Revenue Management Application on Karaoke Industry in Taiwan

Industry Overview
The Karaoke culture is popular in East Asia. Unlike the karaoke in bars/clubs offered publicly, the karaoke style here I want to discuss is the one has private rooms for different size of parties, and that is why the concept of Revenue Management can be applied broadly in this industry. I will specifically focus in Taiwan, because the karaoke culture in Taiwan is mature, and the company even expand the business to other countries.

           

The word “Karaoke” is originated from Japanese, so is the culture. Karaoke is firstly developed in Japan in 1970’s and then expanded to other countries in Asia in 1980’s, but the origin of the idea is obscure. Reference: http://en.wikipedia.org/wiki/Karaoke

 

In Taiwan, karaoke plays an important role in people’s nightlife. It’s the place for family, friends, colleagues, and even doing business. The karaoke industry in Taiwan is dominant by one company which has two different brands, one for higher class (more expensive) and the other one for lower class (cheaper). Higher class brand charges more with its glorious and hotel-look lobby, fancier private room decoration, more delicious food, and convenience (in-room restroom). There is another premium venue of that company that doesn’t see as a brand but more like a status, because it is limited to members, and joining the membership is by invitation (http://www.cashboxvip.com/viprespect.html). Thus, people start to consider going to karaoke as a luxurious entertainment, not to mention it seems to be a trend for the hotels in Hong Kong and Macau to design presidential suites with an “entertainment room” when we visited last June. Since people can easily spend hours in karaoke, the revenue can be generated in many ways. I will discuss the application based on my observations and experiences in Taiwan, and karaokes in Taiwan also do a better job than karaokes in Singapore on applying revenue management.

(Website of karaoke in Singapore:

a. http://www.partyworldktv.com.sg/promotion-29305210352041938144.html

b. http://www.kbox.com.sg/StaticContent.aspx?u=6)

         

The following are the overview of basic levers applied in Taiwan:

Space: (not applied in Singapore)
Karaoke has limited capacity, as the number of private rooms are fixed. Also, the size of the private rooms usually vary from small for 3 to 4 people to party size, 18-20 people, or even super party size for up to 35 people.


Time:
The time slot is limited, but the minimum consumption unit vary as the size of private rooms. Usually the rack rate is charged by hour, but promotion packages are charged based on 3-hour consumption, and you can extend by hour as the basic unit.
Also, karaokes apply dynamic pricing according to peak/off-peak hour and high/low season. The prices are differentiated by time of day, day of week, and month of year.


Occupation: (not applied in Singapore)
In Taiwan, students and senior are privileged for cheaper price. People older than the age of 55 are able to enjoy senior discount, as 55 is the minimum age to retire in Taiwan. The reasons may be students are more price-sensitive, but they also have more free time to spend in karaokes, and seniors also have more free time once they retire.
(Unfortunately, the website of the dominant company is in Mandarin, but I think you can still figure out how variable their prices are! Variable pricing charged by per person: http://www.cashboxparty.com/ktv/web_ktv/web_ktv.asp
Rack rate charged by hour per room: http://www.cashboxparty.com/ktv/map/price/kp17.html)

The Levers
SPACE
The inventory unit for karaokes is private room. A karaoke can be as big as a maze with narrow hallways and unorganized directions so it can utilize the space to its maximum. Karaokes define the space implicitly, because the size categories vary according to the space of each branch. Likewise, the capacity of private rooms varies in different branches. The following are the different private room sizes of the biggest karaoke branch in that company:
Small – 2 to 7 people
Medium – 8 to 10 people
Medium big – 10 to 12 people
Big – 12 to 15 people
Super big – 15 – 18 peope
Party size (“Presidential Suite”) – 18 – 35 people

                           
Other utilizations of space:
a. Other than the main revenue generator, private rooms, karaokes utilize spaces for a major human need, food. Consumers not only can order in-room dining in a la carte style, but also can go to buffet area for all-you-can-eat service. Of course the delicacy level is depending on the class of the brand.

b. Another space utilization for karaoke is to selling company-branded products, such as stationary or products signed by famous singers, but it accounts for a very little part of the revenue.

c. In one of the signature karaokes of this company, there is a restaurant serving Cantonese Dim-Sum inside the karaoke. It is a rare but a brilliant concept. For people who go to karaoke but is not that into singing, they may go to that restaurant so they can eat food at the table with more comfortable height. Also, after an all-night singing, people in Taiwan like to have either a late night snack or early breakfast before dawn. The idea of the restaurant can attract people who bother which restaurant to go to. http://www.cashboxparty.com/ktv/cashboxdining/

         
Karaokes tend to save spaces for private rooms, as the more parties they can accommodate, the more revenue it can generate. To increase more revenue by using space, both brands may consider charging private rooms according to the distance to buffet area. The closer to buffet area, the more expensive the room rent, since people can save more time on going back and forth for food and drinks.

