Friday, December 6, 2013

Price discriminating against brides seems profitable

The wedding industry is notorious for sticking it to brides.   But whether this is due to price discrimination or higher costs (brides can be demanding) is still a matter of debate.  But here is an example that seems clear:

As I wrote in the column, part of the reason that retailers can get away with charging higher prices for wedding-related services is that spouses-to-be probably have stronger preferences for their “special day” than consumers shopping for other kinds of events do. That means they’re less price-sensitive. In the case of gowns, for example, brides probably have much more specific requirements for their own dresses than for the dresses that their bridesmaids will wear, allowing retailers to charge different prices for each, regardless of what material or labor costs go into the respective frocks.

I classify this as direct price discrimination because retailers identify the bride, set separate prices, and prevent arbitrage.  

HT:  JC

10 comments:

  1. And retailers have gotten wise to those brides who recognize the price discrimination scheme. If you search for "white dresses" on most online retail shops, the prices are on average much higher than other, non-white dresses (sometimes even if they are the same dress).

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  2. So I used to watch, Say Yes to the Dress, (Blame it on the Ex) and a concept that is widely known but not discussed in negotiation is the game theory aspect. Brides come in with a set price in their head, but the seller doesnt believe that is their ceiling. In doing so, they suggest that the bride try on a more expensive dress, she falls in love, and the retailer has won the war.

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  3. Before I got married and was shopping for my wedding dress, I was one bride that did many comparable prices. I am always looking for bargains and making sure consumers are not over-charging. What my family had said is that you only wear your dress once, so why spend thousands of dollars for just one dress? I have to tell you my Mom bought my dress & I made sure it was a beautiful dress we both liked and was inexpensive. Picking out my dress with my Mom was a very special day. When it came to my bridesmaids dresses I made sure they were dresses they could wear to dinner parties and they were less than $100. My centerpieces I made, so that saved me money as well. In addition, I also bought all my decorations for the venue. When you are not a celebrity or millionaire there are ways to have a beautiful wedding and not spend a lot of money preparing for it. You have to have a budget and know when to say no to things that don’t make sense.

    What I also found interesting when bridal shopping online, is that vendors will not post prices online, but many will not even quote over the phone, but require a face-to-face meeting first. In fact, before they would even show brides any of their dresses, let alone price tags, some bridal shops have required brides to fill out a form disclosing their occupation, employer, address, dress budget, overall wedding budget, reception venue and other intrusive information. When you are shopping for your most important day you want things to be simple, not more difficult.

    Work Cited:

    The Wedding Fix Is In. Retrieved from: http://www.nytimes.com/2013/12/08/magazine/the-wedding-fix-is-in.html

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  4. I think this is a very interesting article, as I do not think I had ever thought of wedding dress shopping in that way. After reviewing the article, I think it is clever of the industry to think like they do. The one thing almost every girl dreams of is her wedding and her dress, everything else almost goes into the background. You go in with a set idea of the dress you want and price almost goes out the window. A previous comment made about how they always push your ceiling price in the wedding dress industry is true, but that can be said for many other industries as well such as car shopping. But the wedding industry still has in advantage in being able to discriminate pricing due the ability of being able to play on the bride-to-be’s emotions.

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  5. A wedding dress is a great example of direct price discrimination as it relates to a single product. Pricing in this case can be more inelastic because you are targeting a higher value, pre-identified group to begin with. Emotionally and psychologically, a bride to be places a great deal of value on the day itself and on the dress. Because most of the dresses are perceived to be "one of a kind" there is a lack of substitute product and scarcity of supply. This perception can justify a higher price in the mind of the purchaser. The bride to be is much less sensitive to price also because the dress is associated with a desirable activity- one she has most likely spent a great deal of time thinking about. Pricing in this case can be tailored to the purchaser’s emotional value placed on the dress as well as purchaser’s means and expectations, a true win for the seller.

    Works Cited:

    Froeb, e. (2014). Managerial Economics; A problem solving approach (3rd edition). Mason, OH: South-Western Cengage Learning.

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  6. When it comes to the bridal industry, the brides separate themselves from the rest of the buyer population, just because they are joyous and announce their upcoming nuptials. Who wouldn’t? I’m also a soon to be bride and its exciting talking about dresses, etc. when shopping for them. Since we directly identify ourselves to the supplier, they’re easily able to discriminate prices given that they know we want it the special day to be perfect (as can be). I recently reached out to a DJ that worked a friend of mines, parents’ 40th anniversary party. They had more people at this event than I plan to invite at my whole wedding. The vendor told me the price of a regular party, services for 5hours was $2500. When I mentioned it was for a wedding, the price suddenly went up starting at $3000. Would they be using different equipment for the two events? No. Would they be using the same dance lighting? Yes. Would they be coordinating speeches (as the anniversary party had 2 speeches)? Yes. So $500 extra, just because it’s for a wedding. But at the end of the day I as the bride would most likely just suck it up and pay it (not before checking other vendors, but I’m sure it’s the same story). Vendors do have more to deal with, with weddings. So I don’t see it too unfair that they charge more, because I’m expecting more out of them to do the best job they possibly could do. And yes, as a bride, I will probably be nagging them more, than say someone else at a different type of party. As my demands increase, I would expect the price to increase as well.
    Catherine Rampell from the New York Times writes, “wedding vendors seemed to be trying to size me up to figure out how much I’m willing to pay; consumer advocates say this is a common practice, as is charging more for a given service for a wedding than for a “family function” or “corporate event.” Many of us brides-to-be are uninformed on how much these events can actually cost. Unless they have experience putting together such and extravagant event and have some sort of baseline. Vendors can easily persuade brides with talk such as, “oh you know you really don’t want to cheap out on your special day, especially if it’s only a couple hundred dollars in the grand scheme of things”. I’m sure I won’t be the last bride to fall for that line, because when it comes down to it, this will be a once in a lifetime event and I am willing to spend the money if I’m assured the service I’m getting is worth it.

