RSM250H1 Lecture Notes - Lecture 8: Price Ceiling, Price Floor, Price Discrimination
Document Summary
May price below to get customers in early stages. New companies may worry more about attracting customers than profits. Easy to communicate, fair to manufacturers if retailer has same markup on all products. Works if main driver of consumer value is economic value. Ask people how likely they are to buy. Survey useful for new product with experiential value. Flea market, buying house, buying car, pay as you wish. Need to be able to identify consumer segment, force different segments to pay different price, prevent resale. Different groups are charged different prices when consumer type not observable. Airlines, rental companies offer different prices based on class. Sellers consider psychology of price, not just economics. Spend 2 hours driving to store, feel that you must make purchase to make up for 2 hours. Unfair if it costs nothing but producer charges . Fairer if it costs and producer charges . Large proportion of customers with low willingness to pay.
