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    Revati Wable
    WumbleWorld theme park has seen declining profits from 2008-2011. A key driver was a decrease in the number of visitors due to a competitor lowering prices. While WumbleWorld's costs remained stable, revenues declined. The report recommends targeting the family segment by offering a 20% discount, which could increase profits by 42.5 million CNY. However, this could negatively impact customer experience and capacity. Instead, the park should focus on enhancing the premium experience to increase average spending per visitor and attract more customers through improved marketing strategies.

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    Client Deck

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    Revati Wable
    77 views10 pages
    WumbleWorld theme park has seen declining profits from 2008-2011. A key driver was a decrease in the number of visitors due to a competitor lowering prices. While WumbleWorld's costs remained stable, revenues declined. The report recommends targeting the family segment by offering a 20% discount, which could increase profits by 42.5 million CNY. However, this could negatively impact customer experience and capacity. Instead, the park should focus on enhancing the premium experience to increase average spending per visitor and attract more customers through improved marketing strategies.

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    WumbleWorld theme park has seen declining profits from 2008-2011. A key driver was a decrease in the number of visitors due to a competitor lowering prices. While WumbleWorld's costs remained stable, revenues declined. The report recommends targeting the family segment by offering a 20% discount, which could increase profits by 42.5 million CNY. However, this could negatively impact customer experience and capacity. Instead, the park should focus on enhancing the premium experience to increase average spending per visitor and attract more customers through improved marketing strategies.

    Copyright:

    © All Rights Reserved
    Download as PPTX, PDF, TXT or read online from Scribd
    Download as pptx, pdf, or txt
    77 views10 pages

    Client Deck

    Uploaded by

    Revati Wable
    WumbleWorld theme park has seen declining profits from 2008-2011. A key driver was a decrease in the number of visitors due to a competitor lowering prices. While WumbleWorld's costs remained stable, revenues declined. The report recommends targeting the family segment by offering a 20% discount, which could increase profits by 42.5 million CNY. However, this could negatively impact customer experience and capacity. Instead, the park should focus on enhancing the premium experience to increase average spending per visitor and attract more customers through improved marketing strategies.

    Copyright:

    © All Rights Reserved
    Download as PPTX, PDF, TXT or read online from Scribd
    Download as pptx, pdf, or txt
    of 10

    WUMBLEWORLD THEME PARK

    Executive Summary
    To identify reasons for WumbleWorld's declining profits and develop suggestions to
    reverse this trend

    Company Background Project Summary


    WumbleWorld is a theme park operator located in a From 2008 to 2011, the profits of WumbleWorld are
    wealthy coastal city of China. It’s a 50/50 joint venture declining. The client expects a detailed analysis of the
    between a foreign firm & a Chinese state-owned situation along with strategic recommendations to
    enterprise generating revenues primarily from park reverse the trend and therefore increase the number of
    admissions, food-beverages, & merchandising. visitors to the theme park.

    Problem Analysis Recommendations


    • The cost components haven’t changed significantly • Refining the marketing mix and delivering a premium
    and are unlikely to contribute to weakening profits. experience to increase average visitor spending.

    • The number of visitors seems to be a key driver of • Offering a discount to the targeted client segment to
    revenue and they have decreased due to competitor’s beat the competitor's decreased pricing approach and
    underpricing practices. thereby increase volume.
    Profitabilty Structure
    Evaluating decrease in profitability by breaking it down into cost and revenue
    components

    Declining Profit

    Increase in Cost Declining Revenues

    Fixed Cost Variable Cost No. of visitors Avg. spending/user


    Cost Analysis
    Fixed costs have remained constant over the last 4 years but the variable costs have
    declined

    During the past four years, the


    Fixed costs have been mostly stable
    variable costs have fallen steadily and
    over the past four years hence they are
    the primary factor is variable labor
    not expected to have played a
    cost component which needs to be
    significant role in profit reduction.
    investigated further.
    Labour Cost Breakdown
    Variable labor costs per visitor remains constant, thus having no impact on the profit
    decline

