Berkley Gold and Tennis Club offers golf and tennis memberships. Marketing analy

Question

Berkley Gold and Tennis Club offers golf and tennis memberships. Marketing analysis of the local neighborhood served by Berkley Golf $ Tennis Club shows that there are two types of families that might join the club: gold-oriented families, which are primarily interested in gold but enjoy playing some tennis, and tennis-oriented families, which are primarily interested in tennis but enjoy playing some golf. The study further estimated that there 400 golf-oriented families and 300 tennis-oriented families in the neighborhood, and the estimated demand priced for golf and tennis memberships by family are given below. There is no way to identify family types for pricing purposes and all costs are fixed so that maximizing total revenue is equivalent to maximizing profit.

Demand Prices for Gold and Tennis Memberships

Type of family Golf membership only Tennis membership only

Golf-oriented $250 $100

Tennis-oriented $50 $200

a. If Berkley Gold & Tennis Club plans to offer golf and tennis memberships separately, what prices should be charged for each kind of membership if Berkeley wishes to maximize profit? How much total revenue can be generated each month under this pricing plan?

b. The manager of Berkley Gold & Tennis Club has just finished her MBA degree and has an idea that bundling golf and tennis markets memberships might increase profit for the club. Are the conditions right for bundle pricing to increase profit at Berkeley Golf & and Tennis?

c. What is the optimal price to charge for golf and tennis (bundled) membership? How much revenue will this produce for Berkley Gold a& Tennis? Is bundling a profitable pricing tactic for the club?

Explanation / Answer

$2500 total revenue. NO $300

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