Question

Read the following brief regarding the Wet 'n Wild waterpark chain, and then answer the questions below to reflect on your reading.

Brief

Wet ‘n Wild is a chain of waterparks that are operated across Australia, the United States, and now China. The first waterpark in the chain was opened on the Gold Coast in Australia in 1984. Since that time they have expanded to eight locations, including Hawaii and Las Vegas. In 2013, they opened a new water park in Sydney, Australia. Despite Sydney being a major international city with a population of over 5 million, it does not have a major theme or amusement park. Therefore, the new Wet ‘n Wild facility was able to obtain a virtual monopoly in the Sydney area.

Obviously, Sydney is relatively well known for its famous beaches, including Bondi Beach. To counteract this indirect competitor, Wet ‘n Wild located their new waterpark around one hour inland, away from the beaches. This location was still within large residential areas and easily accessible by road. Because Sydney was lacking a major theme park, Wet ‘n Wild was able to attract significant publicity and media attention prior to opening, particularly as the park was promoted as “the largest waterpark in the world”. This was supported by significant advertising expenditure, which was primarily focused on selling season pass tickets.

The pricing structure for the new Wet ‘n Wild waterpark was designed to sell season passes, rather than individual visits. For example, a season pass cost $120 as compared to a one-day visit pass of $70. This meant that there was a significant incentive to buy the season pass. As a result, these season passes were enormously popular. The Christmas period in Australia is in the middle of summer, so these season passes became popular Christmas gifts as well.

As you can imagine, as consumers have paid for multiple visits – many of them want to get great “value for money”– which means as many visits as possible. As a consequence, the park become very crowded at times. On several occasions, in the middle of summer, the waterpark was at full capacity. That means that season pass holders, who had paid for their tickets, were unable to enter the park because it was full. The other contributing factor to this overcrowding situation was that Wet ‘n Wild was not open every day. Although their season ran from September to April (the warmer months in Australia), they were not open seven days a week – sometimes only being open on weekends.

With a waterpark operating at full capacity on a hot day, you can imagine that the lines were quite long and uncomfortable. It was not uncommon to wait 1½ to 2 hours for a waterslide. This resulted in significant customer dissatisfaction that was expressed through social media, including Wet n’ Wild’s own Facebook site.

Answer the following questions:

• As a new facility, Wet ‘n Wild was keen to recoup their infrastructure investment as quickly as possible. Therefore, do you agree with their pricing strategy or would there be a more appropriate approach to pricing?
• As the number of season passes sold was significant, do you think that is ethical of the company to keep promoting these passes or do you think that they have a responsibility to their shareholders to maximize profitability?
• Given that season pass holders paid for a service that was not always available (that is, the park was full), do you think that they should be entitled to some form of refund or compensation? If so, how could this be implemented given thousands of people could have been affected.
• As there were reasonable numbers of dissatisfied season pass holders, what do you think would be the long-term implications of Wet n’ Wild’s objective to sell as many season passes as possible?

Answer 1

PART – 1)

No, In my opinion, the strategy of Wet ‘n Wild is not appropriate as it has set the skimming price i.e. higher price for their individual passes and it uses penetration pricing i.e. penetrating the market with lower prices for the seasonal passes. The season is the peak time period for the water park and thus becomes popular in the customers. But the water park does not have enough space to hold the crowd of all customers. The water park is even open on weekend only which makes delay in entertaining to customers. It creates dissatisfaction to customers and also reduce the profit of water park. In my opinion, the waterpark should sell only seasonal passes as it required to reach the masses and accordingly the profit percentage can also be raised a little bit to cover the profit incurred earlier at selling individual passes. The prices can again be changed as prior once the water park can maintain proper infrastructure.

PART – 2)

No, the company is not ethical to promote the seasonal capacity even after knowing that the capacity of the waterpark is limited. The customers of the Wet ‘n Wild are also dissatisfied because of their limited capacity and long waiting hours to enjoy every single water ride. It will also negatively promote the water park. I agree that the company has the responsibility to increase profitability but it should not be at the cost of their customer’s satisfaction. The firm can manage the situation by opening the park for more days in the week instead of weekends or the firm can also separate their timings are per their user’s requirement.

PART – 3)

The water park can filter their season pass holders and can check whether they get the service or not. The water park can provide a service of compensation in monetary form or in form of gift to their customers. They can identify those customers who using the database of seasonal pass holders and can refund them who are not able to avail their services. But the refund should not be full as it will hamper their profitability.

PART – 4)

The long-term goal of the water park should not to sell as many passes because this has already created dissatisfaction among the customers. The objective in long run should be to achieve normal profit and satisfy their customers which would create loyalty among the customers.