PRICE SENSITIVITIY OF BUYERS

• Low-income and budget-constrained consumers are almost always price-sensitive

• Bargain-hunting consumers are highly price-sensitive by nature.

FACTORS AFFECTING PRICE SENSITIVITIY OF BUYERS

• Buyer price sensitivity increases when buyers are
earning low profits or have low income.
• Buyers are more price-sensitive if the product
represents a large fraction of their total purchases
• Buyers are more price-sensitive when the quality of the product is not uppermost in
their considerations

Buyers are price-sensitive when

• Buyers earn low profits or low income.
• The product represents a significant fraction of their purchases.
• The product is undifferentiated, or quality is not an important factor

THREAT OF SUBSTITUTES
• Substitutes do not include other brands within your industry; this type of pressure
comes from outside the industry
• Substitute products from outside the industry are
those that can perform the same or similar functions for the consumer as products
within your industry

Competitive pressures are stronger when:

1. Good substitutes are readily available and attractively priced
2. Buyers view the substitutes as comparable or better in terms of quality,
performance, and other relevant attributes.