Let's consider a real-life example of how a business might price discriminate between clients. According to an article in Mother Jones, a real-world example is the 'club cards' that are offered by many of the major grocery chains, and many non-grocery chains. These allow a retailer to track every purchase that is made, targeting coupons and specials to your specific spending habits. According to the article, the author speculates that the data is collected from those who sign up for a card, thus granting them the right to your information, that retailers can then do whatever they would like with. One flaw of this method of price discrimination, at least from a consumer standpoint, is that those items that are less price elastic then have the prices raised to offset the cost of the reductions and discounts offered, thus hurting the elderly, the less informed, and those not willing to sign up for the card and allow access to their information. As the information age continues to advance, and these 'club cards' gain popularity, this ability to price discriminate will expand to include nearly every industry, thus reducing the consumer surplus and increasing the producer surplus.
The targets of this type of price discrimination, at least for now, include the middle-class, educated, and computer-savvy people, who are willing to sign up to save money, share their spending habits, and carry new smartphones with apps that also can track spending habits. As technology advances, this target market will continue to expand until it includes virtually everyone within the modern society. While this is a good thing from a business owners standpoint, it is not all good news. Is it a good thing to allow retailers to have access to such personal information? Who is potentially hurt by this type of marketing? As mentioned earlier, the elderly, the uneducated and the unwilling must pay higher prices for the same items, but those who participate in this type of marketing can also open themselves up to having this information sold to anyone with money, to be used for whatever purposes they see fit, whether you as the consumer agree with them or not.
In the information age in which we live, there are countless ways for the government, corporations, and even your neighbor, to gather information about you. While the benefits and the liabilities are just being discovered, it is the way that the world is going. It is becoming a world in which price discrimination is becoming a way of life, and producers are devising methods to catch as much of the consumer surplus as they can in the form of producer surplus. Welcome to the next generation!