Infinite Blue... with finite budget: Pricing a cruise in the Aegean

Name: Infinite Blue... with finite budget: Pricing a cruise in the Aegean (English version)
SKU: OIT-0007-E

Markakis, Mihalis G.

Product #:OIT-0007-E

Supplier:IESE Publishing

Discipline:Operations Management

Setting:Greece, 2022

Details:Case (PDF) • 4 pages • 2023-02-01 (Rev: 2023-07-23)

Subjects:

Business management Operations and supply chain management

Geography:

Greece Europe

Your Price:

$10.54

Purchase this material with a free Educator Account and enjoy more benefits:

Free Educator Copy
Free Teaching Notes
Build your coursepack
Discounted academic price

The Director of Sales of a cruise line, operating in the eastern part of the Mediterranean Sea, is exploring the "crazy" idea of her niece, an MBA student, that the company should offer cruises that are tailored to young people like her. To make a case to her aunt, and help her pitch the idea to the company's CEO, the niece decides to poll her MBA classmates on how much they would be willing to pay for her dream week-long cruise in the Aegean, if it was actually offered the following summer. The data analysis provides insights into the price sensitivity of a market segment that the company had very little experience with, up to that point. The excel mentioned in the case can be provided upon request to the Professor.

Learning Objectives

This exercise provides the opportunity to showcase basic principles of demand modeling (e.g., linear, exponential, and logistic models); to explain the concept of price elasticity; and to illustrate price optimization using willingness-to-pay data. The case is accompanied by an Excel file with real (polled) willingness-to-pay data for the particular cruise offering.