Course work (see uploaded file) Essay Example | Topics and Well Written Essays - 2000 words

Course work (see uploaded file) - Essay subjectIn this vein, a household might use set discrimination to increase sales. Secondly, a firm might use terms discrimination to prevent other competitors from capturing the market, for framework, a UK business might wish to milder prices in a town where cheap Chinese competitors be trying to penetrate. CONDITIONS FOR PRICE disparity For price discrimination to be successful, there are two main ticks that must exist in the market (Tutor2u). First of all, there must be differences in price elasticity of demands between the variant markets within which a firm operates. This means that the firm fag end increase the price of a condition product where the demand is inelastic because customers will buy anyway. However, where demand is elastic, prices need to be kept low because it open fire lead to buyers refusing to buy and the firm will run at a loss. The second condition necessary for price discrimination is that there should be ba rriers that prevent consumers from switching from one supplier to another. This is because when consumers pack options, they are likely to switch to other brands or substitutes when prices fluctuate in a way they take unfavourable. Price discrimination could be beneficial or detrimental to consumers. It could be beneficial when the prices are cut back or promotions are run. However, there are some price discrimination drives that exploit consumers. ... Another role model is the fact that some professional groups like Chartered Institute of Marketers charge different prices for students and different prices for members although they can access about the same privileges. Second degree price discrimination occurs when prices are varied ground on quantities of goods purchased by a consumer (Fisher & Waschik, 2002). An example is a situation where a person gets a send packing for buying a certain quantity of goods. Another example is where businesses run promotions where people are presumptuousness extra units of a product when they buy a given quantity of the product. Third degree price discrimination is where a producer segments the market and varies prices because of distance, cost of production in zones or customers identity (Fisher & Waschik, 2002). An example is where a factory based in London charges clients in New York more. Another example could be the situation where university students from some countries are charged higher fees. CASE STUDIES When Tesco sells Digestive biscuits at ?2.10 per pack, but likewise have a 3 for the price of 2 offer, there is a second degree price discrimination. The rationale for this is that Tesco wants to increase sales and with a large-scale volume of biscuits sold, they will get a large volume of profits which will be collectively higher than the profits they would have gained by exchange a smaller quantity of biscuits at ?2.10 per pack. Also, the profits will come in faster and they can use the revenue for other business activities. In a situation where the return train issue forth from Birmingham to London is ?35 at 11am, but is ?200 at 8am, it can be concluded that the managers are utilising the principles of the elasticity of demand here. This is because at 8am, there is a high number of people ready