Moderating the price sensitivity of online customers

Abstract

If an online vendor understands how to lower the effect of price on customer purchase, the vendor could generate more profit by lowering customers' price sensitivity in their Internet shopping. Hence, moderating the effect of price perception on purchase behavior is a primary concern for online vendors if they were to generate more profit and reduce the potential of price competition. This study provides a clear conceptualization of price sensitivity through a review of past literature, and proposes a new measurement method for changes in the effect of price perception on purchase. Based on pricing theory, this study examines the effects of trust, switching costs and convenience in moderating the effect of perceived price on purchase intention in the context of an online bookstore. We offer theoretical reasoning for the results and discuss the theoretical and practical implications of this study. © 2006 IEEE.