Janie, a farmer, sells a dozen ears of corn to her neighbor for $1/dozen. She sells a dozen ears of corn to the small market down the street for $.75/dozen. She sells corn to the chain grocery store in town for $.50/dozen. Janie is using:________. a. differential pricing b. discriminatory pricing c. price skimming d. illegal pricing
Business · High School · Thu Feb 04 2021
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Janie is using a. differential pricing.
Differential pricing, also known as price discrimination, is a strategy where a company sells the same product to different customers at different prices. This can be based on a variety of factors, such as the customer's willingness to pay, the quantity purchased, the customer's location, or any other market segmentations. In Janie's case, she is selling her corn at different prices to her neighbor, the small market, and the chain grocery store. This likely reflects her strategy to maximize her profits by charging different prices to different types of customers who she believes has different levels of willingness to pay or based on other considerations like the volume they purchase or the ongoing business relationship she might have with them.