Pricing the space program
Editor’s note: William M. Bailey is principal of WMB & Associates, an Orlando, Fla., statistical services firm.
The attraction and tourist entertainment market in central Florida is competitively intense. Attractions and/or exhibits that are not located in the central corridor south of Orlando must go to extraordinary efforts to entice new and repeat visitation. Obviously, the quality of the offerings is important, but the admissions structure must also be economically viable and competitive.
One such attraction, the Kennedy Space Center Visitor Complex, under the management of Delaware North Parks Services, is expanding in an effort to add enjoyment to the current NASA experience and also to capture more of the tourist market. A critical step in this process is an examination of admission ticket pricing. To this end, the author was retained to design a plan that would help determine an appropriate pricing strategy. This article presents the results of 506 one-on-one interviews among visitors to the Complex during the latter part of August 1999.
Tell the NASA story
The Kennedy Space Center Visitor Complex, in cooperation with NASA, has the mission to “tell the NASA story and inspire all people to support the exploration of space.” The Complex includes a wealth of attractions such as:
- An “Astronaut Encounter,” in which guests have the opportunity to come face-to-face with a real astronaut. This program consists of question-and-answer sessions, mission briefings, video footage, space artifacts and personal stories of space travel as told by those who have lived it. Various astronauts from throughout space history are scheduled to appear, including astronauts from the Mercury, Gemini, Apollo and Space Shuttle missions.
- “Early Space Exploration,” an exhibit that gives visitors a comprehensive history of key missions that served as the foundation for the current space program.
- “Exploration in the New Millennium,” visitors to which are taken on a journey from the Vikings’ discoveries of Greenland and Iceland to the flight of the Mars Viking Lander, the first U.S. probe to land on another planet. Visitors can see and actually touch a piece of Mars which fell to the Earth as a meteorite. Guests may also submit their names to fly in space on a future mission!
- The “Apollo/Saturn V Center,” which brings to life the U.S. space program’s missions to the moon. It features an actual 363-foot, 6.2 million-pound Saturn V moon rocket, with a dramatic recreation of the first manned Apollo launch, and hands-on exhibits.
Methodology
This study was conducted among Kennedy Space Center visitors between 9:00 a.m. and 4:30 p.m. during the period of August 16 through September 3, 1999. Each respondent was randomly selected based on a systematic sampling plan, with some direction for quota distribution needs, before entering the ticket booth area. After agreeing to participate, the respondent was taken to a designated location for the one-on-one, computer-assisted interview. All effort was made to prevent the person from seeing the current ticket options displayed on the ticket booths.
Each interview averaged 10 minutes and involved 40 questions ranging from basic demographic classification questions and prior visitation to a set of 18 price sensitivity questions. The pricing questions, by ticket option, were rotated for each interview.
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The response base by residency is shown in the chart above.
The Van Westendorp Price Sensitivity Model, developed in the 1970s by the Dutch economist Peter Van Westendorp, was the basis for the study. The objective of the model is to ascertain the range of acceptable prices, as well as optimum and indifference price points, for a product or service. The range will run from the price at which the preponderance of respondents start to doubt the quality of the product to the point at which the preponderance of respondents consider the product or service too expensive.
In this model, price sensitivity relates not to absolute price, but rather to perceived value of the product and service. Consumer price expectations and tolerances are measured by asking a set of price perception questions. These questions are the key to the model and seek to ascertain the price at which the product or service is:
- so cheap that product quality is questionable (Too Inexpensive);
- a bargain (Inexpensive);
- beginning to seem too expensive (Expensive);
- too expensive to consider (Too Expensive).
Once graphed, the point at which the Inexpensive and Expensive responses intersect is considered the Indifference Price Point (IDP); the point at which the Too Inexpensive and Too Expensive responses intersect is considered the Optimal Price Point (OPP).
IDP is where “cheap” and “expensive” curves cross. At this point, as many people consider the product or service cheap as consider it expensive. This represents the “normal” price in the market. At this point, we have maximized the percentage of respondents whose “normal” range we are in.
OPP is where “too cheap” and “too expensive” cross. At this point, the number of respondents finding the price acceptable is maximized and the resistance (in the form of unacceptability) to price changes is minimal.
