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Find 2 companies in the geographical location you live in and find out if they "price discriminate." Why do these 2 companies "price discriminate?" In what ways do they "price discriminate?" Have these companies faced any negative feedback or press in terms of their pricing behavior? How is Chapter 10's treatment of price discrimination similar to any pricing strategies marketing people discuss? How is it different?

Chapter 10 covered:
Consumer surplus
1st degree price discrimination
Group pricing
Maringal benefit
Markup pricing
Network externalities
Personalized pricing
Price discrimination
Promotional pricing
2nd degree price discrimination
3rd degree price discrimination
Total benefit
Two-part pricing

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The geographical location where two companies are located is Cincinnati. The two companies are Procter & Gamble, and Kroger. Both these companies price discriminate on a wide range of products. These companies price discriminate because they want to charge different prices from different market segments. Consider the example of Procter & Gamble; it makes detergent under the brands Ace, Ariel, Bold, Dash, Gain, and Tide. Each brand of laundry detergent is priced differently. Each brand is targeted at a different market segment. Similarly, consider the example of Kroger. It uses different sales and discounts in different locations. It adjusts prices through discounts so that it can charge different prices for the same product at different store locations. It also gives coupons from its website for the cost conscious customer. The coupons can be redeemed at Kroger stores. The purpose is to target different segments of customers.
None of these companies have faced negative feedback or press in terms of their pricing behavior. Procter & Gamble does not face negative press because it differentiates its detergents. Ace looks ...

Solution Summary

The answer to this problem explains Price Discrimination. The references related to the answer are also included.

See Also This Related BrainMass Solution

Social Welfare Implications of Price Discrimination

1) Price discrimination is often defended on the basis of equity (Charge less for the poor than the rich!). Is this the only rationale for price discrimination?

2) If a market price is determined by a dominant price leader, what happens to the price (gets higher or lower) if the number of the followers increase? (First review Figure 11.2 on page 504.)

(See attached diagram).

3) What is transfer pricing? Give an example.

4) Discuss the social welfare implications of price discrimination

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