Thursday, July 26, 2012

Do you think price discrimination through coupons is fair? Should there be laws against this behavior? Why or why not?

By definition, manufacturers, retailers, and marketing companies use coupons providing discounts to different market segments to drive traffic and increase the profitability of the product. The action of selling a product for different prices to different buyers is in itself not discriminatory or unethical in a legal sense. It is difficult to imagine any organization selling a product not offering a discount on their products or services using coupons or some other marketing scheme as a way to encourage buyers to try their products. Coupons and discounts may be used as a reward for loyalty as well as for inducing new customers to switch brands.
As to the issue of fairness, while it may annoy you someone is getting a better bargain than you are, it is not inherently unfair. For example, the local cable company offering new customers a twenty dollar per month price for a limited term for the same service you pay nearly forty dollars a month. The cable company is relying on you to remain loyal to their service at forty dollars per month, or it is incumbent on you to negotiate the same deal when you become aware of the pricing differential.
As a general statement, marketing practices are reasonably well-regulated. At the federal level, the Federal Trade Commission monitors practices of business for fairness. The Bureau of Consumer Protection protects consumers from abuses in advertising, telemarketing fraud, and identity theft. Local Better Business Bureaus monitor practices locally and investigate complaints against businesses initiated by consumers who believe a business practice has treated them unfairly. Congress investigates incidences that are brought to their attention and proposes new regulations to resolve consumer complaints. There are laws against coupon fraud, which occurs when someone uses a coupon for something they have not purchased and obtains a financial benefit. It appears the regulation of coupon discounts and price discrimination doesn't need additional regulation.
Finally, companies are very invested in maintaining their good reputations with consumers. If price discrimination by use of coupons suddenly came under intense negative publicity, they would not offer them. Coupons benefit consumers by discounting products they use on a regular basis and inducing consumers to try new products. By trying new products in place of the ones consumers are familiar with, consumers increase the competition between sellers for your business and dollars. Price matching has become a very common retail practice offering consumers the same discount on similarly valued products, even if the coupon is for a different product. There is nothing unfair, discriminatory, or in need of regulations in how coupons are issued and used.
https://www.dummies.com/education/economics/how-to-use-coupons-for-price-discrimination-in-managerial-economics/

https://www.forbes.com/sites/moneybuilder/2012/08/21/individualized-coupons-aid-price-discrimination/

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