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Bundling improve profits over the high-cost strategy

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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 is $4800.

Customer Preferences

 

Cruise

Casino

Customer 1

$7,000

$3,000

Customer 2

$2,000

$6,000

Given the preferences, would bundling improve profits over the high-cost strategy?  Support your conclusion by showing if (by how much) profits differ under each strategy, bundle versus high price.

Reference no: EM133063048

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