Class 2

Case

  • What is the good? Product segmentation w/ specific characteristics that differentiate what’s included and excluded (included 747 for cargo but not C130)
  • Who demands and is it elastic or inelastic
    • Inelastic is a very steep slope. If price changes, demand remains mostly constant b/c the demanders don’t have many price increase options.
      • Commonly available substitutes will increase elasticity.
      • The margins are helpful illustrations of what small changes would induce substitutes as compared to major shifts.
      • The nuance of where substitutes are available as well. For shorter flights more substitutes but when you get into a specific segment of flights then you would have less.
  • Rivalry - Strong, but why?
    • Not much differentiation in plane types
    • Lock-in could be stronger or weaker predictors of rivalry. Where does the lock-in live? Transaction or competition.
      • when you’re locked in and you’re not looking for transaction by transaction basis
      • Lock-in can strengthen rivalry form transaction to transaction to competition for the client.