Page 211 - DMGT510_SERVICES_MARKETING

Services Marketing

Notes The discrimination is carried out on the basis of groups of users, points of use and types of use.

Groups of user discrimination: Here the same service is priced for different groups of users
depending on their ability as well as willingness to pay.

Example: Haj pilgrims are charged lower tariffs when compared to the business or
leisure traveller. Similarly, the Government of Maharashtra has floated a controversial proposal
to differentially price school tuitions based on the parent’s income.
But essentially this pricing is based on fine segmentation and the customer’s willingness to pay.
Thus mobile phone tariffs were unbelievably high (when compared to prevalent rates) when
introduced and targeted first to the innovators and then to the early adopters. Indian Railways
offer lower tariffs to price-sensitive senior citizens; the rationale could also be social, intended
for the pensioners. It is easier to do this kind of discrimination in services than for goods as the
customer cannot resell the lower priced offer to someone else profitably.

Points of use/consumption discrimination: Different prices are charged from different points of
service delivery. This is leveraging the locational advantages of the provider. Thus, retail stores
have different price tags in up-market or posh localities than in suburban locations.

Example: The Indian telecommunication department has different tariff structures for
rural areas and for metros. Hotels located near airports or downtown areas have higher tariffs;
the Taj and the Welcome Group hotels will, in Agra, have different tariffs for those rooms that
give an unrestricted view of the Taj.
Time-of-use discrimination: A service industry is usually open to the vagaries of demand and
seasonal demands, as it cannot be stored and resold later (perishibility) and has to be produced
and consumed at the same time (inseparability).

Example: Hotels in Goa would have unoccupied rooms and Esselworld will have only
romantics and rain-dancers during the monsoon. Similarly, while the matinee show in a movie
theatre will have vacant seats, the evening shows could be overflowing.
Thus, during peaks, customers will be willing to pay more (notice higher flight tariffs during
the summer holiday season as well as during winter!). Thus also, the telephone and mobile
services companies usually have lower (or even zero tariff between two preset numbers) tariffs
during off-peak periods like 9 p.m. onwards up to 9 a.m.


Sandeep’s ‘Space Bar’: A College Stores’ Pricing Strategy
Case Study
andeep’s ‘Space Bar’ is a merchandise outlet in an academic campus, which has
engineering, medical, architecture, and management and hotel management colleges.
SSandeep’s ‘Space Bar’ sells new and used texts, stationery and related products,
signature goods (sweat shirts, T-shirts, hats, and so on, with the school’s name and emblem),
newspapers and magazines, candy and gum, gift items and greeting cards, small appliances,
and dormitory products (such as health and beauty aids, food items, and laundry supplies)
to current students, their families, university personnel and alumni.
Contd...

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