Author Question: Outlet Malls Coach Handbags sells its purses through traditional department stores and specialty ... (Read 102 times)

Redwolflake15 · **on:** Jul 1, 2018

Outlet Malls Coach Handbags sells its purses through traditional department stores and specialty shops. But it sells discounted bags through Coach Brand shops at outlet malls. Why does it own the outlet mall stores but not the stores at the traditional department stores and specialty shops?

Question 2

A firm charging different customers different prices for the same product is engaged in:
a. Price discrimination
b. Price matching
c. Markup pricing
d. Predatory pricing.

covalentbond · **Reply #1 on:** Jul 1, 2018

Answer to Question 1

Coach is trying to engage in price discrimination - selling the same model bag at different prices to different customer groups. It could offer lower wholesale prices to third-party discount stores in outlet malls. But if it did, it would worry that these stores would turn around and sell the bags to the department stores and specialty shops and arbitrage away the price differences.

Answer to Question 2

a