Customer Price Sensitivity Research Articles

Predicting m-Commerce Continuance Intention and Price Sensitivity in Indonesia by Integrating of Expectation-Confirmation and Post-acceptance Model

This study explored the antecedents of m-commerce continuance usage intention and their impact on the price sensitivity of Indonesian m-commerce customers. The study also incorporates contextual factors, such as perceived risk, trust, efficiency, and functional benefits, into the model to investigate their impact on the satisfaction of m-commerce users. Moreover, it examines how the efficient and functional benefits of m-commerce affect price sensitivity. The study employed online questionnaires to gather data from m-commerce users in Indonesia. The hypothesis was tested using a partial least squares technique with Smart-PLS. This study demonstrates that user satisfaction with mobile commerce has a significant impact on their intention to continue using it, which in turn affects their price sensitivity. The study found perceived risk, trust, efficiency, and functional benefit to be significant determinants of satisfaction in m-commerce usage. The study also found that trust, efficiency, and functional benefits influence the continuance use of m-commerce, while perceived risk is not an intervening variable for continuance intention among m-commerce users. Furthermore, the results show that perceived risk, trust, and functional benefit influence a user’s price sensitivity, whereas efficiency was not found to be a determinant in influencing price sensitivity. However, the study found that continuance usage intention and satisfaction serially mediated the link between efficiency and price sensitivity, as well as the link between functional benefit and price sensitivity. The outcome of this study would be useful for managers and practitioners who find it difficult to retain their customers’ continued intention to purchase their products and services.

National customer orientation: an empirical test across 112 countries

Customer orientation is a central tenet of marketing. However, less is known about how customer orientation varies across countries and time. Mintz, Currim, and Deshpandé (Eur. J. Mark., 56: 1014–1041, 2022) propose a country-level construct, national customer orientation, and develop theoretical propositions on how a country’s wealth and average customer price sensitivity affect national customer orientation during and after global economic shocks without providing an empirical test. This paper tests drivers of national customer orientation by employing World Economic Forum and World Bank annual panel data from 112 countries between 2007 and 2017. The results show that customer orientation is a greater luxury of richer nations and price sensitivity is a partial mediator of that relationship; however, both relationships only transpire in non-recessionary times. The empirical test furthers scholarly research on national customer orientation and provides managers with country-level customer orientation benchmarks across countries and time.

국 라이브 스트리밍 커머스에서 행위적 의도에 대한 소비자의 가격민감도와 금전적 가치의 영향 평가 : 리뷰 평점 및 성별의 조절효과

본 연구는 중국 라이브 스트리밍 커머스 맥락에서 소비자의 행위적 의도에 대한 가격민감도와 금전적 가치의 직접효과를 고찰한다. 또한 이러한 직접효과에 대한 리뷰 평점 및 성별의 조절적 조절효과를 검증한다. 총 449부의 유효 설문지의 실증분석을 통해서 다음과 같은 연구결과를 얻었다. 첫째, 행위적 의도에 대한 가격민감도와 금전적 가치의 직접효과는 모두 유의하게 나타났다. 둘째, 리뷰 평점 및 성별에 의한 조절효과는 고객세분화 측면에서 매우 상이한 결과를 보였다. 자세히 설명하면, 소비자의 가격민감도가 높은 경우 남성의 행위적 의도는 리뷰 평점이 긍정적일수록 증가하는 반면 여성의 행위적 의도는 부정적 리뷰 평점에 강하게 반응한다. 또한 지각된 금전적 가치가 높은 경우 여성은 긍정적 리뷰 평점에 강한 반응을 보이지만 남성은 부정적 리뷰 평점에 강력한 반응을 보인다. 이와는 다르게, 지각된 금전적 가치가 낮을 경우에는 긍정적 리뷰 평점이 남성으로부터 강력한 반응을 이끌어낸다. 하지만 같은 상황에서 긍정적 리뷰 평점과 부정적 리뷰 평점이 여성의 행위적 의도에 미치는 영향 차이는 크지 않다. 이와 같은 결과를 토대로 이론적, 실무적 시사점과 함께 연구의 한계점을 제시한다.

