Reference no: EM133700548

Assignment: Business and Finance- Marketing

What happens when you are no longer "the Happiest Place on Earth"? The Walt Disney Company doesn't want to find out and is "reimagining" its pricing strategy. Responding to the ever-increasing demand for theme park tickets, especially at peak times, Disney has implemented "demand-based pricing" at both Walt Disney World in Florida and Disneyland in California.

Airlines and hotels have used demand-based pricing for years by charging higher prices during summer vacation season and around holidays when demand for flights and hotel accommodations is highest. Similarly, demand-based pricing has been in use by Disney competitor, Universal Studios, and other theme park operators in the United States. The idea is to redistribute customer demand by lowering prices during times with less demand to encourage more sales and increase prices at times when demand is higher to encourage customers to switch some of their visits to lower-priced times.

Visitors to Disneyland were previously charged a single-day ticket price of 499.00. Under demand-based pricing, there are three prices. "Value" tickets for Mondays through Thursdays during weeks when children are in school are only 495, a reduction of 54.00. "Regular" tickets for most weekends and summer months are $105. "Peak" tickets for visitors during December, spring break weeks, and July weekends are highest at $119. For Orlando's Disney World, the pricing is similar but more complex as a result of having four different parks at the site. The new demand-based pricing is only for single-day tickets and does not affect the price of annual passes or multiday tickets, which most families buy when they travel to Disney.

The unknown is how consumers will respond to this new pricing strategy long term. Will they see it as a more equitable system in which you pay more if you want to visit Disney at the "best" times to travel and pay less if you can vacation at "off" times? Of course, consumers may perceive the new strategy as a pricing gimmick to gouge consumers during heavy travel times to increase Disney profits.

Certainly, demand-pricing tactics airlines employ are not thought of kindly and have contributed to negative consumer attitudes toward the airlines. Although Disney stresses that it is using the new demand-based pricing to more efficiently manage its customer experience, it should be obvious that this policy can also lead to greater profits. Even more important, how will consumers think of Disney and its theme parks long term? Will Disney still be the happiest place in the world?

You Make the Call

I. What is the decision facing Disney?
II. What factors are important in understanding this decision situation?
III. What are the alternatives?
IV. What decision(s) do you recommend?
V. What are some ways to implement your recommendation?