Vertigo Case

1. What are the levels of differential pricing for Vertigo at Stade de France? What are the relevant market segments? What other segmentation strategies can you propose? What threats to these strategies do you identify?

Level of pricing Relevant market segment

Logia, VIP, gold (Carre Or) Corporations high-value hospitality package

Category 1 through 4 General public

Standing General Admission (GA) U2 Members, young fans, students

Other possible segmentation strategies: segment by distribution channel. Threats are that a secondary market (black market) may emerge and eventually eliminate the price differentiation.

2. U2 - Pricing for fans: the fans always go for the GA tickets (“the best seats, also the cheapest”). U2 is debating whether to offer discounts to U2.com members for GA tickets. There are 10,000 U2.com members in France, and U2 believes that they would all would show up if entrance was free. Members are mostly low-budget teenagers and students, so the most that any of them could afford to pay for a GA ticket is €80. Hence, demand for members can be estimated by the linear model DM=10,000-125P. For the general public, demand is estimated as DG=40,000-200P. For security reasons, no more than 20,000 standing tickets may be sold at the SdF.

a) Is it a good idea to give discounts to members, and if so what discount is most profitable? In general, when is it a good idea to discount member tickets?

If the goal is to maximize revenue, it would be a good idea to price general public GA tickets at €115, and discount member ticket at €55.

In general, it is good idea to discount member tickets when the general public can be charged at the premium price and the decrease in demand