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.

47,252 thoughts on “Revenue Management Application on Karaoke Industry in Taiwan”

  10. Only strive to mention one’s content can be as incredible. This clarity with your post is superb! Thanks a lot, hundreds of along with you should go on the pleasurable get the job done. slot bonus 100

  16. A Win VPS refers to a Windows Virtual Private Server. It is a type of hosting service that provides users with a virtualized instance of a Windows operating system on a remote server. This allows individuals and businesses to have dedicated resources and full control over their server environment, while benefiting from the flexibility and scalability of virtualization.

  17. Really I enjoy your site with effective and useful information. It is included very nice post with a lot of our resources.thanks for share. i enjoy this post. slot bonus 100

  19. Venturing into the world of CS2 betting can be daunting, but not when you have the right allies. 2023 stands out as the year that introduces gamers to the most reliable and thrilling CS2 websites. These platforms are meticulously curated, ensuring you bet like the pros and score those elusive skins. So gear up, dive into CS2 betting, and ride the wave of victories!

  20. seo automation

    Find out about the top SEO automation tools that can help you streamline tasks such as rank tracking, backlink analysis, and site monitoring for improved optimization.

  21. BSNS Consulting offers comprehensive Digital Marketing Services in Pakistan, tailored to your business needs. From SEO and content marketing to social media management and paid advertising, our team crafts data-driven strategies to amplify your online presence. Experience measurable growth and a strong return on investment with our dynamic digital marketing solutions.

  24. CaVps specializes in VPS hosting services within Canada. Our hosting solutions are specifically tailored to meet the needs of Canadian businesses and individuals, offering fast and reliable performance, robust security measures, and exceptional customer support. Host your website or application with us and experience the benefits of VPS hosting Canada.

  26. Thanks so much for this information. I have to let you know I concur on several of the points you make here and others may require some further review, but I can see your viewpoint. 대마초삽니다

  32. polkadot chocolate bars
    PolkaDot Chocolate bars are not only delicious, but also very strong. The effect of these bars is very similar to other candy mushroom bars. Polkadot candy bars are some of the best out there right now. With an award-winning bar of Belgian chocolate to start the day and make it a little sweeter. These PolkaDot bars are equivalent to 4 grams of psilocybin & Psilocin from Psychedelic Mushrooms. They are designed to give you the full effects of eating a large amount of chocolate but without the stomach upset and mushroom aftertaste. Each bar is wrapped in a separate wrapper so you can eat them individually.
    https://polkadotmushroombars.us/

  34. Nice post. I was checking constantly this blog and I am impressed! Extremely helpful information specially the last part I care for such info a lot. I was seeking this particular information for a very long time. Thank you and good luck. 대마초삽니다

  35. Boy gift baskets are delightful assortments of presents packaged in an attractive basket, tailored for baby boys. These baskets often include a variety of baby boy-themed items such as clothing, baby care products, toys, and sometimes even a little something for the parents.

  37. A barberstuhl is a specialized chair used in barbershops. It is designed to provide comfort to male clients and facilitate optimal working posture for the barber.hese chairs often have a classic design and can be antique or retro-styled.

  39. Nice post. I was checking constantly this blog and I’m impressed! Extremely useful info specially the last part I care for such information a lot. I was seeking this certain info for a long time. Thank you and good luck. 대마초삽니다

  48. This is a good post. This post gives truly quality information. I’m definitely going to look into it. Really very useful tips are provided here. Thank you so much. Keep up the good works. Raw News

  49. It’s appropriate time to make some plans for the future and it is time to be happy. I have read this post and if I could I wish to suggest you few interesting things or advice. Perhaps you could write next articles referring to this article. I desire to read even more things about it! 대마초삽니다

Leave a Reply

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