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Will the mixed bundling increase profits

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Reference no: EM133048013

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 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 across both tours is $4800.

Customer Preferences

Cruise

Casino

Customer 1

$7,000

$3,000

Customer 2

$2,000

$6,000

You know that 33% of your customers will never bundle, 21% of your customers decline cruises because of seasickness and 12% decline the casino trip saying they don't believe in gambling.

Given the preferences distribution, will the mixed bundling increase profits? To support your answer, you must show your calculation of the net gain in profit, if any, with a mixed bundle strategy.

Reference no: EM133048013

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