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DISCUSSION STARTER
Discussion Starter 1: Should Cash and Credit Prices Differ?
Many gas stations (and some other marketers) set one price for credit purchases and a lower price for cash
purchases. No, credit customers aren’t being charged more—in fact, adding a surcharge to a credit-card
ASK: But should cash and credit prices differ?
Marketers that accept Visa, MasterCard, American Express, and other credit cards have to pay fees to
have credit transactions processed, usually about 2 to 3 percent of the amount charged. Their prices reflect
these fees, passing them along to customers who use credit. Because cash transactions aren’t subject to
ASK: Should marketers by allowed to charge one price for credit purchases and another for cash
purchases?
Discussion Starter 2: Irrational Demand
ASK: For an established product category, how are consumers’ minds changed about what the price
should be for the product?
Often newcomers to a category seek to shift our pricing expectations upward. This was what Starbucks
had to achieve in order to be successful in the coffee market. Consumers were not used to paying $4 or
Discussion Starter 3: Using Reference Pricing
ASK: How do you know you are getting a good price?
When shopping for an infrequently purchased product, consumers often rely on reference pricing. Many
online and traditional stores now have both a reference price and in-store price for their products. This
ASK: How effective is Overstock’s use of reference pricing to consumers?
Often students will find reference prices a compelling argument for the value of an individual purchase.
