Wednesday
How to Avoid a Price Increase
Consumers hate price increases, but what is a company to do when material costs skyrocket? One answer: Think small. Professor John Gourville considers the alternative in this Q&A.
When product companies see the cost of materials rise, the result for consumers is often a price increase (gasoline) or, less often, a smaller amount of product at the same price (potato chips).
Which option is more likely to turn off your customers? For many products, it's better to reduce quantity than raise prices, conclude Harvard Business School marketing professor John Gourville and University of Texas professor Jonathan Koehler. They recently published their findings in a working paper, "Downsizing Price Increases: A Greater Sensitivity to Price than Quantity in Consumer Markets."
Gourville discusses the price-versus-quantity dilemma more..
When product companies see the cost of materials rise, the result for consumers is often a price increase (gasoline) or, less often, a smaller amount of product at the same price (potato chips).
Which option is more likely to turn off your customers? For many products, it's better to reduce quantity than raise prices, conclude Harvard Business School marketing professor John Gourville and University of Texas professor Jonathan Koehler. They recently published their findings in a working paper, "Downsizing Price Increases: A Greater Sensitivity to Price than Quantity in Consumer Markets."
Gourville discusses the price-versus-quantity dilemma more..
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