Question

Sidney purchases a power drill at Trusty Dan's Hardware instead of The Home Supply, where he usually shops, because of a 50% off coupon. What is this scenario most closely an example of?

a) Brand loyalty
b) Coupon incentive
c) Customer retention
d) Price sensitivity

Answer 1

Sidney's decision to purchase a power drill at Trusty Dan's Hardware because of a 50% off coupon is an example of a coupon incentive and demonstrates price sensitivity.

Step-by-step explanation:

The scenario described in the question is most closely an example of b) Coupon incentive. Sidney is motivated to purchase the power drill from Trusty Dan's Hardware because of the 50% off coupon. While brand loyalty might have been his reason for usually shopping at The Home Supply, the coupon from another store incentivized him to switch his purchase to Trusty Dan's. An economist might describe this behavior as price sensitivity, where a consumer's purchasing decision is influenced by the price changes of a product.