In recent seasons, the New Jersey Devils have employed a new type of pricing sch

Question

In recent seasons, the New Jersey Devils have employed a new type of pricing schedule. In addition to discounts offered for season-ticket and multiple-game package holders, the team now varies pricing for individual tickets.
Under the new arrangement, there are three tiers of pricing: games versus the most popular opponents are priced the highest; games against lesser opponents on desirable nights of the week are priced at a moderate level, while games against less popular opponents at inconvenient times are priced at the lowest level.

Do you think that this pricing scheme is successful in raising profits? What principles of pricing strategies are the New Jersey Devils employing? Identify other industries that you think may benefit from a similar approach.

Explanation / Answer

New Jersey devils seems to be employing the principles of price discrimination especially third degree or second degree price discrimination. It can be done when a particular form has information about the segments of the market and the resale of the tickets can be prevented. This is strategy is helpful in raising profits because there are different segments and each segment has group of consumers who are willing to pay different prices. New Jersey devils can increase its profit by charging different prices according to the willingness to pay of different consumer groups. In this part there are three different types of prices according to the willingness and budget of the consumer.

Other industries where this approach is visible and is used widely is airline industry Airlines used to charge different prices from vacation travellers and business class travellers. There are also different prices for booking according to the time period, higher price is generally charged for emergency travel.

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