The effects of competitive context on consumer response to price changes |
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Authors: | Steven Dunn John Dawes Svetlana Bogomolova |
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Institution: | 1. Ehrenberg-Bass Institute for Marketing Science, University of South Australia , Adelaide, Australia Steven.Dunn@marketingscience.infohttps://orcid.org/0000-0002-5649-7090;3. Ehrenberg-Bass Institute for Marketing Science, University of South Australia , Adelaide, Australia https://orcid.org/0000-0003-4004-1475;4. Ehrenberg-Bass Institute for Marketing Science, University of South Australia , Adelaide, Australia https://orcid.org/0000-0003-4449-6514 |
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Abstract: | ABSTRACT This paper aims to understand how a brand’s price level, relative to its competitors, will affect consumers’ responses to price changes of the brand. The study uses experiments to examine brand choice responses to price increases and decreases across contexts differing in competitor brands and their respective prices. These experiments are conducted with six consumer goods categories. The research identifies three key factors that affect the size of responses to brand price changes – (1) passing a competitor brand’s price, (2) narrowing versus widening the price gaps with competitors, and (3) whether competitors are predominantly higher or lower priced brands. |
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Keywords: | Brand price elasticity cross-price elasticity pricing experimentation competitive context |
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