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.

47,261 thoughts on “Revenue Management Application on Karaoke Industry in Taiwan”

  1. What i don’t realize is in reality how you are no longer actually a lot more neatly-preferred than you may be right now. You are so intelligent. You understand thus considerably with regards to this subject, produced me in my view believe it from so many various angles. Its like women and men aren’t fascinated except it’s one thing to accomplish with Girl gaga! Your individual stuffs great. Always maintain it up! taka77 apps

  3. Wow that was odd. I just wrote an incredibly long comment but after I clicked submit my comment didn’t appear. Grrrr… well I’m not writing all that over again. Anyhow, just wanted to say excellent blog! Rai88

  5. Splendid post. We learn brand new stuff upon various blogs daily. Couple of revitalizing to determine content material using their company writers as well as grow to be familiar having a little some thing their own certain. I’d believe to make use of a few inside the information on my blog need to don’t mind. Normally I’ll provides a link back up in internet internet site. Thanks sharing. Rai88

  9. I appreciate the transparency and honesty of Hiron. They provide accurate product descriptions and photos, so I know exactly what I’m getting Best Product

  10. Wow! This could be one particular of the most helpful blogs We have ever arrive across on this subject. Basically Magnificent. I am also a specialist in this topic therefore I can understand your effort. Rai88

  11. Hallo super toller Blog den ihr da habt. Bin gerade über die MSN Suche darüber gestolpert. Gefällt mir echt super gut. macht weiter so. MFG Susi Rai88

  16. This particular is usually apparently essential and moreover outstanding truth along with for sure fair-minded and moreover admittedly useful My business is looking to find in advance designed for this specific useful stuffs… 토토사이트 꽁머니

  20. Watch MyAsianTv official website for free Korean dramas online kshow and asian dramas,
    We release dramas in korean, Taiwanese, Hong Kong, and Chinese for all in hd quality.

    MyAsianTv

  22. Slot games are one of the most popular games throughout the world. There are too many gacor sites that you are confused about choosing one, for more complete gacor slot information you can visit the website. https://kexpros.com/

  25. The lottery slot game is one of the most popular games throughout the world, this lottery slot game is increasing over time and increasing the jackpot prize. With an official license, Waktogel also provides the best service. For more complete lottery slot information, you can visit the website. https://vanduss.com/

  26. scam Momo Sakura yang lahir 2 Desember 1996 ini aktif di industry film hot jepang pada April 2017. Dirinya debut akting lewat film yang diproduksi oleh Studio film JAV Idea Pocket, yang dirilis pada 26 April 2017. Wanita cantik yang tinggi 160 cm ini memiliki ukuran Cup Bra adalah G Cup. Informasi terkini ia membintang film yang diproduksi oleh Studio film JAV Idea Pocket, yang dirilis pada 8 November 2021.

  28. Togel slots are a game that is currently popular, the only way to play is to predict the numbers that will come out, this game is one of the games that makes money the fastest with only a small capital. Don’t miss out. For more complete information about lottery slots, you can visit the website. https://spaccofamily.com/

  30. QQGacor appreciate you taking the time to engage with the content! Your comment adds value to the blog and encourages further discussion.

  33. Togel slots are a game that is currently popular, the only way to play is to predict the numbers that will come out, this game is one of the games that makes money the fastest with only a small capital. Don’t miss out. For more complete information about lottery slots, you can visit the website. https://soundoffilm.com/

  35. I recently came across your article and have been reading along. I want to express my admiration of your writing skill and ability to make readers read from the beginning to the end. I would like to read newer posts and to share my thoughts with you. insight inspirw

  40. Slot games are very popular games all over the world. Especially games
    lottery slots that have the opportunity to win big with fast and safe transactions, one of the games that makes money the fastest. Don’t miss out. For more complete information, you can visit the website. https://howtowriteseo.com/

  44. People try to assure me that casino can be a generator of a money for living. According to candid reviews mrbet casino has been standing up for quite a long time.I couldn’t believe that I can make money https://mrbetcasino.ca/ with fun.

  47. Good to become visiting your weblog again, it has been months for me. Nicely this article that i’ve been waited for so long. I will need this post to total my assignment in the college, and it has exact same topic together with your write-up. Thanks, good share.
    matka result

  48. Pandawin menghadirkan 10 game slot gacor gampang menang maxwin terbaru 2024 yang merupakan berbagai pilihan permainan slot yang mudah di main kan dengan bocoran akun jp resmi dari rtp slot gacor maxwin untuk bisa pengalaman disitus slot jamin maxwin kami untuk mendapatkan keuntungan besar. https://pafibarat.org/

  49. The most popular slot game in the world today is the lottery slot, a game that is quite easy and has the biggest prizes for only a small capital. For more complete information on the most popular Gacor slot sites, visit the website. https://piodaogroup.com/

  50. ConceptCleaning wurde im Jahr 2019 in Moringen als Reinigungsfirma gegründet. Die Gebäudereinigung ConceptCleaning ist heute ein moderner Dienstleister rund um das Thema Reinigung. Gebäudereinigung Göttingen Mit Tradition, Know-how und modernster Technik bieten wir unseren gewerblichen Kunden im Raum Göttingen, Northeim, Hildesheim, und Umgebung professionelle Gebäudereinigung an. ConceptCleaning hat sich überzeugend am Markt etabliert und verzeichnet seit Gründung eine stetig positive Entwicklung.
    Grundlage unseres Erfolgs sind kompetente und gründliche Reinigung, die mit Qualität und Verfügbarkeit verbunden ist.

Leave a Reply

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