estion (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 across both tours is $4800. Customer Preferences Cruise Casino Customer 1 $7,000 $3,000 Customer 2 $2,000 $6,000 You know that 33% of your customer
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
Customer Preferences
|
|
Cruise |
Casino |
|
Customer 1 |
$7,000 |
$3,000 |
|
Customer 2 |
$2,000 |
$6,000 |
You know that 33% of your customers will never bundle, 21% of your customers decline cruises because of seasickness and 12% decline the casino trip saying they don't believe in gambling.
Given the preferences distribution, will the mixed bundling increase profits? To support your answer, you must show your calculation of the net gain in profit, if any, with a mixed bundle strategy.
STEP 1
Customer 1: cost without bundling
=[(7000*0.79) + (3000*0.88)]
= $8170
Customer 2: cost without bundling
=[(2000*0.79) + (6000*0.88)]
= $6860
STEP 2
Total cost without bundling
Total cost without bundling=cost if customer 1+cost of customer 2
=$8170 + $6860
= $15,030
STEP 3
Customer-1: Cost with bundling
=[($7000 + $3000) * 0.67]
= $6700
Customer-2: Cost with bundling
=[($2000 + $6000) * 0.67]
= $5360
STEP 4
Total cost with bundling
Total cost with bundling=cost if customer 1+cost of customer 2
$6700 + $5360
= $12,060
STEP 5
With this calculation, we can tell tell that with the bundling, the total cost will therefore be reduced by;
15,030-12,060
=$2970
this is not the answer my professor is looking for.
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