Originally Posted by
Siriustunes
Maybe I am missing your point, but you made mine. I would agree that there is probably very few Jack fans in Ruth's place, but the point is that both customers desire to fill a basic need, sustenance. Jack is able to appeal to a broader market with price and availability.
In order to fulfill the basic need of music entertainment, Pandora and Slacker seems to be able to appeal to a broader market with price and availability.
The appeal of the product differences is where the market segmentation needs defining. To be able to determine the price elasticity relative to content, to the broadest segment.
If Ruth sold hamburgers, do you think the would be the same price as Jack's?
Surely not, but there is a market segment that pays for the better content of Ruth's burgers.
My opinion is that basic needs of music entertainment are being met with Pandora and Slacker. If the basic needs evolve more toward what SIRI provides and Pandora and Slacker drag behind, then you will see a change in the price elasticity for the basic need. SIRI provides much more than the basic needs, so customers pay a premium. No difference than Jack and Ruth.