THE INFLUENCE OF HYSTERESIS IN CONSUMER’S BEHAVIOUR FOR PREMIUM PRICE EVALUATION

Evgeny Kryukov, Vladislav Malgin and Irina Malgina
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Evgeny Kryukov: Transport and Telecommunication Institute, Riga, Latvia

Management and Marketing Journal, 2014, vol. XII, issue 2, 205-218

Abstract: The paper deals with an example of the manifestation of the hysteresis in consumers’ behaviour for the Latvian company operating on the market closest to oligopoly and having a local brand name. Based on the quota sample of 332 company stores consumers, their loyalty, willingness to pay for domestic cosmetic products and the propensity to buy habitual products were evaluated. In the survey the unfolding bracketing procedure is used. It is shown that the relationship between the number of loyal consumers and the product price depends on the price increase or decrease and has the form of a hysteresis loop. The width of the hysteresis loop depends on the pricing of a competing company. The range of the premium prices bringing a positive economic impact is determined. The obtained results confirm a considerable influence of the hysteresis effect on consumers’ sensitivity to price changes. The findings can be useful for managers in evaluating a possible revenue growth connected with the premium pricing strategy.

Keywords: willingness to pay; premium pricing; hysteresis; consumers’ behaviour (search for similar items in EconPapers)
JEL-codes: M30 M31 (search for similar items in EconPapers)
Date: 2014
References: View references in EconPapers View complete reference list from CitEc
Citations: View citations in EconPapers (1)

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Persistent link: https://EconPapers.repec.org/RePEc:aio:manmar:v:xii:y:2014:i:2:p:205-218

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