Question of the Week: Rollin' Down Prices

[Testtrack321]

After Disney's announcment that they will drop drink prices up to $1, this got me thinking:

QUESTION OF THE WEEK: Will Disney lower any more prices?

 

[doubletrouble_vb]

Lowering drink prices to the "pleasantly surprised" range is good pr for repeat trips. One thing that will stick in a lot of people's heads is how "because its a special event" they were gouged on drink prices & had a hard time finding a water fountain. Lower prices will also discourage people from bringing their own in.

But...there is no reason to generally lower prices. Lower them on the trinkets you might buy for the kids or certain foods (say mickey ears). Hold firm on prices off of food carts (these were mostly just below sticker shock level the last time I was there). Disney will leave a positive image without sacrificing profit.

 

[KNWVIKING]

Obviously they will monitor the sales of soda and water very carefully. If sales indicates that selling more-for-less is more profitable then selling less-for-more, then I think other items will drop as well.

 

[Planogirl]

I think that it depends on attendance at WDW and the surrounding parks. If Universal and others keep gaining attendance while Disney's numbers drop or stay flat, the mouse may finally wake up and decide to compete. They may cut a few items or have a few special promotions to spur interest and to appear competitive.

 

[Bstanley]

This is a hot topic for me right now.

I just purchased our passes for the upcoming family trip. After lots of research I found the following to be the lowest pass prices.

Universal Orlando Passes : $87 for a 2 day 'hopper' pass - 3rd day free (Sam's Club website). Cost per day = $29

Disney World Passes : $205 for a 4 day 'hopper' pass (Disney store). Cost per day = $51

It's no wonder that Universal attendance is up and WDW attendance isn't...

Somebody needs to give Disney a class on the Price Elasticity Curve...

 

[KNWVIKING]

Doesn't your park hopper include 4 theme parks,two water parks and any other option ?

US: 29.00 per day divided by two parks = 14.50 per
WDW: 51.00 per day divided by six attractions = 8.50 per

And yes, to the majority here AK is a half day park, but so is US.

 

[All Aboard]

BStanely, I agree that Universal is being more agressive with ticket pricing and it is likely to serve them well.

But, I believe that Disney is reluctant to do the same because they may just be leaving money on the table. I think they have actually considered the impact of price elasticity. Right or wrong, I think I understand thier thought process.

Disney believes it is the destination. Folks are travelling to Central Florida to go to WDW. Universal and Sea World are "side trips."

Universal even recognizes this. They are trying to move away from it, but the still recognize it for now - have a look at their trip planning video. It mentions that many guests are in Orlando to visit WDW and encourages them to also check out UO.

Given this, WDW figures that folks are going to purchase hoppers for their stay. If they reduce price, they are just "giving" away money. Universal is trying to build market share, take away vacation days from Disney - and they are doing a good job of it. By offering a "day free" and putting an expiration on it, they have a strategy in place to encourage WDW travellers to leave the World for a few days to check them out. It also encourages longer stays for families travelling to Universal as a primary destination.

Now, should Disney consider the same thing? That's a tough call. Discounting your primary product is a strategy that many companies truly dislike. "Cheapening the brand" are words often used. Putting a product "on sale" can reduce its image. You note that often times certain brands at high end department stores opt-out of store-wide coupon sales. Many fragrances and clothing manufacturers do this.

I'm not defending it, but I understand where the thinking is grounded.

 

[PKS44]

I don't think 4 day hoppers include the water parks.

And Disney is wise to avoid discounting admission....it is a slippery slope that leads people to expect discounts. I respected that they don't discount when I was a stockholder...I understand it now as a former stockholder and parkgoer...try buying a ticket to a Broadway show (for 2 hours of entertainment) and see how much you get for your money... IN truth, a day at a WDW park, (with the exception of the pricing on the zoo, er I mean nahtazoo) is a lot for the money.

Paul

 

[KNWVIKING]

...your right,no water parks. But even at the 4 parks,it's 12.75 per.

 

[All Aboard]

But Viking, you are paying for a day's worth of entertainment. If WDW had 100 parks, should it charge more than $1,000 a day for park hoppers? You are limited to 10 or so hours a day to enjoy the parks.

Granted, when comparing the price of 3 to 5 day hoppers, you have more options at WDW, and dividing the daily price by the number of options is tempting, but not really fair. It should be higher - given the freedom you have to move around more at WDW, but really cannot fairly be compared in that fashion.

Annual passes, yes. There are twice as many parks at WDW and the annual passes cost about double that of Universal. That's the way it should be. Over the course of a year, you'll get to enjoy twice as much stuff at WDW as you will at UO.

 

[KNWVIKING]

...I was just using the same math logic bstan was using. I realize there are only some many hrs in a day and you can only be in one place at one time.

 

[Bob O]

Its nice to see the price go down, but it would be even better if they offered the drinks for free like Holiday World in IND. does, as well as free parking,free sun screen and free tube rentals. They had a record attendance last year and suffered no negative effects by their actions.
I wish this was the start of a trend but i doubt it!!!!

 

[raidermatt]

I'm not defending it, but I understand where the thinking is grounded.

I'll go a step further and defend it. I think holding the line for the most part is the right move, HOWEVER, they also have to meet guest expectations with regard to VALUE.

Disney does view themselves as THE destination, and rightly so. But maintaining price is only a piece of the equation. When you charge more, you've got to offer more, and that includes NEW attractions, hours, entertainment, service, the whole package.

Yes, Disney does clearly offer more than Universal, but that's not really the issue. The real issue is that Disney is offering less than Disney did in the past, and the perceived gap between them and Universal is shrinking. Therefore guests are getting less value. Its easier to focus complaints on lowering prices than it is to figure out how Disney could increase the value of your trip.

So I'm with Disney with holding the line on prices, but I think they are falling short on the benefit side of the value equation.

Now, prices for things like soda are somewhat a different issue. A Coke is a Coke, so you can't really offer more value with your Coke than the next guy, so you will be compared strictly on price. So I see a reduction in Coke prices to merely be keeping with the industry trend, and wouldn't expect to see similar drops in ticket or resort prices.

Of course, if Disney continues to reduce the benefit side of the value equation, they will eventually have to reduce the price side further.

 

[Testtrack321]

BobO got me thinking....

What if one of Disney's promotions throughout the off season was a 'freebie' day(s). Those days, certain things would be free or heavaly discounted (like free sunscrean samples as you enter the park.) It would be a huge way to advertise a new product. Then place survayers around the park to ask how the guests liked it. A modern day focus group. Ditto for Coke. Say Coke wants to release a new Iced Tea drink. They contact Disney and on seperate days at different parks, Disney would hand out a limmited amount of 'free' drinks (along with a pass, if they opt to do the suvey latter) and then would ask them to come to a survey location around the park (in an abandoned resturaunt or such, like The Odyssey Center) and then ask them one or two questions. Then they'll be handed 2 free drink passses for each person in the party.