The Effect of Demographic Variables on Price Sensitivity of Customers A Field Study

This study aims to improve understanding of the relationship between some customer demographic variables which are gender, income level, family life cycle and age. And price sensitivity of customers which is an individual difference variable describing how individual consumers show their reactions to changes in price levels. This study will be applied in Fast Moving Consumer goods (FMCG) industry in Egypt. Fast Moving Consumer goods are the products which have high usage frequency, have limited shelf life (up to two years max) for example Biscuits, chocolates, personal care, hair care and dental care products. The consumption of these products is high and that’s why these products move fast from retailers to consumers.

Linking Brand Trust to Brand Engagement and Loyalty on Green Products

In recent years, Thailand has faced a number of environmental issues, such as air pollution, water pollution, soil pollution and noise pollution (Panya, Poboon, Phoochinda, & Teungfung, 2018) Especially in the past 2 years, Thailand has experienced severe air pollution, causing the PM 2.5 level to exceed the standard level. It then affects people's living style so they have more concerns about environment changing behavior and wish to focus more and more on green consumption (Thongplew, Spaargaren, & van Koppen, 2017). Companies and brands have been developing their products to be more environmentally friendly to gain a competitive advantage. However, companies are still facing unpredictable customers' minds and decision-making (Gen, Juan, & Xixiang, 2019) caused by the price sensitivity of customers and other factors. Nevertheless, previous research has found that customers the green products when they trust the brand (Liobikienė et al., 2017; Tseng & Hung, 2013; Wu, Lin, & Chen, 2017). Although there is various research on trust affecting green product buying behaviors, there is little research focusing on brand trust, leading to brand engagement and loyalty to green products. That could contribute to our understanding of brand strategies in green product markets. Keywords: Brand engagement, Brand trust, Green product, Loyalty

Multiple regression model of the consumers’ price sensitivity

All marketing decisions have to take into account the customer’s attitude to the price and consumers’ price sensitivity. Consumers’ price sensitivity depends on various factors: perceived quality and benefits, service quality, and of course, demographic characteristics. The main aim of this paper is to explore the influence of socio-demographic characteristics on the customers’ price sensitivity. Potential influencing factors and sample size were identified based on the literature search. The questionnaires were disseminated on-line in 2019. The majority of respondents were at the age group 25-54 years old (63%) which corresponds to the composition of the Czech population. Most of the respondents live in the family with two children (29%) or only with a partner (28%), 61% of the respondents have a master or bachelor’s degree. The variable Age shows high significance, which means, no surprisingly, that older customers are more price-sensitive than the younger ones. Talking about gender, females are slightly more price-sensitive than males. Then, we can state that the more family members has got the household, the more price-sensitive the customer is. In comparison with other independent variables, Income and Education show a negative correlation with customer price sensitivity, which means that the higher level of Income or Education is, the lower is the customer’s price sensitivity. Based on the multiple regression analysis, the author’s research proves that the most significant impact on the consumers’ price sensitivity have two independent variables - age (positive correlation) and income (negative correlation).

Manufacturer adoption of a unilateral pricing policy in a multi-channel setting to combat customer showrooming

Unilateral pricing policy (UPP), in which the manufacturer mandates a minimum retail price for all retailers, has become increasingly popular. Manufacturers employ this pricing policy to encourage brick-and-mortar retailers to offer a high level of service in their stores and to support brick-and-mortar retailers that provide presales services for customers in the presence of showrooming—a phenomenon in which a customer visits an offline retailer to learn about the product but purchases from an online retailer for a lower price. Our proposed analytical model identifies the motivations of a UPP and helps determine the approach to setting a UPP-based price under various conditions. The UPP price depends on key factors such as the extent of showrooming in the market, customer price sensitivity, and the salience of presales service in their valuation. We compare the outcomes of a UPP with those under the conventional policy, in which the retailers determine prices independently.

