...Dynamic Pricing = Price Discrimination Dynamic Pricing, the idea that prices will change according to the level of demand. Dynamic Pricing is one version of price discrimination that delivers prices to consumers based on their personal attributes and other environment related events. The different attributes are collected by the producer/retailer and are based on bits of information, like age, financial gain, and/or region one inhabitants. The price is then individualized to the consumer. Many consumers find this practice to be harmful and many companies pre-internet commerce found this practice to be overly expensive. But, now that we are out of the dark ages, companies such as Amazon, Best Buy, and (our country’s favorite) Wal-Mart could possibly be able to proceed with this idea if it weren’t looked down upon so feverishly. As for the short term aspect concerning both dynamic pricing and the retail industry, it definitely has some problems to overcome if it were to ever succeed for a long term. Because the idea is based strictly on demand, this is hard for the retail world. Most items sold in retail are items that can become quickly outdated simply because they no longer fashionable. Also it is harder to discriminate buyers when the price is published in multiple places all over the internet. As is well known from the provided literature, the Airline industry is a respected industry that also contains price discrimination. The discrimination is seen when boarding a plane...
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...Responsibility European Court Abolishes Sexual Discrimination In Insurance Pricing Index Introduction ………………………………………………………………………………………………...... 3 Sexual Discrimination and Insurance ………………………………………………………………… 4 Normative Ethics and the Discrimination in Insurance ……………………………………... 5 Utilitarianism ……………………………………………………………………………………………………. 5 Kant Deonthological Ethic Theory ……………………………………………………………………. 7 Critical Opinion ……………………………………………………………………………………………….. 8 Bibliography ……………………………………………………………………………………………………. 9 Introduction The aim of this report is to discuss a controversial and very recent issue regarding business ethics: The sexual discrimination in the Insurance markets. I decided to do further research and build on this subject, because, after reading in the newspaper about it, I still do not know how the future is going to be concerning all the details and crucial aspects of dealing with such a sensitive subject. In this essay there will be an evaluation of the status quo from an economic point of view and an assessment of the market impacts of a potential ban on the use of gender as a differentiating factor of private insurance prices in EU. The question that first arises is: Is the abolishment of the inequalities in insurance premiums and benefits going to have positive consequences for the customers of private European insurance companies? To get the reader closer to the functioning of pricing by private insurance companies, some...
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...PRICE DISCRIMINATION Submitted By: S Date Abstract The aim of this research was to investigate the consumer’s buying behavior related to product differentiation. The report is comprised of three sections. The first section contains the introduction and background about the topic chosen is Product differentiation, the second sections contains the source of reports i.e. from where the data is collected and the last section belongs to the analysis, statistics and summary of the survey which is conducted by the researcher. Dedication A journey of thousand miles Begins with a single step But for that single step, One has to be motivated. This humble effort is dedicated to my sweet Mother & Great Father Who motivated me for That step and has been Guiding me to achieve The heights of an ideal life. Letter of Transmittal Project supervisor & course instructo Respected Ma’am, This letter is a response to the report “Price Discrimination”. The research is conducted to find the impact of price discrimination in our country with respect to the world. This is something which would take the rights of the people belonging to lower class to live in this world. Through this report we can create some awareness and at a snail’s pace we’ll absolutely reach to a conclusion which would b in our favor. Sincerely, Muhammad Najam Absar Taha TABLE OF CONTENTS i. Abstract…………………………………………………………...2 ii. Dedication……………………………………………….......
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...when China joined the World Trade Organization, did the process accelerate. In August 2007, the law was finally passed by the National People's Congress. Although the measure compromised with state-owned enterprises, which dominate industry, people tend to believe it will make way for free market competition against monopolies. It's gained a lot of praise and set a milestone in China's legal history. In our daily life, we can face several kinds of monopolistic practice, for example, if your grocery store sells you a bag of tea with the condition that you buy a pound of sugar that would be a tie-in sale. In this paper, first, I will show the detail in the China competition law, then I will specific the monopolistic practice in Price discrimination which I think we usually face most in our society, and in the last part will be the impact of the Anti-monopoly law. China competition law On 30 August 2007, after more than a decade of legislative efforts, the Standing Committee of the National People’s Congress (NPC), completed its third official reading of the draft Anti-monopoly Law (AML) and formally adopted it as the country’s first comprehensive competition law. Scope of Law The draft is stated to apply to domestic conduct and to foreign activities that “restrict or affect” competition within China and identifies four types of anti-competitive conduct, namely, (1) Monopoly...
