#Ipartition case sensitivity conversion how to#

Brand perception: Loyalty to particular brands can become a significant factor that can increase or decrease price sensitivity.

Switching cost: When the cost of switching from one company to another is considerably high, consumers prefer to be less price conscious and stick to a single product or service.

Perceived substitutes: If consumers obtain an equivalent substitute for a particular product or service at a lower price, they become highly price sensitive.

Ease of comparison: Consumers are more price sensitive if they can easily compare the various options available in the marketplace.

Cost-sharing: When the price of a product or service is to be paid by someone else, on behalf of the consumer, they may not be price sensitive.

An example of this is the case of emergency medical service.

Sense of urgency: If there is an immediate need for the product or service, the consumer generally overlooks the price factor.

Inventory: If buyers need to keep their products in stock, they become more price conscious.

Expense: If the product requires a huge expenditure or involves high cost, the buyer tends to be price sensitive while making a decision.

In such a situation, a slight increase may cause a negative impact, increasing price sensitivity.

Fairness: Price discrimination can lead to a perception of unfair practice among consumers.

Bottom line benefit: If the utility of the product is high for the buyer and efficiently meets the purchase objective, then he is less concerned about the price.

With unique value products or services, the organization can win over its competitors.

Unique value: Product differentiation and unique features affect consumers’ price sensitivity to it.

Price and quality: Buyers are less sensitive to price if the product offered is of superior quality or defines their status quo, such as exclusive or luxury products.

Here are some of the elements that are considered as determinants by consumers when purchasing a product or service.

Subsequent purchase: The customer decides if this was what he or she wanted, if it was a good decision, if he or she regrets it, and if it is time to return the product or request a refund.įor organizations, price sensitivity is a crucial factor in making the best decisions and assigning the ideal prices, so it is essential to understand the consumer’s mindset and behavior.

Purchase: The customer determines what to buy and does so.

This is where price sensitivity can develop and where you can lose the customer.

Deliberation: Using the information gathered, the customer determines what options, alternatives or aspects to consider before proceeding.

Information seeking: The buyer sets out to find out more information about what they want to buy.

Recognition: the buyer realizes that he or she is somewhere between a “real and preferred state.” Whether by marketing, advertising or peer pressure, they want to buy a product.

The consumer decision-making processīefore understanding how the price sensitivity process works, it is extremely important to understand the consumer behavior when going through their buying decision process: Price sensitivity is commonly measured using the price elasticity of demand or the measure of the change in demand as a function of its price change.įor example, some consumers are unwilling to pay a few cents extra per gallon of gasoline, especially if there is a lower-priced station nearby. In general terms, it is how demand changes as the cost of products changes. This means the extent to which the sale of a particular product or service is affected. It is also known as price elasticity of demand.

Price sensitivity is the way in which the cost of a product affects consumers’ purchasing decisions.

But, what is price sensitivity and why is it important? What is Price sensitivity?

#Ipartition case sensitivity conversion how to#

With the help of price sensitivity analysis, companies can make better decisions on how to price a product and services, assigning them the right price and also allowing them to be competitive and increase their revenues.