Service firms often face the problem of maximizing revenue and capacity, and one way to do...
Fantastic news! We've Found the answer you've been seeking!
Question:
Transcribed Image Text:
Service firms often face the problem of maximizing revenue and capacity, and one way to do this is through dynamic pricing. But what exactly is dynamic pricing? Have you had the experience of chatting with your neighbor on a plane and discovering that the two of you paid very different prices for the same air ticket in the same class of seats? That's dynamic pricing at work. Dynamic pricing is a pricing strategy that varies prices for different customers at different times on the basis of demand conditions. It is commonly used in the airline industry but has also gained popularity in other industries. For example, the Eagles, the highest- selling American band in U.S. history, started a system of increasing the prices of the best seats and lowering the prices of cheaper seats for a show organized in early 2010 in Sacramento, California. Their highest-priced tickets cost $250, but the cheapest ticket was priced as low as $32. They cooperated with Live Nation Entertainment Inc. to use dynamic pricing for their tickets. Ten categories of ticket prices were set based on anticipated demand. In this way, the band hoped to fill more seats and at the same time make the tickets more affordable for fans Lion King's success in turning its once-shaky fortunes around and becoming one of Broadway's top grossing shows has been largely attributed to dynamic pricing. Similarly, the San Francisco Giants, a professional baseball team, sold 25,000extra tickets during the fi rest year in which they experimented with dynamic pricing. It earned them an extra $500,000 in revenue. Officials from the Major League Baseball and the National Basketball Association expect dynamic pricing to become the norm for the sporting industry. Companies like Score Big Inc. are hoping to tap into this trend. It has been estimated that about 25-35% of seats for sports. events and 40-50% of concert tickets remain unsold every year. Score Big Inc, aims to become the Priceline.com in this space by using demand-based dynamic pricing to help find buyers for these tickets. Companies in diverse industries such as sports, hotels, airlines, and car rental have been able to benefit greatly from using dynamic pricing. Such a strategy allows companies to increase revenues, allocate their resources more effectively, and focus on improving customer experience. Thus, dynamic pricing is certainly here to stay! On the basis of the above case study answer the following questions (Que 1 and 2) Quel. When there is a complaint about pricing, it's typically the feeling around the price to value, not the dynamic pricing? Elaborate this statement with the help of above case. (8 marks) Service firms often face the problem of maximizing revenue and capacity, and one way to do this is through dynamic pricing. But what exactly is dynamic pricing? Have you had the experience of chatting with your neighbor on a plane and discovering that the two of you paid very different prices for the same air ticket in the same class of seats? That's dynamic pricing at work. Dynamic pricing is a pricing strategy that varies prices for different customers at different times on the basis of demand conditions. It is commonly used in the airline industry but has also gained popularity in other industries. For example, the Eagles, the highest- selling American band in U.S. history, started a system of increasing the prices of the best seats and lowering the prices of cheaper seats for a show organized in early 2010 in Sacramento, California. Their highest-priced tickets cost $250, but the cheapest ticket was priced as low as $32. They cooperated with Live Nation Entertainment Inc. to use dynamic pricing for their tickets. Ten categories of ticket prices were set based on anticipated demand. In this way, the band hoped to fill more seats and at the same time make the tickets more affordable for fans Lion King's success in turning its once-shaky fortunes around and becoming one of Broadway's top grossing shows has been largely attributed to dynamic pricing. Similarly, the San Francisco Giants, a professional baseball team, sold 25,000extra tickets during the fi rest year in which they experimented with dynamic pricing. It earned them an extra $500,000 in revenue. Officials from the Major League Baseball and the National Basketball Association expect dynamic pricing to become the norm for the sporting industry. Companies like Score Big Inc. are hoping to tap into this trend. It has been estimated that about 25-35% of seats for sports. events and 40-50% of concert tickets remain unsold every year. Score Big Inc, aims to become the Priceline.com in this space by using demand-based dynamic pricing to help find buyers for these tickets. Companies in diverse industries such as sports, hotels, airlines, and car rental have been able to benefit greatly from using dynamic pricing. Such a strategy allows companies to increase revenues, allocate their resources more effectively, and focus on improving customer experience. Thus, dynamic pricing is certainly here to stay! On the basis of the above case study answer the following questions (Que 1 and 2) Quel. When there is a complaint about pricing, it's typically the feeling around the price to value, not the dynamic pricing? Elaborate this statement with the help of above case. (8 marks)
Expert Answer:
Answer rating: 100% (QA)
The statement is referring to the fact that when customers feel that they have been charged too much ... View the full answer
Related Book For
Practical Management Science
ISBN: 978-1305250901
5th edition
Authors: Wayne L. Winston, Christian Albright
Posted Date:
Students also viewed these mathematics questions
-
Firms often face the problem of allocating an input in fixed supply among different products. Find the optimal crude oil allocation in the proceeding example if the profit associated with fiber were...
