Price sensitivity can be incorporated into a product's value proposition by understanding the customer's willingness to pay for the product. This can be determined by dividing the demand quantity by the percent of change in price. This gives an insight into the customer's price sensitivity. Based on this, the product's value proposition can be adjusted to match the customer's perceived value and their willingness to pay. For instance, if customers are highly sensitive to price changes, the value proposition could emphasize affordability or value for money.

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Price sensitivity significantly influences promotional strategies. If customers are highly sensitive to price changes, businesses may use promotional strategies such as discounts, sales, or special offers to attract customers and stimulate sales. On the other hand, if customers are less sensitive to price, businesses might focus more on promoting the quality, features, or benefits of their products or services. Understanding price sensitivity can help businesses tailor their promotional strategies to meet their customers' needs and preferences, and ultimately drive sales and profitability.

Price sensitivity has a direct impact on sales volume. If customers are highly sensitive to price, a small increase in price can lead to a significant drop in sales volume. Conversely, a decrease in price can boost sales volume. However, this depends on the elasticity of demand for the product. If demand is inelastic, changes in price will have less impact on sales volume.

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Product Management Toolkit (Part 2)

How do you take your product management to the next level? Due to popular demand, we've expanded our...

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