To Discriminate You Need to Separate

Price discrimination — charging different prices for the same product or service — requires preventing people who pay a high price for an item from being able to buy it at a low price.

This is done by separating the markets — linking the price to different times when the item is bought, such as day or night, weekday or weekend; or different ages of customers; or other ways.

Another market separation gimmick is underscored by a squib in the latest Consumer Reports. Dr. Leonard’s catalog sells the Barber Magic hair trimmer for $12.99, but in the same catalog offers the identical product, called the Trim-a-Pet, for $7.99.

INSERT DESCRIPTIONDr. Leonard’s

INSERT DESCRIPTIONDr. Leonard’s

Other than the names on the packages and a bit of different description, the products are identical; and even the styles of the packages are identical.

Putting advertisements for both packages in the same catalog is a poor way of creating market separation: If I had hair and needed to cut it, I would simply buy the Trim-a-Pet for my personal use and save the $5.

This attempt at market separation might work if done in stores — pet stores could sell the Trim-a-Pet at lower prices than drug or hair-care shops sell the Barber Magic — but without some kind of geographic separation, successful price discrimination can’t occur.

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  1. Randy says:

    identical to the old horse shampoo craze, and even now, the prescription drugs for people vs. pets (which are, in most cases, identical and much cheaper).

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  2. Jacob Robertson says:

    I take a different perspective on this.

    While there is no “geographic separation”, there is a very strong psychological separation here. Even though you’ve assured me that the products are identical, I can’t be positive, and I’m simply not going to take that risk when the reward is only $5. If it was a difference between $500 for human trim, and $5 for pet trim, then I think I’d take the leap. But another part of price discrimination is finding the sweet spot.

    Take the coffee example that I’ve heard quite a few times – if adding extra stuff to your coffee changed the price to $500 you would stick with the cheap coffee. But coffee houses have found the sweet spot at which customers are willing to overlook the inflated price.

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  3. rob says:

    funny that the item numbers are different as well

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  4. AaronS says:

    You said it was a “poor way of creating market separation.” But doesn’t the fact that it is done as it is done demonstrate that something must be working?

    Enough people are buying the expensive model to justify it, apparently.

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  5. frankenduf says:

    I use the opposite rationale- I love Scruffy very much and pamper her- so I bought her the Barber Magic, which is likely higher quality- I never go cheap for my Scruffy- I’ve used it myself a few times, as a bonding thing- but my scalp started to itch real bad…

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  6. Nuclear Mom says:

    Psychological separation can be as effective as physical separation. Women who are hoping to be pregnant will pay more for a pregnancy test with pictures of cute babies on the package; women who hope they aren’t pregnant grab the identical, cheaper product in a plain package. These packages are on the same shelf in the drugstore.

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  7. danny says:

    what, you don’t get cheaper refill blades for the doggie trimmer?!? I’d certainly get the psychologically cleaner human refill blades, then.

    Reminds me of wayne’s world’s “suck-cut”. It sucks as it cuts!

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  8. Jimmy says:

    I claim that the majority of people will not see that the two products are exactly the same. There is some innate belief that something designed for pets would be not as fine or fit for human use. And as Jacob said, even if they did notice that they seemed like the exact same product, would $5 be too much for people to just be sure? For most people, no.

    I also submit as evidence that the items are still up. I would think somebody would notice if nobody was buying the expensive version, and change their prices accordingly. That they’re still selling that indicates that people are not that perceptive.

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