Restaurants and museums discriminate against tourists by printing two menus or by using two ticket windows. Colleague Mike Shor (who speaks Russian) found this in St. Petersberg.
My wife and I were in St. Petersburg this summer and we definitely found this to be the case. We've also seen locals get a better price in Prague, Rome, and in Palm Beach, FL. Is this really price discrimination? Or rewarding your best customers.
This is a "willingness to pay" calculator that any good business person should use. It is all about moving assets to higher valued uses. You know what your everyday customers are "willing to pay", however your incremental out of town business is up for grabs with a potentially higher "willingness to pay" tied to it.
While in Thailand I learned Thai numbers pretty quickly, but since I couldn't look Thai, I was stuck paying "farang" prices most of the time (unless negotiation was possible). John, I don't think they are rewarding their best customers. The best customers are the ones with the highest margin.
Blair, I think you're right about the customers who pay the highest margin are your best customers. As long as you operate under the assiumption that your "Out of town" customers are a steady stream throughout the year. However, I think every travel destination operates seasonally (with the exception of Hawaii and French Polynesia). In addition to that travel destinations fall in & out of consumers favor year to year. During those seasonal lows your best customer quickly becomes those locals who are helping you keep the lights on.
My wife and I were in St. Petersburg this summer and we definitely found this to be the case. We've also seen locals get a better price in Prague, Rome, and in Palm Beach, FL. Is this really price discrimination? Or rewarding your best customers.
ReplyDeleteThis is a "willingness to pay" calculator that any good business person should use. It is all about moving assets to higher valued uses. You know what your everyday customers are "willing to pay", however your incremental out of town business is up for grabs with a potentially higher "willingness to pay" tied to it.
ReplyDeleteWhile in Thailand I learned Thai numbers pretty quickly, but since I couldn't look Thai, I was stuck paying "farang" prices most of the time (unless negotiation was possible). John, I don't think they are rewarding their best customers. The best customers are the ones with the highest margin.
ReplyDeleteBlair, I think you're right about the customers who pay the highest margin are your best customers. As long as you operate under the assiumption that your "Out of town" customers are a steady stream throughout the year. However, I think every travel destination operates seasonally (with the exception of Hawaii and French Polynesia). In addition to that travel destinations fall in & out of consumers favor year to year. During those seasonal lows your best customer quickly becomes those locals who are helping you keep the lights on.
ReplyDelete