Disney Theme Park Ticket Prices May Not Be Aligned With Customer Value 🏰
Disney’s CEO, Bob Iger, believes that the current Disney park prices are set at an appropriate level and does not view the rising ticket costs as an issue, even though reports suggest that high prices and inefficient pricing structures have led to a decline in park attendance. Amid declining sales, can business executives truly maintain confidence in their pricing strategies? Or should they reconsider and make the necessary adjustments?
The issue with Disney park prices, as highlighted by Iger’s statement, appears to be its heavy reliance on what the company believes its value is to customers, without enough consideration for what customers actually value. This one-sided approach can lead to serious problems. By not aligning pricing with customer preferences and perceptions, Disney may risk losing potential visitors, especially during challenging economic times when consumer choices are influenced by value and affordability.
In this article, we are going to discuss establishing suitable pricing structures within theme parks. Initially, we will delve into Disney park prices as a case study, analysing their recent pricing adjustments. Subsequently, we will highlight potential adverse outcomes resulting from their pricing approach. An examination of theme park pricing in Australia will follow, shedding light on the industry’s existing challenges. We argue that theme parks should tailor their offerings and pricing strategies in accordance with customer value.
At Taylor Wells, we believe that, despite the escalating cost of living, theme parks can still attract customers with a well-crafted pricing strategy. By the end, you will have gained insight into how theme parks can effectively strike a balance between providing value to customers and implementing revenue-generating pricing models.
What Is Wrong With The Increase In Disney Theme Park Prices?
In December of last year, Disney World implemented a variable pricing model for operating tickets, which took into account factors such as the specific park, date, and demand. As a result of this new model, ticket prices surged to as high as $189 for entry to Magic Kingdom during the peak Christmas and New Year’s seasons.
The company has also made updates to its Genie+ reservation system. Despite this, there are still available deals, such as the “4-Park Magic Ticket” in Florida, which costs a total of $396 plus tax for four days, averaging around $100 per day. Additionally, Florida residents have the option to save money with special passes, like a 3-day ticket priced at $70 per day or a 4-day ticket at $58 per day.
In an effort to enhance guest experiences and make them more budget-friendly, Disney parks are also reintroducing the Disney Dining Plan and easing the theme park reservation system, which was initially put in place during the COVID-19 pandemic.
Should Disney be unconcerned about their park prices? Reports indicate that Disney World is experiencing a decrease in attendance, which is attributed to both high prices and increasing competition. reports indicating a decline in park attendance. The company cannot simply dismiss the significance of their current pricing strategy. When sales decline, businesses must scrutinise their pricing and the value they provide. Are the prices genuinely aligned with the value they offer? Why are fewer people willing to pay for it? These are essential questions to address.
Setting Disney park prices according to the value perceived by the company, rather than considering what customers truly value, may not be advantageous.
CEO Bob Iger asserts that his priority is to ensure appropriate Disney park prices, which in this regard means generating prices that accurately reflect the value Disney provides to its customers. He further emphasised that Disney parks offer an exceptional and highly sought-after experience, making them a widely successful and popular business and product. However, value-based pricing doesn’t necessarily work like this. What a business thinks is valuable may not be valuable to its customer. In short, if customers don’t believe the value provided to them is valuable, pricing may not be right.
Setting prices solely based on a company’s perception of the value they offer can be a risky approach, as it overlooks the crucial aspect of customer-centric pricing. Many businesses fall into the trap of believing that their products or services are worth a certain price based on their costs, features, or perceived uniqueness in the market. While these factors are essential, they don’t fully capture what customers truly value and are willing to pay for.
The key to successful pricing lies in understanding the customer’s perspective. Customers evaluate a product or service based on how well it fulfils their needs, solves their problems, or enhances their lives. They consider factors such as quality, convenience, brand reputation, and overall experience. Failing to grasp these customer-centric elements can lead to a disconnect between the pricing and the perceived value, leading to lower sales and customer dissatisfaction.
Discussion On What Theme Parks Can Learn From Disney Ticket Prices
Customer discontent is not limited to Disney park prices alone; it extends to Australian theme parks as well. Recently, visitors to some of Australia’s well-known theme parks expressed frustration over a significant 150 per cent increase in membership prices.
Village Roadshow Theme Parks, the owner of subsidiaries like Movie World, Sea World, Wet n Wild, Australian Outback Spectacular, Paradise Country, and Top Golf on the Gold Coast, has reevaluated its offerings, leading to a revision in its membership pricing.
Customers were informed through an email that those currently paying $36 per month for an annual theme park pass would now have to pay $96 monthly. The package offers various benefits, such as unlimited entry to all theme parks except Top Golf, one free entry per year to Movie World’s White Christmas (worth $79), and free entry to Sea World’s Spooky Nights and Carnivale (both valued at $69). Despite these benefits, many subscribers expressed dissatisfaction and even stated their intention to boycott the theme parks, as they believed the pricing changes were not justified.
Why is it essential for Disney Park and other theme parks to match their prices with customer value?
In a market that is becoming more competitive and customer-driven, theme parks should adopt a customer-centric pricing strategy. By doing so, they can not only draw in and retain customers but also cultivate deeper brand loyalty, leading to a more sustainable and profitable business in the long term. As the cost of living continues to rise, prices that are aligned with customer value are vital for theme parks to attract, retain, and satisfy visitors while building a positive brand reputation and long-term loyalty.
1. Attracting and Retaining Customers
In a competitive market, theme parks need to entice customers to choose their parks over others. By matching prices with customer value, theme parks can create a compelling proposition that resonates with visitors. When customers perceive the ticket prices as reasonable and aligned with the overall experience they receive, they are more likely to choose that theme park for their leisure activities. Additionally, visitors who feel they got good value for their money are more likely to return for repeat visits, fostering customer loyalty.
