What is third-degree price discrimination?
What will be an ideal response?
In third-degree price discrimination, the seller charges different amounts to different classes of buyers, as in the following cases:
• Customer-segment pricing - Different customer groups pay different prices for the same
product or service. For example, museums often charge a lower admission fee to students and
senior citizens.
• Product-form pricing - Different versions of the product are priced differently, but not
proportionately to their costs.
• Image pricing - Some companies price 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 image,
and price it at $10 an ounce. The same perfume in another bottle with a different name
and image and price can sell for $30 an ounce.
• Channel pricing - Coca-Cola carries a different price depending on whether the consumer
purchases it in a fine restaurant, a fast-food restaurant, or a vending machine.
• Location pricing - The same product is priced differently at different locations even though
the cost of offering it at each location is the same. A theater varies its seat prices according to
audience preferences for different locations.
• Time pricing - Prices are varied by season, day, or hour. Public utilities vary energy rates to
commercial users by time of day and weekend versus weekday.
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Indicate whether the statement is true or false
Why is follow up after a sale an important part of the selling process?
A) for referral to other customers B) to offer alternatives if the customer is dissatisfied C) to further understand customer needs for future sales D) to determine how the product can be improved E) to address complaints