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...“Pricing Techniques” Studied in- Mobile Industry Company- Nokia Background of the study: Pricing Techniques: are the methods adopted by a firm to set its selling price. It usually depends on the firm's average costs, and on the customer's perceived value of the product in comparison to his or her perceived value of the competing products. Different pricing methods place varying degree of emphasis on selection, estimation, and evaluation of costs, comparative analysis, and market situation. It takes into view factors such as a firm's overall marketing objectives, consumer demand, product attributes, competitors' pricing, and market and economic trends. The term pricing technique is also called cost plus because it attempts to secure the firm against a loss by imbedding marginal and fixed costs into the price consumers pay. The term plus refers to markup, which may ensure some strictly positive profit. If, the firm sets markup = 0, the firm breaks even because the price equals the average total cost. Objective of the study: The objective of the study is to see the different pricing strategies used by Nokia for its different products. Nokia started by making paper – the original communications technology Nokia was founded in 1865 by Fredrik Idestam in Finland as a paper manufacturing company. In 1920, Finnish Rubber Works became a part of the company, and later on in 1922, Finnish Cable Works joined them. All the three companies were merged in 1967 to form...
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...This article talks of rice gouging as a pricing strategy followed by US companies vis-a-vis Australian consumers. We start with the concept of the strategy and the conditions required for its effectiveness. Next it is applied on the current situation that is the focus of the article. Lastly we try and assess the benefits and costs of this strategy. Price gouging is a form of price discrimination, where the producer/seller is able to discriminate between different consumers on the basis of his selling power or some feature of the consumer itself. Price gouging is negative in its implication as it involves charging higher prices from consumers in times of emergency, as the consumer has no choice. It is even treated as illegal in some economies. For example, if there is a hurricane and plywood manufacturers charge a higher price from consumers wishing to rebuild their homes, it is price gouging. This is because there is no change in the good provided or the cost of manufacturing that good. Producers are simply using the consumers’ emergency demand for plywood to boost profits for themselves. Another example is the rise in essential items prices when there is a curfew in riot affected areas. For the producer this makes sense as demand becomes inelastic in times of emergencies and he can charge a higher price and increase his profits. “Everyone engaged in a business who…engages in a policy of selling products in any area of the country at prices lower than those exacted by him elsewhere...
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...Introduction There are a lot of different pricing strategies defined and described. Different companies implement different pricing strategies. But the goal is the same for everyone – to gain maximum profits and to keep one’s business successful. This is there price discrimination could help to solve the problem. Different prices for different segments, in different countries or in different amounts – there are few ways how to implement price discrimination for products and services. The main purpose of this work is to analyze those ways more deeply while looking for various examples concerning price discrimination. The tasks are as follow: To provide the definition of price discrimination by comparing 3 different authors To present 5 examples of price discrimination for products or services To present 5 examples of price discrimination for online products or services Present facts and figures of price discrimination in 5 universities (2 foreign, 3 local) To compare given results After finishing this project it is expected to have deeper understanding on price discrimination, to be able to identify the degree of price discrimination for particular product or service and other types of prices discrimination, to find the main differences and similarities of each author ideas about this issue, to have deeper understanding about the system of higher eduaction and tuition fees in Lithuania and foreign countries. Definition of price discrimination Most businesses charge different...
