An Empirical Analysis of Latitude of Price Acceptance in Consumer Package Goods

Scanner panel data analyses for sweetened and unsweetened drink categories (with four brands in each) support the presence of a region of price insensitivity around a reference price. The analyses also suggest that consumers with higher average reference price have a wider latitude of price acceptance. Consumers with a higher frequency of purchase (i.e., shorter average interpurchase time interval) are found to have a narrower latitude of price acceptance, because they are more aware of the range of price distributions. Finally, consumers with a higher average brand loyalty have a wider latitude of price acceptance, demonstrating greater tolerance of price fluctuations. Copyright 1994 by the University of Chicago.