In the article “Disney Discovers Peak Pricing” by S.K. London, he explores the differences of price surging and price discrimination. Price surging is a system that is commonly known to be used by Uber, “Prices go up to encourage more drive to go online. The increase in price is proportionate to demand” (Diakopoulos). London explains that an article published in Bloomberg states, “Disney introduced surge pricing to its theme parks,” but it is not actually surge pricing, it is price discrimination. Disney is not price surging, but is in fact price discriminating during the summer because the demand is high, children have no school, and it is relatively insensitive to price. According to the article “How Uber Surge Pricing Really Works” by
London states “there is no clear mechanism for supply to increase in response to price…but Disney will struggle to offer more park. Second, because the price changes will be nowhere near as dynamic, prices will be higher at certain times of the year.” Disney is actually doing some “old-fashioned price discrimination” (London). According to Modern Principles: Microeconomics by Tyler Cowen, price discrimination is “the selling of the same product at different prices to different customers” (259). An important principle of price discrimination is, “if the demand curves are different, it is more profitable to set different prices in different markets than a single price that covers all markets” (Cowen, 261). In the summertime, it is easy for Disney to price discriminate and make their ticket prices higher. The demand during the summertime is higher than any other time due to many factors. The graph below shows a demand shift to the right because people have a “greater willingness to pay for the same quantity” (Cowen,
Although Disney has nothing else more to offer for higher prices, people will still go. London states “by having the same price all year round, there is less of an incentive to take children out of school in search of a cheaper holiday.” The supply of tickets at Disney is still the same, it is the demand that is different. This article also connects with the concept of elasticity, according to Cowen, “the elasticity of demand is a measure of how responsive the quantity demanded is to a change in price” (71). Although Disney raises their prices during the summer, the demand still stays the same, meaning that it is less elastic. The more responsive the consumers are to the price change, means that it is more elastic. The Disney tickets would be considered inelastic because the quantity is insensitive to the change of price. There are multiple microeconomic concepts in this article such as price surge, price discrimination, supply and demand, and elasticity. As stated earlier, Disney is not actually price surging like Uber does. They are price discriminating in the summer, making their tickets inelastic because demand is high, kids are out of school, and it is insensitive to
Inelastic demand means that an increase or decrease in price will not significantly affect demand for the product. In spite of the rising prices for the Blue Jays tickets, fans were expected to turn out in large numbers. This inelastic demand for the tickets can be attributed in large part of the fact that their teams plays so well in 1998, and another factor is that the Blue Jays fan could never stay away from their team. Another inelastic demand for the Blue Jays tickets is that there is no other locally substitute team.
The ticket price range at Disney World is ranged from one hundred to over eight hundred dollars. Shown on the Disney World website, the annual passes are eight hundred, and the daily tickets are one hundred dollars per ticket. The price of tickets are much more expensive for non-residents of Florida. Not to mention, purchasing a plane ticket to Florida can add more to the bill. The food prices at Florida are expensive too. Tuttle, a journalist, mentions, “Food easily costs over $10 per person, per order even at Disney's to-go type restaurants, and sometimes over $50 per person for special meals hosted by characters like Ariel and Winnie the Pooh.” (par.4). Hotels at Disney World cost around one thousand dollars a night. Souvenirs can add an extra thirty dollars. On an empty stomach, Disney world serves unique food. Przygoda, a student at university South Carolina, shows a mouthwatering dessert sold at Disney World, “Kitchen Sink.” (par.2). The Kitchen Sink dessert contains a bowl of ice cream and whip cream with loads of cherries on top. Regardless of the price of the park, Disney World brings smiles to kids all over the world with their live Disney characters, and rides. Disney World holds four parks that total to over fifty rides. Porter, a journalist, shows, “If you are visiting for exactly four days you can hit every park giving each its own designated day.” (par.4). It takes more than two days to enjoy all four parks at Disney world, but perhaps even more. The parks also allows families to take pictures with Disney characters walking around the
We the consumer would rather pay less for any product that is needed or want. Ultimately we are the reason for high prices as well as low prices. Prices of products do not always stay the same and more popular products have higher prices than less popular products. These fluctuations, high prices and low prices are from the idea of supply and demand. Supply and demand defines the effect that the availability of a particular product and the desire or demand for that product has on price. Generally, if there is a low supply and a high demand, the price will be high (Investopedia). To understand the idea of supply and demand, the understanding of supply and the understanding of demand must be defined. The Law of Supply states that at higher prices, producers are willing to offer more products for sale than at lower prices, also that the supply increases as prices increase and decreases as prices decrease (Curriculum Link). The Law of Demand states people will buy more of a product at a lower price than at a higher price, if nothing changes, at a lower price, more people can afford to buy more goods and more of an item more frequently, than they can at a higher price and that at lower prices, people tend to buy some goods as a substitute for others more expensive (Curriculum Link). In todays economics these ideas are seen frequently in everyday life. The laws of supply and demand are seen in many ways in the company Apple Inc. Each year Apple Inc unveils a long awaited mobile operating system and IPhone. We can also see many aspects of the law of supply and demand in Nike Inc’s Jordan Brand. Jordan Brand has released a number of...
