PRICING MODELS IN A CAPTIVE MARKET: A CASE STUDY OF LCC DORMITORIES
Abstract
The purpose of this study is to identify the residents’ preference among three pricing strategies: a la carte pricing strategy, limited choice pricing strategy, and bundled pricing strategy. The study analyzes the correlation between the year of study of the dormitory residents and the preferred pricing strategy. It uses an online survey for LCC International University students who were enrolled for the 2015-2016 academic year. A fixed choice set analysis is performed to analyze 126 valid responses. The results show that 42.4% of the respondents prefer an a la carte pricing strategy, contrary to the currently limited choice pricing strategy employed by LCC residency halls. Additionally, the study finds out that the residents are more likely to switch their preference from a bundled pricing strategy to an a la carte pricing strategy the higher their year of study is. Resident preferences for pricing strategies can provide dormitory operators with valuable information on establishing best pricing structures.
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