hospitality marketing online course discussion 6

PRICING AND VALUE

Please reply to the questions and comment constructively on a classmates’ posting.

PART 1 – Reply to two of the questions

Question 1 – Price Discrimination

Give examples of how nightclubs discriminate price based on gender. Is this against the Constitution or any Law?

Question 2 – Pricing Strategy

Give some examples of how restaurants or hotels use the concepts of demand elasticity, price discrimination, yield management, or price bundling in their pricing strategy?

PART 2 – Comment constructively on a classmate’s posting

Here are two classmates’ posting from question 1 and 2. Please write comment for each one.

Question 1 -This semester I interned with MGM Events and Nightlife and price discrimination is common topic within the nightlife industry. The most common form of price discrimination in nightclubs and bars are varying prices for admission for males and females. These pricing strategies only affect a small portion of people who actually pay for admission, many club goers receive complimentary admission to the venues. However, the reason that clubs and bars are allowed to exercise this right is because they are individual and private business that are not subject to the Bill of Rights. They have the right to refuse service to anyone or throw anyone out of their venue anytime for any reason. The nightclubs and bars are also not required to abide by the Fourteenth Amendment and can charge anybody any price, regardless of age or gender. This loophole provides business like clubs and bars to provide discriminatory pricing. However, while these nightclubs take advantage of this gender loophole, it would be against the law to discriminate based on race. This is protected by the civil rights act. These discriminatory laws apply the same standards when businesses apply discount pricing for seniors or frequent customer discounts. Therefore, clubs and bars across the world are in legal boundaries to offer discriminatory pricing based on gender that does not violate the Constitution or laws.

Question 2 – Restaurants and hotels use price elasticity to see how their customers react when they raise the prices of their products depending on the demand there is for the product. For example, if a restaurant decides to mark up a prime cut of steak then a lot of their customers will prefer cheaper alternatives to the more expensive cut of steak. This would make the demand for this type of steak elastic because of how sensitive it is to the price changes. Hotels and restaurants use price discrimination to offer the same product or service to different people at different prices to maximize profit. An example of this would be that a hotel has age discounts for people of a certain age. This would attract more people of the age discount to stay at the hotel that is offering this discount compared to ones that do not offer the discount. An example of restaurants doing price bundling would be when they offer value meals to their customers making the meal cheaper to purchase than if the customer were to buy everything from the meal separately. This is a good way to maximize profit because people are more likely to buy a value meal then to buy everything in the value meal separately.