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.

36,990 thoughts on “Revenue Management Application on Karaoke Industry in Taiwan”

  2. There is no doubt that online lottery games are popular, this very global game has been crowned as the biggest money maker, moreover, registration is very easy and the process is very fast. Don’t miss out. For further information, visit the website. https://esherpamarketreports.com/

  7. Interested in financing your equipment purchase or just a portion of your order? Want to keep the funds you have in your bank account for start-up costs? With financing available through our partners at Econolease Financial Services, we can work with you to ensure you have the cash flow you need for opening day and beyond. lease kitchen equipment vancouver

  8. The TOGEL SLOT game is a very popular game throughout the world. Games that have the opportunity to win big and are declared the biggest money earners with multiple jackpots. For more complete information, you can visit the website. https://healthistip.com/

  9. Online slot games are an interesting and exciting game. With a variety of creative themes and exciting features, every spin of the wheel provides unforgettable thrills and excitement. In online slot games, we can feel the tension and excitement while waiting for the right number combination. Let’s continue exploring the world of online slots, chasing jackpots and achieving impressive wins. For further information, you can visit our website. For further information, you can visit our website https://38.9.141.188/

  10. Let’s enjoy online games wisely and full of fun. Don’t forget to maintain self-control and play within the limits we set. May luck always accompany us at every spin of the wheel and bring unforgettable prizes. For further information, you can visit our website https://gwsengr.com/

  12. Someone Sometimes with visits your blog regularly and recommended it in my experience to read as well. The way of writing is excellent and also the content is top-notch. Thanks for that insight you provide the readers! balkanpharmnutrition

  13. Normally I do not read post on blogs, however I would like to say that this write-up very pressured me to take a look at and do it! Your writing taste has been surprised me. Thanks, quite great post. slot gacor hari ini

  15. Thanks for sharing the info, keep up the good work going…. I really enjoyed exploring your site. good resource… gym

  16. 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 http://www.realspace-furniture.com

  24. No.1 먹튀검증 사이트, 먹튀사이트, 검증사이트, 토토사이트, 안전사이트, 메이저사이트, 안전놀이터 정보를 제공하고 있습니다. 먹튀해방으로 여러분들의 자산을 지켜 드리겠습니다. 먹튀검증 전문 커뮤니티 먹튀클린만 믿으세요!!먹튀검증

  29. The Togel Slot game is a very popular game throughout the world. Games that have the opportunity to win big and are declared the biggest money earners with multiple jackpots. One of the biggest and best lottery slot sites is Tribuntogel, for more complete information visit the website. https://wyomingsafetytraining.com/

  31. The Pajerototo slot site is the most global site, trusted as a site that is easy to win, with different themes and equipped with bonuses that will not make you bored in every spin. Don’t miss out. For more complete information, visit the website. https://sarlsimonnet.com/

  34. 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 slot game information, visit the website. https://rnxkmnngl.com/

  36. An interesting dialogue is price comment. I feel that it is best to write more on this matter, it may not be a taboo topic however usually individuals are not enough to talk on such topics. To the next. Cheers. 슬롯사이트

  37. 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://mihanscript.com/

  44. Enter a magical world in slot games, where every spin is an adventure filled with magic. With a variety of interesting themes, you will find magical symbol combinations and exciting bonus features. Enjoy stunning graphics and captivating sound effects as you spin the reels and hope the right symbols appear. In slot games, you can feel the thrill of being a wizard or a brave adventurer, and achieve incredible wins. For further information, you can visit our website https://cidskip.com/

  48. Online gaming has become a phenomenon that has rocked the world of online gaming. With a variety of attractive themes and exhilarating features, online games offer an engaging and exciting gaming experience. For further information, you can visit our website https://00e4.us/

  49. Online slot games are one type of game that is very popular throughout the world, one of the most popular sites is Meme4d, a site that has interesting themes and real animations, don’t miss out. For more complete slot game information, you can visit the website.
    https://nalgonas.org

  50. This article really opened my eyes to a new perspective. I appreciate how you explained complex concepts in such a clear and concise manner. Read More: joinpd</a

Leave a Reply

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