A supermarket in Germany is now selling separate men’s and women’s sausages. It is the same meat but the packaging and pricing are different.
The version targeting women is half the size of the version targeting men. And for good measure it is priced more than men’s version. To see the price difference you need to look very closely at how they listed unit price for the two making the comparison difficult.
For women’s version they list unit price for 100 grams. For men’s version they list unit price for 1 kilogram. This requires customers to stop in their tracks and do the additional comparison math even though it is a very simple conversion.
Note: If you do the math you will see this could be just a case of non-linear pricing (volume discount), more on that near the end of the article.
One another difference in packaging is labeling -
The male sausage features an alluringly-clad woman – in front of a flaming background – while lady shoppers are being drawn to part with their hard-earned cash by a topless gentleman with excellent muscle tone in front of a serene, cloudy background. (Source and Picture Source)
So is this good or bad price discrimination? Gender based price discrimination is just plain wrong. I have written about Good and Bad price discriminations before.
Journalist Susanne Enz sees this as “dull sexism.”
The sausages’ marketing, she said, implied that “men eat a lot and heartily, while women mainly want to be thin… Women are there to please, while men are allowed to enjoy.”
There is lot of truth to what Enz says here but there is also lots of bad marketing while not necessarily bad price discrimination here. For price discrimination to be labeled good and effective it has to meet the following two criteria
- To be labeled good: Customers must have choice and control to buy whichever version they please and not limited by who they are but only by their willingness to pay and wherewithal to pay. (See Amazon pink watches)
- To be labeled effective: Price fences between versions must be defined such that those who can and willing to pay for higher priced version will not adversely self-select themselves to the lower paid version. Like 13″ 256GB MacBook Air vs. 11″ 128GB MacBook Air.
Sometimes the fences end up done badly that they also punish those who can only afford the lower price version – like roof-less third-class train cars in olden days. (See tyranny of versioning)
Let us evaluate the German sausage pricing on these two criteria.
Good Price Discrimination
Do the customers have choice? Yes. Both women and men can choose any of the two versions. So it is a case of second degree price discrimination (which is the best form of price discrimination despite its ominous name) and better than third degree price discrimination. Third degree price discrimination is when the super-market checkout clerk charges one price for women and another for men at the time of checkout.
This is not that different from the shaving gel case study I wrote a while back. Since nothing prevents women from choosing the cheaper version targeting men, this is good price discrimination.
There is also merit to Enz’s statement that it implies, “men want to eat more”, but I would not take that claim any farther.
Not So Effective Price Discrimination
What are the price fences here ? Price fences are the features and triggers that make sure the higher willingness to pay segment stays with its positioned version and not tempted to choose the version targeted for lower willingness to pays segment. The fences here appear to be the amount of meat and the picture on the label.
There is merit to the supermarket’s thinking that smaller sized version will be more attractive to women and hence setting a higher price. But their price fences are awful – using pictures of “alluringly clad women” on men’s version and “topless gentlemen” on women’s version. Both are insulting to respective genders.
One variation that would have made improved this bad situation is – using “alluringly clad women” on men’s version and use a sane and sombre labeling that appeals to women’s intellect on women’s version. This would be the equivalent of roof-less third-class cars and shaving-gel. The hypothesis here is, women will be disgusted by the picture on the other version and will naturally gravitate towards their version with better picture.
So this gets mixed grade on effectiveness criteria.
Finally is this a case of price discrimination or simply a case of non-linear pricing unnecessarily confused with irrelevant packaging aspects?
If I do the math based on unit prices I see on the picture, the respective unit prices are
250 gram version has a unit price of €0.80 per 100 grams
500 gram version has a unit price of €5.98 per kilogram, or €0.598 per 100 grams
Non-linear pricing is where you give better unit price to customers when they buy more units. Like Costco giving you better unit price on the 50 gallon mustard bottle. It appears that the price difference here fits that mold. Why the marketer chose to erect price fences and extract additional rent from women customers is beyond me.
What do you think? Is this good and effective price discrimination?
Let me leave you with a thought experiment. You likely know most public toilets in Europe charge you for usage. What if they charged different prices for men and women?
Will that be good price discrimination?
How will you make that both good and effective?