Question: Follow up question ( note that the dollar amounts have not changed from the previous scenario. ) You operate a Caribbean destination resort. You currently
Follow up question (note that the dollar amounts have not changed from the previous scenario.)
You operate a Caribbean destination resort. You currently offer plans for a cruise departing from the resort and plans for a casino stay. It is expected that in 2021 there will be some return to more normal travel. You will re-launch your advertising for 2021 announcing that customers will be able to do both for one price. Your marginal cost per customer is $4800.
Customer Preferences
Cruise | Casino | |
Customer1 | $7,000 | $3,000 |
Customer2 | $2,000 | $6,000 |
You have estimated that 33% of your customers will never bundle. Specifically, you know that about 21% of your customers decline cruises because of seasickness. You also know that at least 12% of your customers decline the casino trip saying they don't believe in gambling. Given the preferences distribution, will the mixed bundling increase profits? You must show the calculations that support your conclusion.
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