Differentiating Subjective and Objective Attributes of Experience Products to Estimate Willingness to Pay Price Premium

Abstract

Innovative experiences created by designers, architects, and artists are being combined with foods and services in the tourism industry. These experience products often combine subjective and objective attributes, and travelers’ evaluation of these attributes determine their willingness to pay. However, there is currently no structured approach for determining willingness to pay for the separate subjective and objective attributes of an experience product. This research adopts a categorical hybrid conjoint analysis for pricing such experiences within the restaurant industry, considering 13 attributes and 40 attribute levels under four facets, using data collected from 315 respondents in India. The study found that customers have a separate utility for subjective and objective attributes and will pay significant premiums for subjective attributes. There is scope for marketers to redesign experience products by combining different proportions of subjective and objective attributes. We thus define an optimal bundle of experience, and derive the price for this.