Price discrimination context-rich problem
and is replicated here as part of the SERC Pedagogic Service.
Students prepare an essay to explain pricing strategies for two different companies. One of the firms will find price discrimination difficult as the product can be easily resold.
Context for Use
Description and Teaching Materials
You have been hired to be a consultant on pricing strategies for two different companies. Both of the companies have similar customer bases in that their customers fall into two well defined groups: college students and young well paid professionals. The first company is a trendy bar. The bar is currently seeing many young well paid professionals as customers, but quite a bit fewer college students. The bar has run a marketing campaign to attract more college students, but that only caused a small increase in the number of those customers. The second company is an electronics store selling items such as ipods. This company is also currently seeing many young well paid professionals as customers, but quite a bit fewer college students. The electronics store has also run a marketing campaign to attract more college students, but that also only caused a small increase in the number of those customers. Both of these companies want to know if they could make some changes in their pricing strategy to increase their sales to college students and thereby increase their overall profits. Prepare a report for each company. Each report should be one-half page in length. In each report, make a recommendation to the company detailing what they must do to follow your recommendation and explain why they should follow your recommendation.
price discrimination context-rich problem (Rich Text File 38kB May28 09)