Respondents are also asked for each of the two ticket options the price they would expect to pay, priced and unpriced purchase intentions, and perceived value.
Findings
Ticket Option A
Ticket Option A, which later became the Maximum Access badge, provides full access to the Kennedy Space Center Visitor Complex and was described as follows:
“With Ticket Option A, you will have unlimited access to the Kennedy Space Center Tour, IMAX Movies, Robot Scouts, Universe Theater, Early Space Exploration, New Millennium, and all other Visitor Complex attractions.”
(The Kennedy Space Center Tour takes guests in air-conditioned “open view” buses to exhibits located several miles from the Visitor Complex. These are near the shuttle launch area and include the Apollo/Saturn V Center, the LC 39 Observation Gantry, and the International Space Station Center.)
After the description was read to them, the respondent was asked several unpriced general intent-to-purchase questions. Ninety-four percent indicated that they definitely or probably would buy this ticket option based solely on its description. (Two ticket options were presented and rotated in their presentation. To avoid a potential name association bias, the tickets were labeled and read as Ticket Option A and Ticket Option B.)
Then visitors are asked the series of price sensitivity questions based on the Van Westendorp configuration regarding their pricing perceptions for this (still unpriced) ticket option. The mean (averages) responses to the five key points of the pricing model are shown in Table 1.
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Highlights include:
- Overall, the expected ticket price is $34.71.
- Florida residents are a bit more restrictive, with an expected price of just over $31; non-Florida residents expected a price of $34.21.
- International visitors expected to pay an average of $38.48 for the Maximum Access ticket.
- The plotting of the Optimal Price Point and the Indifference Price Point indicated a range from $31 to $40. (See “Ticket Option A – Pricing Strategy” graphic.)
- After being told that the actual price of the ticket as described was $24, the definite likelihood of purchase increased from the unpriced response of 51 percent to the priced response of 82 percent. (See “Purchase Intent” graphic below.)
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- For the child’s ticket price of $15, the definite likelihood of purchase increased from 51 percent to 60 percent. (No specific question for an unpriced child’s ticket was asked. The purchase decision was made solely on the $15 price presentation. Thus, the same unpriced response.)
When told of the proposed price for Ticket Option A, few (under 5 percent) expressed resistance to the entrance price of $24. This reaction indicated that this price point had strong market acceptance. Further, when asked to express their opinions on the value of Ticket Option A for its $24 price, 91 percent considered it an excellent/very good value for the money.
This study estimates a “definitive balk rate” to be under 2 percent, with another 2-3 percent being indecisive as to their intentions at this price point.
Purchase likelihood is high for Ticket Option A, as seen in the “Purchase Intent” and “Perception of Value” graphics. The bars display the purchase patterns between the unaided initial action question based solely on the ticket option’s description compared to the actual price disclosure.
The percentage saying they “definitely would purchase” increased from 51 percent to fully 82 percent saying that they would purchase the adult ticket at the proposed $24 fee.
Value for Ticket Option A is high, with 91 percent saying it is an excellent/very good value for the price.
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In the “Ticket Option A - Pricing Strategy” graphic, the point at which the Too Inexpensive and Too Expensive responses intersect is considered the Optimal Price Point (solid vertical line), in this case just under $32. The point at which the Inexpensive and Expensive responses intersect is considered the Indifference Price Point (dashed vertical line), in this case it is approximately $39.75. Thus the proposed $24 entrance fee was an appropriate pricing strategy. (The vertical axis is cumulative percentage points and the horizontal is in dollars.)
Ticket Option B
As with Ticket Option A, respondents were first read an unpriced description of a limited access ticket to the Space Center Complex, called Ticket Option B. This ticket design, which became the Limited Access ticket, was described as follows:
“With Ticket Option B, you have access to Early Space Exploration, New Millennium, and Visitor Complex attractions only.”
After reading the description, the respondent continued the interview in the same sequence as with Ticket Option A. Fifty-seven percent indicated that they definitely or probably would buy this (unpriced) option. The mean (averages) responses to the five key points of the pricing model are shown in Table 2.
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- On average, the expected entrance fee for the Limited Access ticket was $19.44.
- Non-Florida residents expected to pay an amount just slightly higher than Florida residents: $19.02 versus $17.67, respectively.
