Jonah has dressed up a few mannequins to represent women doing particular jobs in the store. Dina comments on how this t-shirt activism is really helpful for the store’s profits, particularly because the outfit that Jonah has put together has a higher price tag than a similar combination targeted at boys. Jonah argues that it promotes gender equality, but Dina points out that the shirt costs $12.99 for women, but only $7.99 for men. Jonah tries to argue from a cost perspective, noting that glitter is more expensive, but Dina argues that it’s just a pink tax, charging women more for the same product, like clothes, razors, and deodorant.
Tag: product differentiation
Cloud 9 is offering curbside pickup so that their lazier customers can have a better shopping experience. Monopolistically competitive firms often compete on non-price aspects, so offering curbside pickup may entice new customers to increase their demand. Since they aren’t hiring more workers, the employees are now required to work more, which they don’t see as fair. This increased demand following curbside pickup should result in an increased demand for labor, but the workers only seem to be working more.
First Class Ticket to Heaven
Myrtle dies but has left Jonah $1,000. Feeling guilty, he gives it to Glenn because Glenn seemed so much more upset by Myrtle’s death. Glenn, after talking to his pastor, has decided to give it to his church so that Myrtle has a guaranteed path to heaven. Pastor Craig has convinced Glenn to donate the entire $1,000 so that Myrtle has a first-class experience to heaven. A lower price only gets her to heaven in economy-class. After realizing that Glenn fell victim to a scam, Jonah takes the money back.
A dueling charity outside the store has led Amy to offer a $5 gift card when people donate a toy to the toy drive inside the store. The two charities are substitutes for one another and offer similar goals. Some people donate to charity to feel good about their actions, but others are willing to donate if they are incentivized to do so. The Samaritan decides to buy a jar of army men to get a gift card for each one.
The Extra Smailes
Cloud 9 is instituting a new policy in an effort to compete against online retailers. Associates now are asked to make small talk with the customers and “go the extra smailes.” Since Cloud 9 sells the same products as online retailers, the store is trying to provide a non-price advantage to convince customers to shop locally.
Rationing During a Blizzard
A blizzard hits the St. Louis area and customers are lined up to purchase items they now need. Garrett announces that the store has decided to ration all types of water rather than raise prices in an attempt to prevent people from hoarding water. Another alternative allocation mechanism would be to raise prices, but they have opted instead for an authoritarian approach. As Garrett names the different products under rationing, we also get a list of substitute products which shows the range of product differentiation at the store.
Marcus gets the idea to create a new type of cheese using breast milk. He pitches his idea to his coworkers in the hopes that they’ll invest in his product. He believes that breast milk cheese could enter the cheese market and compete with other, more well established varieties.
Cheyenne and Bo have decided to move their wedding date forward in an effort to end their constant bickering, and Glenn is there to help. He calls his church to see if there’s an open date in the near future. It turns out his church acts just like other monopolistically competitive firms by offering differentiated services, like the option to select either a white or black choir. They practice price discrimination by rewarding Glenn with referral points to the gift store and offering a nuptials package that entitles Bo and Cheyenne to 50% off a baptism.
Differences in Detergents
Mateo helps a customer find laundry detergent and goes through the process of naming some of the different options available. Product differentiation allows companies to offer similar, substitutable products based on customer preferences. Each focuses on a niche market or defining characteristic but are generally substitutes.
Garret notices that the store sells two dresses that look identical, but one is marketed as a white dress and the other is a white wedding dress. The wedding dress costs $200, but the other dress only costs $30. The wedding industry is notorious for high markups on products that are labeled for weddings because brides and grooms often have fairly inelastic demand for their products. Because of this inelastic demand, firms are able to price discriminate and charge higher prices.