How much impact does a 10 percent price rise have on demand? The question is simple but the answers are complex. In some sectors, the impact on demand of such a price change can reach 50 percent. Such as in housing... In others, fluctuations of 10-15 percent do not affect the consumer at all.
Research shows that consumers’ price sensitivities vary according to sector, even according to category within a sector. The areas where price sensitivities are highest are housing, automobiles, white goods and tobacco products. In the automotive sector, a price rise of 1 percent reduces demand by 2-3 percentage points. In the same way, a price reduction of
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1 percent results in a 2-3 percent increase in demand. For example, a 3 percent increase in Special Consumption Tax results in a 6-9 percent decline in demand on the market. The calculations are clear. For that reason, pricing is very critical in sectors such as ours.”
These words belong to Otokoç General Manager Görgün Özdemir. The data that Özdemir has shared come from a special study by the Automotive Distributors' Association (ODD). The figures clearly demonstrate the relationship between price and demand in the automotive sector.
In fact, members of the automotive sector are not alone when it comes to “price-sensitive customers”. Because the picture is similar in many other sectors. So in which sectors are consumers most sensitive? In which are they more flexible in terms of sensitivity to price? What do companies need to bear in mind when balancing prices and what strategies will enable them to progress?
WHERE ARE THE MOST SENSITIVE CONSUMERS?
Research shows that consumers are particularly sensitive to price for products which have a high per unit price. Price is the most important criterion affecting purchasing
decisions in sectors such as automotives, furniture, white goods and real estate.