TIME
Karaoke sells time explicitly. The prices are either charged by per private room per hour, or by per person per certain time slot (ex. by per person for 3 hours). The pricing differs as follows:
a. Hour – separate a day into 5 different slots: (http://www.cashboxparty.com/ktv/map/price/kp17.html)
07:00-10:59 – the cheapest
11:00-15:59
16:00-17:59
18:00-19:59
20:00-22:59(Sunday to Thursday) 20:00-01:59(Friday and Saturday) – the most expensive
23:00-06:59(Sunday to Thursday) 02:00-06:59(Friday and Saturday)

b. Day of week
As what I mentioned above, Friday and Saturday are considered as “peak season”, and Monday to Thursday are “off-peak season”. The pricing for Sunday is slightly higher than weekdays but much lower than Friday and Saturday.

c. Month of year
This pricing differentiation is specially catered to student groups. Since students in Taiwan have winter vacation (3 to 4 weeks long in January and February) and summer vacation (8 to 9 weeks long in July and August), it is less often for students to go to karaokes with friends or classmates.

d. Special holidays
Public holidays are considered as peak season for karaokes, such as Christmas and spring break (can last from 3 – 5 days to celebrate Tomb-sweeping Day and Children’s Day)

Apart from the above explicit specifications of time, I suggest karaokes can consider to charge implicitly by the number of songs. It is not uncommon that the time we pay for the private room is about to end, but my favorite song is not played yet. If people can pay by songs, then such situation can be avoided and customers can also leave without pity.


PRICE
Karaoke uses physical and non-physical rate fences to differentiate its pricing, but the application of physical rate fences is far less than non-physical.
a. Physical rate fences are the size of private rooms, minimum charge for party size private room, and location of the karaoke branch. It is obvious that karaoke locating in downtown business area or in prime cities can charge higher than other locations. (Minimum rental list for Presidential Suite: http://www.cashboxparty.com/ktv/act/1001118_17/)

b. Non-physical rate fences are occupation (student), age (senior and birthday discount), membership (membership of karaoke and certain credit card holder), and time.

Other non-physical rate fences that I think is doable are advanced reservation and distance to buffet. To manage inventory more efficiently, karaokes can consider charge slightly higher for walk-ins in peak hour or hot season. Also, as what I have mentioned, it is possible for people to pay more for a private room which is closer to buffet area.

34,909 thoughts on “Revenue Management Application on Karaoke Industry in Taiwan

  1. I’ve been exploring for a little for any high quality articles or blog posts on this kind of area . Exploring in Yahoo I at last stumbled upon this website. Reading this info So i’m happy to convey that I’ve a very good uncanny feeling I discovered just what I needed. I most certainly will make sure to don’t forget this website and give it a look regularly. Therapy In Kitchener

  2. diamond rings

    Ring | Engagement Ring | Proposale Ring| Diamond Ring Price – Diamond wholesalers, 50% cheaper than large jewelry stores, can be made exclusive Ring – roducts include: Wedding Ring , Engagement Ring , Diamond Ring , Ring , Jewelry‎ , Hearts And Arrows Diamond, gia Diamond

  3. I am a new user of this site so here i saw multiple articles and posts posted by this site,I curious more interest in some of them hope you will give more information on this topics in your next articles.  huawei y5 price in bangladesh

  4. A decent blog dependably concocts new and energizing data and keeping in mind that understanding I have feel that this blog is truly have each one of those quality that qualify a blog to be a one. redmi note 8 bd price

  5. All in all, it seems that buy vcc is best avoided. There are countless reports of scams, poor customer service, breaches of privacy, and deceptive refund policies. If you are interested in buying a VCC, then it would be wise to stick to websites that have good reviews and a solid reputation.

  6. I would like to thank you for the efforts you have put in writing this site. I am hoping the same high-grade web site post from you in the upcoming also. In fact your creative writing skills has inspired me to get my own website now. Actually the blogging is spreading its wings rapidly. Your write up is a good example of it. Therapy In Mississauga

  7. This is just the information I am finding everywhere. Thanks for your blog, I just subscribe your blog. This is a nice blog.. poker88

  8. Thank you again for all the knowledge you distribute,Good post. I was very interested in the article, it’s quite inspiring I should admit. I like visiting you site since I always come across interesting articles like this one.Great Job, I greatly appreciate that.Do Keep sharing! Regards,

  9. I admit, I have not been on this web page in a long time… however it was another joy to see It is such an important topic and ignored by so many, even professionals. I thank you to help making people more aware of possible issues.