In the article. “What’s wrong with price gouging”, by Jeff Jacoby, talks about, why it is not a good idea to increase prices at more than a higher expectation when there is a sudden shortage. This article is referring to the massive pipe break that more than dozens of town in Boston without drinking clean water over the weekend. After the aftermath, the prices of bottled water increased. Massachusetts Attorney General, Martha Coakley insisted the vendors not to increase the prices of bottled water since consumers would not be willing to buy at that given price. After hearing anecdotal reports of price gouging of water bottles. Martha Coakley stated
London states “there is no clear mechanism for supply to increase in response to price…but Disney will struggle to offer more park. Second, because the price changes will be nowhere near as dynamic, prices will be higher at certain times of the year.” Disney is actually doing some “old-fashioned price discrimination” (London). According to Modern Principles: Microeconomics by Tyler Cowen, price discrimination is “the selling of the same product at different prices to different customers” (259). An important principle of price discrimination is, “if the demand curves are different, it is more profitable to set different prices in different markets than a single price that covers all markets” (Cowen, 261). In the summertime, it is easy for Disney to price discriminate and make their ticket prices higher. The demand during the summertime is higher than any other time due to many factors. The graph below shows a demand shift to the right from D1 to D2 because people have a “greater willingness to pay for the same quantity” (Cowen,
After a company decides on its product(s), it has to think how it will price said product(s). Disney goes about pricing for all of its products in different ways. For instance, Disney’s amusement park tickets are cheaper during times of the year that it is the least busy and the tickets prices rise during sessions that the parks are busiest ("Your Ticket"). However, Disney’s biggest competitor, Universal Studios, goes about things in a very different way. Universal Studios tickets cost the same no matter
Supply and demand is what determines the market prices of various items. Whenever the supply is greater than demand the price of the goods must be lowered. In contrast, when the demand is greater than the supply the prices must go up (Funk & Wagnalls New World Encyclopedia, 2015). For example, during the Mardi Gras season in Louisiana the price of a top notch King Cake is about $19.99-$29.99. Depending on the seller. Once Mardi Gras season is over and Lent season begins the demand decreases resulting in the
When it first opened, there was moderate controversy over the lack of African American employees. Since 1963, civil rights activists have pressured Disneyland to hire people of different races to make the park more diverse. Back then Disneyland had a number of temporary rides and shows that passed through rather quickly. This was because the park only had about half the number of attractions it has now. When Disneyland first opened guests were charged separately for admission to the park and attraction tickets. According to the website mouseplanet accessed on November 16 2015, “Adults could get into the park for $1 and rides cost between 10-30 cents.” Since its opening, Disneyland has undergone a number of expansions and major renovations. This includes the addition of New Orleans Square in 1966, Bear Country in 1972, and Mickey's Toontown in 1993. As stated in the article Then and Now on the pbs website accessed on November 16 2015, “Tickets to enter the park now cost around $85.00.” Since the opening the park has restored many classic attractions such as Space Mountain, Jungle Cruise, and the Haunted
Pricing is an important aspect of every business. Chief Financial Officer’s (CFO) use pricing to create financial projections, establish a break-even point, and calculate profit and loss margins (Power Point, 2005). It is the only element in the marketing mix that produces revenue. Price is also one of the most flexible elements of the marketing mix as it can be changed very quickly. This is usually done to beat competitor prices in an attempt to fix the product’s market value position very low (Anderson & Bailey, 1998). After all, high prices make it difficult to become the market share leader. The leading US retailer, Wal-Mart, is an expert at low product pricing as evident in 2004 with $250 billion dollars in sales to their 138 million weekly shoppers. However, they are also responsible for reducing prices so low that it drives specialty stores out of business. This is the effect Wal-mart has had on many toy stores and has almost closed the doors of the famous toy store Toys “R” Us Inc.