Optimal Pricing Under Diffusion-Choice Models

We develop a solution approach to the centralized pricing problem of a firm managing multiple substitutable products. Demand of these products undergoes a diffusion process, and customers choose among the products, with the choice probability of each product given by the logit model. We examine the firm’s optimal pricing problem when product demand can be described by such “diffusion-choice” models. In particular, we focus on two models with proven merits and study a generalized version of the two models. To our knowledge, our work is the first to study the multiproduct pricing problem under the integrated diffusion-choice models, which are of both theoretical appeal and practical advantage. We establish uniqueness of the optimal solution and propose an efficient solution approach in addition to characterizing the optimal prices and their time trend. We show that the price trend can be attributed to diffusion dynamics as well as intertemporal changes in product costs and customer price sensitivity, all of which are integrated into a unified framework in this paper. Our model applies to both simultaneous and sequential product introductions and adapts to stochastic demand.

Risk pooling through physical probabilistic selling

This paper investigates the impacts of a new type of probabilistic selling (PS) where the retailer orders specific products and package some as a discounted physical probabilistic product (PPP) rather than merely a virtual choice. We call this PS strategy as physical probabilistic selling (PPS). The price gap between the specific products and the probabilistic product results in demand reshape, i.e., some customers who originally buy specific products will switch to buying the probabilistic product, which decreases aggregate demand uncertainty. However, the price discount decreases the profit margin. Considering this trade-off, we develop a three-product newsvendor model to address the question of how to set the price for the PPP and make inventory allocation decisions. We prove that there are two effects under PPS, namely the risk pooling effect due to demand reshape and the risk diversification effect due to inventory flexibility. With demand uncertainty, PPS can improve the retailer's profit at lower inventory levels with proper demand reshape induced by the optimal price discount. PPS is more profitable with smaller product differentiation, higher customer price sensitivity, higher demand uncertainty, and lower package cost. With supply uncertainty, we demonstrate through numerical studies that PPS is a viable strategy to combat asymmetrical supply risk that yields higher profits and service levels.

Single-period ordering and pricing policies with markdown, multivariate demand and customer price sensitivity

Abstract This paper studies single-period ordering and markdown pricing policies for short lifecycle products (SLP) by considering differing customer price and time sensitivities. The SLP is assumed to have declining customer valuation (and price) over the selling season and multivariate demand, which is a function of the inventory level, price and time. Promotional markdown (in contrast to clearance markdown) becomes an indispensable part of a pricing policy in view of stock-dependent demand and isused as a mechanism for customer segmentation and price discrimination over time. To offer a realistic pricing, we consider the impact of highly price-sensitive customers who value the price of the product over its innovativeness and who act strategically by purchasing only during a‘sale’ at a markdown price. In this context, single-period inventory models are formulated to include markdown under two market scenarios, namely the homogenous market and thetwo-segment market – a price insensitive (PI) segment, and a price-sensitive (PS) segment. The assumption of non-overlapping segments is relaxed later, and PI customers are allowed to buy later on at a markdown price. The proposed profit-maximising models determine the optimal order size, initial price, markdown time, and price. The solution methods along with the optimality conditions are specified in detail. The results are discussed by using numerical examples, and model behavior with respect to parameters is presented along with the sensitivity analysis.The study reveals the benefits of market segmentation and markdown pricing which recognise high price-sensitive ‘bargain hunter’ customers and offers deeper discounts that yield greater profits. It also demonstrates the superiority of a markdown policy to a single pricing policy, and the benefits of considering the demand stimulating-effect of inventory.

