A business firm practicing price discrimination will be charging different prices in different markets for a same product. Elucidate your experience?

Any global international manufacturing company has the same approach to different markets. The selling price from factory to sales divisions in different markets are also different. For example my previous company manufacturing domain is selling the same spec product to Middle East and to CIS with ex factory price gap up to 40%. Reasons are particular market competition and also import duties, tax structure etc. 

1.    Buying an Airlines Ticket: In most of the times, buying an Airlines ticket through internet will be cheaper than buying through a travel agent

2.    The price of same cosmetics is different at centrally located upscale super market than the convenience store located at street corner

3.    Buying a hotel room on line is cheaper than the price offered at reception counter of the same Hotel

The purpose of price discrimination is to capture the market's consumer surplus and generate the most revenue possible for a good/services.

some countries has small market but big spending money, other countries has big market but lower spending money, you can raise price in small market, but bigger one you can relay on volume of sale for profit.

different because: $ - expert - cost

Thanks ,

Actually , I did not pass in this situation through jobs i worked in , so i will wait with you  colleagues answers to know their experiences .

Price discrimination is a pricing strategy that charges customers different prices for the same product or service. Price discrimination allows a company to earn higher profits than standard pricing because it allows firms to capture every last dollar of revenue available from each of its customers. 

There are three types of price discrimination – first-degree, second-degree, and third-degree price discrimination.

1st degree

Discrimination, alternatively known as perfect price discrimination, occurs when a firm charges a different price for every unit consumed.

The firm is able to charge the maximum possible price for each unit which enables the firm to capture all available consumer surplus for itself. In practice, first-degree discrimination is rare and non-compliant

2nd degree

Here price discrimination means charging a different price for different quantities, such as quantity discounts for bulk purchases. This usually co relate with festive seasons, holidays and celebration time

3rd degree

Here discrimination means charging a different price to different consumer groups. For example, mass transit public transport travelers can be subdivided into commuter and casual travelers, and cinema goers can be subdivide into adults and children. Splitting the market into peak and off peak timings use is very common and occurs with gas, electricity, and telephone supply, as well as gym membership and parking charges. Third-degree discrimination is the commonest type.

Necessary conditions for successful discrimination

Price discrimination can only occur if certain conditions are met.

1.      The firm must be able to identify different market segments, such as domestic users and industrial users.

2.      Different segments must have different price elasticities.

3.      Markets must be kept separate, either by time, physical distance and nature of use, such as Microsoft have personal edition versus enterprises editions for windows and MSOffice as ‘Schools’ edition which is only available to educational institutions, at a lower price.

4.      There must be no seepage between the two markets, which means that a consumer cannot purchase at the low price in the elastic sub-market, and then re-sell to other consumers in the inelastic sub-market, at a higher price.

5.      The firm must have some degree of monopoly  power.  

If a company has a unique product selling in high volumes then surely it has advantage of a leader price which can be minimum in some markets and maximum in some markets others in the category will be following the price after the leader priced product.

Just lately I've read an article about IKEA practise. One customer was surprised why a desk's price is higher in Poland than in Sweden although it was produced in Poland. After a while IKEA answered that they are customising the prices to the market. In this case the prices of such category desks were higher so IKEA set the price at the similar level.

Pricing policy may change from market to market and from customer to customer.

1) Small market/customer would not get price benefit (discounts) as the volumes would not be high due to nature of market/customer business.

2) Big market/customer would be in a better position of getting price advantage as they will operate in volumes.

Eg: Supplier doing business in Kuwait, Qatar would not have better prices in comparison to Iraq, Saudi Arabia, Dubai, Iran, Egpyt.

I fully agree with the answers been added by EXPERTS...............Thanks.