VCE Stuff > VCE Business Management
Business Manangement Examples
jsimmo:
--- Quote from: coblin on April 03, 2008, 11:37:46 pm ---Well, the reason why outer-regional areas have higher prices is because of transportation costs. National pricing just means that people living in other areas have to share the burden of paying for the transportation costs. This is because under national pricing, the price corresponding to maximum revenue is approximately the average of all the individual local prices.
--- End quote ---
My question was, 'Do supermarket chains price products according to the socio-economic status of a particular area?'
Collin Li:
--- Quote from: jsimmo25 on April 03, 2008, 11:43:41 pm ---
--- Quote from: coblin on April 03, 2008, 11:37:46 pm ---Well, the reason why outer-regional areas have higher prices is because of transportation costs. National pricing just means that people living in other areas have to share the burden of paying for the transportation costs. This is because under national pricing, the price corresponding to maximum revenue is approximately the average of all the individual local prices.
--- End quote ---
My question was, 'Do supermarket chains price products according to the socio-economic status of a particular area?'
--- End quote ---
They might, but usually only if it maximises revenue (they have shareholders to please!). I have explained in the earliest posts how this may maximise revenue.
jsimmo:
--- Quote ---Christopher Zinn, a spokesman for consumer magazine Choice welcomed the step by Aldi and said it would help save consumers money.
"We'd say that this is a terrific move and it gives transparency to pricing in regional areas and we're pretty sure there will be savings, even though Aldi is already substantially cheaper," Mr Zinn said.
--- End quote ---
Im confused, lol..
do you agree with what 'Mr Zinn' is saying?
Collin Li:
No, I disagree with what Mr Zinn is saying. He believes national pricing is a terrific move. I believe it is just a hindrance to competition and efficiency. What's worse is that it could end up punishing the poor in that they will have to help contribute to the less competitive prices of ALDI - essentially subsidising the rich and the rural. I only see things this way because I see like an economist.
In terms of ALDI, the business, it may be a good decision. They sacrifice a small amount of revenue (by losing flexibility in pricing) for the "social responsibility" image, which may very well cause a positive effect on revenue - and possibly to avoid ACCC fines. The reason why they can manage to pull off the "social responsibility" image is because the adverse side-effects of them are quite hard to explain. The average uninformed (about economics, that is) reader would not understand it very well.
brendan:
I really don't understand why everyone is getting worked up about this. Firms price discriminate more often than you think.
Examples:
- "Concession prices", "Discounts for seniors"
- product bundling: "throwing in a Free Kids passes to disneyland" in order to charge families less than other tourists who may have more cash to burn, charging higher prices for return flights on Saturday rather than sunday (i.e. trying to charge business passengers more than regular passengers)
Cash back offers (those who bother to fill out the forms will receive a lower price than those who didn't)
etc etc.
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