Parking Pricing for shopping centre - Täby Centrumkth.diva-portal.org/smash/get/diva2:730841/FULLTEXT01.pdf · Parking Pricing for shopping centre - Täby Centrum NESSRIN QATTAN

Parking Pricing for shopping centre - TäbyCentrum

NESSRIN QATTAN

Department: Building and Real Estate EconomicsMaster of Science Thesis

Supervisor: Berndt Lundgren

Thesis No: 291

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Abstract

This paper reports on a study of parking pricing in a shopping centre, TäbyCentrum. Customers play a critical role in a shopping centre, and not least forthe centre’s turnover.This study seeks to determine the optimal parking fee given to customers ofTäby Centrum, without dramatically changing the behaviour of the customers.A study was done, involving 104 parking customers, where questions were askedin order to gain an understanding of their behaviour.Findings show that most customers stay for an hour at most, and usually shopsin the beginning of their visit.The study shows that implementing a fee system with 10SEK per 20 minutesis the best option for Täby Centrum, after offering a 2hours free parking (+1free parking with loyalty card).

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AcknowledgementsI offer my deep and sincere inadequate thanks to my supervisor and mentor, BerndtLundgren, Assistant Professor at KTH, for his inspiration, guidance, enthusiasm,and almost infinite patience.

Support of this work was provided by Unibail-Rodamco. I should express my grat-itude to those various people that have contributed to this project in one way oranother. I am especially indebted to Louise Kristensson and Carl Durlow, mysupervisors at Unibail-Rodamco, whose guidance and insight were invaluable andstimulating.Erika Lundström, Ulrika Palm, Marcus Henrikson, and Janne Sandahl also deservemy gratitude. Their tolerance and moral support have played no small part in theendeavour.Similarly, Ulf Seger, Johan Thomsson and Ove Malmqvist’s counsel and calminginfluence cannot go unrecognised – thanks for helping me across the finish line.

Finally, very special thanks go to my family, whose forbearance and encourage-ment never faltered.

Thank you all.

Contents

Contents v

1 Introduction 11.1 Purpose . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 31.2 Limitations . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 31.3 Background . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 3

1.3.1 Data from Nacka Forum . . . . . . . . . . . . . . . . . . . . . 41.4 Methods . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 71.5 Disposition . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 8

2 Definitions 92.1 Fee . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 92.2 Occupancy . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 9

2.2.1 Occupancy variation . . . . . . . . . . . . . . . . . . . . . . . 10Dimension time . . . . . . . . . . . . . . . . . . . . . . . . . . 10How do you find out current occupancy? . . . . . . . . . . . . 10Future occupancy . . . . . . . . . . . . . . . . . . . . . . . . 10

2.2.2 Payment system . . . . . . . . . . . . . . . . . . . . . . . . . 11

3 Parking Guidance System 13

4 Literature study 154.1 Behavioural Economics . . . . . . . . . . . . . . . . . . . . . . . . . . 15

4.1.1 Rationality . . . . . . . . . . . . . . . . . . . . . . . . . . . . 154.1.2 Framing Effects . . . . . . . . . . . . . . . . . . . . . . . . . . 16

Attribute Framing . . . . . . . . . . . . . . . . . . . . . . . . 16Goal Framing . . . . . . . . . . . . . . . . . . . . . . . . . . . 16Risky Choice Framing . . . . . . . . . . . . . . . . . . . . . . 16

4.2 Pricing . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 174.2.1 Pricing wheel . . . . . . . . . . . . . . . . . . . . . . . . . . . 184.2.2 Customer’s perspective . . . . . . . . . . . . . . . . . . . . . 224.2.3 Consumer psychology and pricing . . . . . . . . . . . . . . . . 224.2.4 Price-quality inferences . . . . . . . . . . . . . . . . . . . . . 234.2.5 Creating satisfied loyal customers . . . . . . . . . . . . . . . . 23

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4.2.6 Customer perceived value . . . . . . . . . . . . . . . . . . . . 234.2.7 Means-end chain theory . . . . . . . . . . . . . . . . . . . . . 24

The basic means-end model . . . . . . . . . . . . . . . . . . . 254.2.8 Company’s perspective . . . . . . . . . . . . . . . . . . . . . . 26

4.3 The Value Chain . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 274.4 Competitors . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 304.5 New Product Development . . . . . . . . . . . . . . . . . . . . . . . 31

5 Reflections on theory 35

6 Methods 376.1 Data collection . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 37

6.1.1 Literature study . . . . . . . . . . . . . . . . . . . . . . . . . 376.2 Qualitative and Quantitative research . . . . . . . . . . . . . . . . . 37

6.2.1 Interviews . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 386.2.2 Survey . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 396.2.3 Other sources (Excel model) . . . . . . . . . . . . . . . . . . 396.2.4 Case study research . . . . . . . . . . . . . . . . . . . . . . . 39

6.3 Reliability and Validity . . . . . . . . . . . . . . . . . . . . . . . . . 406.4 Problematization . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 40

7 Case study 417.1 Retails in Stockholm County . . . . . . . . . . . . . . . . . . . . . . 427.2 Täby Centrum and its neighbourhood . . . . . . . . . . . . . . . . . 42

8 Results 458.1 Empiricism . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 45

8.1.1 Questionnaire study . . . . . . . . . . . . . . . . . . . . . . . 458.1.2 Interview study . . . . . . . . . . . . . . . . . . . . . . . . . . 488.1.3 Excel model . . . . . . . . . . . . . . . . . . . . . . . . . . . . 50

9 Analysis 51

10 Conclusions and Discussions 5510.1 Recommendation for Täby centrum . . . . . . . . . . . . . . . . . . . 57

References 59

Appendices 61

Appendix A Statistics - Nacka Forum . . . . . . . . . . . . . . . . . 63

Appendix B Questionnaire study . . . . . . . . . . . . . . . . . . . . 65

Appendix C Occupancy chart - Täby Centrum . . . . . . . . . . . . 70

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Appendix D Excel-model . . . . . . . . . . . . . . . . . . . . . . . . 88

Chapter 1

Introduction

The task of writing thesis paper was given by Royal Institute of Technology, and theinititor of this research question was given by Unibail-Rodamco; Europe’s leadinglisted commercial property company specialised in shopping centres. Their interestlies primarily in finding the optimal parking price for their new boom system thatis planned to be implemented July 1st 2014 in their shopping centre, Täby Centrum.

As a payment system will be introduced for the first time in the centre, propertyowner of the centre is worried about losing their loyal customers who have beenvisiting the centre for years without paying a parking fee. Therefore, it is impor-tant that a certain parking fee is given that will not make the customers choose togo to another centre, and a fee that the customers are not sensitive towards. Atthe same time, it lies in the interest of the company to maximize the parking revenue.

The problem is quite complex. It is easy to get caught in the theoretical ques-tion of how much revenue will be obtained if a certain fee will be introduced. Butthere is also a psychological effect that is hard to measure. The reason is of coursethat certain behaviour of the customers in a centre with no fees does not mean thatthe same behaviour can be expected when a fee is implemented. If, for an example30% of car customers park more than 2 hours, then it cannot be expected that these30% will pay and stay longer than 2 hours when the fee is implemented. Perhaps60% of these customers change their behaviour.The goal is to keep their previous behaviour, and make them visit the parking garageand spend their money in the shopping centre. Clearly, if one causes a barrier byintroducing a fee system, then it will obviously affect sales in the end.

Many companies have difficulty taking properly paid. The biggest barrier is notthe competition or declining demand from customers. No, the biggest obstacle isoften the enterprises themselves. It bears against to raise the price or to charge atall. For the customer it does not matter what the product costs to manufacture orsupply. What matters is how much he or she believes that it is worth and what he

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2 CHAPTER 1. INTRODUCTION

or she is willing to pay. The answer to these questions is difficult to measure. Thevalue is affected by hard factors as utility and economy, but also the soft factorssuch as taste, fashion and status.The risk is that the price is set lower than what the customer is willing to pay,which means that the company does not reach its full profit potential.

Some important factors that decide paid parking in a shopping centre are:

PR effect (or price sensitivity), can affect the number of visitors negatively. Howdoes it affect when setting a price, and how does it affect that customers do notgo to Täby Centrum, for example? In other words, how customers are affectedfor being charged and the psychology behind customers’ behaviour patterns. Forexample, do a customer stay less in a Mall because they are paying a fee for theparking lot, or will they perhaps spend less in the stores? The way of how theshopping centre introduces paid parking system has a great effect on the PR effect.If it is possible to relieve the PR effect by introducing it in a good way then maybeit is not perceived as bad. It is important that the communication is clear fromthe property owners. If a couple of free hours were introduced before charging forparking, it could perhaps affect the PR effect positively.

Competition plays a big role in pricing for paid parking. The question is howmuch the customer in Täby Centrum is prepared to pay. Because if the customerfeels that the price of the fee is too high, they might take go to town instead andpark there. This would affect the number of visitors and the turnover. But if thecustomer could park in the municipal parking lot, then it would be easier for thecustomer to come to the shopping mall, and it may not affect the number of visitorsor sales. It does however affect the results of the shopping mall, because they wouldnot receive any parking revenue when the customer chooses to park elsewhere thanin Täby Centrum’s garage. This leads to a price effect, also called price sensitivity.The price somehow affects the customer’s decision of coming to the mall or not.That is why there is price sensitivity. But there is also price sensitivity when cus-tomers stop to shop or shops less, in the centre because they feel they are paying toomuch on the parking, but still chooses to visit the mall. So either a customer willnot come at all, because he or she is price sensitive, or they buy less because theyare price sensitive, or they will park elsewhere because they are price sensitivity.There are three reasons for price sensitive.It is important to consider other retail centres, and what they charge. But it is alsoimportant to look at the surrounding area where the shopping centre is located, tosee what selections there are and number of parking spaces, as well as their pricing.

The occupancy could only affect the pay parking positively; the higher the occu-pancy rate, the higher the parking revenue. If customers stay shorter, the parkinggarage gets a better rotation, which also leads to higher parking revenue. However,it is important to keep in mind that not everyone who has parked in the garage are

1.1. PURPOSE 3

visitors to the shopping centre. This in turn affects the number of visitors nega-tively, because less customers of the mall have space to park.

Customer behaviour is a very interesting factor. This affects how much propertyowners earn. An important factor is the average visit time, i.e. how long customersstay, the distribution of visiting hours. How many of the customers are staying 20minutes, 30 minutes, 40 minutes, 1 hour, 1.5 hours, 3 hours, etc., despite of takingcharge or not? This affects the pricing of the garage, in the sense that if the pric-ing is set to have an hour free parking, and let’s say one hundred per cent of thecustomers stay for just an hour, then it will not be possible to make money fromthe parking lot. But if it instead was an hour free and only 50 % stayed for anhour, and the rest of the 50 % stayed for two hours, then the centre would earn onthose who stayed 2h. But then there might be a percentage that stops visiting theshopping centre completely just because of the paid parking.

1.1 PurposeThe purpose of the case study used in this thesis is to increase our understanding ofthe behaviour of customers to a shopping mall when a new parking fee is introduced.The interesting question is really For how long is a customer willing to stay in ashopping centre when a certain fee is introduced? This is a highly relevant questionsince a customer might be price sensitive, and decides to leave the centre after threehours if the parking is only free for three hours.

When receiving a understanding of the customer’s behaviour, a recommendationand the optimal pricing of Täby Centrum’s car park will be given. The attention isto find out how to maximize the parking revenue for the property owner.

1.2 LimitationsIt should be noted from this study, the purpose has been primarily concerned withhow to maximize the parking revenue for the property owner. The total turnoverfrom the stores of Täby Centrum is not taken into account, and neither is the coststructure. But it is important to keep in mind that different payment systems willhave different prices. Because the focus is on maximizing the result; that is thedifference between revenue and cost, a payment system that is way too expensiveis not an option for the property owner.

1.3 BackgroundThis thesis has been performed between the 1st of February to the 30th of April.During this time-period the boom system for Täby Centrum was not yet imple-


mented. This fact makes it not possible to formulate a hypothesis since it is notpossible to verify those within the time frame of the thesis.

As there is no existing theory for car parking, how can we then describe car parkingin a garage? One way, of describing a parking lot, is to view it as a surface or a salesarea that either is active or passive. If the surface, becomes too active it will lead tocongestion and attenuation (loss of revenue in the centres). If the surface would betoo passive it would lead to loss of customers. By “active” is meant that someonehas parked on the surface, and perhaps paid a fee for standing there. When the carmoves from there, it is not active anymore. It is important for the retail managerto find the optimal activity on this particular surface. The question is really forhow long people stay in the parking lot, and how long the surface is active. If itis inactive, no money is made. This activity vary throughout the day, and duringweekdays. There is a strong connection between the occupancy rates of the parkingspace and the economy in the whole centre.

Any price change can provoke a response from the firm’s stakeholders; often, cus-tomers questioning the motive behind price changes (Kotler & Keller, 2007, p. 234).

This study focuses mainly on Täby Centrum. Täby Centrum is an establishedshopping centre, and has loyal customers. For the first time the shopping centreintroduces barrier system, in connection with a fee after x hours of free parking.

The garage associated to Täby Centrum is divided into Carpark North and CarparkSouth, where each garage has 3 floors. Täby Centrum has a parking area that iscalled Grindtorp, which will be closed from 1st of May 2014, this parking will notbe taken into account in this study. The biggest competitors of Täby Centrum arepartly in Stockholm City; Nordiska Kompaniet, Biblioteksgatan, Drottninggatan,Gallerian, MOOD Stockholm, and Sturegallerian, but also Kista Gallerian. Thecentre earns the highest turnover of all centres in Stockholm County, but still doesnot have the most visitors.