- International visitors expected to pay an average of $21.72.
- The plotting of the Optimal Price Point (OPP) and the Indifference Price Point (IDP) indicated a narrow band range from $19.50 to $21.
- After respondents were told the actual $10 price, the “definite likelihood” of purchase increased nearly four-fold from the unpriced response of 12 percent to the priced response of 43 percent.
The Limited Access ticket’s perceived value for its $10 price also was high: 65 percent considered it an excellent/very good value for the money.
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Purchase likelihood was high for Ticket Option B as seen in the graphics above. The bars display the purchase patterns between the unaided initial action question based solely on the ticket option’s description compared to the actual price disclosure. The percentage saying they “definitely would purchase” the ticket at the proposed $10 fee increased from 12 percent to 43 percent. Twenty-four percent said that the $10 entrance fee was an excellent value for the money and another 41 percent rated the value as very good.
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In the “Ticket Option B - Pricing Strategy” graphic, the Optimal Price Point (solid vertical line) is around $19.50; the Indifference Price Point (dashed vertical line) is just about $21.00. This showed that the proposed $10 entrance fee was an appropriate pricing strategy. (The vertical axis is cumulative percentage points, whereas the horizontal is in dollars.)
Secondary set of questions
Ticket Option A was clearly preferred, with over 90 percent of respondents selecting this entrance option. (Responding to the question “Given these two admission options to the Kennedy Space Center, which one would you most likely purchase?”, 93 percent chose Option A and 7 percent chose Option B.
Of the 7 percent of respondents who favored Ticket Option B, most were concerned about not having enough time available to take advantage of all the facilities/attractions involved with Ticket Option A. When these respondents were asked “If Ticket Option B was not available, what would you do?”, 57 percent said they would purchase Ticket Option A; about one-third (31 percent) of this sub-group said they would leave. (This departing group translates into approximately 2 percent of the visitors [31 percent of 7 percent].) The 11 percent who chose “other” generally expressed an interest in a family ticket option or in just walking around.
Respondent demographics
While no specific quotas were planned, a good distribution of visitors was monitored (both at the residency and age group levels) and the principal decision maker was interviewed among those in the travel party. (The author’s experience in the area’s attraction market has found that the decision is typically a family affair.)
Almost half of visitors interviewed were between 25 and 44 years old. (Age 18-24: 21 percent; age 25-34: 23 percent; age 35-44: 24 percent; age 45-54: 23 percent; 55-64: 8 percent; 65 and over: 2 percent.)
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The composition of the visitor travel party was evenly split between family and non-family composition, with an average of 3.3 members per party.
As might be expected, the majority of visitors were from the southern U.S., with 15 percent overall from Florida and the majority being full-time residents.
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Conclusions
Based on the research, the following conclusions were drawn:
Maximum Access badge
- There was strong market acceptance for the proposed Maximum Access ticket option: 82 percent said that they would “definitely” purchase this option as described at the $24 price.
- The estimated “balk rate” was under 2 percent; an additional 2 to 3 percent were “indecisive.”
- The acceptable price range was from $30 to $40.
- Just over half (52 percent) rated the Maximum Access ticket option as an excellent value for the money; 39 percent said its value was “very good.”
Limited Access ticket
- Just under half (43 percent) would “definitely” buy the Limited Access ticket option, as priced and described; 40 percent would “probably” make the purchase.
- There was an approximate 6 percent “balk rate;” 10 percent were indecisive.
- The Limited Access ticket had an acceptable price range of $19.50 to $21.
Positive review
The study received very positive review from both Delaware North management and NASA. The results of their actions took effect in March 2000:
- The pricing study also found a market segment that comes to the Visitor Complex with the sole purpose of purchasing merchandise and/or souvenirs. As a result, a “shopper pass” was introduced into the admissions structure during the last quarter of 2000.
- As of January 2001, the Limited Access ticket option was sold only to visitors who arrived after the last Kennedy Space Center Tour bus departed. Thus, late-arriving visitors are still able to see the many exhibits in and around the actual Visitor Complex.
- Management began an ongoing tracking program to monitor visitor activity, opinions toward the Complex and associated exhibits, and entrance fee structure.
- The study has also generated several adjunct studies for Complex partners such as concessions and food services.