Price Discrimination | Amusement Parks Essay examples

1257 Words Jan 12th, 2015 6 Pages
JWI 515: Assignment Four: Price Discrimination
Amusement Parks
Professor Serluco
Managerial Economics

Charles W. Slaven
November 30th, 2014

Introduction
Consider these Amusement park pricing scenarios:
Six Flags Discovery kingdom sells its annual season pass for $59.99. According to its website, “Buy your Season Pass for $59.99, just $14 more than a one-day admission.”
Bush Gardens Dark Continent. sells its Fun Card for $95.00. According to its website, “Pay for a Day, Get now through 2015 FREE.”,
Now why would they give away an unlimited entry annual pass for an extra 25% over the single entry price?
What is common in these pricing scenarios?
All these businesses are practicing what economists call, “Metered Price
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Part of the value proposition for an amusement park is the highly developed themed experience they provide. Once fully immersed in the amusement park experience the level of difficulty and inconvenience in accessing alternative providers for staples like food, drink, shopping, and accommodations, grows exponentially. Utilizing spatial discrimination, the parks have several different supply, demand and profit opportunities to exploit.
Higher than market food pricing and profits based on proximity and distance to cheaper alternative. Amusement Parks, like many other entertainment businesses can derive extremely high profits from customers on purchases of goods and services once inside the park.
Zero competition from competitors within park confines. The experience of the park itself requires a good deal of isolation and space so the business can control the imagery, interactions, and exposure to inconsistent inputs. The space and isolation enables the parks to create their own marketplace and exclude other industry actors access to the customers in their park avoiding food, retail, services competition altogether. Once the customer is in the park you control the market and the market offerings and pricing
Ingress and Egress marketing opportunities for personalized content like group photos on T-Shirts, Mugs etc. The parks have cameras throughout their facilities and more often than not have a kiosk standing by to sell customers personalized

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