Price Discrimination

Price discrimination happens when the same goods or products are sold with different prices to different group of consumers. This is also a pricing strategy.

Normally, firms will charge higher prices to the group with a higher price inelastic demand whereas charging a lower price to the group with a more elastic price demand. This is because companies can then achieve a higher profit.

Sample Graph

For example, movie tickets in Malaysia. There are various price range for various age groups. Children below 12 will pay a cheaper price of RM 7 for a movie ticket because they do not have a solid financial income therefore cannot afford services or products that are too expensive because it is out of their budget. Price of movie tickets for adults are much higher such as RM 12. This is because adults are more capable to a proper income. With a different price, they still enjoy the same service. Same cinema seats and movie.






Coupons and Discounts

Giving out coupon and vouchers to customers. For example, Giant may send coupons to their regular customers saying they entitle to a 15% discount off selected products to target on the customers spending habits and trigger them.









Loyalty Cards
Offering rewards such as buy 5 free 1. For example, Ding Tea. If you accumulate and purchase 9 drinks, you get the 10th drink for free. This is to reward those that constantly buy from them and on a high quantity. For one-off visitors, they are liking to be less price sensitive.

References:
http://www.investopedia.com/terms/p/price_discrimination.asp
http://www.economicsonline.co.uk/Business_economics/Price_discrimination.html
http://www.tutor2u.net/blog/index.php/economics/comments/airline-price-discrimination-is-this-an-example
http://en.wikipedia.org/wiki/Price_discrimination
https://www.boundless.com/economics/monopolies/price-discrimination/specific-examples-of-price-differentiation/
http://www.economicshelp.org/blog/7042/economics/examples-of-price-discrimination/
http://www.travelfish.org/blogs/malaysia/2011/12/27/kuala-lumpurs-biggest-scam-discriminatory-pricing-for-foreigners/
http://economics.about.com/b/2008/01/02/real-life-price-discrimination-an-example.htm
http://www.forbes.com/sites/timothylee/2012/06/06/comcasts-obnoxious-price-discrimnation-strategy/
http://www.motherjones.com/kevin-drum/2012/08/price-discrimination