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The Influence Of Hysteresis In Consumer’S Behaviour For Premium Price Evaluation

Author

Listed:
  • Evgeny KRYUKOV

    (Transport and Telecommunication Institute, Riga, Latvia)

  • Vladislav MALGIN
  • Irina MALGINA

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.

Suggested Citation

  • Evgeny KRYUKOV & Vladislav MALGIN & Irina MALGINA, 2014. "The Influence Of Hysteresis In Consumer’S Behaviour For Premium Price Evaluation," Management and Marketing Journal, University of Craiova, Faculty of Economics and Business Administration, vol. 0(2), pages 205-218, November.
  • Handle: RePEc:aio:manmar:v:xii:y:2014:i:2:p:205-218
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    References listed on IDEAS

    as
    1. Netemeyer, Richard G. & Krishnan, Balaji & Pullig, Chris & Wang, Guangping & Yagci, Mehmet & Dean, Dwane & Ricks, Joe & Wirth, Ferdinand, 2004. "Developing and validating measures of facets of customer-based brand equity," Journal of Business Research, Elsevier, vol. 57(2), pages 209-224, February.
    2. Boccaletti, Stefano & Nardella, Michele, 2000. "Consumer Willingness To Pay For Pesticide-Free Fresh Fruit And Vegetables In Italy," International Food and Agribusiness Management Review, International Food and Agribusiness Management Association (IFAMA), vol. 3(03).
    3. Gordon, Mirta B. & Nadal, Jean-Pierre & Phan, Denis & Vannimenus, Jean, 2005. "Seller's dilemma due to social interactions between customers," Physica A: Statistical Mechanics and its Applications, Elsevier, pages 628-640.
    Full references (including those not matched with items on IDEAS)

    More about this item

    Keywords

    willingness to pay; premium pricing; hysteresis; consumers’ behaviour;

    JEL classification:

    • M30 - Business Administration and Business Economics; Marketing; Accounting; Personnel Economics - - Marketing and Advertising - - - General
    • M31 - Business Administration and Business Economics; Marketing; Accounting; Personnel Economics - - Marketing and Advertising - - - Marketing

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