Customers are more price sensitive

Symptom: Customers have become more sensitive to overall differences in prices.

Implications for the market:

• In the stage immediately preceding hostility, real prices usually fall and service levels improve as customers look more critically at what suppliers are offering.

• At the same time, customers become more willing to switch suppliers. This is because, as price competition picks up and service innovations among competitors proliferate, customers find that their choices have increased and become more distinct. They have more reasons to consider switching.

• Once customers become less entrenched and begin to shop actively, they are more easily moved on the basis of price or marginal service features. From now on, smaller differences in price or service levels will cause customers to change suppliers.