Price sensitivity: customer reaction to price changes

Price Sensitivity describes the extent to which the purchasing decision of consumers or business customers changes when the price of a product or service changes. High price sensitivity means that even small price changes have a significant impact on demand behaviour - for example, through reluctance to buy or switching to the competition. In markets with low price sensitivity, other factors such as brand, quality or service are more important. Understanding the target group in terms of price sensitivity is crucial for pricing strategies, discount campaigns and product positioning.