Eurodisney Business Case
1) How could the company have erred so badly in its estimates of spending patterns of European customers?
* The idea was market Euro Disney as a complete holiday package and encouraging people to stay in the hotels and eat all meats in the complex. * While setting prices the Company was unable to estimate spending patterns of European consumers and competitors price alternatives. Due to the location advantage and incredible accomodation prices consumers prefer to stay in the city center.
* Travel time to Paris city center from Euro Disney is only 35 minutes and cost of accomodation in Disneyland is as much expensive as a best hotel in Paris. People prefer to stay overnight in the city center instead of staying in the park.
* At the end of 1992, it became clear that the numbers were not being met – there was a recession and people were bringing their own food and not staying in the hotels for many nights. Park admission prices were also very high ($42.25US for adults)
* Skimming Pricing: is relatively high pricing strategy. It is tempting where product is highly differentiated. Setting prices assuming that demand will not be determined by price and therefore the price can be high with large profit margins. It assumes inelastic demad curve, which sales will not affected by prices.
* Penetration Pricing: Setting prices assuming that demand will increase with lower prices and decrease with higher prices and therefore there are limitations on your profit margin. Elastic demand curve assumption.
* Eurodisney saw itself in a monopoly position, and positioned itself in a relatively inelastic demand curve with attracting customers regardless of higher prices. As a result of skimming pricing policy high prices, visitors shortened their stay, avoided hotels abd brought their own food and drink. Many visitors arrived early in the morning, staying late at night or check out early in the morning.
2) Could a better reading of the impact of
* The idea was market Euro Disney as a complete holiday package and encouraging people to stay in the hotels and eat all meats in the complex. * While setting prices the Company was unable to estimate spending patterns of European consumers and competitors price alternatives. Due to the location advantage and incredible accomodation prices consumers prefer to stay in the city center.
* Travel time to Paris city center from Euro Disney is only 35 minutes and cost of accomodation in Disneyland is as much expensive as a best hotel in Paris. People prefer to stay overnight in the city center instead of staying in the park.
* At the end of 1992, it became clear that the numbers were not being met – there was a recession and people were bringing their own food and not staying in the hotels for many nights. Park admission prices were also very high ($42.25US for adults)
* Skimming Pricing: is relatively high pricing strategy. It is tempting where product is highly differentiated. Setting prices assuming that demand will not be determined by price and therefore the price can be high with large profit margins. It assumes inelastic demad curve, which sales will not affected by prices.
* Penetration Pricing: Setting prices assuming that demand will increase with lower prices and decrease with higher prices and therefore there are limitations on your profit margin. Elastic demand curve assumption.
* Eurodisney saw itself in a monopoly position, and positioned itself in a relatively inelastic demand curve with attracting customers regardless of higher prices. As a result of skimming pricing policy high prices, visitors shortened their stay, avoided hotels abd brought their own food and drink. Many visitors arrived early in the morning, staying late at night or check out early in the morning.
2) Could a better reading of the impact of