What happens when you walk in UB City, Bangalore for shopping shoes? You'll get brands like Gucci, Salvatore Ferragamo, Jimmy Choo, and Burberry. But how do a showroom selling these brands segment their products as per price when all of them are premium products and pretty expensive?
How do you handle Price Discrimination when you can't segment consumers?
When you can't handle price discrimination by customer segmentation, you let consumers reveal their selections based on their willingness to pay. This is Price Discrimination by Self-Selection!
Similarly, consider taking an Ola/uber. You have the option for Share rides, Normal rides, as well as Premium Rides. Depending upon your needs, you nook cabs. For Example: If you are short on cash, you might prefer a Share ride. If you have to go to a high-end party and want to reach the earliest, you might prefer a Premium Ride. In case you don't have any cash, you now also have the option of availing rides on Credit!
The above is a classic example of Price Discrimination by Self Selection (Second Degree Price Discrimination) - where the consumer chooses/selects a product depending on their price sensitivity.
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