Mar 3023 Lecture Notes - Lecture 7: Price Discrimination, Contribution Margin, Marginal Revenue
Document Summary
Chapter 10 class notes: economies of airline pricing. Airlines make relatively little profit on economy international tickets or often lose money. At least 2/3 of the revenue for an international flight comes from people in front of the curtain (premium seats) Products of airlines is getting from one place to another. Airlines segment people by what they can pay for seats. Volume maximization- (penetration pricing) set price low. Survival pricing- set the price below what it costs to make it; never want to be in that situation: step 2: evaluate demand. Elastic demand demand is sensitive to price changes. Inelastic demand demand not sensitive to price changes: price inelasticity. Demand for netflix is inelastic, they raised the price and not many people will stop using it: price sensitivity. Buy the same: not price sensitive: demand based pricing, orlando magic and sas. Use dynamic pricing, price fluctuates depending on demand: disney.
