In economics, there are many concepts which we can relate it to our day to day life. One such concept is the price discrimination. So what exactly does the price discrimination means?
PRICE DISCRIMINATION~
Price discrimination is basically a strategy in pricing where the customers pay different price for the same product purchased or the services delivered. In other words, the price varies from customers to customers for the good sold or services offered. In prompt pricing discrimination,the seller charges each customer the maximum price that he or she will pay. In more common form of price discrimination, the seller divide the customers into different segments or groups based on certain characteristics or attributes and charge them with different price.
Example-
We the students of IBA will get diwali holiday in November. So we all have booked the tickets in advance to avoid last minute rush. In spite of booking the tickets too early, we have paid high price for the tickets. So here the airlines have use the price discrimination strategy. Since they know that during the festivals the bookings will be large in numbers and there will be increase in the demand, they increase the price of the tickets as they know that the traveler will be bound to pay for the same as they do not have any other option. But if somebody travels during the non-festival time, the airlines will charge less than before for the same service because they know that during this time, the number of bookings will be less.
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