Pricing Strategy
La Hacienda Del Sol has two alternative pricing strategies that it can use during the off-seasons either to select a pricing strategy for the two closer cities of the US or a pricing strategy for local city Mexicali. Meanwhile, La Hacienda Del Sol offers premium hotel services at higher price and wants to increase the sales revenues during the off-seasons. However, considering the population of the two targeted cities will help the selection of appropriate pricing strategy for the two cities.
However, the target cities of the United States comprise 3.7 million of the total population, which have an aggregate annual income of $101 billion. Meanwhile, the total annual income and total population provide an annual average income for per person of $27,000/- and a per person monthly income of $2,250. Meanwhile, on the other hand the population of Mexico’s city Mexicali comprises of only 358,000 who earns aggregate annual income of $3.5 billion. Further, the average annual income of Mexicali city is $9,963/- per person and an average monthly income of $830 per month per person.
Further, the consideration of the target population of Mexicali city and two cities of the United States, i.e., Loss Angels and San Diego, shows that the average monthly of $2,250 of two US city's population is higher than the average monthly income of $830 per person of Mexicali. Therefore, in order to attract more customers from US cities and Mexicali city, La Hacienda Del Sol will have to adopt price discrimination strategy which will involve different prices charged for the two different populations. Meanwhile, the average spending of La Hacienda Del Sol visitors is around $500 due to the luxurious nature of the hotel services provided by the La Hacienda del Sol, hence, La Hacienda Del Sol will have to include such cost structure that best suites the income level of the Mexicali population so that they can target through reduced prices of hotel bookings. Further, the population Los Angles and San Diego should be charged higher prices due to their higher income levels that enable them to spend more for the same services.
Dealing with Mexican Consumer Perception
La Hacienda Del Sol has number of advertisement option available to reach the target local customers within the Mexico through which it can create awareness among the local potential customers about the openness of La Hacienda Del Sol services to local population as well as its offered to the foreign travelers. However, the local the access that each alternative advertisement media provided to the local population differs, therefore, La Hacienda Del Sol will have to choose an advertisement medium that will give access to the majority of its local Mexicali consumers.
However, the evaluation of different advertisement media shows that the advertisement through press release will provide access to the maximum number of Mexicali population. Since television is commonly watch by the 85% of Mexicali population or they have access to the television, meanwhile, the advertisement through a press release or television will have a greater impact of 15% on the total of 85% population, which is the highest impact of any other alternative advertisement media. Hence, La Hacienda Del Sol should use the press release and television media in order to create awareness among the Mexican consumer that the La Hacienda Del Sol does not specifically exist to serve the foreign traveler but it is equally available for the local Mexican population.
Cultural Issues
The purchasing behavior varies from culture to culture, because each culture has its own values and beliefs about a particular product or service that guides the human behavior towards spending money on buying different good and services. Such as the culture of living in joint family will influence the buying behavior in such a way that the individuals will take advice from the other family members, which definitely influence the buying behavior of individuals. Meanwhile, the cultural values also guide the individual’s loyalty towards the brands and similarly the buying behavior that applies to a hotel will be influenced by the cultural issues of different societies and regions.
Recommendation
However, based on the analysis of the different strategies discussed above, Juanita Garcia would be recommended to divide the consumer market through cultural segmentation which will allow her to offer hotel environment and structure of the services offered that are widely accepted by the United States’ travelers as well as the local population of Mexicali. Meanwhile, service bundle offers and business partnership arrangements should be made as the sales promotion techniques which will increase the sales revenues during the off-seasons. Additionally, the sales promotion through service bundle offers will also increase the customer awareness of such services that are liked by consumers, but they are aware of the availability of such services in the hotel, such as the SPA services.
Further, the discriminatory pricing strategy should be sued for the Mexican and American cultural segments, where lower prices will be charged from the Mexican population for using the hotel rooms during the off seasons. Meanwhile, in order to tackle the Mexican perception that the hotel is only the foreign travelers, Juanita Garcia should use press release and television media for advertisement purposes, which will attract a higher percentage of Mexicali population.Hence, the adoption of these strategies will attract reasonable consumer to use the hotel during off seasons and La Hacienda Del Sol will be able to increase its revenues during off-seasons as well.
Appendices
| INCOME LEVELS OF UNITED STATES' CITIES | |
| LOS ANGELES | |
| Total Population | 3,819,951 |
| Average Personal Income | $26,773 |
| Unemployment Rate | 6.80% |
| TARGET POPULATION | |
| Families Households | 16.40% |
| Families With Children Under The Age Of 18 | 53.50% |
| People 65 Years And Older | 9.70% |
| Total Population Minus Unemployed | 72.80% |
| Population | 2780924.328 |
| Total Income | $74,453,687,034 |
| SAN DIAGO | |
| Total Population | 1266753 |
| Average Personal Income | $27,657 |
| Unemployment Rate | 3% |
| TARGET POPULATION | |
| Families Households | 16.40% |
| People 65 Years And Older | 10.50% |
| Families With Children Under The Age Of 18 | 53.40% |
| Total Population Minus Unemployed | 77.300% |
| Population | 979200.069 |
| Total Income | $27,081,736,308 |
| Summary of US Population and income | |
| Total Target Population From Both Cities | 3,760,124 |
| Total Target Income | $101,535,423,342 |
| Income Per Person Per Year | $27,003 |
| Income Per Month | $2,250 |
| MEXICALI | ||||||
| Total Population | 813,853 | |||||
| Employed Population | 358,095 | |||||
| Population Distribution | ||||||
| Age Brackets | % of Population | |||||
| 0 - 14 | 32% | 260,433 | ||||
| 15 - 24 | 20% | 162,771 | ||||
| 25 - 54 | 38% | 309,264 | ||||
| 55 & Above | 10% | 81,385 | ||||
| 100% | 813,853 | |||||
| Annual House Holds Income | % of Population | Average Incomes | Total Income | |||
| Less than $1174 | 1.40% | 5013 | $ 1,174 | $ 5,885,655 | ||
| $1174 - $1388 | 2.30% | 8236 | $ 1,281 | $ 10,550,562 | ||
| $1389 - $2669 | 7.10% | 25425 | $ 2,029 | $ 51,586,854 | ||
| $2670 - $3949 | 7.70% | 27573 | $ 3,310 | $ 91,253,968 | ||
| $3950 - $5337 | 14.80% | 52998 | $ 4,644 | $ 246,096,712 | ||
| $5338 - $10674 | 25.10% | 89882 | $ 8,006 | $ 719,594,694 | ||
| $10675 - $16011 | 22.50% | 80571 | $ 13,343 | $ 1,075,064,817 | ||
| $16012 - $21349 | 9.70% | 34735 | $ 18,681 | $ 648,871,764 | ||
| More Than $21350 | 9.40% | 33661 | $ 21,350 | $ 718,661,498 | ||
| 100.00% | 358,095 | $ 3,567,566,523 | ||||
| Summary of Mexicali Population and Income | ||||||
| Target Population | 358,095 | |||||
| Total Target Income | $3,567,566,523 | |||||
| Income Per Person Per Year | $9,962.62 | |||||
| Income Per Month | $830.22 | |||||
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