A fitness center targets customers with different valuations of its service (depending on the distance they need to travel). Customers also have different utilization rates. Depending on available capacity, more or less heavy users should be attracted. The only available variable is pricing.
This exercise allows students to determine the optimal pricing strategy (two-part tariff) to segment a market and discriminate between heavy users and light users to best use its available capacity.
- PRICING STRATEGY
- TWO-PART TARIFF
- ACCESS SERVICES
- CAPACITY CONSTRAINT