Maximum Market Share in a commercial/entertainment district

Applied Exercise 7:

Movie Theater Ticket Pricing Activity

You and your group own a local movie theater complex.  Here are the details of your property:

• You have 5 separate screens/theater rooms
• Each theater room has approximately 300 seats
• You can show the same or different movies on each of them, so long as the movies are currently available in theaters
• Your theater has the license and equipment necessary to sell food/drinks

Please choose one of the 3 pricing objectives below:

Objective A: Maximum Market Share in a business district

Pricing objective:  You and your group members have agreed that when setting prices for tickets, your main objective will be to maximize market share. According to this perspective, a higher sales volume will lead to lower unit costs and higher long-run profit.  As a result, you want to make sure that have as many seats filled in every theater for every showing. 

Your theater is located in the business district of a large city.  There tends to be higher traffic during workdays rather than weeknights or weekends. 

Objective B: Maximum Market Share in a commercial/entertainment district

Pricing objective:  You and your group members have agreed that when setting prices for tickets, your main objective will be to maximize market share. According to this perspective, a higher sales volume will lead to lower unit costs and higher long-run profit.  As a result, you want to make sure that have as many seats filled in every theater for every showing. 

Your theater is located in a commercial/entertainment district of a large city.  The area is popular on weekends.  However, during the day and earlier part of the week, the area tends to attract the occasional shopper and lunch-goer.

Objective C: Product-Quality Leadership in a commercial/entertainment district

Pricing objective:  You and your group members have agreed that when setting prices for tickets, your main objective will be to establish product-quality leadership.  Like many car and clothing brands, you would like to position yourself as an “affordable luxury”—an experience characterized by high levels of perceived quality, taste, and status with a price just high enough not to be out of consumer’s reach.

Your theater is located in a commercial/entertainment district of a large city.  The area is popular on weekends.  However, during the day and earlier part of the week, the area tends to attract the occasional shopper and lunch-goer.

Please describe, based upon your pricing objective & location:

1. What type of movies you want to screen, and in which theaters
2. How you would like to price tickets.  Please not that you do not have to come up with exact prices; instead focus on how ticket prices might vary (or not!).