WUMBLEWORLD THEME PARK
Executive Summary
To identify reasons for WumbleWorld's declining profits and develop suggestions to
reverse this trend
Company Background
WumbleWorld is a theme park operator located in a
wealthy coastal city in China coastal city in China. It’s a
50/50 joint venture between a foreign firm & a China
state-owned enterprise generating revenues primarily
from park admissions, food-beverages, & merchandising.
Problem Analysis
• The cost components haven’t changed significantly
and are unlikely to contribute to weakening profits.
• The number of visitors seems to be a key driver of
revenue and they have decreased due to competitor’s
underpricing practices.
Project Summary
From 2008 to 2011, the profits are declining. The client
expects a detailed analysis of the situation along with
strategic recommendations to reverse the trend.
Recommendations
• Refining the marketing mix and delivering a premium
experience to increase average visitor spending.
• Offering a discount to the targeted client segment to
beat the competitor's decreased pricing approach and
thereby increase volume.
Profitabilty Structure
Evaluating decrease in profitability by breaking it down into cost and revenue
components

Declining Profit

Increase in Cost Declining Revenues

Fixed Cost Variable Cost No. of visitors Avg. spending/user

Cost Analysis
Fixed costs have remained constant over the last 4 years but the variable costs have
declined

During the past four years, the

Fixed costs have been mostly stable
variable costs have fallen steadily. The
over the past four years hence they are
primary factor is variable labor cost
not expected to have played a
component which needs to be
significant role in profit reduction.
investigated further.
Labour Cost Breakdown
Variable labor costs per visitor remains constant, thus having no impact on the profit
decline

Variable labor costs observes declining trend on Annual attendance of visitors has dropped
an aggregate basis from 2007 to 2011 substantially by 35% from 2007 to 2011

The cost of labor per visitor has remained constant thus having no impact on declining
profits. In 2011, this cost went high because of lag on labor reduction.
Competitor’s Comparative Study
MightyMountain's reduced admission price likely led to decline in number of
WumbleWorld visitors

Constant average daily spend per visitor

WumbleWorld’s avg. daily revenue/customer has remained
constant for the last 4 years whereas MightyMountain witnessed a
drop of ~35CNY per customer but were still more profitable

MightyMountain’s reduced admission

price
MightyMountain's changed its strategy to enhance visitors by
lowering entry prices and compensated it with greater guest
spending on food-beverages and merchandise. This might explain
the significant decline in the no. of WumbleWorld visitors thereby
indicating that volume is the key driver of revenue.

To increase volumes it is crucial to figure out a new target segment and formulate strategy
accordingly
Customer Segmentation
Analysis of various consumer segments shows that ‘Family Members’ segment should
be targeted
Total Wumble Annual WumbleWorld’ Average
Customer Growth
Market World’s Visits per s Annual Profit per
Segments Rate
Size Share Person Visitors Customer

Family
20 Million 5% 1.25 1.25 Million 200 CNY 20%
Members

Young 10%
5 Million 10% 1.5 0.75 Million 180 CNY
Adults

Adults w/o
10 Million 10% 1 1 Million 170 CNY 10%
Kids

The proposed strategy should focus on increasing market share in the ‘Family Market’ segment because it has
the highest number of annual visitors, growth rate and profitability.
New Pricing Strategy
Creating 20% family discount on ticket price can result in a net profit gain of 42.5
Million CNY
Total Wumble Annual Average Daily Variable
Family
Market World’s Visits Per Total Spend Per Cost Net Profit
Members
Size Share Person Customer Per Person

Old Pricing 281.25

20 Million 5% 1.25 300 CNY 75 CNY
Strategy Million

New 323.75
Pricing 20 Million 7% 1.5 260 CNY 75 CNY Million
Strategy

Net Profit (from the new pricing strategy) = 323.75 Mn CNY – 281.25 Mm CNY = 42.5 Mn CNY

Based on pure profitability, WumbleWorld should ideally offer the discount but the qualitative
factors should also be considered before offering the discount.
Qualitative Factors
Discounted entry price to the Family Segment could have some drawbacks and
unaddressed issues
Customer Increased traffic from the Family Segment can create a negative impact on the customer
Experience segments that are left out and lead to reduced repeat customers

Park Park capacity might be a constraint specially during peak hours with added customers
Capacity thereby increasing traffic further

Customer Non-targeted customer segments (which are not given discounts) could get dissatisfied
Reaction and might not visit the park

Stakeholde Possibility of opposition from the Chinese government on the implementation of this
r Response scheme
Recommendations
WumbleWorld must increase average spending per visitor to increase revenue and
attract customers
Price Promotion
Seasonal passes, price variation by
Seasonal promotions, free/discounted
day of week or season to enhance
coupons, introduction of different
traffic at off times, cashless payment rides with special features using latest
methods, special ticket prices for technology, and celebrity/influencer
children and senior citizens can be
sponsorship
made available
Strategy

Premium Experience Product/Service

Speed passes for rides, premium high- Varied food & beverages outlets,
quality food outlets, customized introduction of concerts, park tours,
merchandise, luxury restrooms and events, hotels, games/prizes, parking
lodges and locker fees

Implementation of this strategy would increase the overall revenue, number of visitors, customer satisfaction and hence theme park’s
outreach