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...16 Pricing Strategies | Definition | 1. Cost-Based Pricing | A pricing method in which a fixed sum or a percentage of the total cost is added (as income or profit) to the cost of the product to arrive at its selling price. | 2. Product Bundling Price Strategies | An advertising ploy in which a few items are offered available to be purchased in one consolidated unit that is regularly stamped at a lessened value contrasted with the entirety of their different buy costs. Item package estimating is frequently effectively utilized by the promoting bureaus of organizations that create PC programming items, fast food suppers and digital TV associations that include assembling numerous items to make a more appealing or sparing entirety. Additionally called bundle arrangement evaluating. | 3. Competition-Based Pricing | A strategy for deciding the cost at which a specific item is sold taking into account the costs of contending items as opposed to on the expense of creation or the measure of interest from clients. Rivalry based valuing can be compelling when the normal cost of contending merchandise is discernibly not quite the same as costs recommended by generation cost or request. | 4. Every Day Low Pricing (EDLP) | It is the valuing procedure utilized by retail locations that gives low costs to the clients each and every day with no extraordinary evaluating markdown, deal, correlation shopping and so on. | 5. Penetration Pricing | A promoting procedure utilized...
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...PRICING STRATEGY IN IMPERFECT MARKET CONDITION Outline: 1. Imperfect markets * Characteristics * Number of firms * Type of products * Entry conditions 2. Industry examples of each market 3. List of Specific companies and their competitors in each industry for analysis * Pricing strategy of the companies in each market * Price discrimination applicability * Market power * Different customer groups * Resale is not possible Imperfect market : * There are four types of imperfect markets: - Monopoly (only one seller) * Oligopoly (few sellers of goods) * Monopolistic competition (many sellers with highly differentiated product) * Monopsony (only one buyer of a product) In this market scenario, the seller enjoys the luxury of influencing the price in order to earn more profits. Monopoly: A market in which a single firm sells a product and that does not have any close substitutes. Characteristics: Market power | The ability of the firm to affect the price of its product | Barrier to entry | Something that prevents firms from entering a profitable market | Patent | The exclusive right to sell a new good for some period of time | Network externalities | The value of a product to a consumer increases with the number of other consumers who use it.It inhibits the entry of new ones. | A natural monopoly occurs when the scale...
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...Marketing principles Price discrimination Outline 1. Introduction............................................................................................................................3 2. Conditions for price discrimination........................................................................................3 3. Types of discrimination..........................................................................................................4 4. Advantages/Disadvantages of price discrimination...............................................................5 5. Economic explanation.............................................................................................................6 6. Examples of price discrimination......................................................................................7-16 7. Price discrimination in universities..............................................................................17 - 23 8. Summary.............................................................................................................................24 What is price discrimination? The goal of every business is to maximize its profits and they can achieve this goal by successfully determining the price of their products. There are many different ways to deal with determining the price of the products. All of these ways are called – pricing strategies. Price discrimination is one of many ways how companies may determine the price of their...
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...Second Degree Price Discrimination: If a single pricing strategy is used, the total revenue of the supplier is the area P2 C Q2*O. If a second degree pricing discrimination is used, the supplier charges a cost P0 for the first Q0 items (point A), a price P1 for Q0 to Q1 items (point B) and a price P2 for Q1 to Q2* items(point C). Thus by charging different prices for different quantities of items bought, the supplier is able to increase his revenue as indicated by the shaded portion. The cross dashed lines indicate the increase in revenue by following second degree price discrimination. Fig: Second Degree price Discrimination Thus, using second order price discrimination, the supplier gets to reduce the consumer surplus and increase his revenue by selling the same quantity of products at different prices to consumers. Third Degree Pricing Discrimination: In order to maximize total profits, the firm must sell in each market until MR1 = MR2 = MC will then involve selling the product at a higher price in the market with the less elastic demand. The firm will maximize its total profit by selling the product in each market until MR1 = MR2 = MC. Fig: Third degree price discrimination Assume the firm operates in two markets, A and B. The demand in market A is less elastic compared to that in B. Thus, the firm can capitalize on the less price elastic market A by charging it a higher...
