preissensitive

Preissensitive, or price-sensitive, describes consumers or markets whose purchasing decisions are significantly influenced by changes in price. In economics and marketing, price sensitivity indicates that demand for a good or service varies with price changes. Highly price-sensitive goods show large changes in quantity demanded with small price changes, while less price-sensitive goods show relatively smaller changes.

Price sensitivity is commonly measured by price elasticity of demand (PED), defined as the percentage change in quantity demanded divided by the percentage change in price. If the absolute value of PED exceeds 1, demand is price-elastic; if it is less than 1, demand is price-inelastic; and if it equals 1, demand is unit elastic. PED is typically negative due to the inverse relationship between price and quantity demanded, but the absolute value is used for interpretation. Elasticity can vary across products, market segments, and over time.

Several factors influence price sensitivity. Necessities tend to be less sensitive than luxuries; goods that occupy a large share of income or have close substitutes are more price-sensitive. The time horizon matters, with longer periods allowing greater adjustment. Brand loyalty, perceived quality, and consumer expectations also affect sensitivity. Retailers consider these factors in pricing strategies, using promotions, coupons, price discrimination, dynamic pricing, and product-line pricing to capture different levels of sensitivity across segments.

Limitations exist, including that elasticity varies along the demand curve and across contexts. Measuring true price sensitivity requires robust data, awareness of cross-price effects, and consideration of external factors such as income trends and seasonality.