Price Discrimination

Often we see various discounts for all sorts of things. As long as you belong to some demographic group you may be eligible for some type of discount. There are discounts on a college education, car repairs, or coffee. One of the most common price discrimination is senior citizen discounts. We might not be apt to look at these discounts as price discrimination, but that's exactly what they are: charging different groups of people different prices for the same product or service.

Our initial reaction may be either "that's not fair" or "it's good to cut someone a break who has a lower income." Let's take the last reaction: Does price discrimination help senior citizens because they are on a fixed income. The truth is, "A 2007 study shows that poverty rate among adults ages 19 to 64 is 15 percent but among people 65 and over is only 13 percent. Certainly there are struggling seniors, but as a group they are actually better off than the general population." price discrimination. So the real motive behind this price discrimination is increasing business revenues. Price discrimination takes advantage of groups who in one way or another have spending power. "Price discrimination exists because it is profitable. It allows sellers to capture demand along different parts of the demand curve." Just Marketing Blog Senior citizens in America “hold 80 percent of the country’s personal net worth" seniors. Making them a target market for many industries. If a senior citizen is going out to get a cup of coffee you might as well make sure they buy your cup of coffee. 

Now our other reaction to price discrimination, "that's not fair." Using senior citizens as an example; they have enough money but still get a discount, that doesn't seem right. Remember price discrimination happens all the time in more discreet ways that we accept. Like charging different prices on soda based on packaging or different prices on a meal based on location. In the case of senior citizens I may not have a satisfactory answer but it is just not strictly fair. As far as business goes its good for the economy. "Thirty-five percent of our population is over 55 years old, and these very affluent senior citizens control almost 45 percent of the disposable income of our country." senior citizen purchasing power. It is good for everyone to have a group of people with money to spend, to use it and fuel the economy. Price discrimination is one of the ways to incentivize that spending.