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Pricing & Price Elasticity Under a Conjoint Study. Content. Industry Competition Methodology Survey Results. Industry . The Crises Economic Downturn ( second half 2000) Sep 11 What might be the best strategy ? Follow the actions of the low cost carriers Try something different.

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Presentation Transcript
content
Content
  • Industry
  • Competition
  • Methodology
  • Survey
  • Results
industry
Industry
  • The Crises
    • Economic Downturn ( second half 2000)
    • Sep 11
  • What might be the best strategy ?
    • Follow the actions of the low cost carriers
    • Try something different
competition
Competition
  • Domestic
    • Aeromexico ( 72 Airplanes ) ( Domestic & International )
    • Mexicana (64 Airplanes ) ( Domestic & International )
    • Aviacsa ( 21 Airplanes ) (Domestic & Some International)
    • Aerocalifornia ( 22 Airplanes ) (Domestic & Very few International)
    • Aerolineas Aztecas ( 6 Airplanes )
    • Others regional and Charters Airlines.
  • International
    • All ( AA, CO, DL, UA, LH, IB, BA…….)
competition cost
Competition (Cost)
  • Cost advantage of the competition
    • Labor (33%)
    • Capital Cost ( In the most of cases Old and cheaper airplanes )
    • Sales & Reservation ( small )
    • Ground Handling (small)
  • Similar Cost
    • Landing Fees
    • Maintenance ( Advantage Labor )
competition cost6
Competition ( Cost )

Estimated Cost of the Airlines in México

10.0

8.7

9.0

7.9

8.0

7.4

7.3

6.7

7.0

6.0

Cvs-USD/Kms

5.0

4.0

3.0

2.0

1.0

0.0

Aeromexico

Aviacsa 727

Aviacsa 737

Aerocalifornia

Aztecas

Operational Variable

Passenger Variable

Direct Fix Cost

Indirect Cost

methodology
Methodology
  • So we need to determine if something can be done to improve pricing or just mach the competition.
  • We need to know if the brand has a value
  • We need to know if the passenger are service sensitive or price sensitive and which is the point of inflexion.
  • What is the elasticity for the markets and segments
methodology8
Methodology
  • We know that our effort to position the brand has a value.
    • How Much ?
    • All the markets are the same ?
methodology9
Methodology
  • Choice Based Conjoint
    • Conjoint uncover the “ value system behind the costumer decisions, reveling willingness to pay and sensitivity to price.
    • It’s a quantitative approach.
    • It’s uses direct surveys that force customer to make trade – off ( as they would have to in the market place ).
    • Products and services are treated as bundles of features and price that customer consider jointly.
survey markets
Survey ( Markets )

ÍNDICE>>

  • Europa
  • Madrid
  • USA
  • Dallas
  • Los Ángeles
  • Miami
  • New York
  • Nacionales
  • Monterrey
  • Guadalajara
  • Cancún
  • Tijuana
  • Mérida
  • Guadalajara-Tijuana
  • Sudamérica
  • Chile
  • Sao Paulo

* In every route there were at list 300 surveys

survey questions
Survey ( Questions )
  • The interview has some questions that help us know the demographic data (age, sex) an others like, if the passenger belongs to a specific frequent flier program and the costumer’s drivers ( business, Pleasure or VFR ).
  • In the conjoint we looked at 6 variables: Brand, Price, On time performance, Frequent flier program, frequencies and comfort.
survey conjoint e g
Survey ( Conjoint e.g. )

Aerocalifornia

Some Times

( 50% –79%)$ 1,700

km – Accumulation

From 1 to 3

Frequencies every

daySame seat space

Mexicana

Always( Punctuality > 94%)$ 2,400

Km. – Accumulation

More than 8 Frequenciesevery

Day

Sameseat space

Aviacsa

Almost Always

( 80 - 93%)$ 1,900

1 Free Flight for every 5

4 – to 8 Frequencies every

daySame seat space

AeromexicoAlways ( Punctuality > 94%)$ 2,400 km – AccumulationMore than 8 FrequencieseverydaySameseat space

results costumer demographic profile
Results ( CostumerDemographic Profile )

ÍNDICE>>

Sex

Age

Civil Stage

Total

75% 25%

69% 31%

63% 37%

74% 26%

16% 38% 35% 7% 4%

13% 44% 30% 9% 5%

37% 30% 18% 11% 5%

15% 48% 19% 15% 4%

59% 38% 4%

66% 31% 3%

60% 37% 4%

33% 63% 4%

results drivers
Results ( Drivers )

ÍNDICE>>

Ticket Type

Drivers

Total

18% 82%

13% 87%

7% 93%

100%

75% 10% 7% 8%

62% 15% 14% 9%

44% 23% 16% 18%

26% 44% 22% 7%

results brand
Results ( Brand )

ÍNDICE>>

Total

59% 23% 10% 8%

28% 51% 13% 8%

24% 25% 39% 12%

25% 31% 17% 27%

results price
Results ( Price )

ÍNDICE>>

Total

34% 28% 20% 18%

36% 29% 21% 14%

53% 22% 14% 12%

50% 23% 16% 11%

results on time performance
Results ( On Time Performance )

ÍNDICE>>

Total

40% 36% 24%

40% 35% 25%

33% 34% 33%

29% 37% 34%

results part worth

Price

Punctuality

$1,400.00 0.63

$1,900.00 0.18

$2,400.00 -0.36

$2,800.00 -0.45

Margen 1.08

Siempre a tiempo 0.178

Casi siempre a tiempo 0.038

Algunas veces a tiempo -0.216

Margen0.395

Comfort

FFP

Frequencies

Mayor espacio

entre asientos 0.062

Mismo espacio

entre asientos -0.062

Margen0.124

1 vuelo gratis 0.120

Acumulación

de Kilómetros 0.029

Sin programa -0.150

Margen 0.27

Más de 8 vuelos 0.069

6 a 8 vuelos 0.059

3 a 5 vuelos -0.042

1 ó 2 vuelos -0.086

Margen 0.156

Results ( Part-Worth )

ÍNDICE>>

Airline

AeroMéxico 0.6687

Mexicana 0.49363

Aviacsa -0.32968

California -0.83265

Margen 1.5

results other applications
Results ( Other Applications )
  • Pricing Structures
    • Through market studies we know the basic customer behavior ( habit & Custom )for every segment so we can define the restriction by each segment.
  • Frequent Flier Program
    • To know the value and effectiveness of the communication again the others

Over all we know our customer.