2. Enhancing Customer Satisfaction
Customer satisfaction is a key driver of success for any business, including theme parks. When visitors feel that the park’s pricing accurately reflects the quality and enjoyment of the attractions, they are more likely to have a positive experience. On the other hand, if prices seem inflated compared to the perceived value of the offerings, it can lead to disappointment and a negative perception of the park. Aligning prices with customer value ensures a positive customer experience and increases the likelihood of positive reviews and recommendations.
3. Building Brand Loyalty and Positive Reputation
Word-of-mouth plays a significant role in the success of theme parks. By setting prices according to customer value, parks can foster positive word-of-mouth marketing. Satisfied visitors are more likely to share their enjoyable experiences with friends and family, encouraging others to visit. This positive reputation helps build brand loyalty and draws in new customers who trust the park’s offerings. In contrast, pricing misaligned with customer value can lead to negative reviews and a tarnished reputation, deterring potential visitors and hindering business growth.
How can Disney theme park prices be aligned with customer value?
By taking the following steps, Disney Park and other theme parks can realign their prices structure to match customer value effectively:
1. Conduct Customer Surveys and Feedback Analysis
To understand the perceived value of their offerings, theme parks should conduct customer surveys and analyse feedback from past visitors. These surveys can gather insights into what aspects of the park are most important to customers, what they enjoyed the most, and what they believe could be improved. The feedback analysis helps identify key attractions and services that customers value the most, which can inform the pricing strategy.
2. Segment Customers and Their Preferences
Different customer segments may have varying preferences and willingness to pay for certain experiences at the theme park. By segmenting customers based on demographics, interests, and behaviours, the park can tailor pricing packages to suit each segment’s unique needs. For example, families with young children may highly value kid-friendly rides, while thrill-seekers may prioritise access to intense roller coasters.
3. Implement Dynamic Pricing Strategies
Theme parks can adopt dynamic pricing models that adjust ticket prices based on factors like peak times, demand, and attendance levels. This approach allows the park to optimise revenue while still appealing to customers seeking value. During less busy periods, the park can offer discounted rates to incentivise visits, and during peak seasons, they can set higher prices without alienating customers who value the experience during those times.
4. Bundle Packages and Offer Customisation
Create bundled packages that combine popular attractions or services at a discounted price compared to purchasing individual tickets. Bundles appeal to customers seeking a comprehensive experience and can lead to higher spending. Additionally, offering customisation options allows visitors to tailor their experience to their preferences and budget. This flexibility enhances perceived value and customer satisfaction.
5. Promote Transparency and Value Communication
Be transparent about the pricing structure and communicate the value customers will receive clearly. Clearly highlight the benefits of each ticket type or package, emphasising unique offerings, and exclusive experiences. Providing detailed information about attractions, shows, and additional services can help customers understand what they are paying for and encourage them to make informed decisions.
Implications Of Customer Value-Based Pricing And Marketing Strategy In Theme Parks
Aligning pricing with customer value requires theme parks to make strategic changes to their organisation’s functions and processes. Consequently, theme parks need to foster a customer-centric culture throughout their organisation. This involves training staff to prioritise customer satisfaction and continuously improving the visitor experience.
Our findings show that with the right set-up and pricing team in place, incremental earnings gains can begin to occur in less than 12 weeks. After 6 months, the team can capture at least 1.0-3.25% more margin using better price management processes. After 9-12 months, businesses often generate between 7-11% additional margin each year as they identify more complex and previously unrealised opportunities, efficiencies, and risks.
Providing comprehensive training to employees is essential in ensuring they understand the significance of customer value and how it relates to the park’s pricing strategies. This training should focus on actively listening to customers, empathising with their needs, and finding solutions to meet their expectations. Employees should be empowered to make decisions that prioritise customer satisfaction without being bound by rigid protocols, allowing for greater flexibility in addressing customer concerns.
A customer-centric culture is not a one-time initiative but an ongoing commitment to improvement. Theme parks should regularly review and refine their pricing strategies and customer service approaches based on data and feedback. This iterative process allows the park to adapt to changing customer preferences and expectations, ensuring that its pricing remains aligned with perceived value.
Our findings show that when a business builds and embeds commercial capability across the business; bolstering its internal pricing skills and capabilities to build a sustainable pricing system, it can generate at least 3-10% additional margin each year while protecting hard-earned revenue and volume. This is at least a 30-60% profit improvement straight to the bottom line.
As the cost of living rises, consumers become more conscious of their spending choices, and discretionary expenses like theme park visits are scrutinised. Theme parks face the challenge of convincing potential visitors that their offerings are worth the price. Aligning pricing with customer value becomes crucial as it directly influences the perceived benefit customers receive from their investment. If theme parks fail to do so, they risk losing potential customers who may opt for more essential or cost-effective entertainment options.
Theme parks need to differentiate themselves by offering a compelling value proposition. When the pricing structure accurately reflects the quality of attractions, services, and overall experience, customers are more likely to perceive the visit as worthwhile. This alignment fosters positive word-of-mouth and encourages repeat visits, driving sustained profitability for the theme park.
Through this approach, theme parks can also mitigate the impact of economic fluctuations and changing consumer preferences. In times of economic uncertainty, customers are more discerning about their expenses. Thus,1 aligning pricing with customer value allows theme parks to adapt to evolving consumer needs and preferences, ensuring their offerings remain attractive and competitive in the market.
For a comprehensive view of building a great pricing team to prevent loss in revenue, Download a complimentary whitepaper on How to Improve Your Pricing Team Performance.
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