1.3.1 Data from Nacka Forum

Nacka Forum is a good comparison to Täby Centrum. Nacka Forum started ofhaving no fee in their parking garage, and offered their loyal customers free parkingfor 3 hours at the beginning. It was later decided to implement a boomsystem witha certain fee after 3 hours. This lies in the interest of Täby Centrum’s case, whereit is interesting to see how the customers will behave when implementing the boomsystem and offering certain amount of hours free parking before taking a fee. Pre-vious data from Nacka Forum shows clearly what happens when a fee is set after xnumber of hours. The problem of pricing a parking garage in a shopping centre isthe amount of free hours the garage should have, or whether to have it at all, andthen how much to charge is the actual painful edge of what customers will accept.

1.3. BACKGROUND 5

Figure 1.1: Shows the occupancy rates for Nacka Forum, parking time between 1stof November 2013 to 30th of November 2013.

If we take examples from Nacka Forum’s data where there is 3 hours free parkingbefore charging fee, the bar chart above shows clearly what happens to the occu-pancy in the garage, and for how long customer+s park their cars (as shown inFigure 1.1). The data was based on 133,547 cars. Most cars stayed between 16-30minutes (25,802 cars) and 1,326 cars stayed for 3-3 ¼ hours. After 3 hours, amountof cars decreased to 814 cars. 2710 out of 133,547 cars stays longer than 3 hour; thatis approximately 2%. In other words, the percentage of receiving parking incomefrom car customers is only 2%. In Appendix A the actual data is shown.

Presented on the next page in Figure 1.2, amount of car customers staying morethan three hours are 2319 out of 115,639. In other words, only 2% are paying feeand is counted in the parking income. In Appendix A the actual data is shown.

These are good examples of a shopping centre that has adopted the boom system,but that is on another catchment area than Täby Centrum. As shown in Fig. 1 andFig. 2, the frequency falls after 3h, with almost 50%. The numbers of free parkinghours have a huge effect on the occupancy rates. In Täby Centrum everything is setin terms of the boom system, and the payment solutions are in place. However, ithas not adopted the boom system yet. There are a lot of risks with this adoption,which is why the process is taking a while. When Nacka Forum first introduced theboom system with paying fee from first minute, it became a failure since customer’sdid not accept it. However, this strategy was changed rapidly to a pricing of 3 hoursfree parking then a fee was charged. Therefore, it has been decided not to do thesame “mistake” for Täby Centrum, without launching it directly with a couple offree hours, then a fee.


Figure 1.2: Another example of Nacka Forum’s occupancy rate that is shown from1st of Febrary to 28th of February 2014.

An important factor that was raised earlier that is crucial when determining thenumber of free hours is how long clients stay in the shopping centre, average visittime. It might also be interesting to see when people spend their money duringtheir stay. Either the customers are efficient and spend their money first then theygo around in the centre, or they go around and check first then spend the money.Because maybe when adopting a fee system people might stay shorter, and it couldbe positive for the results because that will higher the parking revenue when morepeople come and go. But on the other hand, it can also be negative. If you have acustomer that stays for 3 hours:

Hour 1 they spend 100SEK


Hour 3 they spend 100SEK (in total the customer spends 300SEK)

But if that same customer would leave the shopping centre after 1 hour and 30minutes, then he or she only spend 150SEK. Then the loss will be 150SEK in sales(300-150SEK). But it could also be that the customer stays for 3 hours, and shopslike this:

1.4. METHODS 7



Hour 3 they spend 300SEK (in total the customer spends 300SEK)

The customer decides then to stay in the mall and then shop the 3rd hour, andthen you lose it all if the customer goes home after 1 hour and 30 minutes. Or thecustomer shops differently, 300SEK first hour, second hour 0SEK, third hour 0SEK.Then there is no loss, and there will be 300SEK in sales.

This is difficult to measure, and it is important to find out whether it is posi-tive or negative. The best way to find out is by asking customers when they shop.

For example, how long they have been in the shopping centre, and how long theyhave been shopping, what time during the stay did they actually spend their money?If they go around the centre and checks out first, or if they buy first then looksaround. Now that Täby Centrum has more restaurants and cinema, then maybethe visitors decide to visit a restaurant before shopping. Those who go to themovies, eating and shopping they may stay for 4 hours.

Today in Täby Centrum it is possible to stand in the garage for 3 hours free,and then you have to leave the garage. However, if you have the "loyalty card "that Täby Centrum offers, which is totally free to acquire, then it is possible for thecustomer to stay additional one hour for free; in total 4 hours free. This card canbe seen as an advantage and disadvantage. For sure, it attracts customers to theshopping centre, but it is an important factor influencing the total parking revenue.Since Täby Centrum has many loyal customers, most of them will have or alreadyhas the loyalty card. For example, if 5 % of the customers stays longer than 3 hoursin the mall, then it is only those that will contribute to the parking revenue; let’ssay that after 3 hours they start to charge the car customers. With the loyaltycard, which is +1 hour, the percentage is even larger because most customers tendto visit the shopping centre as most 3 to 4 hours. So those who pay provide arelative income. Täby Centrum, unlike Nacka Forum, has more car customers, sothe percentage for those staying more than 3 hours is probably more than thoseshown in the diagrams for Nacka Forum. Täby Centrum is also a larger shoppingcentre, and unlike Nacka Forum, has more restaurants and movie theatre that affectvisiting hours.

1.4 Methods

In order to gain an understanding of how consumers behave and opinions on parkingpricing, the following methods were used: literature study, interviews and consumersurvey. A case study was then made for Täby Centrum.


1.5 DispositionChapter 1 – Introduction: The first part of this chapter addresses the backgroundand the reason behind the issues of the thesis. Background information is also givenon the current system used for monitoring the parking garage. Examples are pre-sented from earlier data to be used as comparison to Täby Centrum. The chaptergoes on with defining the purpose and background of the thesis, as well as limita-tions and methods used.

Chapter 2 – Definitions: This chapter goes through the key definitions for parking.Definitions such as occupancy, fee and dimension time is defined.

Chapter 3 – Parking Guidance System: This chapter describes the system usedin Täby Centrum’s parking in order to keep track on the occupancy in the garage,and guide customers to find a parking lot.

Chapter 4 – Literature study: This chapter adresses theories related to the issues ofthe thesis.

Chapter 5 – Reflections on theory: This chapter reflects the previous theory chap-ter, and connects the theories with the issues of the thesis.

Chapter 6 – Methodology: This chapter adresses the methods used in the paperand the approaches.

Chapter 7 – Case study: A benchmark is shown over the largest surrounded over-all retail sales in Stockholm closed to Täby Centrum. The parking pricing is alsocompared for each retail, in order to get an understanding how much other centresprice their parking. Another benchmark is shown in terms of amount of visitorsand total turnover, for competitive retails of Täby Centrum. Also, a table of supplyof parking spaces in Täby Centrum’s neighbourhood is shown. Another interestingaspect that is brought up in this chapter is the division between how many of thecustomers that come by car, foot, public transport etc.

Chapter 8 – Results: In the beginning of the chapter the results of the empiri-cal tests is presented. That includes the questionnaire study, interview study, excelmodel, and the case study.

Chapter 9 – Analysis: This chapter describes the case of Täby Centrum and ana-lyzes it. The analyze is based on the Excel model.

Chapter 10 – Discussions and Conclusions: The first part of the chapter concludesthe work and discusses different issues brought up during the thesis. The secondpart of the chapter gives recommendation for Täby Centrum.

Chapter 2

Definitions

To gain a complete picture of parking, a book written by Carl-Henrik Henriksoncalled Parkeringslexikon, has been used. Henrikson has since the 1960’s workedin every aspect relating to parking. He is a former student at Royal Institute ofTechnology (KTH) and a land-surveyor. His book is very highly regarded in theindustry and almost every architectural office and consulting firm uses this book.Definitions of the concepts are derived from C-H Henrikson, 1990.

2.1 Fee

Parking fees have been introduced to increase the turnover of cars in public parkingand to facilitate the monitoring of the existing time constraints. There is also theopportunity for municipalities to apply additional parking charges on public streetsand squares. Motorists pay for the privilege to park, and sometimes pay for breachof that privilege. According to Henrikson Henrikson (1990), fees can be divided intothe following categories:

• Parking fee

• Residential parking

• Commercial parking

• Illegal parking fee

• Inspection fee

2.2 Occupancy

Occupancy (or occupancy rate) is a measure of the proportion of the number ofavailable parking spaces that are occupied for a certain period of time. The occu-pancy is measured in percent and time period can be hours, days, weeks or longer.

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10 CHAPTER 2. DEFINITIONS

The occupancy should normally not exceed 90% for a motorist with some ease tobe able to find an available parking space. In a well-planned car park that is forshort-term parking, it can easily achieve an occupancy of up to 100-110% for a shortperiod, due to some cars being constantly in motion Henrikson (1990).

2.2.1 Occupancy variation

Occupancy variations depend largely on what kind of activity (residential, office,commercial, etc.) the current parking lot serves. Visitor parking for trade is extradistance sensitive. The breakdown is as follows according to Henrikson:

Annual variation; wherein the occupancy is usually highest during the spring andfall. The occupancy rate is lower in summer and very high just before Christmas.

Weekly and diurnal variation; store parking with large centres (city and district)along with external systems create regional impacts knows as “oversized time.” Es-pecially on Fridays entering the weekend with Saturday being the most dominant,but also the most apt to decline in importance.

Dimension time

The dimension time is the time when the dimension parking need occurs. Dimensiontimes for store parking are Friday afternoon or Saturday noon in April-May andOctober-November.

How do you find out current occupancy?

For an existing facility the occupancy is studied by directly counting the numberof cars parked at regular intervals, such as once per hour. One can also indirectlycalculate and summarize the cars that drives in and out or study the cash strips.Often occupancy studies is supplemented with inventory of residence, daily receiptsetc. Another measure that is sometimes used is the number of sales/day. It thenmeasures how many times each space has sales for example per day (Henrikson,1990, p. 33).

Future occupancy

Occupancy studies are important for assessing the location, size and economics ofa future facility. One can get a fairly good idea according to Henrikson on futureoccupancy by an analysis of the following factors:

• relationship between supply and demand for parking spaces in the surroundingarea

• fee level in relation to competing parking supply

2.2. OCCUPANCY 11

• facility’s availability

• facility’s interior design

2.2.2 Payment system

Henrikson divide the payment into the following groups:

• motorist pays in advance; motorist pays prepayment. The system requiresmonitoring to verify that the payment was made. This refers to the p-meter,ticket machines and place machines.

• motorist pays in arrears; motorist pays when he picks up the car. This includessemi-and fully automatic systems.

• motorist pays in advance or in arrears; motorist pays at a different time fromthe parking moment. This refers to p-cards, electronic parking instrumentsand credit card machines.

• motorist does not pay at all or in advance; motorist has a parking disc on whichhe himself indicates parking time. The parking disc is sold or distributed free.Monitoring is required to verify that the time the rules are followed.

Chapter 3

Parking Guidance System

Parking guidance systems becomes increasingly important. A parking guidance sys-tem guide a car to a free parking space as quickly as possible. Single space detectionsystems (SSD) accurately detect the occupancy of each individual parking space byusing ultrasonic sensors, in Täby Centrum. The SSD system shows motorists theshortest way to a free parking space using LED displays. This dynamic routing isdetermined by means of control logic as a function of the current occupancy levelof the car park.

The current occupancy level can be detected by two different methods, used standalone or combined depending on the car park layout and customer use case:

• Single space detection (accurate detection of every available parking space)

• Vehicle counting (zone counting for particular parking areas with multiplespaces)

Depending on the parking operator use case, vehicles are guided through the carpark, improving the flow of traffic, reducing the time for finding a free parking spaceand reducing fuel consumption and CO2 emissions. Above each individual parkinglot an ultrasound sensor is installed. The sensor detects if the space is occupied(if the surface is active) or not, displays this information locally using an indicatorRGB-LED and transmits this information to the car park control centre for furtherprocessing. Highly visible at each parking lot is an indicator light that is green ifthe surface is vacant and red if it is busy. Multiple signal options (e.g. type ofcolor, flashing behaviour of the sensor) can be assigned by allocating the sensor toindividually selectable customer groups.

Dynamic displays (arrow, "X") mounted at every junction in the car park ensureefficient traffic guidance within the car park. Drivers following the directional dis-plays (dynamic LED arrows) are guided to the nearest free parking space. Everydirectional arrow is assigned to a specific parking area and will be automatically

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14 CHAPTER 3. PARKING GUIDANCE SYSTEM

updated by the parking guidance server or may be controlled manually by the park-ing operator. To prevent further vehicles entering into levels that will be occupiedby the time of arrival, aisle sensors for vehicle counting are installed at junctions(pre-counting). The counted vehicles will reduce the number of available parkingspaces in the system before parking the car MultiGuide (n.d.).

A car park management system collects and analyzes the information for each park-ing space, controls and monitors all field units, processes and archives the collecteddata and provides statistical analyses as well as visualization of the entire multi-storey car park.At selected points of the car park (for example at the ramps) numerical signs areinstalled for displaying the number of free spaces and the occupancy status of eachlevel and/or of special parking zones (reserved for handicapped, parents and chil-dren, women, VIPs, etc.).At the entrance to the car park, an entry sign is installed, which indicates the num-ber of free spaces in the overall car park or of individual levels. The system deliversreal-time graphics over the capacity status, and it is also possible to examine his-torical data to see how it all came out at some point, for example when it was highoccupancy and a problem arise.

