'Genius Marketing: Part 2. DVD bargain buckets' Blog discussion

This is the discussion to link on the back of Martin's blog. Please read the blog first, as this discussion follows it.
Please click reply to discuss below.

Comments

  • we've been programed by the telly etc to want 'things', we need to take control of our lives and resist the urge to by on impulse, or even buy for that matter. A bank manager in the 60's once told my dad, and I quote ''you've convinced your self you need the equipment, go away and convince your self you don't'',
  • poppy10_2
    poppy10_2 Posts: 6,568
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    edited 5 January 2011 at 12:10AM
    Differential pricing is a very interesting concept, although my understanding of it is different from the example given in this blog.

    Differential pricing occurs when vendors charge different prices to different customers for essentially the same product, based on their ability and willingness to pay. So for example a Mcdonalds might charge £5.99 for a burger meal in a railway station, yet charge only £4.99 for the same meal in their outlet 100 yards down the road outside the station. Marks and Spencers might charge 99p for bottle water at motorway service stations but only 89p in their regular stores. Topshop might charge £30 for a top in their posh Oxford Road shop and yet charge £25 in their shops in poorer areas. An airline might sell seats at £3.99 two months in advance, but ramp up the price to £39 for the same seats the week before the flight.

    It's all about gauging the customer's demand and ability to pay in order to set the maximum price that they will tolerate in different settings. The key part though is that it is essentially the same product being sold by the same vendor at differing prices.

    In the blog example, the products are completely different, as are the vendors. It's understandable that Morrisons would sell things cheaper than HMV's high street stores, just as it is understandable that Lidl sell things cheaper than Waitrose. That's not differential pricing, that's just basic competition and market forces. Also the products are not the same. A cheap-o "3-in-1" DVD set would not appeal to me at all, even at £3.99. If I want to add a DVD to my collection, then I want everything that goes with it, including the individual boxes, liner notes, and DVD extras that are usually missing on the multi-film discs. If the film isn't so good that I want to own it, then I would just download it (legally of course) or watch it on Sky/Virgin box office. The "3-in 1" DVDs do not have the equivalent value to the same three films sold as individual DVDs, and so the prices are not directly comparable.

    It's not the same product, and it's not the same vendor, so this not an example of differential pricing - just different shops selling different things at different prices, or free market capitalism.

    (Sorry for the economics nerdishness, apologies for any errors.)
    poppy10
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