When demand is elastic as with Coca Cola products price changes affect total revenue. When the price increases revenue decreases and when the price decreases revenue increases. For Coca Cola if they notice a decrease in revenue they would offer products at a discount to increase revenue. They do this quite often with sales such buy 2 20 oz. bottles for $3 instead of the normal $1.89 each price
An example of price discrimination in the private sector is the airline industry. In most cases, passengers sitting next to each other on any given flight did not pay the same price per ticket. Factors such as: one-way vs. round-trip tickets, duration of stay, promotions, and when the flight was purchased, all impact the overall price of tickets. The airline industry itself is able to control the market price for the tickets based on demand and the amount of passengers on the flight. Such price discrimination is use...
Morton Salt, the FTC thought that the ability for the larger businesses to buy much more from wholesale producers such as Morton Salt, especially when Morton Salt had special discounts for firms that bought more product. The smaller firms could not compete and the commissioner found that it was monopolistic behaviour and put a stop to it. Another issue of ethics that presides in the study of price discrimination is that companies like morton salt are not very or at all transparent about the reasoning behind certain price discriminations. Companies do not actively state why certain products or services are more expensive for some customers and not others. In the journal article “The ethics of Price Discrimination” the authour Juan M. Elegido describes a common scenario in airline price discrimination tactics “The easiest way to spoil a plane trip is to ask your seatmate how much he/she paid for her/his ticket. You might well find that while you (or your employer) paid $1,100, your seatmate was making the same trip, with the same comfort, for only $180”. Why the vast difference? Only the airline knows for the most part, but they are not telling unless someone tried to dispute the price difference
One method that Toyota can consider is using the price elasticity of demand to determine whether to increase or decrease the sale price of their automobiles. The responsiveness or sensitivity of consumers to a price change is measured by a product's price elasticity of demand (McConnell & Brue, 2004). Market goods can be described as elastic or inelastic goods as change in quantity demanded for that good. If demand is elastic, a decrease in price will increase total revenue. Even though a lower price would generate lower sales revenue per unit, more than enough additional units would be sold to offset lower price (McConnell & Brue, 2004). In a normal market condition, a price increase leads to a decreased demand, and a price decrease leads to increased demand. However, a change in income affecting demand is more complex.
...e enough because the company has chosen the best possible way to increase the company performance. The pricing strategy is the company’s best strategy from all because it affected the sales revenue a lot. Although fluctuating the price is quite risky for a business since the customers might order from other companies if the company doesn’t do it properly, but XXX Company manage to done it well so far. The effectiveness might also be seen by the average of sales revenue between January to August from 2011 to 2013.
For example, the chart would reflect the correlation between demand and the products price, or in the case of supply, the supplied products and its price. Moreover, supply, demand, and price, along with supply elasticity can be graphed and analyzed. This particular method of tracking and analyzing data is essential in identifying the markets status and determining the best plausible route (Skousen, 2014). By studying supply and demand, one is also able to identify whether an excess or a shortage in demand or supply is occurring, or whether an equilibrium has been attained. Consequently, it is evident that supply and demand take part in the market economy and greatly influence and impact the price value. Furthermore, to express how supply and demand impacts the price value, the price value of airline tickets will be utilized as an