Universal rental car pricing simulation

I have a steep learning curve through the process, my first trial of simulation ended up with negative cumulative profits. Secondly, I applied break-even calculator to analysis the price range that I can work on within my capacity.

how to win the pricing simulation universal rental car

What this told me, was out of X amount of cars what percentage was being rented out. The simulation can be assigned and used in different ways to meet the needs of the instructor.

Pricing simulation universal rental car analysis

Account for demand differences across customer segments and regions. Students benefit from running the simulation multiple times with increasing complexity. The higher the price sensitivity, the more careful I will adjust my price so as to protect the market share and increase profits at a reasonable price. Yes I did change strategies, at first I was paying attention to unnecessary things which did not matter in the long run, I guess I was just over analyzing and thought the sim was more powerful and inclusive than it really was. For example, it can be assigned as a pre-class exercise with subsequent in-class debrief. The simulation was run across three cities in Florida; Tampa, Orlando and Miami. Here are some of the strategies that I have applied through the simulation. Whether assigned as individuals or teams, players must set weekday and weekend prices for each region for each period month and make fleet capacity decisions at several points throughout the simulation. I feel from what I saw the markets were fairly fixed in price, yes the prices would change but that is expected in such an industry, especially these two cities. In Orlando and Miami, business users were more price insensitive compared to Tampa. Well, at first I figured that no matter what business was business and people needed to travel and I noticed that when I raised the prices on weekdays rather than weekends utilization in Orlando was always way higher than in Miami, and so I tried to work my prices to a place where I could take business away from the competition and maybe that worked and maybe it didn't but I can see major differences in the different run that I did which basically all used a different strategy, this can of course be seen in the different posts that I made for each run, some more detailed than other and I did provide screen shots so from what is available you may be able to see a trend. Based on our broad. Once what I did was move nearly all of the available vehicles to the most profitable city which at the time I believe was Miami and tried to make money that way but I don't think it worked out as well as I thought it would have being that utilization would go down and with that the prices would have to follow. Secondly, I applied break-even calculator to analysis the price range that I can work on within my capacity. Wednesday, June 2, Final report This is the final strategy report, unfortunately I did terribly on my last run.

As I went through the simulation I changed strategies a few times, however I pretty much always looked at only a few indicators, in my first run I paid a lot of attention to things which I thought mattered, in the end the results showed that they did not matter. From what I saw in the results it wasn't the best idea as I am not able to control the amount of cars that can be rented out on weekends and weekdays and so because of lower profits in that city, I was therefore making less money.

Decisions were made with an informed understanding of the elasticity of demand, fleet utilisation, the gross profit, the contribution, the net profit, seasonal demand changes, the competitors pricing decisions and the context of the scenario. Understand how price and general economic conditions affect overall market demand.

In Orlando for example, it seemed like the market was just eating everything up, and I was not being aggressive enough in my pricing strategy, however Miami was a different story altogether.

If you changed, what caused you to do so?

Harvard business universal car rental

Table 2: Percentage contribution of weekday car hire to overall contribution All pricing decisions the team took are recorded in detail in appendix A, B and C. It is really a good learning experience by observing how different price strategies affects business profits in a different way. Surplus I think, because when I moved cars from one place to the other, I made that decision based on per car profits and it didn't matter if shortfalls were in one market because that was expected. However, in my last run I noticed that although one city was consistently making less money than the other, it was making more money on weekends and so I was able to move cars there and charge more on the weekends. Wednesday, June 2, Final report This is the final strategy report, unfortunately I did terribly on my last run. How were you able to target a specific group of customers through pricing? Prices were also strongly tied-in with the competition as sometimes I would make the mistake of trying to match them, forgetting their higher marker share and power. A Facilitator's Guide provides an overview of simulation screens as well as a Teaching Note with detailed commentary on debriefing the simulation. Sometimes this was a good thing, sometimes not so much. Unrented cars have associated holding costs while running out of cars is lost opportunity for profit. Therefore, along with maximising our capacity utilisation we increased weekday prices at a higher rate in Orlando and Miami compared to Tampa. In the meanwhile, there is more business travelling weekday rentals at the end of the year than in the beginning of the year. In Orlando it is lower because the relatively higher contribution of weekend customers in that market. After a few months of detailed scrutiny of the numbers, we were able to make pricing decisions more quickly by using the breakeven change in volume to set the new price. Table 2 confirms this, as it shows the percentage contribution of weekday car hires as a percentage of the overall contribution of each region.

Unrented cars have associated holding costs while running out of cars is lost opportunity for profit. What I found in Orlando was that although typically you made less money per rented out vehicle, utilization was always high, almost without care to the price, also in Orlando weekend prices were almost always if not always the highest.

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Pricing Simulation: Universal Rental Car V2