Question

a. Explain the differences between the day pricing of hotel rooms and the itinerary pricing of airline itineraries? (i.e. What is the product?, What is the resource?, and What is being priced?)

b. Consider the purchase of a customized laptop on Dell’s website. Customization involves choosing laptop components that have different price points. The choice of components determines the ultimate price of the laptop. Explain why the problem of pricing hotel rooms is a special case of the problem of pricing laptop components being shown to customers in Dell’s website.

c. In what way is Dell’s pricing problem more complicated than the pricing problem faced by a hotel?

Answer 1

a: Day pricing of hotel room is based on the demand for a particular season or for a particular day or month.Most of the hotels put dynamic pricing inorder to maximise their profit and also to enhance the occupancy. Based on location of hotel ( like hill stations, other tourist spots, business cities) etc their pricing varies based on the demand of the season. Airlines itineraries work mostly on the demand base but they also look at the analytics where customers track the dates of booking. And also nearby date bookin fot air ticket would be always costly. Both airlines and hotel are providing services to the customers in the form trvalleing along with hospitality and accomodation. The price for hotel is for the facilities they are providing like ( rooms, air conditioning, water, electricity,room services etc.) and for airlines ( travelling cost, staff services , food etc.)

b: Selecting components for customised laptop people may get more economical deal . At the same time as time goes the component which is economical may get stock out or got fully sold. Thus it has been compared with pricing of hotels where ultimately customers ended up paying more for the same features or facilities.

c:Dell have limited inventory to provide options to customers. They cannot provide same component at different pricing beyond certain margin ( quality vs cost tradeoff). Thus it is much complex than hotel pricing. Also component pricing cannot be that dynamic because in that case customers will prefer their competitive product which may be having almost same feature.