Lahore School of Aviation

The University of Lahore

Assignment Topic

Product Differentiation vs. Price Discrimination

Program: BS Aviation Management Semester: 7th

Course: Managing Airlines
Instructor: Sir Sharjeel

Assign. No: 3rd Date: 17-December-2021

Name: Romaisha Shabbir Reg. No: 70073239

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Marks: / 10

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Instructor’s Signature
Product Differentiation vs. Price Discrimination
In marketing and economics, two tactics are used: product differentiation and pricing
discrimination. The process of distinguishing one company's goods and services from those of
another is known as product differentiation.

Price discrimination, on the other hand, is a tactic for differentiating pricing for the same goods
and services.

Product Differentiation

Product differentiation aims to set a product apart from its competitors in order to appeal to a
specific target market. Horizontal, vertical, and simple product differentiations are the three
categories of product differentiation. Horizontal product differentiation identifies a product based
on one of its characteristics, but customers are unable to tell which product is of superior quality.
Vertical product differentiation is likewise based on a single product attribute, but consumers can
tell which product is of superior quality. Simple product differentiation is separating a product
based on a large number of attributes.

Price Discrimination

When the same goods and services are sold at various prices by the same company, this is known
as price discrimination. Price discrimination, as opposed to product diversification, focuses on
charging different customers varying prices for the same items. Price discrimination, unlike
product differentiation, is not concerned with distinguishing one's product from others.

Price discrimination is a marketing approach in which a vendor charges varying prices for the same
product or service depending on what they think the customer will agree to. The vendor charges
each customer the greatest amount they will pay in pure price discrimination. The merchant divides
clients into groups based on particular characteristics and charges each group a different price in
more typical forms of price discrimination.
Example:

The airline business is a good example of price discrimination. Airline tickets purchased several
months in advance are often less expensive than those purchased at the last minute. Airlines hike
ticket rates in reaction to high demand for a specific flight.