Question

Hi, just wondering if someone could PLEASE help me with maybe a small plan or something? Failing the subject in real trouble here.

The question is: As a graduate from one of the world’s finest universities, you have been hired as a consultant by the West Japan Railway Company (JR West) to write a report on its pricing strategy on its Shinkansen high-speed rail service between Tokyo and Osaka. The requirements of the report are given below, but your report should address each specific question in turn. For the purposes of your paper, you can assume that JR West is a monopolist in the relevant markets.

1. Outline the pricing strategy you recommend when JR West knows the exact willingness to pay for the train trip between Tokyo and Osaka for each customer. What conditions are required for this pricing strategy to be implementable? Make sure you provide clear economic reasoning for your answer.

2. Now assume that there are just two types of customer – business travellers and holiday makers, and that the two types of consumer differ in their valuation for the train trip. Assume, for the purposes of the question, that the business travellers are the high-value customers, and leisure travellers have a relatively low value for the journey. While JR West knows the willingness to pay for each type of consumer, it cannot observe the type of any given traveller (that is, JR West does know whether a particular potential traveller is a business or leisure customer). What pricing strategy would you now recommend? What conditions are required for your recommendation to be implemented? Provide intuition for your recommendation.

3. JR West is also interested in its pricing options for another potential scenario. As it happens, leisure travellers actually want to go to Kyoto, not Osaka itself. (Note that the Shinkansen trainline runs through Kyoto on its way to Osaka, and that Kyoto is relatively close to Osaka.) Business travellers, on the other hand, want to go to Osaka, but they could catch the train to Kyoto if they have to (and then make their way onto Osaka on local services). Moreover, the value to business travellers is more for both a train trip to Kyoto and to Osaka than it is for a leisure traveller.

Given this new scenario, what pricing strategy options are available to JR West? What do you suggest JR West does to help raise its prices? Make sure you provide economic arguments to justify your answer.

Its meant to be 700 words long I just really need direction to get me going. Thank you very much.

Answer 1

Solution for 1.)

As a graduate, before answering to this question we have to know the meaning of monopolist , generally the word monopolist stands for the individual or group that have a control for handling a particular goods or service. so now we can assume the pricing strategy of rail service between Tokyo and Osaka for each customer . Conditions that are implemented for pricing strategy as follows :

1. Cost : We have to know about the cost or value of specific goods or service which covers the distance, time, material e.t.c

2. Competitors : We have to know the competitors in the market, we should know the strengths and weakness, day by day  we have to overcome problems and improve the quality and should give a best competition.

3. Customers : we have to know our  customers first and we have to graph products in markets and compare the ratio of customers relating to which product demand.they want and should give the best service.

4. Profit : This is the last step in Pricing strategy. This is the most important point in pricing strategy and we should analyse the price in local and non local markets and draw a graph where the point meets customer satisfaction without having any loss.

Solution for 2.)

I would strongly recommend price skimming strategy because there was a competition between two persons basing on the conditional point. So at this time Price skimming is the best strategy to analyse the price. Generally, the word price skimming refers to driving down the demand curve. We all know that when  there is a demand, there is supply of production and at the same time there will be raise in price.

Solution of 3.)

After studying this case study we can clearly assume that there is common center which connects two places i.e. Kyoto. Pricing strategy that are applied to this condition is Portfolio pricing. As we know that portfolio pricing means including all customers work in a particular area for a specific period of time. This pricing may also depends on the contingencies following the legal engagements.. At this point, we should give prefer to business persons and should maintain the quality service in our production work in all aspects.