Pricing sensitivity, Marketing Management

Pricing sensitivity: Nagle has identified nine factors that contribute to price sensitivity and has also presented various methods or techniques to measure it. The factors that contribute to price sensitivity are:

1.       Unique value effect: the more unique the product, the lower is its price sensitivity.

2.       Substitute awareness effect: if the buyers are aware of substitute and these perform the same function, then the buyer's price sensitivity will be high.

3.       Difficult comparison effect: price sensitivity will be low if the buyer has difficulty in comparing two alternatives.

4.       Total expenditure effect: if the expenditure on the product represents a low proportion of the consumer income, then the price sensitivity will be less visible for such a product.

5.       End benefit effect: buyers are less price sensitive where the expenditure on the product is low compared to the total cost of the end product.

6.       Shared cost effect: if the cost of the product is shared by another party, which are along with assets previously prone to the price sensitivity.

7.       Sunken investment effect: price sensitivity is low in products, which are used along with assets previously bought.

8.       Price quality effect: the higher the perceived quality of the product, the lower the price sensitivity.

9.       Inventory effect: if the product cannot be stored, the buyer will be fewer prices sensitive.

Posted Date: 9/19/2012 6:58:14 AM | Location : United States

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