    Rampell, C. December 3, 2013. “The Wedding Fix is In”. Retrieved from: http://www.nytimes.com/2013/12/08/magazine/the-wedding-fix-is-in.html

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  7. When it comes to the bridal industry, the brides separate themselves from the rest of the buyer population, just because they are joyous and announce their upcoming nuptials. Who wouldn’t? I’m also a soon to be bride and its exciting talking about dresses, etc. when shopping for them. Since we directly identify ourselves to the supplier, they’re easily able to discriminate prices given that they know we want it the special day to be perfect (as can be). I recently reached out to a DJ that worked a friend of mines, parents’ 40th anniversary party. They had more people at this event than I plan to invite at my whole wedding. The vendor told me the price of a regular party, services for 5hours was $2500. When I mentioned it was for a wedding, the price suddenly went up starting at $3000. Would they be using different equipment for the two events? No. Would they be using the same dance lighting? Yes. Would they be coordinating speeches (as the anniversary party had 2 speeches)? Yes. So $500 extra, just because it’s for a wedding. But at the end of the day I as the bride would most likely just suck it up and pay it (not before checking other vendors, but I’m sure it’s the same story). Vendors do have more to deal with, with weddings. So I don’t see it too unfair that they charge more, because I’m expecting more out of them to do the best job they possibly could do. And yes, as a bride, I will probably be nagging them more, than say someone else at a different type of party. As my demands increase, I would expect the price to increase as well.
    Catherine Rampell from the New York Times writes, “wedding vendors seemed to be trying to size me up to figure out how much I’m willing to pay; consumer advocates say this is a common practice, as is charging more for a given service for a wedding than for a “family function” or “corporate event.” Many of us brides-to-be are uninformed on how much these events can actually cost. Unless they have experience putting together such and extravagant event and have some sort of baseline. Vendors can easily persuade brides with talk such as, “oh you know you really don’t want to cheap out on your special day, especially if it’s only a couple hundred dollars in the grand scheme of things”. I’m sure I won’t be the last bride to fall for that line, because when it comes down to it, this will be a once in a lifetime event and I am willing to spend the money if I’m assured the service I’m getting is worth it.

    Rampell, C. December 3, 2013. “The Wedding Fix is In”. Retrieved from: http://www.nytimes.com/2013/12/08/magazine/the-wedding-fix-is-in.html

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  8. Price discrimination has been a long existing and common practice within the wedding services industry. While I agree that brides can be at times demanding, the amount at which prices are inflated seems often ridiculous, and not worthy of the extra effort a retailer may have to display in an effort to accommodate even the most demanding bride.

    In addition to the wedding dresses mentioned in your post; floral arrangements, wedding cakes, limousines, catering halls, and other related services all seem to deliberately inflate their prices for wedding related services. While this certainly seems unfair, this practice has existed within the wedding industry for a substantial amount of time.

    For example, limousine services have been known to inflate the cost of their services by as much as 50% for a wedding. The difference between the service they provide for a wedding versus any other event? A $20 disposable floor runner that limousine drivers place on the floor of a church. Both the product and the work effort seem hardly worth the substantial increase in price!

    The practice of price discrimination in the wedding services industry appears not only profitable, but sustainable.

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  9. The article discusses how the retailers capitalizing on the preferences of brides-to-be with specific preferences which classifies as direct price discrimination. I do agree that this is a clear case of direct price discrimination that prevents arbitrage, as the specific tastes and demands carries with them unique factors.
    The brides are very particular about their wedding gowns and each one wants their wedding dress to be unique and their wedding to be speculator behind this market’s demand. Many in the wedding industry wielded this once-in-a-lifetime logic, that wedding services are not standardized enough to create a meaningful price aggregator.
    The factor encourages to retailers to use direct price discrimination. In fact the retailer again have no option but to price discriminate, since if both dresses were evenly priced, the bride would feel belittled and seek another retailer. The price discrimination is easer when there are separate and distinct markets for a firm’s for products and when price elasticity of demand varies from one group of consumers to another.

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  10. Price discrimination is the practice of charging different prices to different buyers or groups of buyers based on differences in demand. The wedding industry is a cash cow. Prices are automatically increased when vendors hear the word wedding. Dresses are the centerpiece of a wedding ceremony, and brides are willing to pay a pretty penny for “the one”. When I went dress shopping I had a set price in my head, and trying on more expensive dresses definitely blew by budget. Trying to compare prices can be time consuming, and for some, making centerpieces and gift bags may be cost effective but just too tedious to complete. In my opinion, vendors are fully aware of these deal breakers, so they offer all that a bride needs, but for a pretty penny. For some, the high price is worth it and for others it’s not.

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