P
ProHub
English 简体中文 繁體中文
Medium Profitability Pricing Strategy Cannibalization Analysis

Seven Flags

#Hospitality #Entertainment #Amusement Parks
ProHub Comment

This is a quantitative-heavy case requiring candidates to build a pricing model, analyze cannibalization effects, and calculate payback period against a specific management constraint. The case tests both analytical rigor and business judgment, as the recommendation hinges on several assumptions—particularly the 50% cannibalization rate—which creates meaningful downside risk.

Estimated Time 15 minutes
Difficulty Medium
Source Darden
50 / 100
Our client is a mid-size amusement park chain, with 10 parks around the U.S. serving over 10 million visitors each year. In their Richmond, VA park, it operates both a traditional thrill-ride section, as well as an animal experience. (Show park map.) Currently, the two sections are covered under one entry ticket price. However, management is considering offering a separate ticket for only the animal experience section. They have come to us to determine if this is a good idea.

Clarifying Information

  1. Financial goal: Management wants a payback period less than 10 years. (If the candidate asks, payback period = investment / on-going profit.)
  2. Current price: Tickets are currently $20 and provide visitors full access to the park
  3. Park attendance: The Richmond, VA park is an average sized park within the client’s portfolio
  4. Business model: The park is a typical amusement park (think Six Flags or Busch Gardens). Visitors buy a ticket for entrance (assume same price for adults and children), and all rides / amusements are accessible under the one ticket price. The park also sells merchandise and food / drinks separately.