  10. You know your projects stand out of the herd. There is something special about them. It seems to me all of them are really brilliant!

  11. I love the way you write and share your niche! Very interesting and different! Keep it coming! wiata garazowa

  12. I recently came across your blog and have been reading along. I thought I would leave my first comment. I don’t know what to say except that I have enjoyed reading. Nice blog. I will keep visiting this blog very often. garaze drewnopodobne

  13. Hudsonville Michigan Real Estate

    Our mission is to provide the #1 real estate service in West Michigan! We utilize the latest available technologies, pride ourselves on seamless communication, and possess top notch negotiation skills. We focus on your goals while providing exceptional service that aligns our values both ethically and spiritually.

  14. Grand Haven Michigan Real Estate

    Life is full of transitions. Over the last 16 years, our team has guided more than 1,700 clients through the sale or purchase of a home. More importantly, we work to build a better community by partnering with local non-profit organizations to fundraise and bring awareness to their cause. Whatever the next chapter of your story may be, trust the Luke Bouman Team to help you find the best way home.

  15. call flash alert

    ZFlash.io – Flash Alert Call, Sms, will give you light notification on incoming calls and text messages. The flash alert feature finally available for Android phones.With ZFlash.io, you will be able to answer any call quickly and avoid missing vital communications when you cannot hear your phone ringtone.Key Features of ZFlash.io:■ Flash alert on incoming calls.■ Flashlight will blink on sms messages.■ Flash light on notifications from : Signal, Facebook, Messenger, Instagram, Skype, Whatsapp, Telegram…■ Set automatic flash for alarm clock to wake up with lights.Change the speed of light flashes.■ Silent mode to activate flashing and disable ringing.How to use flash alerts ?■ Helps those who are hearing impaired.■ Hospitals or meeting or in silent zones.■ ZFlash.io may also help you find your phone in dark.■ When you are in a noisy area and won’t hear your phone ringtone.■ Flashlight on alarm can help heavy Sleepers to wake up in the morning.ZFlash.io use your camera flashlight without keeping the app open all the time, if you decide you no longer want the automatic flash notifications, slide the button to “off”.

  16. 2048

    Enjoy 2048. This is the classic version of 2048 game. Join the numbers and get to the 2048 tile. Play 2048 online for free here.

  17. 2048

    Enjoy 2048. This is the classic version of 2048 game. Join the numbers and get to the 2048 tile. Play 2048 online for free here.

  18. Thank you for this article which is very helpful to me.Game slot machines come in many different shapes and sizes, from classic three-reel
    games to more modern video slots with five or more reels. Some games have fixed jackpots, สล็อต89 while others offer progressive jackpots that grow with each bet placed. Thanks for letting me contribute to this blog.

  19. Great goods from you, man. I have understand your stuff previous to and you are just too great. I really like what you have acquired here, certainly like what you’re saying and the way in which you say it. You make it enjoyable and you still take care of to keep it sensible. I can’t wait to read far more from you. This is actually a terrific website.i would love to sip a cup of green tea each morning because it contains L-theanine which calms the mind . I surely did not understand that. Learnt a thing new nowadays! Thanks for that. thank u for sharing, i love it

  20. Positive site, where did u come up with the information on this posting? I’m pleased I discovered it though, ill be checking back soon to find out what additional posts you include.

  21. Im no expert, but I believe you just made an excellent point. You certainly fully understand what youre speaking about, and I can truly get behind that. poker88

  22. how much does morpheus 8 cost

    Discover the ultimate guide to understanding the cost of Morpheus8, a cutting-edge skin rejuvenation treatment that uses a combination of microneedling and radiofrequency. Learn about the various factors that affect the price, the average cost in differen

  23. Java is a versatile and powerful programming language that can be used for a wide variety of applications. Java is easy to learn, and its syntax is similar to other popular programming languages, making it a good choice for beginners. Java is platform-independent, meaning that programs written in Java can run on any operating system that supports Java. Java is free and open-source, and there is a large community of developers who contribute to the language and its ecosystem. Java has a rich set of libraries and frameworks that can be used to develop sophisticated applications.
    Java Classes in Pune

  24. I have been having issues with finding the best  lollipop for myself. After reading this article,카지노 my issues has come to an end. I really love the information you provided here as it has helped me a lot. merely looking at the article, i can see that it is written by a PRO. please check my article on

Leave a Reply

Your email address will not be published. Required fields are marked *