by

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.

36,963 thoughts on “Revenue Management Application on Karaoke Industry in Taiwan”

  7. Very informative post! There is a lot of information here that can help any business get started with a successful social networking campaign. chillhay

  8. Upon thorough examination of the blog, we were truly captivated by its content. On behalf of BRC Construction, we extend our heartfelt gratitude to the writer for their invaluable contribution. A home addition contractor is an exceptionally skilled professional who specializes in expanding or modifying existing residential properties. Their expertise lies in the meticulous planning, designing, and construction of additional space, aimed at enhancing a home’s functionality, aesthetics, and overall value. home addition contractor These contractors work closely with homeowners, comprehending their specific needs and goals, and provide expert guidance throughout the entirety of the project. From acquiring essential permits to creating detailed blueprints, overseeing construction, and managing subcontractors, they handle diverse tasks diligently.

  10. This is such a great resource that you are providing and you give it away for free. I love seeing blog that understand the value of providing a quality resource for free.

  12. I’m usually to blogging and i really admire your content. The article has really peaks my interest. I am going to bookmark your web site and keep checking for brand spanking new information. Blackpids

  16. such an interesting article here.I was searching for something like that for quite a long time and at last I have found it here. pigeon

  17. وان ایکس ایرانی

    در 1xBet بیش از 400,000 کاربر آنلاین با سایت شرط می بندند.سایت 1xBet هرماهه بخش های مختلفی از مسابقات را ارائه می دهد. همچنین فعال ترین کاربران آنلاین در کازینو را داراست و همواره شما میتوانید در ورزش های فوتبال ، بسکتبال ، والیبال ، هندبال ، فوتسال و دیگر رشته های ورزشی شرط بندی کنید.ضمنا در این وب سایت آپشن های زیادی برای ارائه وجود دارد که میتوانید شما با توجه به آنالیزی که کرده اید روی تعداد گل ، هندیکپ های اروپایی و آسیایی ، تعداد اوت دستی ، کرنر و حتی ضربات دروازه و صد ها موارد دیگر پیشبینی انجام دهید . در این سایت تضمین بالاترین ضرایب را نسبت به سایت های مشابه دیگر داده میشود.

  18. وان ایکس بت فارسی در

    1xBet بیش از 400,000 کاربر آنلاین با سایت شرط می بندند.سایت 1xBet هرماهه بخش های مختلفی از مسابقات را ارائه می دهد. همچنین فعال ترین کاربران آنلاین در کازینو را داراست و همواره شما میتوانید در ورزش های فوتبال ، بسکتبال ، والیبال ، هندبال ، فوتسال و دیگر رشته های ورزشی شرط بندی کنید.ضمنا در این وب سایت آپشن های زیادی برای ارائه وجود دارد که میتوانید شما با توجه به آنالیزی که کرده اید روی تعداد گل ، هندیکپ های اروپایی و آسیایی ، تعداد اوت دستی ، کرنر و حتی ضربات دروازه و صد ها موارد دیگر پیشبینی انجام دهید . در این سایت تضمین بالاترین ضرایب را نسبت به سایت های مشابه دیگر داده میشود.

  19. Your post is very helpful to get some effective tips to reduce weight properly. You have shared various nice photos of the same. I would like to thank you for sharing these tips. Surely I will try this at home. Keep updating more simple tips like this. 
    flowers rental near me

  21. Buy Verified PayPal Account is a must-have for anyone looking to conduct online transactions safely and securely. If you’re in need of a verified PayPal account, you can buy one from a reputable provider and gain access to all of PayPal’s features and benefits.

  22. Okeplay777 tempat judi online terlengkap, terseru, tergacor, dan terpercaya serta dengan tingkat kemenangan yang sangat tinggi hingga 98% jadi tunggu apa lagi buruan daftarkan sekarang juga disini rasakan jp nya!!!

  24. โปรฝาก 7 รับ 100

    เพียงฝากเงิน 7 บาท ก็สามารถรับเครดิตฟรีไปได้ทันที 100 บาท นักเดิมพันทั้งหลายไม่ควรพลาด โปรโมชั่นเด็ดๆ ถอนไม่อั้น ล่าสุด 2023

  25. Wow, how can you write this? You’re so smart. Aren’t you a genius? It’s awesome. It’s so much fun that I’ll come back to watch it’ I’m just looking forward to your posting again레플리카사이트 and I felt responsible for receiving this warm energy and sharing it with many people

  28. Thanks for posting this info. I just want to let you know that I just check out your site and I find it very interesting and informative. I can’t wait to read lots of your posts. لیفت صورت

  30. This is my first time i visit here. I found so many interesting stuff in your blog especially its discussion. From the tons of comments on your articles, I guess I am not the only one having all the enjoyment here keep up the good work لیفت غبغب

  31. Sea include onto your website page while utilizing see solely solely a little portion submits. Enjoyable strategy for near future, My business is bookmarking presently find models conduct happens absent. IQOS

  35. Excellent .. Amazing .. I’ll bookmark your blog and take the feeds also…I’m happy to find so many useful info here in the post, we need work out more techniques in this regard, thanks for sharing. เว็บพักยก

  37. Pretty good post. I just stumbled upon your blog and wanted to say that I have really enjoyed reading your blog posts. Any way I’ll be subscribing to your feed and I hope you post again soon. Big thanks for the useful info. เว็บพักยก

  43. Hello! I just wish to give an enormous thumbs up for the nice info you’ve got right here on this post. I will probably be coming back to your weblog for more soon Blackpods mini

  44. I would like to thank you for the efforts you have made in writing this article. I am hoping the same best work from you in the future as well. Thanks… Review Room

  45. I love significantly your own post! I look at all post is great. I discovered your personal content using bing search. Discover my webpage is a great one as you.I work to create several content this post. Once more you can thank you and keep it create! Enjoy!
    Pakistan Crisis

  48. Wow! Such an amazing and helpful post this is. I really really love it. It’s so good and so awesome. I am just amazed. I hope that you continue to do your work like this in the future also พักยก77

Leave a Reply

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