Chapter 4

Literature study

4.1 Behavioural EconomicsIn order to understand how customers of a shopping mall respond to a fee, theorieswill be referred to which may increase the reader’s understanding of this issue; forexample behavioural economics. Interesting theoretical aspects will be presentedbriefly and the writer’s own thoughts and ideas on how a theory may effect theparking issue. Within behavioural economics the assumptions that’s made withinneoclassic economics are being questioned; in terms of both preferences, beliefsand limitations. It has also shown that people do not always deal with informationcorrectly. behavioural Economics seeks to understand how the economy works basedon a model of a person which is in better agreement with psychological knowledgeand observed behaviour rather than that of neoclassical economics assumptions.

4.1.1 Rationality

Explanations and predictions of people’s choices, in everyday life as well as in thesocial sciences, are often founded on the assumption of human rationality. The def-inition of rationality has been much debated, but there is general agreement amongresearchers that a rational decision should satisfy some elementary requirementsof consistency and coherence (Tversky & Kahneman, 1981, p. 2). In the articleTversky & Kahneman describe problems and decisions where people systematicallyviolate the requirements of consistency and coherence. Some of these examples willbe highlighted during the forthcoming composition. It is important to point outthat there is no rationality in general (Thurén, 1991, p. 119). A decision is rationalonly in relation to:

• What objectives you have, which in turn depends on what values they assume.

• What skills you have, what perception of reality you build on.

Thurén defines rationality as following: Being rational is that from the knowledgeyou have, you choose the resources that safest leads to the goal you want to achieve.

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16 CHAPTER 4. LITERATURE STUDY

4.1.2 Framing Effects

A major issue of this work is how price is introduced to customers, and the impor-tance of it. In the article "Consumer choices under product option framing" writtenby Biswas and Grau (Biswas & Grau, 2008, p. 4), they present three different kindsof framing effects; Attribute Framing, Goal Framing and Risky Choice Framing.Attribute Framing will argue that the researcher should put weight on and empha-size the product’s positive qualities/aspects, which means that the customer getsa better impression of the product. Levin, Schneider and Gaeth Levin, Schneider,and Gaeth (1998) gives a clear example made in 1988 where they rate ground beefthat is either labelled "80% lean" or "20% fat". Customers respond more positivelyif a meat product is not labelled that it contains "80% lean". Biswas and Graualso explains Goal Framing, which refers to allowing respondents to strive towardsa specific goal. While in Risky Choice Framing, they adhere that respondents re-act differently based on whether an issue is addressed from a positive or negativeperspective.

Attribute Framing

Attribute framing effects occur when evaluations of an object or event are morefavourable if a key attribute is framed in positive rather than negative terms; suchas % lean rather than % barrel of a food product, % correct rather than % incorrecton a test, and the success rate rather than failure rate of a medical procedure.The examples that Levin and Gaeth Levin et al. (1998) gave, showed that positivelabels tend to evoke positive associations while negative labels tend to evoke negativeassociations. Their study also shows that the design of the description affects therespondents strongly.

Goal Framing

Another study brought forth from Levin, Schneider & Gaeth (Levin & Gaeth, 1988,p. 6) but created by Meyerowitz and Chaiken (1987) showed that women were/aremore likely to perform breast self-examination (BSE) when informed of the negativeaspects if the procedure is NOT performed; versus doing it when enlightened bythe positive aspects of the BSE. Historically, it is been concluded that people aremore prone to execute action or precaution when warned of “bad” side affects froma neglected act. Instead of exercising the same advantage when the “good” in thesame act is presented. Because in theory more people try to avoid a loss than pursuea gain. This process, or rule of action is known as Goal Framing.

Risky Choice Framing

Risky choice-framing effects occur during the process of one attempting to takea risk based on whether the outcome is framed positively or negatively. “Asiandisease task”, according to Tversky and Kahneman (Tversky & Kahneman, 1981,

4.2. PRICING 17

p. 2) states that a higher percentile are more willing to engage in risks framed witha negative outcome than challenging an obstacle with a positive one. Or in morelament terms, avoid a loss than achieve a gain. In this example they test differ-ent configurations of questions on their respondents. These respondents are facedwith a scenario where an Asian disease threatens to kill 600 people and they areprompted to choose between two programs that can save lives. The programs on therespondents can choose between are Program A and Program B. If Program A isadopted 200 people will be saved. If Program B is adopted there is 1/3 probabilityThat 600 people will be saved, and 2/3 probability That no people will be saved.There were 152 respondents, and out of those 72 % favoured Program A, while 28% favoured Program B. In this case the respondents thought the alternative thatfor sure saved all 200 lives was more attractive than the riskier alternative to saveall lives.

Another interesting aspect that Tversky and Kahneman (1981) looked into is when asecond group of respondents was given the cover story of problem 1, with a differentformulation of the alternative programs: Program C and Program D. If program Cis adopted 400 people will die, and if Program D is adopted there is 1/3 probabilityThat nobody will die, and 2/3 probability That 600 people will die. Out of 155respondents, 22% chose Program C and 78% chose Program D. The design anddelivery of the question(s) is what determines the outlook of the respondent. Inthe example of A and B, it concludes that people were more likely to take the riskof saving 200 lives instead of all 600. Theoretically stating it is better to for suresave some than to risk lose all lives. Tversky and Kahneman shows in the latterexamples that when winning is given as the more favourable option, people are morewilling to take risks. As shown in option #1, the highlight is how many people willsurely LIVE. And in option #2 it clearly states how many will DIE. Concludingthat people will take more risks when they feel they are facing loss.

4.2 Pricing

Pricing is one of its most important tasks. This is probably the biggest question ofthis work ”What is the optimal pricing?” Correct pricing is a profitability factor,which sometimes is taken too lightly. Effective pricing is all about keeping trackof one’s own costs, competitors’ prices and customers’ perception of the value ofone’s products. The perfect pricing is when the gain is optimized by achieving themaximum with the buyer for a minimal reduction in price or a maximum price fora minimal reduction in the number of buyers. This is a constant balance. Youhave to look over the pricing and may have to change it when or if the customerchanges their behaviour, when one’s own cost changes, or when the general pricelevel changes (Lundén, 2013, p. 9).


Figure 4.1: Pricing wheel by Shipley and Jobber

4.2.1 Pricing wheel

According to Monroe (Shipley & Jobber, 2001, p. 1) the cost information of thecompany is only the starting point in the pricing process. The company needs moreinputs in the creation of a more error free and sustainable pricing. A contributingfactor to conduct an efficient pricing of service is that the price setter understandshow the consumer looks at price and how they react to price changes (Zeithaml,Bitner, & Gremler, 2006, p. 513-514).

In the article by Shipley and Jobber (Shipley & Jobber, 2001, p. 2) shows a figure(shown above) of the "pricing wheel" that is a cycle so that the marketers couldbe sure to maintain an active and adjustable pricing in order to know when it iscurrent with pricing changes.

1. Deciding strategy role: First the process begins with an identification of whichrole the price should have in relation to the main marketing strategy; shouldthe price have a big role, small role or a facilitation role. The answer tothat question may be different depending on the type of production used andhow the company wants to be perceived by customers. Shipley and Jobber(Shipley & Jobber, 2001, p. 2) mentions that companies with a high focus onthe matching of the prize role and marketing strategies, has to consider andsee a segmentation perspective. It is also difficult and takes a long time tochange an already elaborate positioning of the customer, the company needs

4.2. PRICING 19

to decide what type of positioning and what role the price should have fromthe start (Shipley & Jobber, 2001, p. 2).

2. Prioritise pricing objectives: Priority pricing objectives is all about gettingthe company’s overall strategies linked with the marketing and pricing of theproduct. Within this category these may need to be corrected as the marketchanges. If the firm for example, uses a growing strategy, the pricing objectivescould be to increase market share or volume. If the product becomes lessattractive and is in the final phase of the product cycle, the company canchange to a shorter profit strategy (Shipley & Jobber, 2001, p. 2-3). Shipleyand Jobber also believes that there are a variety of pricing objectives in whichthe most important are related to gain, survival, market segment, the creationof image and competitive advantages.

3. Assess Pricing Determinants: In order to create an effective pricing it is for themarketer’s important to know both the external and internal factors affectingefficiency. The overall areas are cost, competitors and customers (Shipley &Jobber, 2001, p. 4). Another problem is that many companies miss an in-depth analysis of demand. There are many different factors that can affectit. The price setter needs to know for example how price changes affect thedemand of the product. In order to get a good picture of it the company cananalyze how many customers there are, the use of the product and customer’sprice sensitivity (Shipley & Jobber, 2001, p. 4).One important factor to consider is the price elasticity which refers to how aprice change in a product affects demand of goods. To understand the priceelasticity factors concerning the price sensitivity of the goods or services needsto be understood (Dolan, 1995, p. 7-8).Another important factor to look over is the price sensitivity which is alsoimportant for price setters where price sensitivity explains how sensitive cus-tomers are to price differences on a certain product. There are many factorsthat affect the price sensitivity of a product/service, which Dolan (Dolan,1995, p. 7-8) explains by dividing the price sensitivity into three categories:

The consumer’s economy: when the consumer can assess the quality of theproduct and ignore the price. Perfume is an item where price and qualityare related; high price equals high quality. For example a shopping mall suchas NK (Nordiska Kompaniet), that could be seen as a mall of high quality,the customers can accept to park in the related garage for a high fee. Theprice is being ignored because it is related to the good quality of the shoppingmall. This should be considered when looking at how the price is introducedto customers.Consumers’ search and use: are factors that affect the consumer’s search anduse in their buying process; how easily consumers can find information foranalyzing the different offerings and prices.


The competitive situation the company faces: if companies on a market havesimilar products it may result in increased price sensitivity.

The demand curve shows the market’s probable purchased quantity at alter-native prices, summing the reactions of many individuals who have differentprice sensitivities. The first step in estimating demand is to understand whataffects price sensitivity. Generally speaking, customers are most price sensi-tive to products that cost a lot or are bought frequently. They are less pricesensitive when price is only a small part of the total cost of obtaining, operat-ing, and servicing the product over its lifetime. Companies, of course, prefercustomers who are less price sensitive (Kotler & Keller, 2007, p. 220). Mar-keters need to know how responsive, or elastic, demand would be to a changein price. If demand hardly changes with a small change in price, we say thedemand is inelastic. If demand changes considerably, it is elastic (Kotler &Keller, 2007, p. 221). Demands is likely to be less elastic when:

a) there are few or no substitutes or competitors;b) buyers do not readily notice the higher price;c) buyers are slow to change their buying habits and search for lower prices;d) buyers think the higher prices are justified. If demand is elastic, sellers

will consider lowering the price to produce more total revenue (Kotler &Keller, 2007, p. 222).

4. Deciding price strategy: the overall task the marketer has is to determinethe company’s price position and how the firm prices new products. Priceposition involves being able to determine the customer’s perceived value inrelation to the benefit of the products to the customer. The price can influ-ence a buying decision, if the price exceeds the customer’s perceived value,a rational customer does not buy the product. If the output perspective in-stead is the company, the service provider will refrain to charge a higher priceif the perceived value for the customer exceeds the price (Shipley & Jobber,2001, p. 7). Furthermore, Shipley and Jobber explain that an effective priceposition needs to include competitor’s positions. Competitors could influencea company’s current position in price related to the perceived value. Let’s saya company has a low price and a low perceived value, the company is thenvulnerable to their competitors (in the same segment) that can offer a lowerprice or superior benefits.

5. Select pricing method: the price is affected by many factors and there arethree main factors companies use when setting prices (companies typicallyuse one of the three): The three pricing methods are cost-based, customer-based, and competitor-based pricing (Shipley & Jobber, 2001, p. 10-11).Cost-based pricing: is the most common form of pricing. The cost-based pric-ing is based primarily on the company’s costs and a specified margin. The

4.2. PRICING 21

starting point is the cost where a margin is added. This type of pricing givegood control effects; by that it means that the price should be such that itleads to a desire of both sellers and buying units to utilize resources in the waythat is optimally viewed from the entire company’s perspective (Ax, Johans-son, & Kullvén, 2009, p. 553). In a study by Avlonitis and Indounas (Avlonitis& Indounas, 2005, p. 8), it appears that most of service companies used thecost-plus method and set prices based on market equilibrium price. Avlonitisand Indounas criticize cost-plus pricing based on the the pricing is based onthe company expenses, and miss taking market conditions into account. Manyservice companies starts pricing based on the cost and then adds a margin,and hopes that customers are willing to pay that price Rosén (2010).Competitor-based pricing: with competitor-based pricing it means that a com-pany within the same industry or market puts focus on what the competitorsets for their price. The price does not need to be exactly equal to what thecompetitor sets (Zeithaml et al., 2006, p. 522).Customer-based pricing: This pricing method is more or less about meetingthe customer’s perceived value. This pricing is different from the others men-tioned above, because the price should correspond to the customer’s perceivedvalue and takes into account the non-monetary costs and benefits.

Here are two strategies that can be applied in order to take advantage ofthe customer’s perceived value:Market-penetrating pricing: With market-penetration pricing, the firm setsthe lowest price, assuming the market is price sensitive. This is appropriatewhen the market is highly price sensitive and a low price stimulates marketgrowth; when production and distribution costs fall with accumulated pro-duction experience; and when a low price discourages competition (Kotler &Keller, 2007, p. 220).Market-skimming pricing: Many companies favour setting high prices to “skim”the market. Market-skimming pricing makes sense when enough buyers havehigh current demand; when the unit costs of producing a small volume arenot so high that they cancel the advantage of charging what the traffic willbear; when the high initial price does not attract more competitors; and whenthe high price communicates the image of a superior product.

