Page 4 - PCM - Pricing strategies Revista

DIFFERENTIAL PRICING

STRATEGIES

SECOND MARKET DISCOUNTING REAL LIFE EXAMPLE

S
econd market discount is a manufacturer
strategy that only can occur if the firm has

two characteristics: (1) The firm has
unused capacity in their production facilities;

(2) There are high transaction costs, which mean
that is difficult to consumers change between

segments. Cinemas Nos is an example of a company that
charges different prices through different
Therefore, companies will try to target different
segments. We can see through the discounts they
markets, consequently different customers, by
made for students.
selling the product at a lower price than the
product’s price in the originally market but higher With the presentation of our student card, we can

than its variable costs. have a special price menu. Menu: Ticket + Small
Menu (Drink+Popcorn)
In this situation, there are three examples of what

firms can do: http://www.portal-cinema.com/
(1) Enter in the new markets with an unbranded http://cinemas.nos.pt/

product

(2) Sell the product in different segments at
different prices (Demographic segmentation, for
example: students, children, and elder people)

(3) Sell the product in different markets at

different prices (geographic segmentation)

This strategy is very criticized by some economists

that consider it as dumping. Despite the idea of
setting prices below the average costs, but

continuing cover the fixed costs is not the right
decision in the long-term.

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PRODUCT AND CLIENTS MANAGEMENT