Ksh

linage pricing, Sdttic companies priee the same product at two different levels based on image differences. A perfume manufacturer can put the perfume in one bottle, give ¡it a name and iniafje. atul price it at Si0 an ounce. It can put the same perfume in another hottie with a different name and image and price it a( $30 an ounce.

■ Channel pricing. Coca-Cola carries a different price depending on whether it is purchased in a fine restaurant, a fast-food restaurant, or a vending machine.

n Location pricing. The same product is priced differently at different locations even though the cost of offering at each location is the same, A theater varies Its seat prices according to audience preferences for different locations.

c Tinte pricing. Prices are varied by season, day, or hour, Public utilities vary energy rates to commercial users by lime of day and weekend versus weekday. Restaurants charge less to "early bird" Customers, Motels charge lesson weekends.

The airline and hospitality industries use yield management systems and yield pricing, by wlli^h they offer disc uu lit etl but limited early pit re hases, higher-priced late purchases, and the lowest rates on unsold inventory just before it expires.61 Airlines charge different fares lo passengers on the Same flight, depending oti the seating class: the time of day i morning or night coach); the day of the week (workday or weekend}; the season; the person's company, pasi business, or status (youth, military, senior citizen); and so on.

That's why on a flight from Xeiv York City to Miami you might have paid S200 and be silting across from someone who has paid SI,290.Take Continental Airlines: It launches 2, IM0 flights a day and each flight lias between 10 and 20 prices. Continental stuns booking flights 330 days in advance, and every flying day Is different from every other flying day. At any given moment the market litis more than 7 million prices. And ill a system that tracks the difference in prices and the price of competitors' offerings, airlines collectively change

75.000 prîtes a day! H's a system designed io punish procrastinators by Charging them the highest possible prices.

The phenomenon of offer in g different pricing schedules 10 different consumers and dynamically adjusting prices is exploding.® See "Marketing Insight; Smart Pricing Takes Off," for more on how companies are using software packages that provide real-time controlled tests of actual Consumer response to different pricing schedules.

Most consumers are probably not even aware of the degree to which they are the targeis of discriminatory pricing. 1 or in si a nee, catalog retailers like Victoria's Secret routinely send out cala logs that sell identical goods except at different prices. Consumers who live 111 a more free-spend In g zip code may see only the higher prices. Office product superstore Staples also sends ont office supply catalogs with different prices.

Some forms of price discrimination [in which sellers offer different price terms to different people within the same trade group) are illegal. However, price discrimination is legal if thti seller can prove that its eosis are different when selling different volumes or different ij ual ¡ties of the saint? product to different retailers. I Ted a tory pricing- -selling below cost with the intention of destroying competition—is unlawful,67 Even if legal, some differentiated pricing may meet with a hostile reaction. Coca-Cola considered raising ils vending machine soda prices on hot days using wireless technology, and lowering the price on cold days, Customers so disliked the idea iliat Cuke abandoned it.

E:or price discrimination to work, certain conditions must e^ist, E=1rst. the market ituisi be segtnenlable and the segments must show different intensities of demand. .Second, members In the lower-price segment must not be able to resell the product to the higherprice segment. Third, competitors must not he ah le to undersell the firm in the higherprice segment. Fourlb, the cosl of segmenting and policing the market must not exceed the extra revenue derived from price discrimination. Fifth, the practice most not hreed customer resentment and ill will. Sitfth, the particular form of price discrimination must not he illegal/3

Salehoo Secrets and Tips

Salehoo Secrets and Tips

As with any web site, SaleHoo has a number of features that will help you in buying products from around the world. Once you have an account on SaleHoo, which only costs a one-time fee, you can establish up to twenty named searches for products. After that, any time those items become available, you’ll be alerted.

Get My Free Ebook


Post a comment