Substitute awareness effect
DESCRIPTION
An effect on consumer price sensitivity resulting from a consumer’s awareness of one or more substitutes for a particular product or service offering.
An effect on consumer price sensitivity resulting from a consumer’s awareness of one or more substitutes for a particular product or service offering.
KEY INSIGHTS
Consumer awareness of alternatives to a given product or service offering has the potential to significantly influence the consumer’s price sensitivity to the offering. In particular, increased awareness of substitutes is associated with a reduction in the price the consumer is willing to pay for the offering.
Consumer awareness of alternatives to a given product or service offering has the potential to significantly influence the consumer’s price sensitivity to the offering. In particular, increased awareness of substitutes is associated with a reduction in the price the consumer is willing to pay for the offering.
KEYWORDS Substitute product(s), consumer awareness, price sensitivity
IMPLICATIONS
Marketers involved in price setting should strive to understand consumer price sensitivity for any given offering in order to set and manage prices effectively. Recognizing how and to what extent price sensitivity is due to consumer awareness of substitutes can be beneficial in dynamically setting prices as consumer knowledge of substitute offerings also changes with time.
Marketers involved in price setting should strive to understand consumer price sensitivity for any given offering in order to set and manage prices effectively. Recognizing how and to what extent price sensitivity is due to consumer awareness of substitutes can be beneficial in dynamically setting prices as consumer knowledge of substitute offerings also changes with time.
APPLICATION AREAS AND FURTHER READINGS
Online Marketing
Dou, Wenyu (2004). ‘Will Internet Users Pay for Online Content?’ Journal of Advertising Research, 44, 349–359.
Dou, Wenyu (2004). ‘Will Internet Users Pay for Online Content?’ Journal of Advertising Research, 44, 349–359.
Marketing Strategy
White, Gerald B., and Uva, Wen-fei L. (2000). Developing a Strategic Marketing Plan for Horticultural Firms. Ithaca, NY: New York State College of Agriculture and Life Sciences, Cornell University.
White, Gerald B., and Uva, Wen-fei L. (2000). Developing a Strategic Marketing Plan for Horticultural Firms. Ithaca, NY: New York State College of Agriculture and Life Sciences, Cornell University.
BIBLIOGRAPHY
Erdem, T., Keane, M., and Sun, B. (2004). The Impact of Advertising on Consumer Price Sensitivity in Experience Goods Markets. New Haven: Yale University Mimeograph.
Erdem, T., Keane, M., and Sun, B. (2004). The Impact of Advertising on Consumer Price Sensitivity in Experience Goods Markets. New Haven: Yale University Mimeograph.