Business Case study

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The UA project went very well. When dropping you at the airport, Kate says: “I know some people who are looking for a pricing consultant. Yesterday I was contacted by a company called FYRE looking to rent an aircraft for some charter flights. They told me that they are organizing a big music festival in the Bahamas.Search on youtube for their promotion vidoe. I can give you FYRE’s contact, since you are already in the US, I think they will be happy to pay for your plane ticket to Nassau and cover your expenses while in there”. After talking to Lukas, you call FYRE and, with Kate ́s reference, they are happy to bring you in as a pricing consultant for the music festival.

Once in Nassau, you meet FYRE’s marketing manager Grant. He explains that they are organizing the festival in a small and remote island, so they are currently busy in planning the transportation (by plane or boat), accommodation, and catering for all attendees. However, your job is exclusively about pricing: Grant is very clear about the different types of festival experiences that he wishes to offer, however, the previous pricing consultant resigned due to disagreements with him. You can access all the data available so far and continue the project from there. Grant has designed three types of tickets, which only differ in terms of the quality of transport, accommodation and catering provided for the festival attendees: 1) the basic “Lodge” ticket, which includes flights, standard meals, and shared accommodation in a beach lodge; 2) the middle-end “Villa” ticket, which improves the quality of meals and includes private accommodation for small groups; and 3), the high-level “Ocean” ticket, which includes transportation and accommodation in a cruise ship, as well as luxury meals. After doing some research, the previous pricing consultant identified five demand segments (“VIP”, “Influencer”, “Traveller”, “Music”, and “Civilian”). He estimated the average willingness to pay of a representative individual in each segment for each of the three types of tickets. In addition, there are estimates of the market size and the costs of the marketing campaign that would be necessary to reach each segment. The operations team has also provided estimates of fixed costs and unit costs associated to each ticket version. All this information is summarized in Table 1. Finally, the marketing team also advises that reaching the “Civilians” segment is going to require distribution through third-party booking platforms (i.e. like Ticketmaster) which will take a 30% commission on our recommended retail price.

The next day in the office, one of your co-workers reveals that the costs above do not cover renting the land for the festival site as well as other “hidden fees” that FYRE must pay to government officials. These extra costs add up to 2 million US dollars and they must be paid upfront so they need to make the highest possible profit from ticket sales. She also says that the last consultant got into a huge fight with Grant because of the number of ticket versions to offer. In this context, your job is to determine the optimal pricing strategy for the FYRE festival: how many ticket versions should they offer? At what prices? Summarize your method and conclusions in a short report (approx. 1,000 words plus tables). If you must cancel a ticket version, bear in mind that Grant will not accept any recommendation that is not supported by numerical data. After looking at the final results, do you have any further advice for the festival organizers?

Client: FYRE festival
Task: Determine the optimal versioning strategy for the festival Method: Pricing Analysis (profit maximization)
Data: See cost, demand, and WTP estimates in the table 1 which is attached as a file! Make sure use the right data which says Lodge, Villa and Ocean : A short report (approx. 1,000 words) including:

a) Methodology

• b) Single-version solution
• c) Multi-version solution
• d) Optimal profits and recommendations

We want numerical numbers of the optimal profits and cover all the parts!

Make sure to provide tables, figures, screenshots, and appendices (e.g. with additional calculations) to support your arguments. These contents will not be part of the word count . Look for additional references, which can include academic papers, industry reports, press releases, legal documentation. Separate lists of references must be provided at the end of each section. An extremely good formatting, presenting and writing style.

Important notes

• The client is in the US, so use USD as the symbol,
• At least 7 sources for referencing, all referencing for the reference list and in text referencing must be HAVARD referencing.
• Arial 11, spacing 1.5

In the file set of two questions, read the question 1 and 2 and their answers, the answer are in the slideshow which is called question 1 and 2 answers.

Look at the example 1 and example 2 to help you construct similar tables. CS is an important part!

Now there needs to be a through read through about the powerpoint which says essay last , take extremelly care about the second slide which is about the clothing about the luxury stores. Slide 9 about versioning and slide 10 about the self -selection constraint. Take extremely care in each slide and the self-selection constraint must be emphasized in the essay, its extremely important and it must be included and emphasized, also make reference about it. With versioning, think about apple and its products.

Now make sure to put this in the essay

optimal versions and which end will launch

summary all the information you have in a table. And then you are able to solve it.

no mathematical demand functions and try different options and check out profits for different options,

• One version of the product, eg only the full version
• Launch the striped version
• The both version

Bear these in mind which is related to question 1 and 2) and will help in the essay

consumer WTP, the 1000, the high end users will but it but the profits is much reduced. the high end and low will still buy it. look at the numbers in the table to check points. high version pnly and then only striped down version. so the multiversion, the full price at the highest WTP.

only one version, only launch the higher one for the high end consumers but with limitations, eg only 1 milion custoemrs and less revenue.

Emphasize on the consumer surplus.

For the single pricing strategy, implement exactly every line shown in the question 1 and 2 answers PowerPoint. Versioning, second price discrimination, the consumers have many choices. Criteria to model consumer's choice. eg cs. Which is the WTP and the price they are paying . rule of thumb, search the optimal prices, the price that extracts all the CS. We want the high end consumers to buy the high end products.

Also consider different costs and draw up a table, there are three different versions of the product, five different segments of demand.

For some tables, you can use the tables from the slides and no problem about this.

For the last slide in the question one and question two, the tables has the biggest hint, middle version will not be launched as although VP gives some profits, the higher end it gives more profit.