The Geauga Lake story has made a Chicago paper.

It was $4 at HW when they switched over. (not to mention increases since then that are among the largest in the industry - 67% gate increase since switching over)

Magic Springs raised both parking and the gate for a total of something like $7 when they went to free drinks.

Not sure about Lake Compounce.

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Jeff said:
Indeed you are wrong.

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...and apparantly it gave you great pleasure to utter those words.

My next question is, what is a normal price increase for Holiday World? Have their prices ever increased that much at another point in time? If so, I would still call that a price increase that has nothing to do with the addition of "free" drinks.

^ That big wood thing they put in the park probably has nothing to do with it.

Here's a direct quote from Will Koch on the subject:

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In 2000, we added a big new wooden rollercoaster (The Legend) and began Free Unlimited Soft Drinks. We raised our gate by $4.00. We thought of this as $1.00 for the new ride, and $3.00 for soft drinks (allowing that some tickets are comps, season passes, etc.).

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Puppies and rainbows give me pleasure. Telling you you're wrong, Rob, was just in response to you asking if you were wrong.

sure jeff. I'd have to say that you enjoy telling people they are wrong more than anything else in the world. You sure seem to do it enough. Do you remember when an online forum about an Amusement Park used to be fun?

Anyway I found and interesting page over at a competing Geauga Lake website that may shed some light on the rise and fall of the park. Draw some comparisons throughout history and you might just see why people stopped having so much FUN. *** Edited 11/6/2007 5:34:00 AM UTC by Zima***

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Rob Ascough said:
^^ Peruse the Sunday circular for your local grocer and you'll see tons of loss leaders. That 12-pack of Pepsi selling 2/$3.00? The $.79 dozen of eggs? Those are deals that actually costs the store money. They're willing to lose fifty cents on those sales if it means you coming into the store and spending a bunch of money on stuff that is highly profitable like baked goods and deli counter items where the profit margins are upwards of 35%. Why do you think most grocery stores have dozens of individual departments surrounding the perimeters of the buildings? There is hardly any profit on actual grocery items but tons of money to be made on the other stuff like meats, seafood and produce.

I haven't really given much thought to how a loss leader would benefit an amusement park operator but Ensign is 100% right that those things do exist. Call it taking one for the team, to great benefit of the team.

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I always thought prices were dropped to sell more of that same item, not to get the GP to buy more in the store. Not saying I'm right, just saying it's what I was thinking. If that is the case, then you and Ensign may have convinced me of that possible scenario, whether it's true or not.

As long as the demand curve for a product is elastic, dropping the price will increase sales, I was taught in Econ 101. (Not that I was paying all that much attention at the time.) Increasing sales also has the ancillary benefit of increasing store traffic.

I haven't even convinced myself that this is what Cedar Fair was doing, let alone am I trying to push the idea on others. Just saying, it might be one more factor in the debate.

Sounds very plausible. I thought you were saying that with the removal of the ride side, CP would notice a huge spike in attendance and that is where I was confused. This is an interesting discussion. *** Edited 11/6/2007 3:13:47 PM UTC by Coasterbuzzer***

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Coasterbuzzer said:

I always thought prices were dropped to sell more of that same item, not to get the GP to buy more in the store. Not saying I'm right, just saying it's what I was thinking. If that is the case, then you and Ensign may have convinced me of that possible scenario, whether it's true or not.

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Sometimes prices are dropped to sell more of an item but when it comes to the "front page" stuff where the deals seem to be too good to be true, those are usually loss leaders. I don't know if it's still the case but a few years back you could look at the shelf tag of an item being sold and see what the store was purchasing the item for. If it was a loss leader, you'd see the purchase price was higher than the sale price.

There will be a great example of this on November 23.

If you want proof of the concept, look at Wal-Mart who engages in this kind of "bait" all the time, even if not all their advertised items are loss leaders. Wal-Mart gets you into the store by advertising a microwave oven for $39.99. You realize this is a great deal and figure if the price on the smaller microwave is so great, the price on the larger one is just as great.... but it's not. Wal-Mart makes a lot of money on the larger microwave but people buy it because the smaller one convinced them all of Wal-Mart's prices are exceptional, even though in reality they're not.

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Rob Ascough said:
Wal-Mart gets you into the store by advertising a microwave oven for $39.99. You realize this is a great deal and figure if the price on the smaller microwave is so great, the price on the larger one is just as great.... but it's not. Wal-Mart makes a lot of money on the larger microwave but people buy it because the smaller one convinced them all of Wal-Mart's prices are exceptional, even though in reality they're not.

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Again, I think you're stretching the definition of a loss leader item.

I don't think it's an upsell technique. It's an additional-sell technique.

It's not that Wal-Mart expects you to buy the higher margin microwave because they offered one at a loss, it's that they expect you to buy other things in the store after they lure you in with the super-cheap microwave. Things that you wouldn't have bought from them if they hadn't drawn you in with the loss leader.

Another example is the old "razor and blades" approach where a company sells the initial item at a loss (the razor) knowing that you'll have to buy the high-margin blades if you plan on using the razor.

Video game companies do this too. The PS3 is sold at a loss knowing that if you want to use it you'll have to buy the high-margin games.

Hell, even DirecTV does this. You can get their equipment and have it installed for dirt cheap (often free) because in order to use it, you'll have to sign a contract to use their high-margin service for a period of time.

The point of a loss leader is to attract people with a 'too good to be true' promotion in hopes of (or in some cases knowing that) it will result in a boost of sales of other high-marging items.

So when Best Buy sucks you in with that ridiculous price on a DVD player, it's not that they expect you to come and buy a more expensive one. It's that they expect you to buy some DVD's and cables to hook it up while you're there as well.

Actually, it's a little from column A and a little from column B. There's the whole loss leader concept where an item being "given" away is meant to increase store traffic and therefore lead to sales of other profitable items, but the upsell technique is absolutely something that stores like Wal-Mart employs with great success (I know this because I've dealt with Wal-Mart on numerous occasions as part of my job and they readily admit this is something they do on a regular basis). But more than merely convincing people to buy a more expensive item, it's about sending a message. The consumer sees a basic, bare-bones DVD player being sold for $40 and they are lead to think that all items being sold in the store are just as good a deal.

^^ They sell games for the PS3??? ;)

Ray P.

I think so. I haven't bought anything since Heavenly Sword came out a few months ago. I'm not sure if anything came out for the PS3 since then.