Pricing of experience products under consumer heterogeneity |
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| Institution: | 1. School of Management and Economics, University of Electronic Science and Technology of China, Chengdu, 611731, PR China;2. Rowe School of Business, Dalhousie University, Halifax, NS B3H 4R2, Canada;3. Department of Management, University of Bristol, Bristol, BS8 1TZ, UK;1. SHU-UTS SILC Business School, Shanghai University, Shanghai 201899, PR China;2. Business School, University of Edinburgh, Edinburgh, UK;1. Universität Augsburg, Augsburg 86135, Germany;2. Universität der Bundeswehr München, Neubiberg 85577, Germany;3. University of Warwick, Coventry CV4 7AL, United Kingdom |
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| Abstract: | An experience is designed to engage the customer and leave a lasting memory. While experience is relevant to a broad array of marketing situations including retailing, leisure, entertainment, and hospitality industries, no prior studies could be located that have assessed the values of experience components to customers, and the pricing implications of such assessments.This study illustrates how an experience offering can be designed and priced using the context of the upscale dining experience. Choice-based conjoint analysis and a hierarchical Bayes methodology are used. A cluster analysis of the part-worth scores reveals three very distinct benefit segments. This study shows how a marketer can: (1) Design and price experience products to match the needs of the different benefit segments. This study also shows how to find optimum price for maximization of revenue and profit. (2) Examine how a product would perform against known competitors, and the potential impact of new competitive entries. (3) Determine own and cross-price elasticities of demand to assess resiliency in the face of price competition. |
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