Price sensitivity to tourism activities: looking for determinant factors

The literature contains evidence that there is a marked heterogeneity in price responses to tourism products, leading to a great variety of tourist sensitivities to price. Thus the role price plays is complex, and a particularly challenging aspect of this complexity is that its effect is not unambiguous, thereby negating the idea that the demand for tourism products and tourist activities can always be regarded as demand for ordinary goods. This article identifies and explains, as a novelty for the tourism industry, price sensitivities to tourism activities individual by individual. The operative formalization uses a mixed logit model to estimate the individual sensitivities to price, and then a regression analysis is applied to detect their determinants. The empirical application finds that motivations, influenced by age, and length of stay with a non-linear effect, are explanatory factors of tourists’ price sensitivity to activities.

Price promotions effects of virtue and vice products

Purpose: This paper aims to propose models that capture the own effect of price promotions of virtue and vice products on sales and cross effects within the subcategory, between subcategories and between periods. The hypotheses assume that, due to reverse consumption self-control, the demand for vice products is more price-sensitive than demand for virtue products, but the demand for vice products is less price-sensitive between periods than demand for virtue products; furthermore, due to the degree of impulse-buying and to licensing, the demand sensitivity of the products of a subcategory and of those of other subcategories varies according to the type of promoted product (vice or virtue). Design/methodology/approach: The methodology is based on different econometrical models that estimate the total net effect of price promotions of virtue and vice products on sales. Findings: The results show a greater own effect for price promotions of vice products than for virtue products. However, the complementary sales effect between subcategories for virtue products facilitates greater expansion of the subcategory in virtue products than in vice products. Originality/value: Although price promotions of virtue products (light) and vice products (regular) have proliferated in recent years, researchers have only estimated their own sales effect. Alternatively, the paper contributes by considering own and cross effects.