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...Discuss the main factors affecting product pricing in the UK (1000 words) Two surveys on the price-setting behaviour of UK firms published by the Bank of England in 1996 and 2008 concluded that the price, the amount of money expected, required or given for a certain level of output, was most often set as a result of market conditions. The same report however found that the second largest price differential was the objective of the specific firm surveyed, and thus product pricing in the UK can be seen to be determined primarily by the objectives of its firms, which are bounded by the differing market structures under which they operate. In the UK these dominant structures are monopolistic, oligopolistic and perfectly competitive, within which there are differing degrees of price setting ability and inter-firm competition, both of which influence the individual objectives the firms choose to pursue. As witnessed in recent years with the impact of the global recession however, all markets are vulnerable to external shocks to their product pricing. The classical theory of the firm assumes that they will pursue the objective of profit maximisation. As Milton Friedman put it in his 1970 article, ‘‘There is one and only one social responsibility of business - to use its resources in activities designed to increase its profits so long as it... engages in open and free competition without deception or fraud’1. Within a profit-maximising objective, the price charged will still be...
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...Implementation of Revenue Management 5 2.3.1 Objectives for Establishing Prices 5 2.3.2 Pricing Strategy 5 2.4 Methods of Revenue Management 6 2.4.1 Price Discrimination 6 2.4.2 Capacity Control 8 2.4.3 Overbooking 9 2.4.4 Dynamic Pricing 9 3 Case „Theater Hagen“ 10 3.1 Review of the criteria for application 10 3.2 Description of used methods 11 4 Conclusion 13 5 Reference 14 List of figures 1.1 Interdependence between criteria....................................................................4 1.2 Criteria for market segmentation.....................................................................7 1.3 Theatre hall plan...............................................................................................11 1.4 Pricing table......................................................................................................12 Introduction Revenue Management is pioneered by American airlines and is in practice since the “Airline-Deregulation-Act” from 1978. Since this act the airlines are free to set their prices the way they want to. Most of the airlines used this new opportunity to take advantage of their customer’s different levels of price sensitivity (Kimms & Klein, 2005, p. 2). Theoretically revenue management is part of the micro economical price theory and is often regarded as second degree price discrimination (Hermann Diller, 2007, p. 497). This paper wants to give an overview over the theory behind...
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...Price Differentiation and Two Part Pricing Strategy of Amazon By: Sonal Uban Amazon.com is an American international e-commerce company headquartered in Seattle, Washington. It is the world's largest online retailer[1] that started as an online bookstore, but soon diversified, selling furniture, food, toys, and jewelry among other things. [2] The company also produces the popular Kindle e-book reader and the Kindle Fire tablet computer—and is a major provider of cloud computing services. [3] Amazon is considered the fourth most successful startup company of all time by market capitalization, revenue, growth and cultural impact.[4] Amazon’s e-commerce strategy is multi-level. In its annual summary, Amazon stresses that “It believes the main competitive factors in its market segments include selection, price, availability, convenience, information, discovery, brand recognition, personalized services, accessibility, customer service, reliability, speed of fulfillment, ease of use, and ability to adapt to changing conditions, as well as our customers’ overall experience and trust in transactions with us and facilitated by us on behalf of third-party sellers”. [5] The key to realizing and achieving all these factors lie in Amazons strategy. This paper will explore how Amazon is employing price discrimination and two- part pricing system as its strategy to realize its goals on profit. Background In order to maximize their revenue, Amazon has to first learn...
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...There are four main factors retailers consider when setting a retail price. The four factors are (1) the price sensitivity, (2) the cost of the merchandise and services, (3) competition and (4) legal restrictions. Some retailers also often use high/low pricing strategy. High/low pricing is a type of pricing strategy that usually small to medium size retailer firms’ use. Mostly firms will charge you at a high price and after the demand for the item has decreased, the firm will then lower the cost and sell it to customers at a discount price. The high/low pricing has some benefits. The advantages are that this strategy increases profits because high/low pricing lets retailers charge a higher price to customers who are willing to pay and lower the price for price-sensitive customers who are waiting for the sale price. It also creates excitement, sales and promotions are always something to look forward too. Moreover the merchandise sells. Sales allow retailers to get rid of slow-selling merchandise. (Levy & Weitz,2012, p.373). Another strategy that retailers use is the “Everyday Low Pricing” (EDLP) strategy. “Many retailers, like supermarkets, home improvement centers, and discount stores use EDLP. This strategy emphasizes the continuity of retail prices at a level somewhere between the regular non sale price and the deep-discount sale price of high/low retailers.” (Levy & Weitz, 2012, p.372). Some advantages of the EDLP are that it assures customers of low prices, it...
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