Essay on Merlin
Assignment: Question one, essay on Merlin
Word count: 1,406
The purpose of this essay is to investigate future pricing policy for Merlin for the tower. A brief review of Merlin’s management of the Blackpool Tower will be highlighted, and then using economic tools of analysis, it will clarify the concept of pricing discrimination and how companies use prices to attract certain kinds of customer. Followed by, the use of price and attendance data from other attractions, such as Camelot and Alton Towers to support the argument. Finally the essay will come to a conclusion.
`Merlin Entertainment in 2010 took over the management of Blackpool Tower, one of the U.K.’s more iconic tourist attractions. The Tower was built in 1894, and contains a circus, an aquarium, a world famous ballroom, Jungle Jim’s, The Tower Top and Jurassic Walk. The new owners are adding a Tower Dungeon and a new tower top 4D cinema experience (News Release, 2010). Earlier, entrance to the tower cost £17 for adults, £14 for seniors and children payable at the door, with a £3 discount for those booking online. For this, customers gained access to all facilities, as well as admission to the circus show. Merlin has commissioned to advise them on their future pricing policy for the tower. Price discrimination is the practice of setting different pricing methods in different virtual markets, while still preserving the same product throughout. The prices are based upon the price elasticity of demand in each given market and practice of marginal analysis (Armstrong, 2006). It is ideal to capture consumer surplus and to recognise degrees of discrimination. There are three degree of price discrimination, such as First degree, second degree and third degree. In first degree price discrimination, it is recommended that one charges a customer the maximum amount they are willing to pay. In second degree price discrimination, tactics such as “block pricing” and “commodity bundling” are common. (Tribe.
Word count: 1,406
The purpose of this essay is to investigate future pricing policy for Merlin for the tower. A brief review of Merlin’s management of the Blackpool Tower will be highlighted, and then using economic tools of analysis, it will clarify the concept of pricing discrimination and how companies use prices to attract certain kinds of customer. Followed by, the use of price and attendance data from other attractions, such as Camelot and Alton Towers to support the argument. Finally the essay will come to a conclusion.
`Merlin Entertainment in 2010 took over the management of Blackpool Tower, one of the U.K.’s more iconic tourist attractions. The Tower was built in 1894, and contains a circus, an aquarium, a world famous ballroom, Jungle Jim’s, The Tower Top and Jurassic Walk. The new owners are adding a Tower Dungeon and a new tower top 4D cinema experience (News Release, 2010). Earlier, entrance to the tower cost £17 for adults, £14 for seniors and children payable at the door, with a £3 discount for those booking online. For this, customers gained access to all facilities, as well as admission to the circus show. Merlin has commissioned to advise them on their future pricing policy for the tower. Price discrimination is the practice of setting different pricing methods in different virtual markets, while still preserving the same product throughout. The prices are based upon the price elasticity of demand in each given market and practice of marginal analysis (Armstrong, 2006). It is ideal to capture consumer surplus and to recognise degrees of discrimination. There are three degree of price discrimination, such as First degree, second degree and third degree. In first degree price discrimination, it is recommended that one charges a customer the maximum amount they are willing to pay. In second degree price discrimination, tactics such as “block pricing” and “commodity bundling” are common. (Tribe.
Bibliography: Bull, A. (1996), The Economics of Travel and Tourism, 2nd (Edn) Addison Wesley Longman, Melbourne, Australia. Holloway, J.C. (2002), The Business of Tourism, 6th Edition, Harlow: Pearson Education HR Varian (1989), ‘Price discrimination’: Handbook of industrial organization, Elsevier HR Varian (1985), ‘Price discrimination and social welfare’, The American Economic Review, JSTOR Krugman, Paul R Knetter MM (1989), Price discrimination by US and German exporters, The American Economic Review Laffont JJ, Rey P (1998), Price discrimination II, RAND Journal of Economics Schmalensee R (1981), Output and welfare implications of monopolistic third-degree price discrimination, The American Economic Review Samuelson & Marks (2003), Managerial Economics (4th Edn) Sinclair, M. and Stabler, M. (2002), The Economics of Tourism, Routledge, London. Tribe, J The Times of London (2010), Blackpool Tower to be sold as resort embarks on £40m development [online] Available at: http://business.timesonline.co.uk/tol/business/industry_sectors/leisure/article7082081.ece [Accessed: 18th March, 2011] Appendix 1 Figure 1. Adult prices (Source: Company Pricing Data, 2011) Declining Fortunes: 1995-2010 Figure 2 (Source: The Times of London, 2010) Revenue Projections Figure 3. (Source: Times of London, 2010)