Q: Where do you get store-specific sensitivities from?
A:
This is actually something that is pulled out of the model.
There are a lot of ways to come up with this, but
what I'm really going after is
some measure of how sensitive people are to price changes.
Q (Normand):
I ask because I wonder--How much variance is in these
estimates?
A:
In this case, these are fairly well measured, at least relative
to the ranks.
So, we really could
say pretty precisely that the third blue stores all are
very price sensitive and the
third of the stores that are coded by yellow are price
insensitive. This is an important point, and the reason I'm
putting this up here is to try to get the idea across that
there is some kind of geographic dispersion in pricing sensitivities.
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