The Influence and Mitigation of Consumer’s Price Sensitivity on the Pricing of Luxury Brands & Two Case Studies

Abstract

The current economic crisis and the worldwide Covid-19 pandemic, which is lasting about three years, have increased price sensitivity globally. A crisis-ridden external environment is a predominant explanation for this trend. However, what can be found is that previous studies have mainly relied on big data and have surveyed businesses as a whole, and thus, it has been unable to disentangle the price sensitivity in luxury brands. This report mainly uses the opinion of pioneers and collects the data from the official website of the luxury brands to figure out the current consumer’s preferences and their price sensitivity so that there can be more objective opinions. What is more, the report introduces the factor, the effect of price sensitivity and the way to alleviate it. The finding indicates that demand, income level and customer loyalty would affect most and mentions such mitigations as dynamic pricing and building more loyal customers.