6. Implementing and controlling the price: The pricing wheel’s final phase is tolink all the information in each step and pass it to relevant target groups.The relevant target groups are for example: customers, the sales force anddistributors. Furthermore, a detailed analysis of all the internal and externalpricing determinants should be maintained. The firm should revisit the pricingwheel if any of these changes have gone wrong.


4.2.2 Customer’s perspective

The price is an important competitive tool, and has many functions from both theseller and buyer’s perspective. It is not just about crass economics, but instead alot of mental aspects involved Lundén (2013). According to Lundén (Lundén, 2013,p. 16) the price includes the following functions from the customer’s perspective:

• Wallet: The customer should feel that he or she can afford to buy the product.The question is whether to buy or not buy. For those with limited funds, theprice can be decisive. Partly because there is not enough in the wallet, andalso to those who have limited resources rather do a price comparison andlook at what competitors are taking.

• Fairness: The customer should feel that he or she will not be deceived byfinding similar product cheaper elsewhere (or even worse if it is founded thesame place the following day). The price should be perceived as fair andequitable. There are many ways that the customer can feel cheated by:

1. The price includes additional things that the customer did not found outin relation with the purchase.

2. The price is reduced for a short time after the customer has purchasedthe product.

3. The customer gets some lower prices on products without reasonablereasons and other customers become aware of this.

4. The customer discovers that at another supplier, the price is 20% loweron the products of the same quality as that offered.

• Status: A high price gives the buyer a higher status. This however, under theassumption that other people really understand how much the product costs.For some people it’s status to own expensive things. Some companies helpthese people achieve this status by having high prices on their products.

• A good business: Many people feel satisfaction over making a good deal.

4.2.3 Consumer psychology and pricing

Many economists assume that consumers accept prices as given. Marketers rec-ognize that consumers often actively process price information, interpreting pricesin terms of their knowledge from prior purchasing experience, formal communi-cations (advertising, sales calls, and brochures), informal communications (friends,colleagues, or family members), and point-of-purchase or online resources. Purchasedecisions are based on how consumers perceive prices and what they consider to bethe current actual price- not the marketer’s stated price. Consumers may have alower price threshold below which prices signal inferior or unacceptable quality, aswell as an upper price threshold above which prices are prohibitive and seen as notworth the money (Kotler & Keller, 2007, p. 219).

4.2. PRICING 23

4.2.4 Price-quality inferences

Many consumers use price as an indicator of quality. Image pricing is especiallyeffective with ego-sensitive products such as perfumes and expensive cars. Higher-priced cars are perceived to be high quality. High-quality cars are perceived tobe higher priced than they actually are. When alternative information about truequality is available, price becomes less significant indicator of quality (Kotler &Keller, 2007, p. 220). Price-cues: consumers tend to process prices in a “left-to-right” manner rather than by rounding. Thus many will see a stereo priced at€299 as in the €200 price range rather than the €300 range. Price encoding in thisfashion is important if there is a mental price break at the high, rounded price.Prices ending in odd numbers may also convey the idea of a discount or bargain, sofirms with high-price images should avoid this tactic (Kotler & Keller, 2007, p. 220).

4.2.5 Creating satisfied loyal customers

How do companies approach to win new customers and outmaneuver their com-petitors? This is done according to Kotler(Kotler & Keller, 2007, p. 63) by makingtheir customers happy in a better way than other companies. It is assumed herebased on a customer-oriented perspective where the customer stands in the centreand where the company’s purpose is to ensure the most efficient manner possibleto create value for the customer.

4.2.6 Customer perceived value

Kotler’s premise is that customers tend to be value-maximizers. He or she will buythe product that provides the most "value to the customer", which is defined asfollows: Value to the customer is the difference between the total value of what thecustomer experience of the product and the total cost of the acquisition and use ofthis product is associated with.

+ Product value

+ Services value

+ Personnel value

+ Image value = total customer value

- Monetary cost

- Time cost

- Energy cost

- Psychic cost = total customer cost


Figure 4.2: Customer-Delivered Value

Customer perceived value (CPV) = total customer value minus total customer cost,i.e. customer delivered value. The figure on the following page shows what deter-mines Customer-Delivered Value (Kotler & Keller, 2007, p. 64):

4.2.7 Means-end chain theory

Olson and Reynolds (Reynolds & Olson, 2001, p. 3) describes a similar theory calledmeans-end chain theory. The idea behind this approach is that decision makerschooses their acts based on important outcomes that seems most likely to achieve.It refers to a set of methods for interviewing consumers about the reasons for theirdecision choice and intepreting consumers’ responses in terms of linkages betweenoutcomes. This is important in order to understand consumer decision-making, andit explains the important question of why certain factors are important to a decisionmaker. The process could be divided into two steps. First, the marketing problem ofconcern must be framed as a specific decision made by consumers. Second, managersneed to understand precisely how consumers go about making that decision. In orderfor a marketer to understand consumer decision making, there are two importantkey issues that has to be considered according to Olson and Reynolds (Reynolds &Olson, 2001, p. 4):

1. What are the salient choice criteria that consumers consider in evaluatingalternatives.

2. Why are those factors important to the consumer?

4.2. PRICING 25

There are many things that the consumers make decisions about. One thing to keepin mind is that all decisions involve choices among alternative behaviours or coursesof actions. Consumers do not really choose to buy product A or brand B. Instead,they choose to buy, consume, recommend, sell, or return brand A rather thanbrand B. In other words, it is about evaluating and selecting alternative behavioursor actions (Reynolds & Olson, 2001, p. 5). It is important to focus on behavioursas choice alternatives, rather than marketing research; focus on physical products,brands, or stores. Decisions, or specific behaviours, could also be influenced bybroader contextual factors; such as one’s economic situation, cultural influences,and social roles. As Olson and Reynolds (Reynolds & Olson, 2001, p. 6) mention,in order to study decision making as it naturally occurs, researchers need to knowthe specific choice alternatives that consumers actively consider in making theirchoice decisions.

The basic means-end model

Consumers have three levels of product-related knowledge: attributes, the conse-quences or outcomes of using a product, and the broad goals or values that maybe satisfied by use of that product (Reynolds & Olson, 2001, p. 13). It could beseen as a hierarchical chain of associations, where consumers see the product andits attributes as a means to an end:

Attributes Þ Consequences Þ Values

The attributes have more meaning and value for customers largely in terms of theconsequences they are perceived to bring out, rather than product attributes thathave little or no importance or relevance to consumers. The end consequence in ameans-end chain is often a personal goal or a life value the consumer is striving toachieve. The simplest means-end chain model links attributes to consequences tovalues. But there are more complex means-end chains that have been proposed bysome researchers. The six-level model which is described by Olson and Reynolds(1983), distinguish finer graduations of attributes and consequences:

Concrete Attributes Þ Abstract Attributes Þ Functional Outcomes Þ Psychoso-cial Outcomes Þ Instrumental Values Þ Terminal Values

But most researchers agree that this six-level model is rather complex and notnecessary for most business applications (Reynolds & Olson, 2001, p. 14). Insteada four-level model has become the most common means-end chain:

Attributes Þ Functional Consequences Þ Psychosocial Consequences Þ Valuesor Goals

During consumption, product features or attributes produce immediate and tan-


gible consequences that are experienced directly by consumers. These outcomes arecalled functional consequences. These consequences can lead to higher level, morepersonal consequences that are more affective or emotional. These outcomes can beof two types; psychological consequences and social consequences. The combinationof these two outcomes is called psychosocial consequences.The associations between concepts at different levels of abstraction create the mean-ing of any one concept. The meaning of any one concept is given by the other con-cepts to which it is connected. This is the basis for the evaluation of the attribute(Is this attribute a good thing or a bad thing for me?).A related implication of a focus on consequences or outcomes is the accompanyingfocus on behaviour. Most of the consequences associated with the attributes of aproduct occur, either directly or indirectly, as a function of behaviours performedby consumers.Attributes can not have direct consequences by themselves. Consumers must per-form particularly product usage behaviours, that then generate those consequences.This simple point is so obvious that one can miss its importance. Attributes, takenalone, have no consequences, and thus have no relevance. Consequences occur onlywhen the consumer buys and consumes (or uses) the product and thereby experi-ences the consequences of use.Applying the means-end model to the thesis, it could look something like this:

Parking lot (attribute) Þ Fully occupied/almost occupied (functional consequence)Þ Irritation (psychological consequence) Þ Easy to find (instrumental value) Þ

Calm and quite (terminal value)

Let’s say a customer wants to park in a parking garage. The parking garage/lot hasto be calm and quite, and easy to find. These are the values the customer bringswith them when going in a parking garage. The functional consequence could bethat it is nearly full. What would then happen to the psychological consequence ofthe customer? They would probably become irritaded. This forms a chain. Thequestion would be, what actually makes the customers satisfied and feel it is worthcoming and park in the garage? What makes them willing to pay for parking? Thischain is a way to describe how a product interacts with the consumer.

There is a good interview technique, means-end approach when using laddering,referred by Olsen and Reynolds. It is used to uncover the underlying emotions,consequences, and personal values that drive consumer choice. The gathering ofdata is done qualitatively through in-depth interviews using the laddering tech-nique, but the output is structured and coded for quantitative analysis.

4.2.8 Company’s perspective

Even from the company’s perspective, the price has several functions:

4.3. THE VALUE CHAIN 27

Revenue per unit (for example hour) it may seem that the turnover (andthus profitability) would always increase when you raise the price. But that’s onlyif the demand remains the same, or at least reduces in a lesser degree than the priceincrease. This is obvious, otherwise everyone would raise their prices with highamounts. Here it is instead about to find the optimal price. It is the price wherethe gross margin is highest, i.e. the company earns the most money.

Revenues in the measurement of volume a high volume is desirable. Butonly if the unit price (price per hour, etc.) is high enough so that the gross margin ispositive . This is obvious, otherwise everyone would lower their prices any amount.

The company’s image the price of the company’s products are very importantfor the image shown to the world. The difference between NK that is on a morefancy street and IKEA that is out in the suburb, is obvious. A discount storehas not only low prices, it also radiates cheapness in other respects. Some peoplerefuse to go out in such stores. People might think that they have become insolvent.

Marketers need to know how responsive, or elastic, demand would be to a change inprice. If demand hardly changes with a small change in price, we say the demandis inelastic (Kotler & Keller, 2007, p. 221). If demand changes considerably, it iselastic. Demands is likely to be less elastic when:

1. there are few or no substitutes or competitors;

2. buyers do not readily notice the higher price;

3. buyers are slow to change their buying habits and search for lower prices;

4. buyers think the higher prices are justified.

If demand is elastic, sellers will consider lowering the price to produce more totalrevenue (Kotler & Keller, 2007, p. 222).The price elasticity seems high for parking spaces. In other words, if the price ofthe parking fee is raised then the demand will change considerable.

4.3 The Value ChainThe value chain was proposed by Michael Porter of Harvard as a tool for identifyingways to create more customer value. According to this model, every firm is asynthesis of activities performed to design, produce, market, deliver, and supportits product. The value chain identifies nine strategically relevant activities thatcreate value and cost in a specific business. These consist of five primary activitiesand four support activities, as shown in the Figure 4.3 on the next page. The firms’task is to examine its costs and performance in each value-creating activity andlook for ways to improve. In addition, the firm should estimate its competitors’


Figure 4.3: The Value Chain by Michael Porter

costs and performances as benchmarks against which to compare its own costs andperformances.To more smoothly manage delivery of quality customer services, companies needto manage these five core business processes according to Michael Porter (Kotler &Keller, 2007, p. 23).:

• the market sensing process. All the activities involved in gathering marketintelligence, disseminating it within the firm, and acting on it.

• the new offering realization process. All the activities involved in research-ing, developing, and launching new, high-quality offerings quickly and withinbudget.

• the customer acquisition process. All the activities involved in defining targetmarkets and prospecting for new customers.

• the customer relationship management process. All the activities involved inbuilding deeper understanding of, relationships with, and offerings to individ-ual customers.

• the fulfilment management process. All the activities involved in receivingand approving orders, shipping the good on time, and collecting payment.

4.3. THE VALUE CHAIN 29

Figure 4.4: The five competitive forces by Michael Porter


4.4 CompetitorsKotler describes Michael Porter’s theory (Kotler & Keller, 2007, p. 161) were Porterhas identified five forces that determine market attractiveness: industry competi-tors, potential entrants, substitutes, buyers, and suppliers. See Figure 4.4 on theprevious page.

1. Threat of intense segment rivalry. A segment is unattractive if it already con-tains numerous, strong, or aggressive competitors. It is even more unattrac-tive if the segment is stable or declining, if considerable plant capacity isbeing added, if fixed costs are high, if exit barriers are high, or if competitorshave high stakes in staying in the segment. These conditions will lead to fre-quent price wars, advertising battles, and new-product introductions-makingcompetition more expensive.

2. Threat of new entrants. A segment’s attractiveness varies with the height of itsentry and exit barriers. The most attractive segment has high entry barriersand low exit barriers, so few new firms can enter, while poor-performing firmscan exit easily. Profit potential is high when both entry and exit barriers arehigh, but firms face more risk because poorer-performing firms stay in andfight it out. When entry and exit barriers are both low, firms enter and leavethe industry easily, and the returns are stable and low. The worst case iswhen entry barriers are low and exit barriers are high: Firms can enter duringgood times but find it hard to leave during bad times. The result is chronicovercapacity and depressed earnings for all.

3. Threat of substitute products. A segment is unattractive when there are actualor potential substitutes for the product. Substitutes place a limit on pricesand on the profits that a segment can earn. The company has to monitorthe price trends in substitutes closely. If technology advances or competitionincreases in these substitute industries, prices and profits in the segment arelikely to fall.

