Question

A retailer of lawnmowers is considering changing the prices of some of his products. A pricing consultant advises him to consider the IRPs of the consumers in his market.

(a) Formulate a survey question that the retailer could use to measure consumers’ IRPs.

(b) Assume that the retailer is currently selling a particular lawnmower for $269. If the retailer’s research determines that the IRP of most consumers for this lawnmower is the range from $250 to $299, what are the implications of knowing this for possible price changes on this product?

Answer 1

Ans-

(a) A survey question that retailer could use to measure consumers’ IRP is the following: “How much money did the last lawnmower you bought cost you?” By using this question, the retailer is able to know about consumers’ IRP because consumers try to keep the last price they paid for an item as a price base.

(b) In this case, the retailer’s price for the lawnmower is inside the IRP’s range. This will not make a big impact on customers’ decisions. The retailer can expect differences on customers’ price responses if they set a price that is outside of the IRP’s range. Therefore, if the retailer sets a price that falls within the range, customers will have a little or no change on their price responses. The retailer has now a range that is needed to take into consideration before setting a price for the lawn mower. In this way, the retailer will know when there is going to be a difference or change that will affect customers’ price responses.

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