Dynamic Pricing in Amusement Parks

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Differentiation

The high standards can be set by a entertainment park by having a branch in the prime location. Disney World and Universal studios have parks across worlds in the most lucrative locations which helps them to make their businesses more profitable. As well as, Wonderla in India has been opened in Bangalore, one of the major metropolitan in India.

The major differentiation strategy employed by Entertainment parks has been to convert themselves into theme parks, a theme based on their associations and image which further help them to enhance their images as well as make them more lucrative. Parks indulge themselves in differentiated pricing and offers multiple packages.

There are several critical issues based on the lifestyles of the area for the business to be accepted and survive.

- Produce maximum profits, but still able to offer affordable entertainment

- Provide the best games/family sports

- Great food

- Little or no educational curve

- Repeat customers/tournaments/enjoyment

- Allow space for other retail tenants (reduce overhead)

- Do not compete with our tenants for the same dollar

- Provide activities for a large range of age groups

- Unique in design with comfortable ambience

- Exciting work environment

Marketing Strategy

Since, customers belong to all age groups, gender, races, geographic, demographics , Psychographics and different behavioral patterns, it becomes imperative to have a marketing strategy in place. Marketing plan focus on the by keeping in mind the fact that the more fun the park looks, more people will come to the park. By providing a superior product, parks can differentiate on their innovation and quick response. Large theme parks differentiate themselves by proving a association to the customer by providing services. While, the smaller parks have found their differentiating strategy in terms of cost. Parks having a particular sustainable competitive advantage will be able to create more profits.

Product segmentation

This statistic shows the leading amusement and theme park companies worldwide in 2014, by revenue. Merlin Entertainment Group generated approximately 1.9 billion U.S. dollars in revenue in 2014.

Figures were taken from annual reports or other company publications where applicable.

In 2014, Disney Parks and Resorts was by far the largest amusement and theme park company in terms of revenue worldwide. With revenues exceeding 15 billion U.S. dollars, Disney generated almost six times that of its closest competitor, Universal Studios Theme Parks. The third largest company was Merlin Entertainments Group. The British company is the leader of visitor attractions in Europe and, after Disney, had the largest attendance at its attractions worldwide in 2013, with almost 60 million visitors. Disney still dwarfed Merlin, however, with more than 130 million visitors to its parks and resorts.

The Walt Disney Company’s path to global domination began in 1923 when Walt and Roy O. Disney founded Disney Brothers Cartoon Studio in Hollywood, California. Disney quickly became the leader of the animation industry in the United States and, in 1955, Walt Disney opened his first theme park, Disneyland. In 2014, the Walt Disney Company’s revenue amounted to nearly 50 billion U.S. dollars and, in 2013, consumers named it the most loved company worldwide. Disney’s parks and resorts do not only rank high when compared to other theme parks – ten of the 50 most visited tourist attractions in the world belong to the Walt Disney Company.

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Market Segmentation

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Market segmentation can be done on four factors :

- Geographic

- Local Consumer

- Rural consumer

- Urban consumer

- Demographic

2.1 Age

2.2 Gender

2.3 Income

2.4 Occupation

3. Psychographic

4. Behavioral

4.1 Lifestyle

4.2 Patterns

As it can be seen from the above pie chart, the critical factor taken into mind to segment the market was the age of the customer. The customer was divided in to various age group to determine the age group producing maximum revenue. Then, the data can be used to implement the strategically changes in order to better serve the age group producing maximum revenue.

Other factor taken into account was that whether the customer was a local customer or a foreign customer.

As it can be observed from the pie chart, maximum revenue comes from the local consumers in the age group of the customers who were younger than 18 years. Other major contribution comes from the international customer. Together, this category comprises of 45.6% of the sales.

This analysis can be used to improve the quality of the service to the customer which provides more value to the park. Operational efficiency can be increased further to increase the profitability.

Barriers to entry

- Barriers to entry in this segment is very high as the segment is heavily dominated by the competitors - the four largest players are expected to account for about 81.5% of total industry revenue in 2012

- There are significant costs for entry associated with the area of land required, which can vary anywhere between 100 acres to over 300 acres, and the initial capital investment required for buildings (including public facilities), displays and rides.

For new parks to enter the entertainment park category, enter barriers are very high due to high capital costs, area of the land required, high concentration, high competition