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.

41,666 thoughts on “Revenue Management Application on Karaoke Industry in Taiwan”

  1. 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. laptop repair

  2. Thanks for sharing the post.. parents are worlds best person in each lives of individual..they need or must succeed to sustain needs of the family. Viking axe

  8. I actually enjoy the posting. It usually is wonderful to evaluate any one demonstrate around thoughts in the cardiac coupled with lucidity in this significant dilemma can be immediately found. rtp live slot

  10. I think this is one of the most significant information for me. And i’m glad reading your article. But should remark on some general things, The web site style is perfect, the articles is really great : D. Good job, cheers Olio Siciliano

  14. I have to say that this is really a good affecting view on this specific matter. And I’d like you to know that I’m really pleased you shared your thoughts plus knowledge and I find that i agree. I genuinely enjoy your straightforward writing plus the work you may have used with this post. A great many thanks for this solid work plus good luck with the web-site, I’m looking forward to updates in the future. eskorte jenter

  16. “I wanted to write you this little bit of note to finally thank you over again on your stunning ideas you have documented in this case. This is generous of people like you to give freely all that most of us might have made available as an ebook to make some money for their own end, principally since you could have tried it if you decided. These strategies also worked as the great way to realize that most people have similar keenness similar to my very own to grasp way more on the topic of this problem. I believe there are numerous more enjoyable instances up front for folks who check out your website.” 영화다시보기

  26. Pada era digital yang serba canggih seperti sekarang ini, game online telah menjadi fenomena global yang melibatkan jutaan orang dari berbagai penjuru dunia, termasuk di Indonesia. Game online adalah permainan video yang dapat dimainkan secara daring melalui internet, baik secara mandiri maupun dengan bermain bersama pemain lain. Artikel ini akan membahas mengapa game online begitu populer, dampaknya pada masyarakat, dan manfaat serta tantangan yang dihadapi oleh para pemainnya.

  28. Game online Ace99play mengacu pada berbagai jenis permainan video yang dimainkan melalui internet. Jenis-jenis game ini sangat beragam, mulai dari game petualangan, RPG (role-playing game), game olahraga, hingga game simulasi. Para pemain dapat bermain dengan mengakses permainan tersebut melalui perangkat komputer, laptop, smartphone, atau konsol game. Popularitas game online terus meningkat seiring dengan kemajuan teknologi dan akses internet yang semakin mudah.

  30. I was very impressed by this post, this site has always been pleasant news Thank you very much for such an interesting post, and I meet them more often then I visited this site. Click to Write

  31. Thank you because you have been willing to share information with us. we will always appreciate all you have done here because I know you are very concerned with our. ai img genetator

  35. Thank you because you have been willing to share information with us. we will always appreciate all you have done here because I know you are very concerned with our. Hailea hc

  41. APKALLDONE is a one-stop destination to download The latest updated MOD APK paid & modded Applications and games for free. We focus on quality and user satisfaction, and our well-experienced Developers continuously work to meet our website users’ requirements.APK MOD APPS

  44. APKALLDONE is a one-stop destination to download The latest updated MOD APK paid & modded Applications and games for free. We focus on quality and user satisfaction, and our well-experienced Developers continuously work to meet our website users’ requirements.APK MOD APPS

  50. Selamat datang di artikel King4D Queen yang akan membawa Anda dalam perjalanan menarik untuk menjelajahi industri game Indonesia. Dunia game telah mengalami perkembangan pesat di negara ini, dan banyak perusahaan lokal dan internasional telah berinvestasi di pasar ini. Melalui panduan ini, kami akan mengungkap potensi yang luar biasa dalam industri game Indonesia, serta memperkenalkan Anda pada tren terbaru, perusahaan unggulan, dan peluang menarik di sektor ini.

Leave a Reply

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