What pricing strategy charges different prices for the same product to distinct market segments?

The pricing strategy that charges different prices for the same product to distinct market segments is known as price discrimination. This approach allows businesses to maximize their revenue by setting varying price levels based on the characteristics or willingness to pay of different consumer groups. For instance, airlines often use this strategy by charging different fares for the same flight, depending on factors like the time of booking, the traveler's age (such as student discounts), or whether they are purchasing a round-trip or one-way ticket.

By segmenting the market and applying different prices, businesses can cater to different customer needs and enhance overall profitability. This strategy relies on the ability to identify and target distinct market segments effectively, ensuring that each segment is willing to pay what the business determines as feasible for them.

Other pricing strategies listed, such as promotional pricing and psychological pricing, focus on specific tactics for setting prices based on time-limited offers or consumer perception rather than segmentation. The extension strategy does not pertain to pricing at all but rather to product line expansion or marketing efforts.