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Odyssey Isle: Analyzing Pricing Strategies

Case study of Odyssey Isle

From the Odyssey Isle’s point of view it could be said that the maximum number of stalls visited by a customer, who could be profitable at current pricing rates, would be seven, since, beyond this number, the marginal costs are greater than marginal revenues, and are hence unremunerative.

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The present rate structure by which a person paying just a small amount and can visit five attractions is counterproductive for the company’s overall profitability.

Thus, it is necessary to introduce a two-price strategy that could be prolific to both the customers and the company. However, the fixed fee needs to be traded off with a lowering in charges for visiting attractions that need to be reduced to attract more customers to more events.

It seems that the charges of $3.70 do seem to be on the higher side, especially if one were to consider the fact that customers now need to also pay some fixed fee. Therefore, the event fee could be brought down to $3.10 and would fetch maximum returns and profitability. “By dropping the price per attraction to $3.10, we increase the number of attractions visited 11, which increases revenue. And because the price per attraction is still larger than the marginal cost, profit shall also increase.” (Ellis University: Economics for Managers: Mythos Task 2 2009, p.17).

It could be seen that by pursuing this policy, the overall profits based upon the number of visitors and the number of stalls that they visit would also increase.

During special occasions, family people who visit the venue could be provided with free visits to attractions based upon the fixed fees that they have paid.

Case study of Jetsetter

It is seen that presently Jetsetter is combining its golf package with its luxury agency. But apparently, this has not produced the desired results nor propelled growth prospects for the future. Under such circumstances, it would be necessary for Jetsetter to market its golf package separately from its luxury agency business, through individual pricing or differential pricing depending upon the demand scenarios and individualized customer needs.

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“Personalized pricing is a pricing strategy that sets different prices and/or products to different buyers based on the information the seller has about the buyer. Many businesses offer different products and often personalized deals to customers by extracting their personal information.” (Ellis University: Economics for Managers: Mythos Task 2: How companies use personalized pricing 2009, p.22).

It is now necessary to consider the demand trends in each of these golf, family, and luxury segments of a business.

Coming first to golf, it is seen that the highest projected demand is $464.12 and the lowest is $23.37. Similarly, the highest projected demand for a family is $439.84 while the lowest is $43.40. Again, coming to the luxury segment, it is seen that the highest projection is $503.01 and the lowest is $1.40.

Again the diagrams representing the reservation prices – family v golf, seem to suggest that the highest concentration is in the range of $200,000 – 250,000 group.

Similarly considering the reservation prices of luxury v. golf, the highest density is in the range of $200,000 – 250,000 group.

Thus considering price differentiation, it is necessary that Jetsetter needs to concentrate on high demand and value segment customers in each of its family, golf, and luxury segments. The present package system needs to be scrapped and individual rates need to be fixed, keeping into account the demand trends and the maximum willingness to pay segments. This would go a long way in providing differential pricing for different markets that will ensure all-around profitability and growth, would also ensure that customers are well taken care of. Just as in airlines we have executive class, economy class, etc. it is necessary to have differential segments in the golf and luxury business to provide specialized services and also ensure the satisfaction of the customers.

Big Apple Platinum Package

Coming to the demand analysis of the Big Apple Platinum Package, it is seen that the customer event segmentation is as follows:

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Customer type Dining
$
Event
$
Total
$
A 50 300 350
B 300 50 350
C 150 275 425
D 225 200 425

When the above data are considered discretely, it is seen that maximum demand for dining is generated from Customer B type, while that for events is Customer A-type. Again, if one were to consider the overall bundling, it is seen that this is between Customer C and D types. Thus, if the company is considering dining exclusively it needs to concentrate on B type of customers that could fetch it the highest revenues and profits. Again considering events individually, it would be A-type customers that need to be enticed.

However, if bundling is to be encouraged then there would be an equal proportion between C and D types of customers. Let us consider that there are 700 customers which need to be apportioned between Dining and Events with costs for Dining being say $ 100 each and for events being $ 50 each.

When considered unbundled, under dining we have differential customer preferences as follows:

For Dining:

Customer B 300 @ 100 = $ 30,000

Customer C 150 @ 100 = $15,000

Customer D 225 @ 100 = $22,500

Customer A 25 @ 100 = 2,500

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______

Total 70,000

For Events it is

Customer A 300 @ 50 = $15,000

Customer C 275 @ 50 = $13,750

Customer D 125 @ 50 = $ 6,250

______

Total 35,000

Therefore total earnings under the unbundled method would be $ 105,000

Coming to the bundled method, it is seen that the values would be as follows:

  1. Customer C type and Customer D having equal values, it is proposed to divide it in equal proportion
  2. For Customer C types – 425 X 100 = $42,500

For Customer D types 425 X 50 = $21,250

Total profits $ 63,750

Thus it is seen that in certain instances, it is more profitable for companies to sell products separately than as package offers or bundled, since there may be more profits in individualized sales.

Bibliography

Ellis University: Economics for Managers: Mythos Task 2. (2009). P.17 (provided by customer).

Ellis University: Economics for Managers: Mythos Task 2: How Companies Use Personalized Pricing. (2009). P.22 (provided by customer).

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StudyCorgi. (2021, October 21). Odyssey Isle: Analyzing Pricing Strategies. Retrieved from https://studycorgi.com/odyssey-isle-analyzing-pricing-strategies/

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StudyCorgi. (2021, October 21). Odyssey Isle: Analyzing Pricing Strategies. https://studycorgi.com/odyssey-isle-analyzing-pricing-strategies/

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"Odyssey Isle: Analyzing Pricing Strategies." StudyCorgi, 21 Oct. 2021, studycorgi.com/odyssey-isle-analyzing-pricing-strategies/.

1. StudyCorgi. "Odyssey Isle: Analyzing Pricing Strategies." October 21, 2021. https://studycorgi.com/odyssey-isle-analyzing-pricing-strategies/.


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StudyCorgi. "Odyssey Isle: Analyzing Pricing Strategies." October 21, 2021. https://studycorgi.com/odyssey-isle-analyzing-pricing-strategies/.

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StudyCorgi. 2021. "Odyssey Isle: Analyzing Pricing Strategies." October 21, 2021. https://studycorgi.com/odyssey-isle-analyzing-pricing-strategies/.

References

StudyCorgi. (2021) 'Odyssey Isle: Analyzing Pricing Strategies'. 21 October.

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