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Exhibition World | Feature15My partner at JWC, Dr. Anna Holzner, is a leadingexpert in the area of pricing strategies in the trade fairindustry. She has run several pricing projects. From herpractical and scientific work but also from the surveys wehave conducted we can draw one very clear conclusion:The most valued location to the exhibitors is a place onthe main aisle, or places of high visitor frequency.Locations close to the market leader or close tocompetitors are also attractive to the majority of thosesurveyed, but there were also exhibitors which didn'twant to be next to the market leader or competitor. So what does this mean, in practical terms, when itcomes to floor plan? Our floor plans today are driven simply by quantityconsiderations. We want to put as many stalls into a hallas possible. We should rethink that and focus on valueconsiderations. The more our floor plans reflect thevalues we bring to our exhibitors, the better we canimplement price differentiation schemes and increaseprofitability for the show organiser. How often do we have to discuss with customers whosay 'I'm in a terrible location, but I have to pay the sameas that guy at the front'. You avoid dissatisfaction of yourexhibitors by giving them choices. By creating differentprice segments (eg premium, comfort and standard) fordifferent qualities of location show organisers were notonly able to increase exhibitor satisfaction but alsorevenues and profit of their shows.On top of this we have applied a more sophisticatedapproach: Each show has a number of magnets, or'stars', and all these industry-leading companiesnormally want to stay on the main aisle or at the frontentrance. By placing these stars in strategic positionsthroughout the hall, we created a strong increase inpremium space as there are always many companieswho want to be around those stars. This in turn resultedin a steep profit increase for the show.Of course, before doing that we surveyed the customer'swillingness to pay and analysed price elasticities.In summary, if right methods and tools for location-based pricing are applied, the profitability of a show canbe increased by about 10 to 15 per cent at thebeginning; then over time and with more experience, thatprofit increase will rise even higher.If you add the bundling part and the yieldmanagement part, you can increase your profit marginfurther still. The best thing is that you can employ all thesemethods separately. Our advice is to start with a simpleprice differentiation model, which reflects the valueperception of the exhibitors and, over time, refine andextend that model.By intelligently introducing a simple but well foundedlocation-based pricing scheme, along with intelligentbundling methods, you can grant your exhibitors valueand choice. After all, customers who have choice are happycustomers. THE MAGAZINE FOR THE GLOBAL EXHIBITION COMMUNITY WWW.EXHIBITION-WORLD.NET| September2010|are highly profitable: They cross-sell the iPhone with highmargin telecom services and thus improve profitability.So what can we learn from that? Yes, we do bundles aswell, but we don't do it with deep analysis of customerneeds and customers' willingness to pay. Also, in thevast majority of projects, we concluded that bundling inthe exhibition industry is done without accurate analysisof bundle composition.In one of our projects we did a customer profitabilityanalysis. The result wasn't surprising: Customers takingless than 12sqm proved to be unprofitable. So thosecustomers were made to purchase certain bundles,which achieved profitability for each single customer. Butagain, before you apply such methods you will have tofind out what the customer is willing to pay for eachsingle product.Shopping mallsEach shopping mall has different quality locations. Adark location will be cheaper, a central shop near a cafemore expensive and then a location next to the mainentrance more expensive still. It's very clear; differentquality, different visitor frequency etc. drive the price. For our industry such a system would result in exhibitionstands being priced differently based on their individualquality in the hall. This is something mainly for venueowners of course, but in the long term it might also beapplied for organisers. PublishingWhat drives the price for an advertisement in amagazine? It is clearly the extent to which anadvertisement reaches its target group. A normal adcosts x, and if you place it near the front cover you mayhave to pay five times that amount. The price isdetermined by the location of the ad in the magazine, thenumber of potential readers or the proportion of thetarget group which can be reached by such ad. In the projects JWC has conducted, we were able todetermine through surveys that the most important factorto the exhibitor is very clearly location. If we offer ourexhibitor the right location, if we offer them the choice tosay 'I want to be in the top location, a medium location ora low frequency location', then we not only increasecustomer satisfaction because all of a sudden thecustomer has choice, but we also increase ourprofitability.CompetitionCostCustomer perceived valueYield ManagementBundlingPricing by quality of infrastructurePricing based onReaching target groupsLocationPricePricing Tools