Price discrimination

Price discrimination

Describe a price discrimination opportunity your chosen company faces - direct, indirect, or bundling. What advice/recommendations would you give the company?
I went to work for the phone company right out of college in the early 70's. Ma Bell was THE classic example of a monopoly. You did not own any of the equipment, not even the telephone itself it was all part of a lease (sort of) agreement. The Phone act of 1984 broke up the Bell Telephone Co. into what many people called the Baby Bells and opened the door to competition as well as ownership of the equipment and introduced Price Discrimination in a competitive way for the first time to the Phone companies.
Most businesses charge different prices to different groups of consumers for what is more or less the same good or service! This is price discrimination and it has become widespread in nearly every market and now includes your Telephone companies. Price discrimination or yield management occurs when a firm charges a different price to different groups of consumers for an identical good or service, for reasons not associated with costs. The phone companies basically had Residential, Business and Long Distance markets. It is important to note that charging different prices for similar goods is not pure price discrimination. We need to distinguish between price discrimination and product differentiation. Product differentiation gives the supplier greater control over price and the potential to charge consumers a premium price because of actual or perceived differences in the quality and/or performance of a good or service. Conditions required for discriminatory pricing include differences in price elasticity of demand between markets: There must be a different price elasticity of demand from each group of consumers. The firm is then able to charge a higher price to the group with a more price inelastic demand and a relatively lower price to the group with a more elastic demand. That was and probably still...

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