Online consumer price sensitivity

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price sensitivity e-commerce


Profile picture for user Maria Jose Guerrero

Maria Jose Guerrero

Covid19 has generated a change in the behavior of online clients, making them more sensitive to the prices of products and services for sale. In wake of the pandemic, the most prudent consumers when it comes to spending money, is reflected in e-commerce sales. One example that proves this is that, following the data of Google Ads, keywords searched like “small budget” and “online outlet” have increased by 200% and 60% respectively in comparison to the previous year.  This tendency to towards savings drives consumers to show a greater sensitivity to prices, namely, their purchase decision with be more conditioned by the price of products. To adopt to this new situation, you should get to know in detail your target audience and their willingness to pay, so as to monitor competition prices.

A detailed analysis of demand and supply will allow you to carry out an adequate variation of prices to optimize sales at any time. You will be able to set prices coherent with the perception of the quality of the item, based on elements like innovation, the packaging, or the brand image, and with the prices of your competitors. Being aligned with the prices of your competition will be especially relevant in the case of substitute products, whose items can be acquired in place of others. In the last instance, this flow of information can allow for better decision making, favoring the growth of the business.

Factors that affect the price sensitivity 

In the price sensitivity of online consumers influences cultural, social, and psychological factors. In the latter, the final purchase decision intervenes the beliefs and personal tastes, as well as the perception transmitted by the price of an article. Because of this, psychological prices exist. 

But these are not the only factors. You can also find other conditions linked with the products and selling brands. 

  • Exclusivity of the item: users will be willing to pay a greater price if it is an exclusive product, sold in small amounts, or associated with a specific social status.
  • Lack of knowledge about substitute products: above all this happens with brands that are very well positioned, where it costs their competitors to gain visibility.  The ignorance of the quality of substitute products also affects the price sensitivity.
  • Level of competition: in a highly competitive market, potencial clients will be more sensitive to the price, as they already can resort to other brands. The impact of this factor in your sales will depend on your prices and level of user visits and interactions with your e-commerce.

Finally, and related to the uncertainty of the pandemic, you should also keep in mind that the price sensitivity will be greater when the final expense is greater in relation to the income of your target

e-commerce price sensitivity

Effects of offers and promotions on price sensitivity.

To counter a greater price sensitivity, a good option is planning offer or promotion campaigns. Lowering prices will serve as a claim to attract a greater number of buyers, it is necessary to do it in a controlled way so that there is not a doubt about the quality of the items or motives behind your discounts.  The prediction is that the consumers will be inclined towards brands with better quality-price relationships. 

To make user satisfaction compatible with the growth of the e-commerce, we advise you to employ a pricing tool with which you can streamline price changes in the moment of offers. These automated functionalities will allow for the optimization of discount campaigns to maintain the profit margin of the stable business.  Look here for a demo

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