4. Threat of buyers’ growing bargaining power. A segment is unattractive if thebuyers possess strong or growing bargaining power. Buyers’ bargaining powergrows when they become more concentrated or organized, when the productrepresents a signinficant fraction of the buyers’costs, when the product isundifferentiated, when the buyers’switching costs are low, when buyers areprice sensitive, or when buyers can integrate upstream. To compete, sellersmight select buyers with less power to negotiate, switch suppliers, or developsuperior offers that strong buyers cannot refuse.

5. Threat of suppliers’ growing bargaining power. A segment is unattractive ifthe company’s suppliers are able to raise prices or reduce quantity supplied.Suppliers tend to be powerful when they are concentrated or organized, whenthere are few substitutes, when the supplied product is an important input,

4.5. NEW PRODUCT DEVELOPMENT 31

when the costs of switching suppliers are high, and when suppliers can in-tegrate downstream. The best defenses are to build win-win relations withsuppliers or use multiple supply sources.

4.5 New Product DevelopmentTo develop and launch new products is very risky (Kotler & Keller, 2007, p. 184).Not to renew the products is also very risky. The challenges that lead to failure, dueto the development of new offers, can occur because of personal ideas, the marketsize is being misjudged, poor design, poor positioned and development costs biggerthan expected. The stages in the new product development process are shown inthe Figure 4.5 below.

Figure 4.5: New Product Development

1. Idea generation: In this stage ideas are being searched. Some marketing ex-perts believe that the greatest opportunities and highest leverage with newproducts are found by uncovering the best possible set of unmet customerneeds or technological innovation (Kotler & Keller, 2007, p. 185). The differ-ent ideas can come from interacting with customers, scientists, competitors,employees, etc. It could also come from using creativity-generating techniques;listening attributes, identifying relationships, etc.

2. Idea screening: This stage of the process is to screen out weaker ideas. Thecommittee reviews each idea against criteria such as: “Does the product meeta need and offer superior value? Will it deliver the expected sales volume,sales growth, and profit?” Next, the company estimates each product idea’s


overall probability of success and determines which are high enough to warrantcontinued development.

3. Concept development and testing: A product idea can be turned into severalconcepts by asking: Who will use this product? What primary benefit will itprovide? When will people consume or use it? By answering such questions,a company can often form several product concepts, select the single mostpromising concept, and create a product-positioning map for it (Kotler &Keller, 2007, p. 187).

Figure 4.6: a.(left) Product-Positioning Map (Breakfast Market) b.(right) Brand-Positioning Map (Instant Breakfast Market)

Figure 4.6 a. shows the positioning of a product concept, a low-cost instantbreakfast drink, compared to other breakfast foods already on the market.These contrasts can be used in communication and promoting the concept tothe market. Next, the product concept is turned into a brand concept. Totransform the low-cost instant breakfast drink concept into a brand concept,the company must decide how much to charge and how calorific to make itsdrink.Figure 4.6 b. shows the positions of three instant breakfast drink brands. Thenew brand concept would have to be distinctive in the medium-price, medium-calorie market or the high-price, high-calorie market. Concept testing involvespresenting the product concept to appropriate target consumers and gettingtheir reactions. The concepts can be presented symbolically or physically.The more the tested concepts resemble the final product or experience, themore dependable concept testing is (Kotler & Keller, 2007, p. 186).

4. Marketing strategy development: After a successful concept test, the new-product manager will draft a three-part preliminary marketing strategy for

4.5. NEW PRODUCT DEVELOPMENT 33

introducing the new product into the market. The first part describes the tar-get market’s size, structure, and behaviour; the planned product positioning;and the sales, market share, and profit goals sought in the first few years. Thesecond part outlines the planned price, distribution strategy, and marketingbudget for the first year. The third part describes the long-run sales and profitgoals and marketing-mix strategy over time. This plan forms the basis for thebusiness analysis that is conducted before management makes a final decisionon the new product.

5. Business Analysis: The company evaluates the proposed new product’s busi-ness attractiveness by preparing sales, cost and profit projections to determinewhether these satisfy company objectives. If they do, the concept can moveto the development stage. As new information emerges, the business analysismust be revised and expanded accordingly.

6. Product development: At this stage the company will determine whether theproduct idea can be translated into a technically and commercially feasibleproduct. If it cannot, the accumulated project cost will be lost except forany useful information gained in the process. The job is to actually translatetarget customer requirements into a working prototype.

7. Market testing: Now the product is ready to be dressed up with a brand nameand packaging and put to a market test. The new product is introduced intoan authentic setting to learn how large the market is and how consumers anddealers react to handling, using, and repurchasing the product.

8. Commercialization: If the company goes ahead with commercialization, it willface its larges cost to date. The company will have to contact for manufactureor build or rent a full-scale manufacturing facility. The company must alsodecide whether to launch the new product in one locality, one region, severalregions, the national market, or the international market. Finally, the firmneeds an action plan for introducing the new product into the rollout markets.

Chapter 5

Reflections on theory

When Biswas and Grau explains the theory Framing Effects, precisely AttributeFraming, it is interesting to consider and relate to customers in a shopping centre,and see how a shopping mall should introduce a fee system. If a shopping centrehave never charged and introduces a price, then it is important for the retail ownerto present this new fee correctly. It has to be seen positively from the customer’spoint of view, so that they feel that it is worth paying for. For example introducingthe fee by saying: It costs X SEK/X minutes. Instead bring out the positive sidewith paying the fee by saying: For X minutes in the parking lot the shopping centreyou will be served free coffee.

Another effect that was brought up was the Risky choice-framing effects. Thisis another interesting observation, what actually motivates people? For exampleentrepreneurs? Could it be the feeling of loosing something? That could perhapsbe the reason behind taking big risks. Or for example, what drives people to edu-cate themselves? If living in a too good society, then there might be no motivationto take higher risks (to take higher education). If for example a shopping centrecustomer does not visit a certain centre than the person might miss something.Therefore, the customer might choose to visit the centre anyway. But is not reallyconnected to the parking or the willingness to pay for parking fee, it is more aboutvisiting in the centre. Another example is the loyalty card, Täby Centrum offers.Maybe a customer will loose something if they do not apply for a loyalty card. Thesetype of theory is interesting, as they relate to economic development and economictheory. But in this particular case, it is difficult to see how it could be applied toparking.

Another interesting part of the theory chapter is about pricing. When a shoppingmall prices their parking fee, it is important to take into account how customerschange their behaviour, and whether to alter the pricing. The interview with JanGösbäck (centre manager for Kista Galleria) brought up an example where theshopping centre Kista Centrum year 2010 charged 5SEK per each started 30 min

35

36 CHAPTER 5. REFLECTIONS ON THEORY

for parking fee, and then raised the fee up to 6SEK per each started 30 minutes,the customers became really annoyed and upset. Kista Centrum then decided to goback to 5SEK, but this time 5SEK per each started 20min period. When doing so,the customers were not annoyed anymore, even though they were actually payingmore parking fee than from the start (when they had complained). This shows anexample of how one must take into account the customers changes in behaviour,and were the retail owner has to look over the pricing.

The pricing wheel on page 18 introduced by Shipley and Jobber is another in-teresting aspect. The first step is to decide strategy role, in other words the goal.The second step is to prioritze pricing objectives. Täby Centrum for example hasnever introduced a fee earlier, and will all of a sudden introduce a parking fee tothe customers of the shopping centre. The company will be perceived in a certainway by the customers, even if the price will not have a big role. It is important forthe retail owner of the shopping mall to decide how big the role of the price shouldbe. This goes back to the question of what the optimal price is. When pricing,the retail owner has to consider not only the customers, but also the competitors.That would be one of the external affects. So the next step in the wheel which isto find out what it is that the company will charge the customers for. Today TäbyCentrum is basically on step 4, deciding price strategy. That is what this thesisfocuses on. Step 5, selecting pricing method is already done; as the boom systemis implemented shortly. After selecting the pricing method, it is time to implementthe system. In the case of Täby Centrum when selecting pricing method, all thementioned pricing methods in the theory chapter are relevant when deciding whichmethod to apply. It is of course important to both consider the costs of the im-plementation, to see what other competitors are pricing, that it is worth for thecustomer’s (it meets their perceived value), etc.

The customer perceived value, as described earlier, is very important. It is notall about how much the fee will be in the end of the visit to the centre, but alsowhat the customers perceive when they are shopping, the environment of the mall,the environment of the parking garage, the service given to the customer while shop-ping, etc. It is important to consider all facts, because that is when the customerwill feel it is ”okay” to pay at the end of the visit.

It is important to remember that these are limitations of theories specific for thiswork.

Chapter 6

Methods

This chapter outlines research methodology that has been used in this thesis. Thechapter will provide an introduction to the qualitative and quantitative methodsused in the data collection.

6.1 Data collection

The data collected for the analysis is based on three different sources: a literaturestudy, interviews and a consumer survey. The reason behind these chosen sourceswas to gain a better understanding of consumer behaviour and opinions on parkingpricing. In order to create new knowledge empiric research has been combined withthe literature study.The information used within the case study at Täby Centrum comes from partici-pating in the daily work; sitting at their office, participating in meetings, speakingwith different managers regarding the current parking situation for respective shop-ping mall.

6.1.1 Literature study

A literature study was made at first. It is mainly based on online sources, thatare mostly from online journals, previous consultancy reports and documents, andliterature books.It has been important to balance the different opinions and being clear when aperson expresses a personal opinion.Much effort was put into scanning the Internet to find good sources of information,using search engines such as Google scholar and KTH’s Primo library database.

6.2 Qualitative and Quantitative research

This study is based mainly on theories within behavioural economics and pricing.These are then connected together with a qualitative and quantitative.

37

38 CHAPTER 6. METHODS

Researcher, Stake 1995, has pointed out three major differences in qualitative andquantitative studies:

1. The distinction between explanation and understanding as the purpose ofinquiry.

2. The distinction between a personal and impersonal role for the researcher.

3. A distinction between knowledge discovered and knowledge constructed.

This qualitative-quantitative difference is linked to two kinds of research questions.In quantitative studies, the research question seeks out a relationship between asmall number of variables. For example, ”Is there an enduring correlation betweenstudent achievement, and the training of the teachers over a variety of classroomand community situations?”In qualitative studies, research questions typically orient to cases, seeking patternsof unanticipated as well as expected relationships. For example, ”What happensto personal relationships among teachers in a remedial reading project if they areobligated to employ a problem-solving pedagogoy?” (Stake, 1995, p. 39).

6.2.1 Interviews

development/growthqualitative study in this thesis, are the interviews which are oneof the most important sources of case study evidence. They will resemble guidedconversations rather than structured queries. The actual stream of questions in acase study interview is likely to be fluid rather than rigid. This type of interviewhas alternatively been called an “intensive interview”, “in-depth interview”, or “un-structured interview”. In other words, there are two jobs throughout the interviewprocess (a) to follow your own line of inquiry, as reflected by your case study proto-col, and (b) to ask your actual (controversational) questions in an unbiased mannerthat also serves the needs of your line of inquiry.Rather than occurring over an extended period of time or over several sittings,many case study interviews may be more focused and only take about 1 hour orso. In such situations, the interviews may still remain open-ended and assume aconversational manner, but you are likely to be following your case study protocolmore closely. For example, a major purpose of such an interview might simply beto corroborate certain findings that you already think have been established, butnot to ask about other topics of a broader, open-ended nature (Yin, 2014, p. 111).

The main purpose of the interviews was to gain an overall understanding of thecurrent situation for Täby Centrum regarding their parking garage. What earlierexperiences can affect the decisions of having parking payment today? How do theythink customers will behave after implementing a new pricing strategy? The reasonof choosing certain people to interview was based on their knowledge and experienceof this topic concerning parking. It was important to target people from different

6.2. QUALITATIVE AND QUANTITATIVE RESEARCH 39

positions as possible to get a better overview of the different opinions. Some of theinterviews could be seen as in-depth interviews were it allowed the interviewer to askmore examined and customized questions to each individual. Of course it requiredmore amount of time to both perform, transcribe and analyze the interviews, butstill these types of interviews fits the purpose of this thesis the best. The analysis ofthe interviews commenced after all interviews had been collected, then an analysisof the collected material was done against the theory in the study.

6.2.2 Survey

In addition to the interviews and the literature study, a survey was carried out inTäby Centrum to try to capture some information. This is another example of aquantitative study. It was a challenge to design the questions in the survey due tothat the questions had to be asked in a manner so that the customers who wereinterviewed did not feel offended or would ask further information on the decisionof pricing in Täby Centrum.

6.2.3 Other sources (Excel model)

A quantitative study is made by using an excel model. In this model differentvariables are defined to show the effect they have on total revenue. As interest liesmainly in developing how to maximize the revenue, a model is needed to calculatethe effect of the variables used in the study. These assumptions are based oninterviews, previous reports and an evaluation of the theories presented in the theorychapter. The excel model shows the price sensitivity. The main point is to find outhow different factors interacts, and how they affect each other.

6.2.4 Case study research

A case study is a qualitative study which is used in this thesis. It was a naturalchoice to do a case study for each shopping centre. Case studies is defined as “Acase study is an empirical inquiry that investigates a contemporary phenomenon(the “case”) in depth and within its real-world context, especially when the bound-aries between phenomenon and context may not be clearly evident.” (Yin, 2014,p. 16)

The customer’s behaviour is important for the revenue from the parking garage.Choosing to study the situation a case study for Täby Centrum was a good choicesince the property owner of the centre has not yet come to an agreement how thepricing should be set. There are also very few academic studies made in this subject.A case study allows to capture the interplay between different factors, in order toprovide as complete understanding of a situation as possible.The focus of the case study and the information that comes from the research willbe used as decision material when pricing the centres.