The Islamic Vehicle Financing Market in Malaysia: Identification of Factors Influencing Price Sensitivity

In recent years, Islamic finance has gained increasing attention by financial corporations in countries that are marked by a considerable Muslim population. In conjunction, Malaysia’s Islamic vehicle finance market has experienced a period of rapid growth and is now maturely coexisting besides conventional vehicle financing. Nonetheless, corporations question in how far it is viable to charge a price premium for Islamic products to compensate the additional effort required. As little research is in existence about the price sensitivity of customers towards these product offerings, this study aims to examine factors that influence the price sensitivity in the Islamic vehicle financing market. Potential influencing factors were identified in literature covering Islamic banking and a model is subsequently tested by an experimental survey that was distributed within Malaysia. The study concludes that not only the belongingness to Islam is influential, but also the way of practicing the religion and the knowledge about Islamic finance. The awareness of the specific Islamic vehicle financing product makes customers less price sensitive as well as the marital status. The results of this study are beneficial to corporation who perform pricing decisions according to specific customer segments.

Does a Satisfied Customer Care about Price? The Link between Customer Satisfaction and Price Sensitivity in the Commercial Martial Arts Industry

ABSTRACTExtensive research has shown that customer satisfaction is an important driver of profitability. However, academic understanding of pricing outcomes associated with customer satisfaction evaluations is limited. The purpose of this study was to investigate the relationship between customer satisfaction and price sensitivity, while also examining the moderating effects of gender and participation frequency. Results indicated that four dimensions of customer satisfaction have an inverse effect on customer price sensitivity. Results also showed that there were significant differences on the linkage between customer satisfaction and price sensitivity across gender and participation frequency groups. These findings illuminate concerns among martial arts consumers which are most likely to prompt an exploration of alternative purchase choices in attempt to seek fairer pricing. They also identify individual characteristics among martial arts segments which can be used to build pricing strategy.

Shopping intention prediction using decision trees

Introduction: The price is considered to be neglected marketing mix element due to the complexity of price management and sensitivity of customers on price changes. It pulls the fastest customer reactions to that change. Accordingly, the process of making shopping decisions can be very challenging for customer.Objective: The aim of this paper is to create a model that is able to predict shopping intention and classify respondents into one of the two categories, depending on whether they intend to shop or not.Methods: Data sample consists of 305 respondents, who are persons older than 18 years involved in buying groceries for their household. The research was conducted in February 2017. In order to create a model, the decision trees method was used with its several classification algorithms.Results: All models, except the one that used RandomTree algorithm, achieved relatively high classification rate (over the 80%). The highest classification accuracy of 84.75% gave J48 and RandomForest algorithms. Since there is no statistically significant difference between those two algorithms, authors decided to choose J48 algorithm and build a decision tree.Conclusions: The value for money and price level in the store were the most significant variables for classification of shopping intention. Future study plans to compare this model with some other data mining techniques, such as neural networks or support vector machines since these techniques achieved very good accuracy in some previous research in this field.

Pricing of excess inventory on Groupon

We consider the problem faced by a business that is considering using the Groupon platform to sell excess inventory. We discuss how demand functions can be derived using management knowledge. Then, using a single period model where excess inventory is exogenous, we show that the decision to use Groupon and the price to set on that channel depend on two parameters: the relative price sensitivity of Groupon customers as compared to the retailer's regular customers and the relative size of the Groupon market as compared to the regular market. Under a two-period model, when initial inventory is a decision, we show optimal inventory quantities. Our two-period model suggests that managers may plan on using Groupon and order inventory accordingly. We discuss the implications on third party channels as well as retail managers.

Sales Force and Competition in Financial Product Markets: The Case of Mexico's Social Security Privatization

This paper examines how sales force impacts competition and equilibrium prices in the context of a privatized pension market. We use detailed administrative data on fund manager choices and worker characteristics at the inception of Mexico's privatized social security system, where fund managers had to set prices (management fees) at the national level, but could select sales force levels by local geographic areas. We develop and estimate a model of fund manager choice where sales force can increase or decrease customer price sensitivity. We find exposure to sales force lowered price sensitivity, leading to inelastic demand and high equilibrium fees. We simulate oft proposed policy solutions: a supply‐side policy with a competitive government player and a demand‐side policy that increases price elasticity. We find that demand‐side policies are necessary to foster competition in social safety net markets with large segments of inelastic consumers.

