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| Author: | Han, S. Gupta, S. Lehmann, D. R. |
| Title: | Consumer price sensitivity and price thresholds |
| Journal: | Journal of Retailing
2001 : WINTER, VOL. 77:4, p. 435-456 |
| Index terms: | CONSUMERS PRICES SENSITIVITY ANALYSIS |
| Language: | eng |
| Abstract: | The authors examine consumers' price sensitivity using a new approach that incorporates probabilistic thresholds for price gains and price losses in the reference price models. The authors model the threshold as a function of company, competitor and consumer specific factors. Model application to scanner panel data for coffee shows that the authors' model is superior in fit compared to ordinary logit and two existing reference price models. The authors' results indicate that higher own-price volatility makes consumers more sensitive to gains and less sensitive to losses, while intense price promotion by competing brands makes consumers more sensitive to losses but does not influence consumers' sensitivity to gains. Two clear segments that differ in the size of their thresholds emerge. |
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