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.

46,687 thoughts on “Revenue Management Application on Karaoke Industry in Taiwan”

  1. LOOKAH’s dedication to artistic innovation is evident in its broad offering of water bongs, which include designs from the intricately small to the magnificently elaborate.

  2. Set out on a tailored adventure to uncover the ideal weed bongs from LOOKAH’s curated selection, distinguished by its distinctive designs and premium craftsmanship.

  4. Begin your customized quest to find the perfect weed bongs among LOOKAH’s offerings, which are acclaimed for their innovative designs and exceptional quality in craftsmanship.

  6. Start your individualized journey to discover the perfect weed bongs from LOOKAH’s collection, celebrated for its original designs and superior craftsmanship.

  7. Welcome to Lookah Online Store, where we celebrate the art of fine writing with our exquisite collection of dab pen ,
    These devices are designed to be both robust and customizable, appealing to a wide range of users from beginners to those well-versed in dabbing.

  8. Welcome to Lookah Online Store, where we celebrate the art of fine writing with our exquisite collection of dab pen battery,
    Lookah Dab Pen Batteries are setting the standard in the dab pen market with their exceptional performance and innovative design. They have gained a reputation as a top choice for users seeking a seamless experience, offering robust power and customizable settings that cater to both novice dabbers and seasoned enthusiasts.

  9. Welcome to Lookah Online Store, where we celebrate the art of fine writing with our exquisite collection of dab pen battery,
    Lookah Dab Pen Batteries are setting the standard in the dab pen market with their exceptional performance and innovative design.

  15. Create inviting rooftop gardens and balconies with Messiturfcom space-saving synthetic turf options, designed to add greenery to urban living spaces without the upkeep of natural grass.

  17. Dolabuy Replica Bags is the number one designer replica handbags retailer and wholesale on the net. Our Replica Handbags are so perfectly reproduced, you won’t even be able to tell the difference! We don’t need to market our designer handbags vigorously, because we simply deliver the best.

    LouisVuitton-Hermes-Gucci-ChaneI-YSL-Goyard-Dior-Celine-Balenciaga-Prada Designer Replicas. Our replica handbags are made with the highest quality, most authentic looking replica handbags available! Don’t be fooled by cheap street replica handbags. Ours have the look, touch and even the smell of the real deal ! Order your designer replica handbags from us and you will be convinced.

  22. A very excellent blog post. I am thankful for your blog post. I have found a lot of approaches after visiting your post. Fmovies

  25. Choose Messiturfnet for premium synthetic turf that’s both practical and luxurious. Ideal for rooftops, balconies, or large-scale projects, it guarantees a lush, green aesthetic with minimal upkeep .

  27. An impressive share, I with all this onto a colleague who has been carrying out a small analysis for this. And that he the truth is bought me breakfast simply because I came across it for him.. smile. So ok, i’ll reword that: Thnx to the treat! But yeah Thnkx for spending plenty of time to talk about this, I’m strongly over it and love reading much more about this topic. Whenever possible, as you grow expertise, does one mind updating your blog post with additional details? It really is highly useful for me. Big thumb up because of this blog post! 해외스포츠중계

  28. Took me time to read all the comments, but I really enjoyed the article. It proved to be Very helpful to me and I am sure to all the commenters here! It’s always nice when you can not only be informed, but also entertained! FOX EYE VISION CANADA

  29. I appreciate the entirety you have got added to my knowledge base.Admiring the effort and time you placed into your blog and special facts you offer.thanks. doujin sak

  34. data analyst course in hyderabad with placement
    Enroll in 360DigiTMG Data Analytics online course and experience the best learning experience. Getting trained by world-class professionals with 300 plus hours of assignments will make you an expert Data Analyst in no time.
    data analyst course in hyderabad

  42. I impressed, I have to say. Really not often do I encounter a blog that each educative and entertaining, and let me inform you, you’ve hit the nail on the head. Your concept is outstanding; the difficulty is one thing that not sufficient individuals are speaking intelligently about. I’m very glad that I stumbled across this in my seek for something regarding this. iptv en ligne

  43. Trust Messiturf12com for expert advice on choosing and installing synthetic turf that enhances the beauty and functionality of any space See more.

  44. Thanks for a very interesting blog. What else may I get that kind of info written in such a perfect approach? I’ve a undertaking that I am simply now operating on, and I have been at the look out for such info. briansclub cm

  45. راهنمای گردشگری

    در این مقاله، قصد داریم تا با معرفی جاهای دیدنی بارسلونا، شما را با جذابیت‌های بی‌پایان این شهر از جمله کلیسای ساگرادا فامیلیا و پارک گوئل

  47. This can be neat article along with i quite like you just read this specific article. your blog can be amazing so you get very good staff members as part of your web site. wonderful expressing continue. slot gampang menang

Leave a Reply

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