously subsidizing the accounts of people who don't send text messages.

chc 14y ago
Except that would entail prices for non-text services go down proportionately as texting gets more popular, which is not borne out by reality AFAIK (my bill certainly hasn't dropped despite being a very light texter). So while that way of looking at it is good for your blood pressure, I don't think it's good for modeling reality.
- larrys 14y ago
  "Except that would entail prices non-text services go down proportionately as texting gets more popular" Things like this sometimes only work in one direction in businesses which have locked in customers and depending on their competition and what they do. Now a bank that all the sudden loses income in one area will try and make it up in other areas (as was shown recently) by increasing costs. But a bank which makes extra money in an area won't (unless they have to for competitive reasons) lower the costs of their other services. They will keep that money and report more profit! Because it's not that easy to switch your banking arrangement. It's not like buying a Western digital hard drive instead of a Seagate. So this has to do with competition as well as the ease of someone switching their provider or vendor. And exactly how much competition they have or what their competitors are doing and what they are charging. Every situation is of course different.