Maximizing Profits Through Optimal Pricing and Sustainability Strategies: A Joint Optimization Approach

Implementation of optimal pricing and sustainability strategies are among the most efficient approaches for hotels to maximize their profits. This study uses a theoretical modeling approach to identify the joint optimal pricing and sustainability effort levels. In addition, through sensitivity analysis, this study examines how external factors may influence the optimal pricing and sustainability efforts decisions. Findings indicate that customers’ willingness to pay a premium is a critical determinant of sustainability action level while price sensitivity of target markets and cost-of-sustainability actions are two main inhibitors of sustainability practices at hotels. Findings further suggest that factors that positively influence demand levels also play critical roles in determining optimal room rates. However, findings suggest that optimal room rate is negatively influenced by price sensitivity of customers, customers’ sensitivity to premium charged to cover the cost of sustainability actions, and the unit cost of sustainability actions.

Personal Trainer in the Fitness Industry in Poland. Exemplification of Business Model Components and Exploration of Domains of Innovativeness: Results of Preliminary Studies

The purpose of this paper is recognizing of activity of personal trainers within the fitness industry conducting registered business activity in Poland in terms of the shape of the used business model and conditionings of innovation introduction. Qualitative analysis of the source material gathered with the use of a structured questionnaire. With regard to the character of surveyed subjects nonrepresentative sampling in the form of a snowball method was used. Fragmentary descriptions of the conditions of running business in the fitness sector existing in the literature are reflected in explanation of the ontological components of business models in the cases examined. Whereas in the opinion of the respondents the key relationships exist between such ontological components of business model as: customer value, target group of customers, forms of service and the following issues of innovativeness: current form of the offer, forms of the conducted marketing activity, process of offer improvement, value of profit margin. The results of the study indicate that even among homogeneous group of personal trainers there might be differences in the declared description of ontological components of business model. These differences can be seen as the result of innovations. Innovations, however, are conditioned by the terms of Polish fitness sector, by the price sensitivity of Polish customers in particular.

Determinants of customer price sensitivity: an empirical analysis

PurposeConsumer price sensitivity has become a major issue over the past few decades. This paper aims to investigate the importance that insurance customers give to premiums, insurers, intermediary recommendations and bundling strategies. The relationship between attributes and consumer price sensitivity is also studied.Design/methodology/approachTo calculate the importance of attributes and part-worth utilities, a Conjoint Analysis with Full Profile was performed. To segment the market, a two-stage cluster analysis was performed. The traditional formula for estimating price elasticity of demand was also used.FindingsPrice sensitivity is affected by the level of purchase involvement, bundled discounts and brand loyalty. Also, brand loyalty has a strong influence on customer acceptance of bundled discounts. Price bundling increases a firm’s revenues and profits.Research limitations/implicationsThe size of the sample of the second stage of the research could be higher.It would also be interesting to have the collaboration of an actuary to carry out more precise analysis of premium estimation of bundling strategies and to study the ideal number of products that would compose the bundling strategy. Moreover, it could be relevant to consider life insurance products as part of the bundling strategy. It would also be interesting to study whether there is any benefit in applying the bundle discount to the anchor product instead of applying it to the accessory product.Practical implicationsInsurers and intermediaries can benefit from price bundling strategies to increase sales and profit.Originality/valueThe study contributes to the service marketing literature and marketing of the insurance sector by providing empirical evidence of the impact of price bundling on insurance customer sensitivity, with the use of a methodological and experimental approach.

Modern Gross Profit Analysis

Merchandise retailers such as Walmart, Costco, and Target routinely track product margins to assist operating managers in making local stocking and pricing decisions. This article shows how to penetrate product margin behavior based on the price sensitivity of customers and shifts in product mix. © 2016 Wiley Periodicals, Inc.

Letter From the Editor

Letter From the Editor