Price changes have a significant influence on consumer behavior and purchase decisions. For example, a study by Paswan, Crawford, Ngamsiriudom, and Nguyen (2014) showed that an increase in gasoline prices causes anxiety and lifestyle changes, prompting consumers to switch to another mode of transportation. However, the influence of price on purchase decisions and consumer behavior can also vary depending on the type of product. The present paper will examine my reaction to an increase in earphone pricing and outline how changes in the prices of certain products will affect different customer groups.
The last product I purchased for over $50 was a Sony MDR-XB950BT/B wireless headset, which I bought on Amazon for $96. I enjoy listening to music, which is why having high-quality, comfortable headphones is essential to me. If the price of this headset increased by 10% overnight, my purchase decision would not change, as I have purchased the headset from Sony before the price increase. However, in the long term, it would no longer fit my budget for new headphones, and I would consider purchasing another product. For example, JBL E45BT wireless headphones have a similar quality of sound and are $20 cheaper than the headphones I bought from Sony. Based on the above scenario, I believe that I am price-sensitive when it comes to electronics, as I try to fit all purchases into my monthly budget.
Indeed, some categories of consumers are more affected by price changes in certain products than others. For instance, a noticeable increase in the prices of some luxury products, such as cars and houses, could affect the purchase decisions of high-income customers. Although high-income consumers are generally not as price-sensitive as those with low or medium income, this group could still react to steep price increases (Mhurchu et al., 2013). Thus, if the prices of houses or luxury cars increase by 10-15%, the change will be noticeable for this group. Low- and middle-class customers are less likely to be affected by price changes in these categories of products, as they would usually avoid buying luxury products and houses altogether.
Groceries are an important product category that is often subject to price changes. Import and export, as well as seasonality, may affect the price of certain groceries, including meats, fruits, and vegetables. High-income customers are not likely to be sensitive to price changes in this category. Low-income customers, on the other hand, could switch to cheaper products in case of moderate price changes (Mhurchu et al., 2013). Similarly, medium-income customers with children can be affected by significant price changes in groceries. For example, as the price of organic food products increases, they could choose to switch to non-organic produce to prevent excessive spending (Aschemann-Witzel & Zielke, 2015). Middle-class customers without children are not likely to be affected by price changes in groceries, as they spend less money on food in general.
Overall, changes in prices affect various groups of consumers differently. As evident from the examples above, low-income customers with children are usually the most price-sensitive customer group. They will be affected by price changes in most product categories, including clothing, groceries, electronics, cars, and telecommunication services (Ramachander, 2016). Middle-class customers, however, will only be sensitive to price changes inexpensive, but necessary goods, such as electronics, cars, and real estate, although families with children could also respond to price changes in other product categories to avoid increasing their expenditures. Finally, high-income customers will only be influenced by price changes in a few types of products, such as luxury cars and real estate, regardless of whether they have children or not.
References
Aschemann-Witzel, J., & Zielke, S. (2017). Can’t buy me green? A review of consumer perceptions of and behavior toward the price of organic food. Journal of Consumer Affairs, 51(1), 211-251.
Mhurchu, C. N., Eyles, H., Schilling, C., Yang, Q., Kaye-Blake, W., Genç, M., & Blakely, T. (2013). Food prices and consumer demand: Differences across income levels and ethnic groups. PloS One, 8(10), 1-12.
Paswan, A., K. Crawford, J. C., Ngamsiriudom, W., & Nguyen, T. (2014). Consumer reaction to price increase: An investigation in the gasoline industry. Journal of Product & Brand Management, 23(3), 220-229.
Ramachander, S. (2016). The price sensitivity of mobile use among low-income households in six countries of Asia. Telecommunications Policy, 40(7), 673-691.