40 CHAPTER 6. METHODS

6.3 Reliability and ValidityTwo important things must be addressed when doing quantitative, inductive, sur-veys; is reliability and validity. Reliability means that the measurements are donecorrectly. A poll must be based on a representative sample of individuals so thatno coincidences affect the result. If it is correctly counted, if the random factors aresomewhat successfully eliminated, if several investigators using the same methodscome to the same result, then the investigation has high reliability (Thurén, 1991,p. 22). In most cases quantitative surveys might use reliability as a scale to seewhether the result is stable or not. How the survey is carried out becomes veryimportant in order to create reliable studies.In order to achieve a high reliability in this thesis, the way the questions are askedduring the interviews are of an importance. When implementing the customer sur-vey, and choosing to interview every fifth or tenth customer who passed by, to getrandom numbers, the result will increase the reliability. The customers must bechosen randomly.Validity means that what was meant to research has actually been researched, andnothing else (Thurén, 1991, p. 22). Questions such as "Is the validity of this workhigh? " or "Does previous studies about parking show same results?" should beasked.Stake points out that the need of not only being accurate in measuring things butlogical in interpreting the meaning of those measurements, is also important (Stake,1995, p. 108). It is hard though, to say that other studies can be replicated whenthe methodology may be different and performed in different ways.

6.4 ProblematizationIn this section, the problems encountered during the study will be discussed.When doing the literature study, it was early discovered that there were no realtheory behind parking. So one had to quickly start thinking in other directions.Regarding the short in-depth interviews, it was a little bit difficult to stay on thesame track as the guidelines for the interview questions. There were usually a lotto discuss, and most interviewees wanted to state their ideas and points of viewimmediately. So that resulted in different unstructured interviews.The surveys on the other hand, were a little bit different. The guidelines of theinterview questions were clearly followed. It was difficult at times to catch someonefor an interview, since many people had no desire in attending a survey. It wasnot possible to choose whom to interview because the interviewees were randomlypicked.It was also hard when the different assumptions had to be made for the excel model.Some assumptions were hard to base anything on, and therefore a rough guess couldbe made.

Chapter 7

Case study

Benchmark allows to learn from others, in order to improve their own operations(Ax et al., 2009, p. 654). This case study begins by a benchmark made to show howTäby Centrum stands in terms of amount of visitors and total turnover comparedto some other competitive centres in the Stockholm County.

Figure 7.1: This diagram was taken from HUI Research - Köpcentrumbarometern2013 showing the total turnover 2013 for respective retail (y-axis, billion) and theamount of visitors (x-axis, million) in Stockholm County.

41

42 CHAPTER 7. CASE STUDY

Name Amount of parking lots PricingSouth Parking 1067 3 hours free parkingNorth Parking 986 3 hours free parkingJärvenpä 20-30 3 hours free parkingM-huset 44 15000SEK/yearTibblegaraget 108 For a fixed parking 1000SEK/monthÅvagaraget 140 For a fixed parking 750SEK/yearKallgaraget 128(20) 9000SEK/yearArkaden/Annexet 15 15000SEK/year

Table 7.1: Supply of parking spaces in Täby Centrum’s neighbourhood

7.1 Retails in Stockholm County

Another benchmark on the centres mentioned above, along with some other largecentres sales in the Stockholm County closed to Täby Centrum, is shown at the endof this chapter in Figure 7.2. These are the “total retail” which means groceries +consumer discretionary + restaurant + cafe + other services.These data is collected from HUI Research – Köpcentrumbarometern 2013 (exceptfor the parking prices, which was collected by myself). The overall purpose of theshopping centre barometer is to work as a tool to continuously monitor how theSwedish shopping centre trade develops.

7.2 Täby Centrum and its neighbourhood

The table below shows the supply of parking spaces in Täby Centrum’s neighbour-hood (the number of parking spaces and its pricing): There is a parking garagecalled Säkerhetsgaraget that has zero parking lots at the moment due to construc-tion establishment. The parking garage, Kallgarage, has at the moment 20 parkinglots due to construction. The garage called Järvenpää is hard to find space to parkdue to construction establishment, and the few lots that are available are taken inthe morning by construction workers.

It is also interesting to see how many of Täby Centrum’s customers come by car,bicycle etc. Every year a face-to-face study is made (ordered by the property owner)which asks customers how they came to Täby Centrum. 501 respondents were in-terviewed on their way out from the centre to the big entrence. The distributionsover competing means of transportation to Täby Centrum 2013 are the following:

7.2. TÄBY CENTRUM AND ITS NEIGHBOURHOOD 43

Type of transport 2013 2012Foot 30% 26%Two-wheelers 3% 8%Public transportation 20% 33%Car 50% 41%Another means of transport 1% 4%Total 501 499

Table 7.2: Transportation to Täby Centrum

44 CHAPTER 7. CASE STUDY

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Chapter 8

Results

8.1 Empiricism

Empiricism is the scientific study of reality. Empirical experiences are based onreal experiences, samples, surveys, interviews and experiments. These observations’probative value depends of their accuracy and scope. The empirical chapter does notbring up any philosophical reasoning, only the actual study, results of the performedempirical tests; which in this case are survey, interview, Excel-model and case study.These are called direct results.In this thesis nine number of quantitative interviews has been made and also asurvey. For the qualititative part there is an Excel-model and case study.

8.1.1 Questionnaire study

Six questions was asked to the customers visiting the centre. These questions whereasked when they left the garage, in order for the customer to be able to answerthese questions. Visitors where randomly selected by choosing one in five. If thefifth did not want to participate in the survey, the next was chosen. The key is toeliminate a potential bias in the selection of respondents and less slavishly followingevery 10 incoming visitors. Not only were the visitors randomly picked, but thequestionnaire study was asked during each day of a week, from Monday to Sunday.During Monday to Thursday the study was done during different times, in order tobe able to draw conclusions. On Friday the study was done from 10 oclock to 20oclock. Saturday and Sunday, the study was done from 10 o’clock to 18 o’clock.The data was the collected together in order to draw a rough conclusion. The week-days are reported in Appendix B. A Monday morning has been calculated as beingworth as much as a Tuesday morning; and as much as a Wednesday and Thursdaymorning. Therefore, the survey took place on Monday morning (10-12), Tuesday(12-15), Wednesday (15-18), and Thursday (18-20).

The questions were the following:

45

46 CHAPTER 8. RESULTS

1. What was your main purpose with your visit to Täby Centrum today?

2. For how long have you been in the centre?

3. Have you spend any money in the centre today?

4. During what time of the visit did you spend money? (if the answer is Yes inquestion 4)

• In the beginning of the duration (usually the first hour)• In the middle of the duration• At the end of the duration

5. Do you have loyalty card?

The purpose was again to gain an understanding of how long a customer is in ashopping mall and during what time of their visit they actually spend their money.The questions were not asked straight out, instead I tried to find answers to thequestions in a way that let the customer respond freely.A total of 104 people answered the questionnaire study. Figure 8.1 below shows thecar visitor’s duration in hours. It is clearly shown that out of the 104 interviewed,most of them stayed for 1 hour or less.

Figure 8.1: The graph shows the duration in hours (x-axis) and number of cars(y-axis) given by the questionnaire study.

8.1. EMPIRICISM 47

Since this is a survey with 104 respondents it is difficult to generalize to theentire population. We can only draw rough conclusions. These are statistics onhow long people stayed in Täby Centrum when the boom has not yet been intro-duced, and neither the fee system. It is important to observe that only a singlepoint measure was made, and it may vary with time, that is why the assumptionsmade are rough.

Through the questionnaire study together with the data from the parking guidancesystem (that gives us the actual outcome) it became possible to find out approxi-mately how many of the total car customers that has loyalty card. This was one ofthe reasons for doing the questionnaire study.

Out of 104 of the interviews 85 car customers said they spent money. The customerswho had not been shopping was either working in the shopping centre, visiting adoctor or dentist in the centre, or just looking around. When asking those who hadspent money, during what time of their stay they spent their money, the results isthe following:

In the beginningof the stay (0-1h)

In the middle ofthe stay (1-2h)

At the end of thestay (2-3h)

Number of cars 62 21 2Percent 73% 25% 2%

Table 8.1: The table shows the duration of the 104 interviewed car customers inTäby Centrum

This shows that most of Täby Centrum’s car customers (out of the 104 inter-viewed) shops in the beginning of the duration. Only 2% shops in the end of theirvisit.

An interesting aspect that was investigated, was how many of the 104 visitors thathad the loyalty card:

Yes, I have loyalty card No, I don’t own a loyalty cardNumber of cars 47 57Percent 45% 55%

Table 8.2: The table shows the percentage of the interviewed car customers havingloyalty card

The main reason the car customers did not have a loyalty card was becausethey did not know what it was, or what services it offered. This was an interestingfactor to consider, because there is no exact numbers of how many of the loyalty card


customers are car customers. Therefore, the customer survey took into considerationthis question.

8.1.2 Interview study

Different interviews were made with representatives in order to understand the de-mands and wishes better, and what the important issues are. These interviews wereheld either at the interviewees’ offices, or at the office where the interviewer wassitting.The interviewee was not given the questions in advance as to capture the individ-ual’s opinions. Detailed notes were taken during the interview to capture as manyelements as possible of the interview.The interviews were initially character of relatively unstructured conversations,where the interviewer tried to create confidence, in order to get as much informa-tion as possible about the subject. The interviewees were simply asked to describethe parking situation for the two shopping malls and their point of view regardingthe parking payment. Parallel with the data collection, an extensive review andsummary of the previous research that seemed relevant was done.Questions the interviewer sought answers to:

The boom system together with a fee system that is implemented inTäby Centrum, how will it affect consumer behaviour? The boom itselfwill affect car customers’ willingness to park in the parking garage, regardless ofpayment structure. This effect will however decreate with time.There has earlier been an investigation if one was to introduce the boom in year2013, and concluded that for the year 2013 the car customers propensity to visitTäby Centrum negatively by 3% and in 2014 by 2%. This effect occurs even thoughit is free to park in the garage. Subject to the uncertainties in the calculations(partly due to the short implementation time) and due to the uncertainties in theinput data, the provided mathematical calculations indicate that parking chargesare likely to be profitable in Täby Centrum.However, there is also a psychological and marketing-rate aspect that should alsobe considered. Although the calculated numbers showing at a charge from the startis likely to be profitable, this positive effect could be reduced considerably due tothe badwill that it generates.

What is the optimal fee, and how price sensitive is the customer really?Parking is not an end in itself, the economic part of the parking is in demand. Thescience lies in the travel habits, living habits, and behavioural habits. Not in theactual parking.People are not as clever as they think they are, and not always aware of what theyare paying. There is an example that was made through interviews to customersin a parking garage. Among the questions they were asked how much they werewilling to pay to park. There were many who said that they would never in their

8.1. EMPIRICISM 49

life pay more than 25SEK/hour. But in the garage these people were in, they paid40SEK/hour; and they had just parked there. At the same time they said theywould never pay for more than 25SEK/hour.

Another interesting example is from Kista Centrum. Year 2002, Kista Centrumhad 2 hours free parking, and then changed it to 1 hour free parking. But later year2007 the centre changed it to zero free parking, and started to take fee from firsthour. The customer usally parks in average 1hour and 45 minutes. If one offers 1hour free parking, then the entire visiting time is pretty much for free. During acouple of years the fee was set to 5SEK during each started 30minutes period. Year2010 it was decided to change the fee to 6SEK for each started 30minutes period.This change in fee, adding 1SEK, aroused irritation form customers, mostly dueto the increment but also due to customers only having 10SEK and not 12SEK(thus, not having two crowns loosely). It also created operational problems withthe ATMs, because approximately 25% pays in cash (in Kista Centrum); and withcrown coins it must gives out more gear. Regardless of the price change, the cus-tomers got irritated when the ATM became inoperative.Anyhow, after two months it was decided to go back to implementing a fee of 5SEK,but this time during each started 20minutes period instead of 30minutes. In otherwords, a price increase by 50%. This increased the revenues, but at the same timethe occupancy decreased with some procent. What was surprising is that this timethe customers were not irritated as before, even though they were actually startingto pay more fee.The behaviour of the customers in unpredictable, and hard to measure.

There is a price sensitivity depending on which price is charged, and if they areprepared to still go to the centre or not. Then there is also a price sensitivity whencustomers stop buying from the centre because they think that they are alreadypaying too much fee. But still willing to visit the centre. So either one will notcome to the centre at because of price sensitivity, or buys less due to price sensitiv-ity, or park somewhere else because of price sensitivity. There are three reasons forprice sensitivity.

What are the advantages of the boom system? The advantages with theboom system is that no one can sneak park. The advantage of tickets, is whena customer is about to park they ask themselves ”for how long am I going topark”. They might pay for 2hours, but only stays for 1hour and 15minutes. In oherwords, they have paid for 45SEK extra, that gives an overpayment. It is thereforeinteresting to check out which payment system you should have. But in TäbyCentrum, the boom system is already implemented. But which system is actuallymost profitable?Another way is to impose fine on people. But then you need someone doing it, andthat costs as well. In a boom system you don’t need it. Then there are those who


register with their card. In that way, no overpayment will occur, and neither fines.Imagine having an overpayment of 10%, that might give 20 million SEK, then those10% are important.Even imposing fines to people generates a lot of money. A list of all the interviewerscan be found in the reference list.

8.1.3 Excel model

An excel model was built based on a number of assumptions that obtains differentresponses. The study aims to see the relationship between the number of free hoursthe customer is allowed to park, against parking revenue.