-
Derive Eq. 6.3. [Here's one way to do it: Assume the dipole is an infinitesimal square, of side 6 (if it's not, chop it up into squares, and apply the argument to each one). Choose axes as shown in...
-
(a) Explain why the problem of maximizing the distance from a point to a subspace does not have a solution. (b) Can you formulate a situation where maximizing distance to a point leads to a problem...
-
Ames Manufacturing Plant produces two different replacement parts for dishwashers. During a normal shift, they have 7 hours of time available on their main fabrication machine. The machine will...
-
A common ethical dilemma used to distinguish between philosophical reasoning methods is the following. Imagine that you are standing on a footbridge spanning some trolley tracks. You see that a...
-
Describe the nature and purpose of reasonable efforts and permanency planning in the context of child abuse and neglect actions.
-
Given two rectangular ducts with equal cross-sectional area, but different aspect ratios (width/height) of 2 and 4 , which will have the greater frictional losses? Explain your answer.
-
Pet acquired 80 percent of the common stock of Sul for $4,000,000 on January 2, 2011, when the stockholders' equity of Sul consisted of 5,000,000 euros capital stock and 2,000,000 euros retained...
-
Newtech limited is a new start-up financial technology company based in the East Coast of Scotland. As a start-up, it has 50 full-time employees and has successfully won a number of lucrative...
-
James Smith and Donald Robertson are assistant portfolio managers for Micro Management Partners. In a review of the interest rate risk of a portfolio, Smith and Robertson discussed the riskiness of...
-
What constitutes sociology as a discipline, and how does C. Wright Mills' concept of sociological imagination elucidate its essence?
-
What is the standard structure of a business memo, and how should each section be formatted to enhance readability and clarity? Discuss the role of headings, bullet points, and white space in memo...
-
On January 1 Primary Manufacturing had a beginning balance in Work-in-Process Inventory of $82,000 and a beginning balance in Finished Goods Inventory of $22,000. During the year, Primary incurred...
-
Len is a keen rugby fan. He sees this advertisement: Rugby World Cup in Australia Be There! See 8 rugby games including one semi-final and the final: Then spend 10 days touring the Australian Outback...
-
#2: If 2 masses 7 kg and 17 kg have velocities <6,-10 > and respectively, find the final velocities of the 17 kg objects a) Find the final velocity of the 5 kg object if the collision is elastic...
-
Evaluate, correct to 2 decimal places When a = 3.43 b=1.55 c = 5.78 d = -0.26 ab-cd c2 d
-
With factor conditions, Porter's diamond model distinguishes between basic factors, those a country inherits, and A. imported factors, those it brings in from abroad. B. climate conditions, the...
-
The packaging division of a company having considered several alternative package designs for the company's new product has finally brought down their choices to two designs of which only one has to...
-
A bank needs exactly two employees working each hour from 9 a.m. to 5 p.m. Workers can work the shifts and are paid the wages listed in the file P04_74.xlsx. For example, a worker working 9 a.m. to 2...
-
Pine Valley Bank has three branches. You have been asked to evaluate the efficiency of each. The following inputs and outputs are to be used for the study: Input 1 = labor hours used (hundreds per...
-
The quantity discount model in Example 12.2 uses one of two possible types of discount structures. It assumes that if the company orders 100 units, say, each unit costs $150. This provides a big...
-
Browne Cleaning and Gardening Services commenced on 1 June 2026 when Lorne Browne contributed \($120\) 000 into a business bank account. Perhaps more thought could have been given to the business...
-
A proton, a deuteron (a hydrogen nucleus containing one proton and one neutron), and an alpha particle (a helium nucleus consisting of two protons and two neutrons) initially at rest are all...
-
Identical positively charged objects \(A, B\), and \(C\) are launched with the same initial speed from the same position above a negatively charged sheet that produces a uniform electric field. The...
Study smarter with the SolutionInn App