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Hanson production: Pricing For Opening Day Case Solution

Back Ground

Hanson production started its work in the mid-1950s from a very small scale investment. Since then it grew rapidly. Joanne Shen who started as an intern has worked for Hanson production for 12 years and she is a huge asset for the company. She has a very good personal relation with the people in the Broadway production industry. Although this company grew rapidly its work force expanded at a much slower rate. Currently Joanna Shen has to make a decision on the new theater and ticket pricing structure for her new play.

Objective

  • The objective of this report is to determine the correctprice for the tickets in the play and to decide which theater out of the three theatershe should choose in order to conduct her musical play.
  • Lowering the theater price by great amount will decrease the revenue and profit.
  • Increasing the price leave substantial amount of seats vacant which will give a bad impression to the critics.
  • We should decide the optimum price for the tickets to get the highest amount of revenue and profits

Problem Statement

The major problem that the president of the Hanson Production is facing is related to its current production as Shen has to make different decisions in order to make the final ticket pricing decision that allow to target greater number of People. Moreover, making the appropriate pricing for the ticket is the most important issue as it will assist in order to enhance the growth.

In addition to that, the issues that the company is facing include identifying the best location for the show as well as number of the seats that should be in the selected theater. Secondly, the marketing of the production is another area of concern of the Shen.

Case Analysis

Marketing and Research

  • Shen currently has a cast of 20 musicians.
  • Shen first conducted a market research which did not show positive results so she decided so rewrite the entire musical and did additional marketing so that demand for her play became satisfactory.
  • She also targeted a particular segment in the market which are the children as the female lead was a Disney star. She was quite impressive in her marketing strategy.
  • This will also help her determine the suitable price for her seats. There are different types of seats in the theaters which have different prices.

Alternative Solutions

 

There are three alternatives solutions that are available for the Hanson Production in order to make the final decision for the pricing structure of ticket.  These three alternatives are the venues that will provide accommodation for the new play production of the company .The selection of right pricing with provides the chances to target larger number of audience whereas, on the other side, charging price too low or too high will greatly impact the sales of the company.

 Alternative 1:

The alternative 1 that is available for the Hanson Production for its new production is to select the Hilton Theater in order to make the final decision related to the charging of tickets prices.

Alternative 2:

The alternative 2 that is available for the Hanson Production for its new production is to select the Longacre Theater in order to make the final decision related to the charging of tickets prices.

Alternative 3:

The alternative 3 that is available for the Hanson Production for its new production is to select the St.James Theater in order to make the final decision related to the charging of tickets prices.

 

Standards used in Pricing Decisions

  • The pricing of seats in thetheater can be made on historic cost for musical shown in exhibit 4.
  • There are 6 types of seats in the theater and they all have different types of prices. There is different price for an individual and for a group.
  • The average price for the different seats of group and non-group has been used. A price of 79.10 is assumed where the historic price is not available.
  • For the price below 79.10the demand is 100%. The price above 79.10 the demand is 98% based upon historic data available on averageoccupancy shown in exhibit 2 of the 10 m most successful shows based upon the highest revenues.

Revenue

  • ­The calculation of projected revenue is based upon the assumption of multiplying average daily price withoccupancy percentage with capacity to give a figure if average daily revenue for different products.
  • The weekly revenue is calculatedby multiplying the daily revenue with number of different days to give revenue for the week of that particular product.
  • There are a total of 8 events in the week...........................

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