Elliott, Caroline

English

University of Huddersfield Repository

University of Huddersfield RepositoryElliott, CarolinePrice discrimination isn't only about pink razorsOriginal CitationElliott, Caroline (2016) Price discrimination isn't only about pink razors. The Conversation. This version is available at http://eprints.hud.ac.uk/27186/The University Repository is a digital collection of the research output of theUniversity, available on Open Access. Copyright and Moral Rights for the itemson this site are retained by the individual author and/or other copyright owners.Users may access full items free of charge; copies of full text items generallycan be reproduced, displayed or performed and given to third parties in anyformat or medium for personal research or study, educational or not-for-profitpurposes without prior permission or charge, provided:• The authors, title and full bibliographic details is credited in any copy;• A hyperlink and/or URL is included for the original metadata page; and• The content is not changed in any way.For more information, including our policy and submission procedure, pleasecontact the Repository Team at: E.mailbox@hud.ac.uk.http://eprints.hud.ac.uk/February 5, 2016 4.21pm GMTCaroline ElliottProfessor of Industrial Economics, Director of Teaching and Learning - Business School,University of HuddersfieldWould you pay more for a pink razor? High street stores Boots and Superdrug have beenbusy reviewing how they price their products after campaigners claimed products targeted atwomen were marked up on the shelves. Both retailers seem to have acknowledged thatfemale customers may have been getting a bad deal. Widespread price discrimination like thismight appear unfair but in truth, it’s happening all the time, everywhere, to all of us.It’s not restricted to two shops, who are at least doing something about it by looking again atproducts and urging action from suppliers. Allegations of brands and retailers chargingdifferent prices to men and women have been seen on both sides of the Atlantic. A 2015report from the New York City Department of Consumer Affairs surveyed around 800 productswith male and female versions across more than 90 brands and concluded that on averageproducts aimed at women cost about 7% more. Women’s personal care products were 13%more expensive than comparable men’s products; women’s clothing was 8% more expensive.Pink ones are better? REUTERS/Paul HackettPrice discrimination isn't only about pink razors http://theconversation.com/price-discrimination-isnt-only-about-pink-r...1 of 4 15/02/2016 10:16Discrimination by degreeWhen comparable products targeted at men and women are sold at different prices this is astraightforward example of price discrimination.In economics there are considered to be three different types of product differentiation. First-degree or perfect price discrimination exists when sellers are able to charge a different priceto each potential buyer, with the seller able to determine the unique maximum price that eachbuyer is willing to pay. It’s difficult to find examples of this pricing strategy, but the souks ofMarrakech may be one good one, where traders agree prices after assessing buyers’willingness to pay and their bargaining skills.Second-degree price discrimination arises when consumers are charged different prices forproducts based on quantities purchased. So the price of a single toilet roll will differ dependingon whether a pack of two, four, or nine are purchased, and retailers often offer multi-purchasediscounts such as “buy two, get a third free”.Then there is third-degree or multi-market price discrimination, when sellers charge differentprices for similar products to different groups of consumers. This is where things can start toseem a little unfair.In this case, sellers estimate the differing willingness to pay for products for groups ofconsumers and then price accordingly. So rail operators around the world often offer seniorcitizen or young person discounts on rail tickets whether they are required to or not, identifyingthese groups of consumers as more “price sensitive”. Better to have them on board than notbuying at all.In other settings, sellers may realise that groups of consumers have a different willingness topay but rely on these consumers self-selecting into more or less price sensitive groups. TheREUTERS/Darren StaplesPeter Clark, CC BY-NCPrice discrimination isn't only about pink razors http://theconversation.com/price-discrimination-isnt-only-about-pink-r...2 of 4 15/02/2016 10:16ubiquitous coffee shop is a great example of this. The economist and journalist Tim Harforddescribes how your local Starbucks or Costa chooses base prices for a “regular” cappuccinoor latte, but then layers on mark ups for extra shots or flavoured syrup which are relativelylarge. It means sellers can make a greater profit from less price-sensitive consumers willing topay for modifications to their drinks.By law, retailers cannot announce and charge different prices to men and women. But, if theythink one group is less price sensitive than another, then they can differentiate productsslightly and charge a higher price or higher mark up for the products bought by the less pricesensitive group.There have been many recent examples of products that fall into this category – as diverse aspens, jeans, razors and scooters – where seemingly minor differences, for example in productcolour, result in very different prices which cannot be explained by cost of productiondifferences. If a shop charges more for a razor with a pink handle, it is because the retailerthinks some consumers are less price sensitive, and will be willing to pay a higher price for apink item. In theory, this is not necessarily gender-specific, of course, but it’s pretty easy tosurmise the thinking behind the strategy.It is less a cause for concern when similar products are positioned near to each other instores, including online stores, with prices easily identifiable. That helps consumers tocompare products and prices, and choose the product most in line with their preferences.Some people will be happy to pay a bit more for a pink razor; others will not. One benefit ofthe recent media attention is that it highlights to consumers the choices they face. Hopefully itwill lead to better informed purchases.Anyone can buy a pink razor, but a line is crossed when price discrepancies occur forproducts which are gender specific but which cost pretty much the same to make as a similaritem for the other gender. Jeans made from identical fabric but cut slightly differently accordingto gender, for example. Charging more in this case is unfair and should be ended. This couldbe enforced legally, but we should hope that better-informed consumers will choose productsfrom retailers that do not discriminate in this way and which will give our high street retailersthe incentive to drop the gender discrimination.Tweet54Share12RetailDiscriminationGenderBusinessGender politicsPharmacyUpselling opportunity. Pierre-Olivier Carles, CC BY-NC-NDPrice discrimination isn't only about pink razors http://theconversation.com/price-discrimination-isnt-only-about-pink-r...3 of 4 15/02/2016 10:16Supply chainsPrice discrimination isn't only about pink razors http://theconversation.com/price-discrimination-isnt-only-about-pink-r...4 of 4 15/02/2016 10:16

Price discrimination isn't only about pink razors

Abstract

Similar works

Full text

Available Versions

University of Huddersfield Repository