There are many valuable techniques and tactics that markets widely accept when deciding how to charge prices for their goods or services. One such tool is known as price segmentation, and it is the second most powerful and used pricing tactic that, however, is not considered entirely fair by some people. This marketing strategy is based on charging different customers different prices for the same or similar product, but companies may use it provided that they prove to have various costs to serve or unequal demand. This technique is frequently confused with price discrimination though there is a significant difference between them.
First of all, the reason for considering them a single technique with different names is that both of them are structured on charging people diverse prices. Nevertheless, price segmentation requires firms to have strong arguments for adopting such a strategy, and it is focused more on reducing prices for some groups of people than on increasing them. On the contrary, price discrimination is an illegal tactic applied by companies that want to get as much income as possible. That is why they generally make their prices higher for specific persons who appear to look like being ready to pay more.
Therefore, the price segmentation system may be considered rather fair and even necessary. It allows companies to regulate their incomes and expenses, while some persons who objectively cannot earn much, such as students, children, the elderly, or people with disabilities, also get an opportunity to purchase products or services. What is more, even when this tactic is used to provide additional discounts or coupons to people with average or above-average earnings, it is still appropriate. Such individuals are also pleased to save money sometimes and spend it on other goods. Thus, it is possible to state that firms should not be required by law to always charge the same prices regardless of who it is sold to. Price segmentation is a unique and powerful tool that is helpful for both companies and customers.