Factors Affecting Price Sensitivity
Price is the economic value which is assigned by the market seller to something for the
buyer. It is also something purchased, sold, or offered for sale in the marketplace. There
are a number of factors that will affect the price sensitivity of products in the marketplace.
From the marketing point of view, there are seven main factors that affect the price
sensitivity which considered in the retail pricing. The seven main factors that affect the
price sensitivity are perceived substitutes effect, unique value price, importance of
purchase effect, difficult comparison effect, price quality effect, expenditure effect, and
fairness and transparency effect.
The first factor that affects the price sensitivity in the marketplace isperceived substitutes
effect. Perceived substitutes effect is the factor is meant that buyers are more sensitive with
the higher the product’s price is in relation to another product or replacement of the
product that they can purchase in the market. Hence, the consumer would like to buy a
substitute product for the higher product’s price. With the perceived substitute effect, the
level of price sensitivity is high. For the example, the Sunkist orange juice in the market is
selling RM 6.50 per bottle; however, the Tropicana orange juice in the market is selling
RM 4.90 in the market. But, two brands of the orange juice are quite similar with the taste.
So, the consumer would like to buy the Tropicana orange juice compare with the Sunkist
orange juice as their taste is similar but the prices are a big different for both of them.
