The art bundling: price bundling in tourism business.
5
Issued Date
2006
Resource Type
Language
eng
Rights
Mahidol University
Suggested Citation
Naphawan Jane Chantradoan. (2006). The art bundling: price bundling in tourism business.. Retrieved from: https://repository.li.mahidol.ac.th/handle/123456789/32878
Title
The art bundling: price bundling in tourism business.
Author(s)
Other Contributor(s)
Abstract
This topic has arisen from the interest in pricing strategies in tourism
sectors and the study of managing package tourism to satisfy demands of
potential clients. The study of pricing in tourism business has started
long before, however for the more intimate study on price bundling seems
to be very little comparing to other service sectors. As the connection
between pricing and profitability is fundamental, the understanding of
price bundling is prominent.
The main proposal of this paper is to investigate the pricing and bundling
activities which in turn affect the total perceived quality of package tours.
There is a mutual interest for the business sectors, tourism authorities and
the local suppliers in Phuket, a very well-known beach destination in
Thailand, to upgrade the destination and find out the possibility to repackage
Phuket for the major group of customers - European markets.
Therefore, there is a need to study deep down to discover whether or not
the all-inclusive holiday packages would match the needs of European
travelers.
This study particularly analyzed the behaviors and the attitudes of the
Swedish tourists who are now becoming the major customers of Phuket,
and used bundling technique to create the optimum holiday packages
according to their preferences. The discussions were mostly in the
economics and marketing directions. A case study of a travel agency was
introduced in this paper to illustrate how packaging principle and price
bundling strategies can be applied.
The outcomes of empirical findings verified that price is the most
significant factor which influences purchasing decision of the Swedish
travelers towards package tour to Phuket. The Swedes perceive that
purchasing an All-inclusive package (consisting of all products in one
package) is more valuable than paying for an individual component.
However, it was also found that the Reservation Prices (RP) of the
Swedes towards their preferred activities exceeded the reference market
prices which indicated the possibility to charge at a high markup for some
products. Derived from the interviews, surveys, literature and
observations of Swedish tourists’ travel behavior, sightseeing, spa and
diving are proved as preferable elements for package tours to Phuket.
The study finally concluded that the tour operators should implement
mixed-bundling as the optimal strategy in packaging holidays for the
Swedish tourists. This can reduce heterogeneity through selling one
bundle products (all-inclusive) with discounted price in order to capture
more customers, while those individual products can also be purchased
separately with higher prices to collect high markups.