Short answer
Designers and marketers should prioritize and clearly communicate the value of itinerary duration, booking flexibility, and desirable onboard amenities, as these are the primary drivers of customer price perception in the cruise market.
- Field
- Innovation & Markets
- Source
- European Journal of Management and Business Economics (2018)
- Method
- Hedonic Pricing Methodology
- Sample
- 36,000+ price observations
- Evidence
- Strong effect
Understanding the hedonic pricing of cruise attributes allows for strategic market positioning and yield management. This innovation & markets research insight is drawn from a 2018 study published in European Journal of Management and Business Economics. Using Hedonic pricing methodology with 36,000+ price observations, researchers explored how this design variable affects real-world outcomes. The key design takeaway: Designers and marketers should prioritize and clearly communicate the value of itinerary duration, booking flexibility, and desirable onboard amenities, as these are the primary drivers of customer price perception in the cruise market.
Cruise pricing is driven by itinerary length, booking timing, and onboard amenities.
Understanding the hedonic pricing of cruise attributes allows for strategic market positioning and yield management.
European Journal of Management and Business Economics · 2018
Key Findings
- 01Itinerary length (number of nights) significantly impacts price.
- 02Departure date and booking lead time (days before departure) are strong price determinants.
- 03Accommodation type and specific onboard facilities (casinos, cinemas, swimming pools) are key value drivers.
- 04A ranking of cruise companies based on price and perceived quality can be derived.
Application
Design takeaway
Designers and marketers should prioritize and clearly communicate the value of itinerary duration, booking flexibility, and desirable onboard amenities, as these are the primary drivers of customer price perception in the cruise market.
How to apply
Conduct a similar hedonic pricing analysis for your specific product or service category to identify the most influential features that customers are willing to pay for. Use these insights to refine product design, marketing messages, and pricing tiers.
Project actions
- 01When researching a product, think about what specific features customers care about most and how much they'd pay for them.
- 02Use data to back up your claims about what makes a product desirable.
Method & Evidence
Variables
Strengths & Limitations
Strengths
- +Utilizes a large, real-world dataset of actual prices paid by consumers.
- +Applies a well-established economic methodology (hedonic pricing) to a novel market segment (cruise industry).
Limitations
It can be difficult to isolate the exact price contribution of each feature, as many factors influence purchasing decisions simultaneously. Data availability and quality can also be a challenge.
Reliability & validity
The study's reliability is supported by the large sample size and the robustness of the statistical models (high adjusted R²). Validity is enhanced by using actual transaction prices rather than advertised prices, reflecting real market behavior.
Think critically
How might the 'quality' dimension in this study be subjective and how could it be more objectively measured in future research?
Design Principles
"Attribute-based pricing analysis reveals customer value drivers for product differentiation and market segmentation."
This research provides a data-driven framework for understanding how specific features of a cruise offering translate into customer willingness to pay. By identifying the most influential attributes, businesses can optimize their product development, marketing efforts, and pricing strategies to maximize revenue and market share.
What This Means for Your Design
This study shows that the price of a cruise depends a lot on how long the trip is, when you book it, and what cool things are on the ship, like a pool or casino.
How to use in your project
- 1.Use the hedonic pricing methodology to analyze the value of different features in a product you are designing. For example, if you are designing a backpack, you could research how much extra people are willing to pay for features like a laptop compartment, water resistance, or extra padding.
Add to My Project
Quick Cite
Paragraph starter
The hedonic pricing approach, as demonstrated in cruise tourism research, highlights the importance of deconstructing a product into its constituent attributes to understand customer value perception. By analyzing how features like itinerary length, booking lead time, and onboard amenities influence price, designers can gain critical insights into market demand and develop offerings that are both desirable and commercially successful. This methodology provides a robust framework for identifying key value drivers that can inform strategic product development and marketing efforts.
Source
European Journal of Management and Business Economics
Cruise tourism: a hedonic pricing approach
journal · 2018
View sourceQuestions About This Research
- What does the research say about cruise pricing is driven by itinerary length, booking timing, and onboard amenities?
- Designers and marketers should prioritize and clearly communicate the value of itinerary duration, booking flexibility, and desirable onboard amenities, as these are the primary drivers of customer price perception in the cruise market. Evidence: European Journal of Management and Business Economics (2018).
- Why does "Cruise pricing is driven by itinerary length, booking timing, and onboard amenities." matter for design?
- This research provides a data-driven framework for understanding how specific features of a cruise offering translate into customer willingness to pay. By identifying the most influential attributes, businesses can optimize their product development, marketing efforts, and pricing strategies to maximize revenue and market share.
- How can designers apply this research?
- Designers and marketers should prioritize and clearly communicate the value of itinerary duration, booking flexibility, and desirable onboard amenities, as these are the primary drivers of customer price perception in the cruise market.
- What were the main findings?
- Itinerary length (number of nights) significantly impacts price.. Departure date and booking lead time (days before departure) are strong price determinants.. Accommodation type and specific onboard facilities (casinos, cinemas, swimming pools) are key value drivers.. A ranking of cruise companies based on price and perceived quality can be derived.
- What research method was used?
- Hedonic Pricing Methodology with 36,000+ price observations.
- How strong is the evidence?
- Evidence strength is rated Strong effect, based on a 2018 journal from European Journal of Management and Business Economics.
- What should I do differently in my next project?
- Conduct a similar hedonic pricing analysis for your specific product or service category to identify the most influential features that customers are willing to pay for. Use these insights to refine product design, marketing messages, and pricing tiers.
- What are the limitations?
- The study is based on data from 2013, and market dynamics may have evolved. The analysis focuses on price as the primary indicator of value, potentially overlooking other customer satisfaction factors.