Microsoft Word 2007 ichrie conference Proceedings Final-Final 06-06-07. doc

IMPLICATIONS AND CONCUSIONS 
The results of the study show that the price-sensitivity-technique can be applied to a buffet restaurant. We 
were able to establish an indifference point, an optimum pricing point, a stress level, and a range of acceptable 
prices, all of which can be identified as indicators for levels of price sensitivity in a market. Therefore, the 
following answers to our research question can be provided: First, the price at which customers are least resistant to 
purchase the dinner buffet is $139, which is $11 higher than the regular buffet price of $128. Second, we 
determined that the point of marginal cheapness is $100. Therefore, it can be assumed that dinner buffet guests 
perceive the price range between $100 and $138.99 as cheap without doubts about food quality. On the other hand, 
the point of marginal expensiveness was established at $148, indicating that the price range from $139 - $148 is 
considered expensive by customers, but is still perceived as worth it. In addition, a buffet price above $148 is 
considered to be too expensive and beyond purchase consideration. Furthermore, dinner buffet guests indicated that 
a dinner buffet price below $100 will induce doubts about its quality.
Even though we are not able to draw definite conclusions about the Hong Kong buffet dinner market 
because of the lack of benchmarks, we are able to draw useful managerial implications. Several indicators were 
identified that determine price sensitivity in the restaurant studied. The degree of price sensitivity depends on the 
interplay of stress level and the range of acceptable prices. For example, as found in this study, a low stress level 
(an optimal pricing point close to the indifference point), and a large acceptable price range (HK $48) suggest that 
the market is not very price sensitive. To minimize resistance to purchase due to price, the price in this study would 
have to fall within the threshold limits. It was established that the price where the resistance to purchase was the 
lowest was HK $ 139, which is higher than the price actually charged (HK $ 128).
On the other hand, because of the low sensitivity to price, the marketer has a measure of flexibility with this 
market. An excessive emphasis on price as the component of the marketing mix would be a wasted effort and might 
damage future marketing efforts. This information provides a framework within which the manager can form his 
advertising efforts. For example, the restaurant’s promotional efforts to advertise the dinner buffet of $99 prove to 
be futile, as the threshold of marginal cheapness is above $99, which means that potential customers may feel that 
the quality of the buffet may be questionable and therefore not worth purchasing. On the other hand, customers 
attracted by the promotion may only purchase the buffet for the promotional price and not return when they have to 
pay the regular price. 
Furthermore, regular customers will purchase the buffet and only spend $99 when they were perfectly 
willing to spend the regular price. In addition, it may be possible that loyal customers do not patronize the restaurant 
on very busy days when promotions are run, because they may want to avoid the crowds. It can be concluded that 
regular customers do not perceive the price of $128 for the dinner buffet as too high.
Therefore, the manager should concentrate on identifying and offering cues that influence quality 
perception, given customers’ expectations within the range of acceptable prices. In summary, regardless whether a 
market is identified as price sensitive or not, price sensitive emphasis must be placed on those markets in which the 
perception of the product is within the acceptable range of prices. Furthermore, the PMS model can be used to 
identify the price sensitivity of different target markets and of markets with different loyalty levels. 

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