Wednesday, March 3, 2010

Segmented Pricing

Segmented Pricing

Awers Inc. manufactures and sells red salmon caviar both online and at a brick and mortar retail location. Awers practices SEGMENTED PRICING because they sell their “product at two or more prices, where the differences in price is not based on differences in costs" (Armstrong and Kotler pg. 275). For example, a 200-gram can of caviar costs $5.99 in the retail store and only $5.90 online. This price difference is not due to costs because there is only one factory that makes this product and then it is distributed to the retail store and the online store. Online there is an $18 fee for special refrigerated shipping and handling, but this does not affect the price, since it is an add-on price. The segmented prices reflect differences in demand as well as customer perceived value.



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