Small business industrial buyers' price sensitivity: Do service quality dimensions matter in business markets?

One of the major obstacles to effective pricing emanates from difficulties experienced in predicting business buyers' price sensitivity. With a view to obviating these obstacles, this study examines the effect of five key physical distribution service quality dimensions on price sensitivity from the perspective of small and medium retail buyers. Based on a survey of 233 cellular phone retailers in China, the authors articulate how the five salient service quality dimensions exert either direct effects on price sensitivity or indirect impacts through perceived value and customer satisfaction. Theoretical and managerial implications are also provided for effective retailer relationship management, profitability improvement, and customer segmentation in distribution channels.