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How up-, cross-, and downgrading substantiate segment-specific price responsiveness and purchasing motives: The case of premium durables

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Abstract:

Nowadays, even premium segments cannot completely escape the almost omnipresent increase of aggressiveness in product pricing. Therefore, the identification of those prices that adequately balance customers' price-value expectations and manufacturers' overall sales volume or profit targets is a major managerial issue. This article empirically investigates whether and how the common practice of a priori customer segmentation into "upgraders", "crossgraders" and "downgraders" results in different price response patterns and purchasing motives.

To answer this question, a replication study focused on one of the most competitive durable goods markets, the car market, is presented. Our research substantiates the existence of segment-specific reservation prices as well as latitudes of price acceptance. In addition, underlying purchasing motives and their relationship with segment-specific pricing strategies are discussed. The detected differences regarding the willingness to pay, existing reservation prices and main purchasing motives allow for segment-tailored marketing strategies to better utilise corresponding business potentials.

Keywords: AND DOWNGRADING; CAR INDUSTRY; CROSS-; MARKET SEGMENTATION; PREMIUM DURABLES; PRICE RESPONSIVENESS; PURCHASING MOTIVES; UP-

Document Type: Research Article

DOI: http://dx.doi.org/10.1362/147539211X602487

Publication date: September 1, 2011

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