Discrimination in various kinds is always harmful and destructive action, whether it considers more narrow or broader aspects. There is a specific type of discrimination in the business industry, specifically the sales field. Marketers and managers can speculate prices based on customers’ characteristics or buying opportunities. Thus, this paper aims to compare the similarities and differences between price and behavioral discrimination and indicate why it is unreasonable for organizations to apply them.
First Degree Discrimination
Price discrimination is a common phenomenon in the business sphere that can be observed everywhere, from the local supermarkets to the bigger corporations. However, three degrees of price discrimination occur in the selling strategy. The first degree is strongly connected with behavioral discrimination. Companies charge different prices for different people depending on their income and financial abilities. They can gather information about the budget and all financial expenses that create a picture of the possible amount of money an individual will be more willing to pay. For example, organizations that sell already used vehicles, such as cars and buses, might access the data through data mining and gather facts about the customer’s buying abilities.
Second and Third-Degree Discriminations
Second-degree discrimination is broader and targets everyone by implementing certain tools such as coupons, sales, and loyalty cards. Through those instruments, companies can influence the number of goods the clients buy and stimulate them to spend more financial resources in the store. For example, customers who buy more products get it by the retail price, while those who get a single unit pay as regular customers. Third-degree discrimination is similar to the first because it focuses on certain groups and sets prices for each. For instance, a museum can charge less for the children and older people for the entrance but more for the regular adults, although the exposition is the same for everyone.
Differences and Similarities
Those degrees might differ in the determinants that they use to set prices, such as buying history and focusing then e certain population groups. Nevertheless, the purpose is similar – to earn more through the certain specifics of each category. Behavioral discrimination, such as first degree, is inappropriate for companies because it is not fair pricing anymore and is a strongly biased decision. For example, the customer might have a history of massive and expensive buying, but in the present moment, the situation is different, and they no longer can spend as much as they used to. Therefore, they will no longer be able to afford to pay for the product because the seller wrongly identified their buying abilities.
Conclusion
Overall, price and behavioral discriminations have their differences and similarities. They rely on the different aspects that serve as a foundation for the other pricing decisions regarding the financial history and various prices depending on the groups’ specifics. Still, they are similar because the main goal of the discrimination is to increase the company’s income by manipulating the prices using certain customer data. These practices are not appropriate because they are strongly generalized, contribute to overconsumption and make people with different incomes pay a certain amount of money even if it does not reflect the real financial situation.