Question

For many goods, supermarkets would offer deep discounts once for a few weeks. How do you understand this using what you have learned from price discrimination?

Answer 1

The approach adopted by supermarket is driven by second degree price discrimination where the supermarkets have analyzed the consumers buying data and found a trend of time where they buy more. At this time duration (such as first week of the month, or just before festival) these supermarkets offer deep discounts to deliver benefits to the customers upon their bulk purchases. It also helps supermarkets to earn good profit as they have sold huge amount of merchandise as well. So, it is a win-win situation for the supermarkets and they develop a good reputation among the buyers.