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.

46,496 thoughts on “Revenue Management Application on Karaoke Industry in Taiwan”

  1. I needed to thank you for this incredible read!! I unquestionably adored each and every piece of it. I have you bookmarked your site to look at the new stuff you post.
    nyc florist

  8. It’s late finding this act. At least, it’s a thing to be familiar with that there are such events exist. I agree with your Blog and I will be back to inspect it more in the future so please keep up your act. dabwoods disposable

  9. You’ve completed in excellent work. t suggest to my frtends ind personilly wtll certitnly dtgtt. t’m conftdent they’ll be gitned from thts webstte.
    nyc florist

  10. Hi. I found your blog using msn. This can be a really well written article. I’ll be guaranteed to bookmark it are available returning to read much more of your useful info. Thanks for the post. I am going to certainly return. Tải App 8xbet

  11. FMovies is a popular website that provides a wide selection of movies and TV series from different genres, including action, comedy, drama, horror, romance, and more. Whether you’re looking for the latest blockbuster hit or an old classic, Fmovies.run has got you covered.

  12. You make so many great points here that I read your article a couple of times. Your views are in accordance with my own for the most part. This is great content for your readers.
    bipoc winemakers

  13. I was perusing your article and thought about whether you had considered making a digital book on this subject. You’re composing would offer it quick. You have a great deal of composing ability. breeze boost

  15. I definitely enjoying every little bit of it. It is a great website and nice share. I want to thank you. Good job! You guys do a great blog, and have some great contents. Keep up the good work
    bipoc winemakers

  26. https://highforceresearch.com/

    HFR has access to a wealth of knowledge in applied chemistry from a variety of academic and business backgrounds. Whether you are a multinational corporation seeking dependable, small-scale commercial manufacturing on an ongoing basis or a fledgling company investigating potential uses for novel concepts, High Force Research is here to help. Located in the North East of England, HFR has been operating independently and privately since its establishment in 1988. From smart materials to organic electronics, and from pharmaceuticals to diagnostics, our materials find usage in a wide variety of applications through our partners. Delivered from our research chemicals and production facilities in the UK, our in-house knowledge allows us to give a varied and information-led approach to your project.

  31. Your content is nothing short of brilliant in many ways. I think this is engaging and eye-opening material. Thank you so much for caring about your content and your readers. acim podcast

  33. Thank you a bunch for sharing this with all of us you actually realize what you are talking about! Bookmarked. Please also seek advice from my site =). We could have a hyperlink change contract between us! acim podcast

  34. Thank you a bunch for sharing this with all of us you actually realize what you are talking about! Bookmarked. Please also seek advice from my site =). We could have a hyperlink change contract between us! acim podcast

  35. Thank you a bunch for sharing this with all of us you actually realize what you are talking about! Bookmarked. Please also seek advice from my site =). We could have a hyperlink change contract between us! acim podcast

  36. I am glad you take pride in what you write. This makes you stand way out from many other writers that push poorly written content. acim

  38. Hey, this day is too much good for me, since this time I am reading this enormous informative article here at my home. Thanks a lot for massive hard work. acim

  40. Chơi Tài Xỉu Sunwin ngay hôm nay để nhận được những phần thưởng hấp dẫn! Game Tài Xỉu Online Đổi Thưởng Uy Tín 100%, tỷ lệ thắng cao, Nổ hũ cực lớn, giao diện đẹp mắt. #SunwinTàiXỉu #taixiusunwin #taiappsunwin #Sunwin

  45. Nice post. I discover something tougher on diverse blogs everyday. Most commonly it is stimulating to learn content from other writers and use a little something from their website. I’d would rather apply certain using the content in this little blog regardless of whether you do not mind. Natually I’ll offer you a link in your web weblog. Many thanks for sharing. seo tolol

  48. Kunjungi Situs Judi Online Bigo88 saat ini kemudian klik menu DAFTAR untuk memulai peruntungan Anda sekarang, diajak pula teman serta kerabat Anda agar bisa merasakan jackpot besar besaran bersama.

Leave a Reply

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