Price sensitivity

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

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

2) Substitute awareness effect: if buyers are aware of substitutes 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 coma ring two alternatives.

4) Total expenditure effect: if the expenditure on the product represents a low proportion of the consumer income then total 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 compares to the total cost of the end product.

6) Seared cost effect: if the cost of the product is shared by another party, the buyer will be less prone to 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 store the buyer will be fewer price sensitive.