Abstract
The purpose of this study is to identify the residents’ preference among three pricing strategies: a la carte pricing strategy, limited choice pricing strategy, and bundled pricing strategy. The study analyzes the correlation between the year of study of the dormitory residents and the preferred pricing strategy. It uses an online survey for LCC International University students who were enrolled for the 2015-2016 academic year. A fixed choice set analysis is performed to analyze 126 valid responses. The results show that 42.4% of the respondents prefer an a la carte pricing strategy, contrary to the currently limited choice pricing strategy employed by LCC residency halls. Additionally, the study finds out that the residents are more likely to switch their preference from a bundled pricing strategy to an a la carte pricing strategy the higher their year of study is. Resident preferences for pricing strategies can provide dormitory operators with valuable information on establishing best pricing structures.
Highlights
Price is the primary concern for the majority of people facing the decision of renting a temporary place of residence
This research suggests that the customers in the accommodation sector prefer a partitioned pricing strategy over a limited choice fee or a bundled price
The results of this study suggest that the longer the stay of a resident in the dormitory, the higher the probability that he will prefer a partitioned fee
Summary
Price is the primary concern for the majority of people facing the decision of renting a temporary place of residence. According to a study by Repetti et al (2015), customers prefer bundled pricing strategies in the hospitality industry. Kaitlyn Wells (2014) states that customers choosing an all-inclusive vacation package may not be any cheaper than a standard version. A study conducted by Gillian Naylor finds the anecdotal evidence that “consumers would rather pay more for an all-inclusive package than deal with separate charges, even if the total bill is less” (2001). This represents a paradox from the standard economic model, which assumes that people behave rationally and selfishly. The same research concludes that this effect does not apply for repeat guests because they have the knowledge to pick the bundle that fits best their needs and expectations (Naylor, 2001)
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