[SOLUTION] Snapple Prices

I’ve noticed a couple of things over the past few years. The price of gasoline continues to fluctuate over time. We are thrilled when the price decreases. And we complain about the price of gasoline when it increases. We are fully aware that there are very limited substitutes for gasoline and oil, as used for driving and heating homes. Recently a common price for unleaded gasoline at the gas pumps in the Mid-Hudson Valley of New York has been approximately $2.35 per gallon. The other day a local gas station was selling regular unleaded gas for $2.09 per gallon…. I filled up the tank in my car and felt that I had gotten a real bargain! Gas prices are currently low due to the pandemic and it is one of the things that we are happily noticing.On the other hand, bottled water has become a popular consumption item. We willingly purchase bottled water, even though there are substitute beverages, including juice, coffee, tea, milk, soda, and TAP WATER. I collected information on the price of bottled water at a local grocery store. The least expensive brand was Poland Spring Water (@$.49 per quart) and the most expensive brand was Perrier (@$1.89 per quart). If we compare the price of water with the price of gasoline, Poland Spring Water costs $1.96 per gallon and Perrier costs $7.56 per gallon. The least expensive brand is not much cheaper than gasoline and the most expensive brand clearly costs a lot more than gasoline per gallon.Recently it was reported that Dr. Pepper Snapple Group Inc. has experienced growth in sales and profits, largely attributable to an increasing demand for bottled water as growth in the company’s fountain food service business.Why are we so willing to pay these prices for an item (bottled water) that has many alternatives and yet complain about the price of gasoline, for which there are few alternatives? Does there seem to be a relationship between a buyer’s sensitivity to price and how much we complain?!?!?!?!Do you think marketing and advertising has anything to do with our willingness to pay for water? A successful marketing or advertising campaign will increase the demand (shift the demand curve to the right) and/or decrease the buyer’s sensitivity to price changes. What factors do you think affect our sensitivity to prices of gasoline and bottled water? Please comment…


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