Walt Disney World

Walt Disney World is a company that has touched the hearts of so many people. Its movies, theme parks, and merchandise make many people to remember those golden days when they were kids. The Walt Disney has a magical touch that has made it a big brand and to win audiences over and over. The company’s magical mix is where this magic is found. Walt Disney has three major products. Firstly its production company; makes movies and cartoons. The second product is Disneyland which is the most profitable theme parks; here, one is sure to be bedazzled. People get to meet the Walt Disney’s characters, go on rides and the amazing world of Walt Disney first hand. The third business is the Disney store which sells products that are connected to Disney; accessories, watches, clothing, and what not.

Since Walt Disney is a company that is mainly focused on getting the general population involved, the pricing is always mindful of the middle class (Sehlinger. 2016). Disney wants everybody to have their products. Thus, these merchandises are priced in such a way that it is possible for the middle class to also enjoy them. As much as the tickets of Disneyland are not cheap, they are also not that high to make it impossible for everybody to visit them on a frequent basis. It is important to note that many families visit Disney land so many times in their lives to have fun at the park. The pricing strategy for the entrance fee to the themes park of Disney is what this research mainly focused on and how it has contributed to the success of the park and in managing demand.

Walt Disney World strategy for the pricing of the entrance fee to its parks is a dynamic one; the prices are based on the demand level that is there at a given time (Veness. 2015). In the dynamic pricing, ticket prices are increased when there are many visitors (peak times), like summer weekends and school holiday breaks, and the prices drops during low traffic times like weekdays. The dynamic pricing strategy makes the market to be more open to the people, who are more price-sensitive (middle class), and this helps in managing demand; crowds are effectively reduced and the time spent in lines (Hughes, et al. 2014). This pricing strategy has made it possible for the company to properly manage demand especially during the peak seasons. This is very crucial to Walt Disney World because it is now able to deliver world-class experience to its guests. This peak pricing is a good and effective way of motivating customer behavior.

The dynamic pricing strategy is a successful one because it is mainly focused to benefit the customers (Smith. 2012). It has also opened communications with the customers through surveys. This pricing strategy has been marketed in a way that provides the customers access to Disneyland, rather than to just increase the profits. This is because offseason prices make it affordable to more consumers and the higher prices discourages overcrowding that was initially witnessed during the peak seasons. This pricing strategy is a good one but it can also destroy the reputation of Disneyland is some way. Many people don’t like the dynamic pricing strategy since it clearly favors those people with higher income (West, et al. 2015). The high income earners are able to enjoy so much flexibility when it comes to the dates of visiting the parks. For instance, peak pricing is usually in effect during times like Christmas and this is when schools are closed and the kids are free, while the lower income customers are usually restricted to times that are less convenient. The idea of adjusting prices on the basis of customer demand is harmful because it fails to take into consideration the importance of all the factors involved (Rajagopal. 2013). Generally speaking the dynamic pricing strategy adopted by the organization is so far working as intended and is good for Walt Disney World product although it has some disadvantages. It is important that people don’t only focus on the high price aspect of the tickets during the peak seasons and fail to acknowledge the benefits customers gain when the prices are reduced. Disneyland is on the view that if it can activate the dormant customers by lowering the ticket prices during off peaks; it is a good thing for the business and their product.

Universal World is a Walt Disney World close competitor. In the two parks, the daily cost of tickets drops greatly with the more days one stays there. A Walt Disney World ticket for 8 days is approximately $30 more as compared to a 5 day ticket of the park (Sehlinger, et al. 2016). This shows that the longer one stays the cheaper it gets on a daily basis. A Universal Orlando Park-to-Park ticket for 8 days is around $5 less as compared to that of Walt Disney. The pricing strategy that Universal Orlando uses is tailored to take advantage of attendance surge and to encourage people to stay for longer periods just as it is the case in Walt Disney (Sehlinger, et al. 2016). This pricing strategy was first adapted by Walt Disney in 2005 and it was being referred to as the “Magic Your Way”. It proved to be advantageous to the company and it is the reason why Universal Orlando Park also adopted it. The only difference that is there between the pricing of the two organizations is that one will pay more at Walt Disney World than they will pay Universal World at any given time.

It is the responsibility of the product/service manager to come up with a formal price plan when their competitor has significantly reduced the price of their product/service (Haines, 2013). It is very important that the company handle the pricing plan well. Pricing is something that is cost oriented (Nelson, et al. 2013). It isn’t varied enough for different market segments, product items, and purchase occasion. The ceiling of the price that Walt Disney World can charge for its services should be determined by their demand, while the operation cost should set the floor. As the manager, it will be important for one to start by considering why the competitor decided to lower their prices. Are they coming up with a new service because this is what the market demands or have they been compelled to reduce prices so as to boost their dwindling profit levels? Prior to considering coming up with a price plan, one must be confident that discounting will protect the company’s profit margins (if not increase it) and that the profit margin of the company is not just being given away by the price cuts (Ramaswamy, et al. 2011). It might even be profitable to have fewer customers at a higher sustainable price instead of having more at lower prices. If reducing the price is really necessary, then a formal price plan will be prepared.

Setting the price

  1. Selecting the pricing objective

The objective of setting the new price is to prevent losing the customers of the business to its competitor because of their lowered prices. The company has to maintain its current maximum revenue. The price charged by the company must also be an indication of the quality of the services offered and to maintain leadership through price.

  1. Determining the demand

The next step will be to determine the possible demand for the company’s services at different possible prices. Economic theory states that as the prices of a given product/service increases, its demand will come down. The survey approach will be used to estimate the demand curves. Here, the company will have to establish the intentions of its customers of hiring its services at different price levels. The cost that customers will be willing to pay for the company’s services will be used to inform on the appropriate price range.

  1. Estimating cost

The operation cost at the level of estimated demand will be then be established.

  1. Analyzing competitors costs and prices

It will then be necessary that the costs and margins that are earned by the competitors are established by analyzing their balance sheets and the other different ways that can be used to for setting prices.

  1. Pricing Method

Various pricing methods such as target return pricing, markup pricing, value pricing, perceived value pricing, and going rate pricing will be used to establish the different pricing alternatives that are there for the company to explore.

  1. Selecting the final price

These pricing methods will provide a narrow range that the price can be set. This stage might take into consideration some psychological factors that are related to market in deciding on the final price.

 

 

 

 

 

 

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