Price sensitivity is when the consumer is aware of what they perceive the window of cost to be where they will consider buying a certain service or product. It is crucial that the marketing person accurately assess the sensitivity of price in their target market. Even missing the window by a small amount can have huge consequences on the bottom line of the company. Companies have to closely monitor prices or price expectations. This helps to figure out what the customer will tolerate and so that they can be as near as possible to the price that the customer is willing to pay.

Each and every customer has a certain window of acceptability of price in which they are willing and able to pay. This can and does vary from customer to customer. All customers have different price limits and perceptions of what prices are within their price range. Establishing a bottom line is where the customer perception meets the actuality. This also is indicative as to whether the market is price sensitive. There are many factors that each customer takes into consideration when determining a price that they will pay for a product or service.

This is where it is key for marketing professionals to attempt to figure out how a customer determine what price means for each person. A perfect place to study the effect and meaning of the sensitivity of price is the online retailer Priceline.com. The customers of Priceline are extremely price sensitive and this model works very well for the company.

Customers have come to know what they can expect a provider to charge for each service and what they consider to be an excellent price as well. The customers of Priceline look for a variety of things including price and quality. When they have obtained the best pricing possible, these customers then look for quality. For instance, if there is a long layover or a departure time is not convenient or there are too many transfers, quality may be perceived as too low to make the reduced price worth the extra savings achieved.

Those in marketing must know or must quickly learn the range of price sensitivity for the product or service that they are trying to promote. The curve of demand will usually reveal the most like quantity that a marketer can sell at alternative prices. The curve of demand is equal to many different factors including the level of satisfaction, the awareness that a customer has of acceptable substitutes.

There are many important things to be considered when starting or founding your online business. First, it is important to determine what type of business you wish to have or start. There are so many factors to take into consideration. You can sell products or provide services. You can start your own company or partner with an existing company. Many companies are willing to franchise or let you resell their products. There are also other types of business ventures where you sell a combination of services and products. If any of these are appealing to you, then you may choose to get involved.

Niche marketing or focusing on one product line has proven to be successful. However, taking advantage of varying needs for different consumer bases can also be successful as well. Niche marketing and serving a niche market allows you to solely focus on one segment. Offering a product mix allows you to completely diversify your product line and reach a far greater portion of the market. For instance, if you are in the printer business, you may consider diversifying to sell paper, printer cartridges, etc.

Having significant working capital is something that you should seriously consider when starting any type of business especially an Internet business. Expenses can easily mount and it is important to keep in mind the types of expenses that you may have. The biggest expense that you will make involving your business will singlehandedly be the marketing of your business. Having a solid business plan in place will help you to determine several factors including focus, target market, projected budgets, etc. Without a solid business plan, you can and most likely will fail.

Having a solid business plan in place will also assist you in sustaining growth and maintaining your business. Being able to sustain growth is crucial to the success of any business and is especially important for online businesses as they do not have the opportunity to see customers in person to build their brand. This may hamper some businesses but other types of businesses can thrive in this type of environment.

Being able to focus on customers, both existing and new is something that can really grow any business. In addition, other factors to consider are the ability to provide good customer service and to continue to provide the same level of service throughout the years. These are some general principles or ideas to consider whenever starting and running a business.