The following parking income in relation to free parking have been studied in theExcel model:

Income from parking (SEK million)0 minutes parking 116.21 hour free parking 49.52 hours parking 22.03 hours parking 11.54 hours parking 7.1

Table 8.3: Parking income in relation to free parking

Fee from first minute would generate highest overall revenue, however this strat-egy is risky.

A table of the assumptions, and the different amount of free hours parking, canbe found in Appendix D. Note that the loyal customers were not included in thecalculation, and neither was the change in turnover in stores.

Chapter 9

Analysis

This case is based on a few number of known facts and a great number of assump-tions, so that the uncertainty in the results is relatively large. When the boomsystem together with a fee system is in place, data on parking time and occupancycan be given, and the result can be much accurate.The assumptions are estimations made from interviewing experiential people, andconsultancy reports of previously known data from Täby Centrum.

Looking at the results from the Excel model it clearly shows that having no freehours parking before fee is the best option regarding the parking income. This ofcourse might not have been to a surprise. The important part of these calculationsis to look at the assumptions made for each “free amount of hours”, and the reasonbehind each assumption.

When deciding the percentage of car customers that will not come by car whenfee implemented (%) is not easy to measure. It is hard to predict how many cus-tomers will be affected by the fee and amount of free hours. But it makes mostsense that more car customers stays longer when there is more free hours than lessfree hours. The price sensitivity, PR-effect, and the competitors to Täby Centrumwas taken to consideration when deciding these percentages. Looking at Figure 7.1,it clearly shows that Täby Centrum is doing very well (at least year 2013), and doesnot have as many customers as perhaps the other centres in the Stockholm County,but still the turnover is high for the centre. This means that it is not really affectedby its competitors, or has no reason to “worry”. Because Täby Centrum has manyloyal customers, and not very good public transportation (as Kista Centrum forexample), the customer’s are depended on taking their car to the centre. In otherwords, not easy to change transportation. Listed in Figure 7.2, there are many ofthe competitors to the centre that takes fee. So Täby Centrum implementing a feesystem, should not make many of their customers choose another centre. There isnot even so many parking places in the neighbourhood (as illustrated in Figure 7.2),and even some of those are demanding a fee.

51

52 CHAPTER 9. ANALYSIS

If there would be 4 hours free, then no customer would be affected and wouldcome as usual (even if a fee would be added). In other words, no percentage woulddecide not to go to Täby Centrum. But if it only were 3 hours free parking andthen fee system would be added, then the customers would be irritated of onlyhaving 3hours free and then having to pay for parking fee. So that is why in theassumption, 2.5% of the car customers are set to not come by car. If having 2 hoursfree parking, then even more customers will decide not to come. I made a decisionof decreasing 2.5% for each added free hour.

The amount of customers that park each half an hour (0.5hours, 1 hour, 1.5 hours,etc.) was taken från the Parking Guidance System. The data was taken from thesame week the survey was made (10th of March to 16th of March). The number ofcars parked per day was calculated by dividing total customers year 2013 by 365,then multiplied with 50% in order to see how many are car customers. BecauseTäby Centrum has 50% of their customers coming by car (presented in Table 7.2).

According to the survey made, most customers stays between 0-1 hours in thecentre (Figure 8.1). This might not come as a surprise. But it is interesting tosee during what time of their stay that they actually spend their money, which isalso in the beginning of their duration, shown in Table 8.1. That means that mostcustomers comes to the centre and shops directly, or knows what to buy, and thendecides to go around to just look.Keep in mind that only 104 customers were interviewed, and that it was a week inMarch (it is a bad shopping week for the centre). The results could have differed ifit was another week, or another month, or during a longer period of time.Another interesting aspect to look over in Figure 8.1 is the amount of customersthat stays between 3hours-3.5hours. Those are 12 out of 104. These people usuallyturn the p-sheet. That is also a reason of implementing boom system, in order toavoid this type of behaviour. Because these people will receive a fine otherwise.It is also known that many employees drive into the garage and parks for 3-4hours,and has the loyalty card, and also turns the p-sheet. This kind of problem will alsobe dealt with when the boom system is implemented.

With all these assumptions it became possible to calculate how many car customersin total would come after fee is implemented. In this case, the loyal customers arenot taken into account. But it is important to keep in mind that all people thatparks in the garage are not actually customers to the centre. There must be plentyat the moment who are not customers, because of 3 hours free parking system,or people that works in the centre. But there are no number on how many theyactually are. This percentage of non-customers are included in the calculation andis seen as a visit to the centre. It is hard to measure this.

Another important aspect that has an impact on the result (parking income) andhow many customers decides to come or leave when the boom and the fee system is

53

implemented, is the introduction of the boom system to the customers. It is impor-tant to implement this sort of system in the right time. Which is now, year 2014,when Täby Centrum has already expanded and reconstructed, and new parking lotshave been built (also 450 new parking lots will be available from May 2014).

Chapter 10

Conclusions and Discussions

There are two ways to draw conclusions, through induction and deduction. Induc-tion is based on empiricism and deduction in logic. In this case, the conclusion isbuilt on induction, which means that it draws general conclusions from empiricalfacts. Induction presumes thus quantification. But the recommendation given forTäby Centrum is also built on deduction.

The introduction of paid parking will most likely change the customer’s behaviourespecially if paid parking is introduced in previously fee free areas, such as TäbyCentrum. However, it is difficult to know how customers will behave at differentprice levels, and where their pain threshold goes for accepting a certain price.

If the customer experience that it is really hard to make the payment and it takesa long time, then it can also have an affect. It would for example have been easierif there were tolls such as those in the City, that after a while sends an invoice. It’smuch smoother and easier, but the system costs a lot. In the case of Täby Centrum,the system has already been bought.

The pricing is affecting earnings for paid parking. The question is really how toset a price, should there be free hours first? What’s the advantage? Should thefee be SEK/min or SEK/h? How does the customers think psychologically? Thisconnects with the customers’ behaviour patterns.

Competitors are most likely to react to a price change when few firms offer theproduct, the product is homogenous, and buyers are highly informed. Anticipatingreaction is complicated because each rival may have different interpretations of aprice cut: One may think that company is trying to steal the market; another maybelieve that the company wants lower prices industrywide to stimulate total de-mand. To understand possible competitive reactions, companies must contionluslymonitor and analyse rivals’ activities.

55

56 CHAPTER 10. CONCLUSIONS AND DISCUSSIONS

Charging for the parking lots is basically the only way to control customers’ be-haviour. Right now the car park in Täby Centrum is fully occupied at Christmastime and other major holidays. That is why questions such as: For how long doescustomers park? What do they do, are they customers to the centre? Are thosestaying longest also those who spend the most money in the shopping centre? Isthere any survey that tells you for how long you are an effective customer?

When implementing paid parking, people will probably park for a shorter time,and this is positive in the result, because more parking revenue will be receivedwhen more people rotate in the garage. But it could also be negative. It dependswhen during the duration the customer decides to shop. That is one of the mainreasons a survey was made, in order to make a decision of how many free parkinghours Täby Centrum should have. The results showed that 73% (out of the 104interviewed) spends money in the beginning of the duration, usually the first hourof the visit. In other words, having 3 hours free parking, gives the customers morethan enough time to spend for shopping. They might as well leave before 3 hours,which means no money on parking is made. At the same time, Täby Centrum haveinvested in restaurants and cinema to attract customers to stay longer. So eventhough the customers might not shop in the stores, they might go for eating andwatching a movie afterwards. If implementing 1hour free parking, that could givea negative affect on the customer’s behaviour, which might result to the customerleaving the centre earlier and not spending time on eating etc.

Those who are not customers to the centre but still parks in the garage, how shouldthat be dealt with? One way is to create some kind of incentives if you shopped inthe centre, for example if you have a receipt that you have shopped. This on theother hand, is also psychological, some think this system can be tedious and com-plicated. Then you get rid off of these people that goes to the library instead. Butit could also be that they go to the library once, and next time they go shoppingfor 50,000SEK. You can never predict the behaviour of the customer.Then there are those who work in the stores that is not really wanted in the garage;because they are not customers to the centre and they don’t pay fee. At the sametime, they need to park somewhere, and if there are no other alternatives it is quitehard to stop them from parking (and especially parking at the parking lots close tothe entrances). So there has to be other alternatives given to the staff and thereshould also be a certain pricing for those. This has not been considered in thispaper, but should be highlighted for future problems.

Then there is the question whether to take charge per 20minutes versus 30min-utes. It could cause problem when changing the fee or changing it per certainperiod of time. So it is better to find the right tariff at first to implement, and notto need to change it. The later if needed, a decision can be made if it needs to bechanged.

10.1. RECOMMENDATION FOR TÄBY CENTRUM 57

Another important aspect that has not been addressed in the work that is worthmentioning is the parking garage’s inner dimension. But how does that affect paidparking? The customer might not want to take the car at all, or do not park in thatgarage, or might just take the subway instead, if it is complex to park or if there isnot more exits than entrences. But this type of question is more of a hygiene factor,and everything else that is about the design of the garage.

Another interesting topic that has not been lifted is the E-commerce, that couldaffect the amount of car customers. One can walk into a store and try on clothes,and order home delivery; instead of having to walk around with a bunch of shop-ping bags or the need of taking the car to be able to carry everything. It could bepositive if it could be seen as part of the turnover for the shops, even if it is orderedonline. But in the long run it is negative for the parking income, if less customersdecides to come by public transportation instead of coming by car.

I do not believe customers are price sensitive for paying parking nor how muchyou charge in the parking garage in the centre. Just because there is a fee of forexample 10SEK/hour the customer’s won’t buy less in the shops either. This is ofcourse hard to measure, the price sensitivity of the customers.

Because Täby Centrum has never implemented boom system nor a fee system ear-lier, it will have an effect on the amount of car customers coming to the centre topark. But this percentage I believe is very small and will decrease even more withintime. The fee will come as a chock for the customers, and by time the customerswill get used to it, and start to come back again with car.The question is how to judge and measure the price sensitivity. I believe such thingis difficult to be able to invesigate and simulate. The only way to actually find outis to implement different fees and see how customers react. But this way is of courserisky and not recommended.

10.1 Recommendation for Täby centrum

At the moment Täby Centrum offers 3 hours free parking, and 4 hours free parkingif the customer has the loyalty card. There is no boom system nor a fee systemat the moment (April 2014). If Täby Centrum would implement a system wherethe customer is allowed to park 1 hour free, studies has shown that it will forcecustomers to stay one hour. This is based on a psycological aspect. That is whyin this case it is not profitable, because the idea is to make the customers stay longer.

If the centre would charge from the first minute, that is no hours free parking,then the customer would not be thinking if they have been parking for 1 hour or1.5 hours. In other words, the customer is not really aware of how much they arepaying, and they have no limited time to follow. The customer has nothing to make

58 CHAPTER 10. CONCLUSIONS AND DISCUSSIONS

use of. But the problem with charging from first minute is that the outcome willlead to a huge PR effect. I think this is the most sensitive option, especially if acentre has never charged for their parking before. So PR-wise it is not the bestoption.

Since the loyalty card is an option for the customers, I think it is not a goodidea to offer 3 hours free parking, plus one extra hour with the loyalty card. Insteadit is better to offer 2 hours free parking and one hour extra with loyalty card. Asseen in the results, the parking income differs quite a bit from having 4 hours freeversus 3 hours free. This in turn, is an incentive to provide customers with loyaltycard and make the customer want to stay longer in the centre. It also raises debateamong people, and new customers. It makes it sound like a good deal to park inTäby Centrum, and will receive more loyal customers.

Then there is an issue of whether to take charge per 15 minutes, 20 minutes or30 minutes. As mentioned earlier about the example of Kista Centrum, I believethat charging per 20 minutes is the best option. In that way, the customers havea harder time calculating for how long they have parked and how much they havepaid so far. This is just a psychological fact.If you have the same fee per 30 minutes as per 20 minutes, then of course you earna lot more parking revenue. It does not sound like that much more money to thecustomer, if they pay per 20 minutes than paying per 30 minutes.

The exact amount of fee that Täby Centrum should charge is hard to say, andwhere the exact price sensitivity is. As mentioned in the theory chapter, consumerstend to process prices in a “left-to-right” manner rather than by rounding. Thusmany will see a fee priced at 19SEK as in the 10SEK price range rather than the20SEK range. But at the same time it is important to keep in mind that TäbyCentrum has not implemented fee system earlier and therefore it is better to startof with a lower amount. That is why it is recommended for Täby Centrum to charge10SEK.

Summing up the conclusion, my recommendation for Täby Centrum is: 2 hoursfree parking (+1 hour free parking with loyalty card) and a fee of 10SEK per 20minutes.

References

Avlonitis, G., & Indounas, K. (2005). Pricing objectives and pricing methods in theservices sector. Journal of Services Marketing, 19 (1), 47-57.

Ax, C., Johansson, C., & Kullvén, H. (2009). Den nya ekonomistyrningen (4.,omarb. uppl. ed.). Malmö: Liber.

Biswas, D., & Grau, S. (2008). Consumer choices under product option framing:loss aversion principles or sensitivity to price differentials? Psychology &Marketing, 25 (5), 399-415.

Dolan, R. (1995). How do you know when the price is right? Harvard BusinessReview, 73 (5), 174-183.

Henrikson, C.-H. (1990). Parkeringslexikon : en handbok för arkitekter, ingenjöreroch planerare. Stockholm: Pelarkonsult.

Kotler, P., & Keller, K. L. (2007). A framework for marketing management (3. ed.ed.). Upper Saddle River, N.J.: Prentice Hall.

Levin, I., & Gaeth, G. (1988). How consumers are affected by the framing ofattribute information before and after consuming the product. Journal ofConsumer Research, 15 (3), 374-78.

