Price Determination

For this discussion, you are asked think of a business you will like to start. Briefly describe your products and services. Decide which type of price discrimination would work best for your products or services. Be specific and consider the real applicability of your choice. Explain in detail.

Price discrimination occurs in a very competitive market environment when a given seller decides to sale goods at different prices to the customers of the goods and services.  The sellers in such a scenario try to charge the consumers the exact prices that they are willing to pay to acquire a given product or service. The business I will like to start is the ice cream business. The firm will offer cold, flavoured ice cream products to its customers. By starting this business, I will be able to sale flavoured ice cream products to the customers using the prices that they will be willing to pay to acquire the products.

There are three types of price discrimination which are first degree, second degree and third degree. The ice cream business will use the third degree of price discrimination whereby the customers will consume the same kinds of products but charged different prices for the unit consumed. The firm will categorize its customers into three segments like students, potential customers and the visitors in the United States. The students will be charged less to boost their demand. Besides, the other customers will be charged higher than the students. And the visitors will pay more prices for similar units of ice cream consumed. This will allow the business to collect as much profits as possible by charging the customers the prices that they are willing to pay. The use of price discrimination is beneficial to the ice cream business since it will give it an opportunity of remaining profitable as it serves more customers. Besides, the use of price discrimination is able to encourage the consumers to purchase more products.

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