Question
Price sensitivity, also known as price elasticity of demand, can be used to forecast sales volume by evaluating the product's real value. This provides insight into the readiness of shoppers to make a purchase. High price sensitivity indicates that customers may view the product or service as overpriced, which could negatively impact sales volume. Conversely, low price sensitivity suggests that a higher price will likely not deter customers from purchasing the product, potentially leading to a stable or increased sales volume. Understanding the level of price sensitivity can also help set optimal prices across every category in the product line and influence customer behavior through specials, discounts, and other marketing techniques.
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Price sensitivity (a.k.a. price elasticity of demand) evaluates the product's real value which, in turn, provides an insight into the shoppers' readiness to swipe their cards. Knowing the product's price sensitivity gives the power to forecast the sales volume more accurately. The high price-sensitivity signals that customers consider the product or service unreasonably overpriced. And the low price sensitivity signals that the higher price will most likely have no negative effect on shoppers' willingness to purchase the product. But most importantly, knowing the level of price sensitivity allows to set optimal prices across every category in the product line, as well as influence customer behavior through specials, discounts and other marketing techniques.
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