Managers are likely to have greater success raising prices by 1) targeting consumer segments high (vs. low) in PDB, 2) activating a high PDB via ads, slogans, or POP material, 3) heightening the need for closure using contextual cues, or 4) increasing social density in stores.

1. Culture and Price Sensitivity
How can marketers identify price-sensitive consumers based on
consumers’ endorsement of hierarchies and inequalities in society?
From: Lee, Lalwani, and Wang (2020)

2. Research Motivation
From: Lee, Lalwani, and Wang (2020)
Currently, many firms find it difficult to raise or even maintain prices.
Our focus: Factors that influence consumers’ price sensitivity and in identifying
consumer segments that are more or less price sensitive.
The role of culture has been underexplored.

3. Research Question
From: Lee, Lalwani, and Wang (2020)
Power Distance Belief (PDB)
High PDB individuals
support inequalities in
society
the extent to which people endorse
inequalities in society.
(Hofstede 2001)
Price Sensitivity
the relative change in consumers’ purchase
likelihood after a price change
(Wakefield and Inman 2003)
Low PDB individuals
believe in equality in
society

4. Key Findings
From: Lee, Lalwani, and Wang (2020)
Low (vs. high) PDB consumers
1) purchased more units of carbonated beverages and dried fruits when the price
is low (vs. high; study 1a),
2) rented a movie when the price is low (vs. high; study 1b),
3) and purchased more units of yogurts when the price is low (vs. high; study 1c).
These evidences suggest that low (vs. high) PDB consumers are more price
sensitive (i.e., react more to price changes). Moreover, high (vs. low) PDB
consumers “seize and freeze” on purchases to gain closure, making them less
price-sensitive (study 2a and 2b), suggesting that this effect is driven by high PDB
consumers’ greater desire for a quick solution to problems (i.e., need for closure).

5. Summary
From: Lee, Lalwani, and Wang (2020)
▪ Consumers who support inequalities (i.e., high, compared to low, PDB
individuals) are less price sensitive.
▪ This is because they have greater desire for a quick solution to problems (i.e.,
need for closure). This motivates them to “seize and freeze” on a current offer,
and quickly arrive at the final purchase decision, rather than search for a better
price.
▪ This tendency reduces their price search behavior and price sensitivity.

6. Managers are likely to have greater
success raising prices by…
• Targeting consumer segments high (vs. low) in PDB
- PDB is higher in certain cultures (e.g., China) than others (e.g., USA)
- PDBs are higher for Conservatives than Liberals
• Activating a high PDB via ads, slogans, or POP material
• Heightening the need for closure using contextual cues
From: Lee, Lalwani, and Wang (2020)