Six Flags Discovery Kingdom Revenue Management Term Paper

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Flags Discovery Kingdom in Vallejo, California wants to implement a new revenue management system, maximizing revenue per customer, per visit and improving overall revenue. There are several tactics that can be utilized to extract the maximum revenue from customers. Some of these will be discussed in this paper. The nature of the business is important here, because amusement parks deal in a perishable good (park capacity). There are many different revenue streams within the park as well, so revenue management policies affect an entire suite of products and services, rather than a single good (No author, 2013).

One revenue management strategy is to foster repeat visits. While some customers travel to visit the park, there is a market of local consumers who might visit the park. Converting occasional visitors from this group into regular visitors can increase revenue substantially. Heo and Lee (2009) note that consumers find revenue management at theme parks to be acceptable, and view it as being similar to how the hotel industry works.

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The revenue manager faces an interesting decision here, because offering discounts to entice repeat visits means forgoing some income on the gamble that more income will accrue as the result of that decision (Walls, 2013). This is entirely possible for the theme park, because the entrance ticket is only one revenue stream -- most of the other streams come inside the park. Thus, offering discounts to encourage repeat visits from locals is sound revenue management practice. Theme parks in the Orlando area do this for Florida residents to entice them to utilize the parks sporadically throughout the year.

The trade-off with the entrance fees plays itself out with other forms of discounts as well. For Six Flags, the company should have gathered data that tells breaks down revenue, and allows for estimates of how much of a discount will entice visitors, and how much additional revenue the park will gain from attracting those visitors. If there are to be discounts, what type and to whom?.....

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