Some other methods to determine customer price sensitivity include conducting surveys to understand what price customers are willing to pay, observing how sales change in response to price changes, and using conjoint analysis which involves presenting customers with hypothetical products at different prices and asking them to choose between them. Another method is the Van Westendorp's Price Sensitivity Meter which asks customers at what price they would consider the product to be too expensive or too cheap.

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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 Product Development Toolkit to include more tools...

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To determine how sensitive your customers are to your prices, you need to divide demand quantity by the percent of change in price. The difference is your customer's price sensitivity. PMs will often introduce discount codes to check conversion on a decreased price to determine their customer's price sensitivity. (Slide 9)

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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.

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.

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