Price Segmentation Even at Christmas?
Thank you to Ken Forziati for an excellent seasonal example of price segmentation.
This is a cut your own tree place, and the first part of price segmentation is they have different prices for different tree types. Blue Spruce and Concolur Fir (????) were the most expensive at $9 per foot and White Pine was the least expensive at $6.50 per foot. Presumably that is due to the desirability of the different varietals.
Now it gets interesting though. Think about who would pay the most for a christmas tree. Someone who is really not price sensitive (rich) probably has a very large house, with very high ceilings. It only makes sense to charge them more. They do that by charging more per foot for trees over 9 feet tall. The upcharge is either $2.50 or $3.00 depending on varietal. Brilliant!
Of course, they have an offering for those that are more price sensitive. Instead of cutting your own tree, you can purchase a tree 6 feet or smaller that has already been cut and presumably is much less expensive. They don’t get the experience of cutting their own, but they can buy a tree at a low price.
If you want to see this for yourself, click on the photo to see a more readable higher resolution version.
Price segmentation is around us in so many places. The question for you is are you doing it?
Photo by Ken Forziati
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