Smarter Pricing: How to capture more value in your market

Driving miles to buy cheap petrol

Price sensitivity of customers varies dramatically between different product categories and is not always logical. There is a curious phenomenon about petrol purchases investigated by Marcel Cohen (1999). He describes how purchasers will sometimes go considerably out of their way to hunt for the cheapest petrol, forfeiting much of the benefit that a cheaper price might provide by seeking it. Customers show an obsession with prices in this market despite the fact that the spread of prices is small with a range of less than 1 percent between the highest and lowest prices in a market. Even if a customer consistently bought the most expensive petrol, it would have little impact on his or her overall motoring costs ...