Determinants of customer price sensitivity: an empirical analysis

Abstract

Purpose Consumer price sensitivity has become a major issue over the past few decades. This paper aims to investigate the importance that insurance customers give to premiums, insurers, intermediary recommendations and bundling strategies. The relationship between attributes and consumer price sensitivity is also studied. Design/methodology/approach To calculate the importance of attributes and part-worth utilities, a Conjoint Analysis with Full Profile was performed. To segment the market, a two-stage cluster analysis was performed. The traditional formula for estimating price elasticity of demand was also used. Findings Price sensitivity is affected by the level of purchase involvement, bundled discounts and brand loyalty. Also, brand loyalty has a strong influence on customer acceptance of bundled discounts. Price bundling increases a firm’s revenues and profits. Research limitations/implications The size of the sample of the second stage of the research could be higher. It would also be interesting to have the collaboration of an actuary to carry out more precise analysis of premium estimation of bundling strategies and to study the ideal number of products that would compose the bundling strategy. Moreover, it could be relevant to consider life insurance products as part of the bundling strategy. It would also be interesting to study whether there is any benefit in applying the bundle discount to the anchor product instead of applying it to the accessory product. Practical implications Insurers and intermediaries can benefit from price bundling strategies to increase sales and profit. Originality/value The study contributes to the service marketing literature and marketing of the insurance sector by providing empirical evidence of the impact of price bundling on insurance customer sensitivity, with the use of a methodological and experimental approach.

The Review Study of Halal Products and Its Impact on Non-Muslims Purchase Intention

“…A study conducted by (Dominique-Ferreira, S., Vasconcelos, H., & Proença, 2016) reported that pricing has also been debated over the past few decades because it is difficult to estimate and has also influenced business profit. Therefore, the challenge of setting the right price often means that not all consumers are willing to pay for a given item at a comparable value.…”

“…Therefore, the challenge of setting the right price often means that not all consumers are willing to pay for a given item at a comparable value. (Dominique-Ferreira, S., Vasconcelos, H., & Proença, 2016) have noted that the company's overall revenues and market acceptance were taken into account in the pricing strategies. The chances of success in achieving the corporate profitability goal will be higher if managers have more information and well-equipped with the reactions of consumers over the price.…”

The Role of Dynamic Pricing and Dynamic Bundling on Unfairness Pricing Perceptions

“…So that the bundling strategy is considered ineffective and triggers consumer dissatisfaction. Bundling with a variety of products that can provide new benefits can also reduce the risk of unfairness (Dominique-Ferreira et al, 2016; 2017) [13][12], because it makes consumers reluctant to compare with others. Likewise the application of dynamic prices must be adjusted to time, consumers, and / or circumstances based on consumer characteristics (Haws & Bearden, 2006) [22].…”

“…Variable of dynamic pricing is measured using three questions(Petro, 2015)[34]. Dynamic bundling variables with three items of questions (Dominique-Ferreira et al, 2016[13];Li et al, 2018).…”

Bundling and product strategy in channel competition

“…() utilized discrete choice data to investigate whether price framing affects choice in mixed‐price bundles, and found that the joint and integrated frame results in the highest proportion of respondents choosing the bundle and the fewest choosing “none.” Dominique‐Ferreira et al. () investigated the importance that insurance customers give to premiums, insurers, intermediary recommendations, and bundling strategies, and studied the relationship between attributes and consumer price sensitivity.…”