Downsizing Price Increases: A Greater Sensitivity to Price than Quantity in Consumer Markets

41 Pages Posted: 30 Jun 2004

Date Written: January 2004

Abstract

As the cost of goods increase, manufacturers routinely pass these costs on to consumers through higher prices. A less obvious strategy is to maintain price, but to reduce the size of the product. In many ways, this downsizing should mirror a straight price increase when it comes to consumer behavior. Marketplace and experimental data show this is not the case and that consumers are more sensitive to changes in price than to changes in quantity.

Keywords: Marketing

JEL Classification: M3

Suggested Citation

Gourville, John T. and Koehler, Jonathan J., Downsizing Price Increases: A Greater Sensitivity to Price than Quantity in Consumer Markets (January 2004). HBS Marketing Research Paper No. 04-01. Available at SSRN: https://ssrn.com/abstract=559482 or http://dx.doi.org/10.2139/ssrn.559482

John T. Gourville (Contact Author)

Harvard Business School ( email )

Soldiers Field
Boston, MA 02163
United States
617-495-6133 (Phone)
617-496-5637 (Fax)

Jonathan J. Koehler

Northwestern University - Pritzker School of Law ( email )

375 E. Chicago Ave
Chicago, IL 60611
United States

Register to save articles to
your library

Register

Paper statistics

Downloads
838
rank
25,915
Abstract Views
5,220
PlumX