Strayer University High Price Strategy Report

PART A

Giventhe preferences, would bundling improve profits over the high-pricestrategy? Support your conclusion by showing if (by how much) profitsdiffer under each strategy.

You help couples book their perfect honeymoon. You currently offer plans for a cruise and for a casino stay.

Your sales manager is getting her MBA and has suggested you might consider bundling as a way to boost profits.

The table below shows the customer preferences. Your costs are $100 for the first booking in a customer’s name and $50 for each additional booking in the same customer’s name.

PART B

Follow up question (note that the dollar amounts have not changed from the previous scenario.)

You help couples book their perfect honeymoon. You currently offer plans for a cruise and for a casino stay.

Your sales manager is getting her MBA and has suggested you might consider mixed bundling as a way to boost profits.

Thetable below shows the customer preferences. Your costs are $100 forthe first booking in a customer’s name and $50 for each additionalbooking in the same customer’s name.

Youknow that about 21% of your customers decline cruises because ofseasickness. At least 12% decline the casino trip saying they don’tbelieve in gambling. As a rough approximation, you estimate thatapproximately 33% of your customers will never bundle. Given thepreferences distribution, will mixed bundling increase profits? Youmust show the calculations that support your conclusion.