Dynamics of price sensitivity among mobile service customers

Purpose - Price sensitivity is one of the key factors affecting to companies pricing choices. Yet in mobile services sector business practitioners are facing problems in pricing decisions as they are short of knowledge on their customers' price sensitivity levels and dynamics. Therefore this study aims to focus on this unexplored field in order to provide more accurate tools for mobile service providers to price their services more effectively. Design/methodology/approach - This study is conducted on Finnish mobile services markets. The focus is on examining how customers' price sensitivity differs between different customer segments and which factors affect to the price sensitivity levels. The sample data is collected through a quantitative postal survey in which 3,000 questionnaires was sent to mobile service customers of a Finnish teleoperator. In analyzing the empirical data the explanatory factor analysis and multiple regression analysis was applied. Findings - It was discovered that mobile service customers differ significantly in their price sensitivity levels; customers with moderate usage of mobile services are least price sensitive, while intensive and low-end users are most sensitive to price changes. Important was also the notion that customers' price perceptions and innovativeness levels were accurate indicators of their price sensitivity. Research limitations/implications - This paper has concentrated only on Finnish mobile services markets. In order to construct a robust set of indicators for international use, cross-cultural study on testing the factors of this study should be conducted. Practical implications - For business practitioners, the most distinctive finding of this paper are a new set of factors through which segmenting of their customers can be made more accurately. Originality/value - With the findings of this paper a mobile service provider is able to increase efficiency of pricing of mobile services.