    Variable labor costs have declined on an Annual attendance of visitors has Variable labors costs have declined but
    aggregate basis due to fewer visitors dropped substantially by 35% from 2007 the labor cost per visitor has remained
    since the past 4 years to 2011 almost constant

    The per-visitor labor costs in 2009 increased due to a lag in labor reduction and WumbleWorld's inability to
    adjust its labor force quickly to match the sharp decline in number of visitors. The cost of labor per visitor has
    remained constant thus having no impact on declining profits hence we should now investigate revenues.
    Competitor’s Comparative Study
    MightyMountain's reduced admission price likely led to decline in number of
    WumbleWorld visitors

    Constant average daily spend per visitor


    WumbleWorld’s average daily revenue/customer has remained
    constant for the last 4 years whereas MightyMountain witnessed a
    drop of ~35CNY per customer but were still more profitable

    MightyMountain’s reduced admission


    price
    MightyMountain's changed its strategy to enhance visitors by
    lowering entry prices and compensated it with greater guest
    spending on food-beverages and merchandise. This might explain
    the significant decline in the number of WumbleWorld visitors
    thereby indicating that volume is the key driver of revenue.

    To increase volumes it is crucial to figure out a new target segment and formulate strategy
    accordingly
    Customer Segmentation
    Analysis of various consumer segments shows that ‘Family Members’ segment should
    be targeted
    Total Wumble Annual WumbleWorld’ Average
    Customer Growth
    Market World’s Visits per s Annual Profit per
    Segments Rate
    Size Share Person Visitors Customer

    Family
    20 Million 5% 1.25 1.25 Million 200 CNY 20%
    Members

    Young 10%
    5 Million 10% 1.5 0.75 Million 180 CNY
    Adults

    Adults w/o
    10 Million 10% 1 1 Million 170 CNY 10%
    Kids

    The proposed strategy should focus on increasing market share in the ‘Family Market’ segment because it has
    the highest number of annual visitors, growth rate and profitability.
    New Pricing Strategy
    Creating 20% family discount on ticket price can result in a net profit gain of 42.5
    Million CNY
    Total Wumble Annual Average Daily Variable
    Family
    Market World’s Visits Per Total Spend Per Cost Net Profit
    Members
    Size Share Person Customer Per Person

    Old Pricing 281.25


    20 Million 5% 1.25 300 CNY 75 CNY
    Strategy Million

    New 323.75
    Pricing 20 Million 7% 1.5 260 CNY 75 CNY Million
    Strategy

    Net Profit (from the new pricing strategy) = 323.75 Mn CNY – 281.25 Mm CNY = 42.5 Mn CNY

    Based on pure profitability, WumbleWorld should ideally offer the discount but the qualitative factors
    should also be considered before offering the discount.
    Qualitative Factors
    Discounted entry price to the Family Segment could have some drawbacks and
    unaddressed issues
    Customer Increased traffic from the Family Segment can create a negative impact on the customer
    Experience segments that are left out and lead to reduced repeat customers

    Park Park capacity might be a constraint specially during peak hours with added customers
    Capacity thereby increasing traffic further

    Customer Non-targeted customer segments (which are not given discounts) could get dissatisfied
    Reaction and might not visit the park

    Stakeholde Possibility of opposition from the Chinese government on the implementation of this
    r Response scheme
    Recommendations
    WumbleWorld must increase average spending per visitor to increase revenue and
    attract customers
    Price Promotion
    Seasonal passes, price variation by Seasonal promotions,
    day of week or season to enhance free/discounted coupons, bundling,
    traffic at off times, cashless payment introduction of different rides with
    methods, special ticket prices for special features using latest
    children and senior citizens can be technology like AR-VR, and
    made available
    Strategy celebrity/influencer sponsorship

    Premium Experience Product/Service


    Different food & beverages outlets,
    Speed/express passes for rides,
    introduction of concerts, events,
    premium high-quality food outlets,
    park tours, hotels/hospitality,
    customized merchandise, luxury
    games/prizes, parking and locker
    restrooms and lodges
    fees

    Implementation of this strategy would increase the overall revenue, number of visitors, customer satisfaction and hence theme park’s
    outreach

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