Question
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
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 tours for one price. Your marginal cost per customer across both tours is $4800.
a) Here are the customer preferences. Determine how much your net profit will increase with a single bundle price compared to the maximum net profit you would make with a high price strategy.
b) From experience you know that some traveler will never bundle. For example, you know that about 21% of your customers decline cruises because of sea sickness. At least 12% decline the casino trip saying they don't believe in gambling. As a rough estimate you initially expect that approximately 33% of your customers will never bundle. Will mixed bundling increase profits? You must show that calculations that support your conclusion.
Step by Step Solution
There are 3 Steps involved in it
Step: 1
Get Instant Access to Expert-Tailored Solutions
See step-by-step solutions with expert insights and AI powered tools for academic success
Step: 2
Step: 3
Ace Your Homework with AI
Get the answers you need in no time with our AI-driven, step-by-step assistance
Get Started