Price Discrimination

Topics: Marketing, Supply and demand, Pricing Pages: 3 (873 words) Published: August 28, 2013
3 price discrimination

With the rapid development of economy and market, the price discrimination phenomenon is more and more universal and the form is more and more multiple. Price discrimination refers to companies selling exactly the same or similar production to different customers at different prices.

1In November 2006, the major IT Web site noted, Lenovo in the United States launched a holiday promotion, and four models of ThinkPad were under undercut. TP R60 price was down from $ 640 to $ 565, the maximum price decrease of 33% and 42% respectively. The discount in United States was bigger compared to China. (xueqin Tong, yunyun Huang, Special case of price discrimination, June 2007).

2As we all know, the global laptop PC market in general is not the monopoly structure, there are many well-known brand laptops, such as Asus, Apple and HP. Lenovo's TP Series laptop is different. ThinkPad is originally created by IBM high-end business laptop. Consumers’ awareness of TP is the leader of laptops and it represents high-end, technical, excellence, honour, and identity.

TP series are not cost-effective terms. There are not so many companies competing with TP. It is also difficult for other computer companies to collude with TP and to create an avenue, so the ThinkPad series are more influential in the market. Lenovo TP pricing strategy at China and abroad obviously is a typical third-degree price discrimination. 3price discrimination

In general, price discrimination is divided into three different types: first degree price discrimination, second degree price discrimination and third degree price discrimination.

First price discrimination is firms charge consumers the maximum price they are willing to pay. In reality, it is difficult to know the highest price for products consumers are willing to pay, so complete putting the first degree price discrimination into practice is almost impossible. Second degree price discrimination is the firms...
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