1) You operate a Caribbean destination resort. You currently offer plans for a cruise departing from the resort and plans for a casino stay. It is expected that in 2021 there will be some return to more normal travel. You will re-launch your advertising for 2021 announcing that customers will be able to do both tours for one price. Your marginal cost per customer across both tours is $4800.
a) Here are the customer preferences. Determine how much your net profit will increase with a single bundle price compared to the maximum net profit you would make with a high price strategy.
We Book Your Honeymoon Tour
Customer 1 $7,000 $3,000
Customer 2 $2,000 $6,000
b) From experience you know that some traveler will never bundle. For example, you know that about 21% of your customers decline cruises because of seasickness. At least 12% decline the casino trip saying they don’t believe in gambling. As a rough estimate you initially expect that approximately 33% of your customers will never bundle. Will mixed bundling increase profits? You must show that calculations that support your conclusion.