consumer surplus

(noun)

The monetary gain obtained by consumers because they are able to purchase a product for a price that is less than the highest price that they would be willing to pay.

Related Terms

Examples of consumer surplus in the following topics:

  • Price Discrimination

    • Although there are legal concerns around monopolistic practices, price discrimination is a popular tactic for capturing consumer surplus.
    • Output can be expanded when price discrimination is very efficient, but output can decline when discrimination is more effective at extracting surplus from high-valued users than expanding sales to low valued users.
    • Here, the monopoly seller knows the maximum price each individual buyer is willing to pay, allowing them to absorb the entire consumer surplus.
    • Unlike first degree, sellers are unable to differentiate between individual consumers, and so they provide incentives for consumers to differentiate themselves.
    • Sellers are able to differentiate between different types of consumers.

  • Demand-Based Pricing

    • Demand-based pricing is any pricing method that uses consumer demand - based on perceived value - as the central element.
    • Demand-based pricing, also known as customer-based pricing, is any pricing method that uses consumer demand - based on perceived value - as the central element.
    • The objective of a price skimming strategy is to capture the consumer surplus.
    • In practice, it is almost impossible for a firm to capture all of this surplus .
    • The theory is this drives demand greater than would be expected if consumers were perfectly rational.

  • Settling the List Price

    • 'certified organic' and 'product of Australia') may add value for consumers[1] and attract premium pricing.
    • In certain supply chains, where a manufacturer sells to a wholesale distributor, and the distributor in turn sells to a retailer, the use of a suggested retail price is used to denote the price to use when selling to the consumer.
    • They must decide on a price that is attractive to the consumer and yields the maximum profit for the retailer.
    • In economic terms, it is a price that shifts most of the consumer surplus to the producer.

  • Price Fixing

    • In neoclassical economics, price fixing is inefficient, transferring some of the consumer surplus to producers and results in a deadweight loss.

  • Product, Placement, Promotion, and Price

    • These promotions present information to consumers, increase demand by rewarding purchases, and differentiate the product.
    • Product distribution (or placement) is the process of making a product or service accessible for use or consumption by a consumer or business user, using direct means, or using indirect means with intermediaries.
    • Utility represents the advantage or fulfillment a customer receives from consuming a good or service.
    • Understanding the utility a consumer expects to receive from a product being offered can lead marketers to the correct distribution strategy.
    • In economic terms, it is a price that shifts most of the consumer surplus to the producer.

  • Value and Relative Value

    • One of the big problems is the large number of different types of values that seem to exist, such as exchange value, surplus value, and use value.
    • Discuss the different concepts of value and how it influences consumer buying decisions

  • Alternative Arrangements

    • Business-to-government, consumer-to-consumer, and institutional markets are additional types of marketing channels.
    • These include business-to-government, consumer-to-consumer, and institutional markets.
    • Consumer-to-consumer commerce is the completion of transactions between private individuals or consumers.
    • Craigslist and eBay usually involve consumer-to-consumer transactions.
    • There are also older forms of consumer-to-consumer transactions, such as classified ads and garage sales .

  • Consumer Behavior and Advertising

  • Defining Consumers

    • A consumer is a person (or group) who pays to consume the goods and/or services produced by a seller (i.e., company, organization).
    • It is important to note that consumers (or customers) play a vital role in the economic system of a nation.
    • In the fields of economics, marketing and advertising, a consumer is generally defined as the one who pays to consume the goods and services produced by a seller (i.e., company, organization).
    • It is important to note that consumers (or customers) play a vital role in the economic system of a nation .
    • Example of an open food market in Vienna, showing how consumers play an important role in a nation's economy.

  • Consumer Perception of Communication

    • Analyzing how consumers access marketing messages can help brands discover consumers' preferences for how to receive information.
    • Failure to follow consumers' changing media preferences can be expensive.
    • Consumers use a variety of sources, including:
    • Marketing messages must use the right timing and context to be effective for consumers.
    • Explain why managing consumer perception is integral to successful marketing communications