Levin, I., Schneider, S., & Gaeth, G. (1998). All frames not created equal: Atypology and critical analysis of framing effects. Organizational behaviourand human decision processes, 76 (2), 149-188.

Lundén, B. (2013). Prissättning : praktisk handbok (3. uppl. ed.). Näsviken: BjörnLundén Information.

Multiguide. (n.d.). Retrieved 2014-04-01, from http://www.multiguide.comReynolds, T., & Olson, J. (2001). Understanding consumer decision making: The

means-end approach to marketing and advertising strategy. Mahwah, N.J.:Lawrence Erlbaum Associates.

Rosén, C. (2010). Debatt: Glöm timmarna och ta betalt för värde. Balans(10),48-49.

Shipley, D., & Jobber, D. (2001). Integrative pricing via the pricing wheel. IndustrialMarketing Management, 30 (1), 301-314.

Stake, R. E. (1995). The art of case study research. Thousand Oaks, Calif.: Sage.Thurén, T. (1991). Vetenskapsteori för nybörjare (1. uppl. ed.). Stockholm: Runa.Tversky, A., & Kahneman, D. (1981). The framing of decisions and the psychology

of choice. Science, New Series, 211 (4481), 453-458.Yin, R. K. (2014). Case study research : design and methods (5. ed. ed.). London:

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SAGE.Zeithaml, V. A., Bitner, M. J., & Gremler, D. D. (2006). Services marketing :

integrating customer focus across the firm (4. ed. ed.). Boston: McGraw-Hill.

Appendices

61

APPENDIX A STATISTICS - NACKA FORUM 63

Appendix A Statistics - Nacka ForumParking time from 01/11/13 to 30/11/13

Duration Amount of cars Percent0-15 minutes 13,361 1016-30 minutes 25,802 1931-45 minutes 22,394 1746-60 minutes 17,668 131-1¼ hours 13,192 101¼-1½ hours 10,136 81½ - 1¾ hours 7,566 61¾ – 2 hours 5,734 42 - 2¼ hours 4,335 32¼ - 2½ hours 3,487 32½ - 2¾ hours 3,068 22¾ – 3 hours 2,768 23 - 3¼ hours 1,326 13¼ - 3½ hours 814 13½ - 3¾ hours 507 03¾ – 4 hours 360 04 - 4½ hours 425 04½ – 5 hours 228 05 - 5½ hours 116 05½ – 6 hours 84 06 - 6½ hours 39 06½ – 7 hours 38 07 - 7½ hours 22 07½ – 8 hours 18 08 - 8½ hours 13 08½ – 9 hours 18 09 < hours 28 0Total: 133,547

64 REFERENCES

Parking time from 01/02/14 to 18/02/14

Duration Amount of cars Percent0-15 minutes 12,489 1116-30 minutes 23,023 2031-45 minutes 19,008 1646-60 minutes 14,866 131-1¼ hours 11,181 101¼-1½ hours 8,660 71½ - 1¾ hours 6,141 51¾ – 2 hours 4,752 42 - 2¼ hours 3,749 32¼ - 2½ hours 3,030 32½ - 2¾ hours 2,687 22¾ – 3 hours 2,592 23 - 3¼ hours 1,142 13¼ - 3½ hours 642 13½ - 3¾ hours 434 03¾ – 4 hours 293 04 - 4½ hours 392 04½ – 5 hours 199 05 - 5½ hours 112 05½ – 6 hours 83 06 - 6½ hours 38 06½ – 7 hours 21 07 - 7½ hours 20 07½ – 8 hours 18 08 - 8½ hours 18 08½ – 9 hours 9 09 < hours 40 0Total: 115,639

APPENDIX B QUESTIONNAIRE STUDY 65

Appendix B Questionnaire studyMonday to Thursday (a total of 46 people were interviewed)

Duration Amount of cars Percent Spent money0-1:00 12 26% 71:00-1:30 6 13% 51:30-2:00 5 11% 52:00-2:30 4 9% 22:30-3:00 5 11% 43:00-3:30 4 9% 33:30-4:00 - - -4:00-4:30 3 7% 24:30-5:00 2 4% 15:00-5:30 4 9% 25:30-6:00 1 2% 16:00-6:30 - - -6:30-7:00 - - -7:00-7:30 - - -7:30-8:00 - - -8:00-8:30 - - -8:30-9:00 - - -9:00< - - -TOTAL 46 100% 32

When during the visit the money was spent

1st hour or less 2nd hour or in the middle of visit 3rd hour or last hourNumber of cars 21 10 1Percent 66% 31% 3%

Loyalty card

Yes NoNumber of cars 22 24Percent 48% 52%Number of cars that stayed more than 3 hours (out of 14) 10 4

66 REFERENCES

Friday (a total of 22 people were interviewed)

Duration Amount of cars Percent Spent money0-1:00 7 32% 61:00-1:30 5 23% 51:30-2:00 3 14% 32:00-2:30 - - -2:30-3:00 5 23% 53:00-3:30 2 9% 23:30-4:00 - - -4:00-4:30 - - -4:30-5:00 - - -5:00-5:30 - - -5:30-6:00 - - -6:00-6:30 - - -6:30-7:00 - - -7:00-7:30 - - -7:30-8:00 - - -8:00-8:30 - - -8:30-9:00 - - -9:00< - - -TOTAL 22 100% 21



Loyalty card

Yes NoNumber of cars 7 15Percent 32% 68%Number of cars that stayed more than 3 hours (out of 2) 2 -


Saturday (a total of 20 people were interviewed)

Duration Amount of cars Percent Spent money0-1:00 3 15% 31:00-1:30 6 30% 41:30-2:00 - - -2:00-2:30 4 20% 42:30-3:00 4 20% 43:00-3:30 3 15% 33:30-4:00 - - -4:00-4:30 - - -4:30-5:00 - - -5:00-5:30 - - -5:30-6:00 - - -6:00-6:30 - - -6:30-7:00 - - -7:00-7:30 - - -7:30-8:00 - - -8:00-8:30 - - -8:30-9:00 - - -9:00< - - -TOTAL 20 100% 18


1st hour or less 2nd hour or in the middle of visit 3rd hour or last hourNumber of cars 14 4 -Percent 78% 22% -

Loyalty card

Yes NoNumber of cars 11 9Percent 55% 45%Number of cars that stayed more than 3 hours (out of 3) 3 -

68 REFERENCES

Sunday (a total of 16 people were interviewed)

Duration Amount of cars Percent Spent money0-1:00 5 31% 41:00-1:30 - - -1:30-2:00 3 19% 32:00-2:30 - - -2:30-3:00 4 25% 43:00-3:30 3 19% 33:30-4:00 - - -4:00-4:30 - - -4:30-5:00 1 6% -5:00-5:30 - - -5:30-6:00 - - -6:00-6:30 - - -6:30-7:00 - - -7:00-7:30 - - -7:30-8:00 - - -8:00-8:30 - - -8:30-9:00 - - -9:00< - - -TOTAL 16 100% 14


1st hour or less 2nd hour or in the middle of visit 3rd hour or last hourNumber of cars 11 3 -Percent 79% 21% -

Loyalty card



Monday to Sunday (a total of 104 people were interviewed)

Duration Amount of cars Percent Spent money0-1:00 27 26% 201:00-1:30 17 16% 141:30-2:00 11 11% 112:00-2:30 8 8% 62:30-3:00 18 17% 173:00-3:30 12 12% 113:30-4:00 - - -4:00-4:30 3 3% 24:30-5:00 3 3% 15:00-5:30 4 4% 25:30-6:00 1 1% 16:00-6:30 - - -6:30-7:00 - - -7:00-7:30 - - -7:30-8:00 - - -8:00-8:30 - - -8:30-9:00 - - -9:00< - - -TOTAL 104 100% 85



Loyalty card


70 REFERENCES

Appendix C Occupancy chart - Täby Centrum

Monday 10th (from 10.07am) to Sunday 16th (to 5.57pm) of March, real data onthe occupancy showed:

Figure 1: Pricing wheel by Shipley and Jobber

APPENDIX C OCCUPANCY CHART - TÄBY CENTRUM 71

Duration Amount of cars Percent0:15:00 4138 11.30%0:30:00 6394 17.47%0:45:00 5857 16%1:00:00 4710 12.87%1:15:00 3569 9.75%1:30:00 2765 7.55%1:45:00 2002 5.47%2:00:00 1506 4.11%2:15:00 1193 3.26%2:30:00 885 2.42%2:45:00 666 1.82%3:00:00 573 1.57%3:15:00 515 1.41%3:30:00 336 0.92%3:45:00 209 0.57%4:00:00 179 0.49%4:15:00 163 0.45%4:30:00 109 0.30%4:45:00 84 0.23%5:00:00 50 0.14%5:15:00 41 0.11%5:30:00 42 0.11%5:45:00 23 0.06%6:00:00 24 0.07%6:15:00 24 0.07%6:30:00 35 0.10%6:45:00 34 0.09%7:00:00 33 0.09%7:15:00 32 0.09%7:30:00 26 0.07%7:45:00 35 0.10%8:00:00 40 0.11%8:15:00 28 0.08%8:30:00 41 0.11%8:45:00 61 0.17%9:00:00 186 0.51%Total 36608 100%

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(Breakpoint for short events 0:02:00)(Total movements 51408)(Movements after reducing 36608)(Number downgraded 14800)

Movement for the whole week in Täby Centrum (10th of March to the 16th ofMarch), taken from the parking system program from MultiGuide:


Monday, 10th of March: During interview hours, Monday 10.07am to 11.57am,real data on the occupancy showed:



The movements in the parking garage (North and South) the whole day ofMonday showed:

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Duration Amount of cars Percent0:15:00 497 11.46%0:30:00 908 20.94%0:45:00 748 17.25%1:00:00 581 13.40%1:15:00 442 10.19%1:30:00 322 7.43%1:45:00 192 4.43%2:00:00 163 3.76%2:15:00 124 2.86%2:30:00 76 1.75%2:45:00 74 1.71%3:00:00 53 1.22%3:15:00 42 0.97%3:30:00 32 0.74%3:45:00 18 0.42%4:00:00 21 0.48%4:15:00 12 0.28%4:30:00 13 0.30%4:45:00 2 0.05%5:00:00 3 0.07%5:15:00 2 0.05%5:30:00 0 0.00%5:45:00 0 0.00%6:00:00 1 0.02%6:15:00 4 0.09%6:30:00 2 0.05%6:45:00 0 0.00%7:00:00 1 0.02%7:15:00 2 0.05%7:30:00 0 0.00%7:45:00 0 0.00%8:00:00 0 0.00%8:15:00 1 0.02%8:30:00 0 0.00%8:45:00 0 0.00%9:00:00 0 0.00%Total 4336 100%

(Breakpoint for short events 0:02:00)(Total movements 6205)(Movements after reducing 4336)


(Number downgraded 1869)

Tuesday, 11th of March: During interview hours, Tuesday 12.07am to 2.57am, realdata on the occupancy showed:


The movements in the parking garage (North and South) the whole day ofTuesday showed:

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Wednesday, 12th of March: During interview hours, Wednesday 3.07pm to 5.57pm,real data on the occupancy showed:


The movements in the parking garage (North and South) the whole day ofWednesday showed:

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(Breakpoint for short events 0:02:00)(Total movements 7033.5)(Movements after reducing 4964)


(Number downgraded 2069.5)

Thursday, 13th of March: During interview hours, Thursday 6.07pm to 7.57pm,real data on the occupancy showed:


The movements in the parking garage (North and South) the whole day ofThursday showed:

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(Breakpoint for short events 0:02:00)(Total movements 7244.5)(Movements after reducing 5284)


(Number downgraded 1960.5)

Friday, 14th of March: During interview hours, Friday 10.07am to 7.57pm, realdata on the occupancy showed:


The movements in the parking garage (North and South) the whole day of Fridayshowed:

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Saturday, 15th of March: During interview hours, Thursday 10.07am to 5.57pm,real data on the occupancy showed:


The movements in the parking garage (North and South) the whole day ofSaturday showed:

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Sunday, 16th of March: During interview hours, Sunday 10.07am to 5.57pm, realdata on the occupancy showed:


The movements in the parking garage (North and South) the whole day ofSunday showed:

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Appendix D Excel-modelASSUMPTIONS

Number of parking lots (North and South Carparking) 2053Number of customers per year (2013) 11236330% that are car customers 50%Number of customers coming by car per year (2013) 5618165Car customers that will not come by car when fee implemented (price sensitive) 2.5%Number of car customers when implementing fee per year 5477711Number of cars parked per day (without boom system, data from 2013) 15007

Data from 2013 (without boom system):

March week12 205641 2%Rest of the year 11030689 98%Total year 11236330 100%

Data from 2013 (with boom system):

March week12 (car customers) 109554Rest of the year (car customers) 5368157Total year (car customers) 5477711

RESULTS

Rotation (cars/day/space, minus 2% due to workers in center) 0.13Approximately % of workers that occupy space 2%Amount of free hours 3Hours free parking 0 1 2 3 4Car customers not coming by car when fee implemented (%) 10 7.5 5 2.5 0

APPENDIX D EXCEL-MODEL 89

% of car customers that park 0.5 hours, 1 hour, etc:

Time Mon Tue Wed Thu Fri Sat Sun Total15min 497 675 588 601 641 593 543 413830min 908 887 928 972 1110 865 724 639445min 748 797 789 838 1117 917 651 58571h 581 661 626 695 827 795 525 47101h15min 442 462 454 531 593 676 411 35691h30min 322 356 369 349 477 548 344 27651h45min 192 261 256 270 329 429 265 20022h 163 194 167 202 233 329 218 15062h15min 124 146 127 156 181 302 157 11932h30min 76 92 97 125 121 242 132 8852h45min 74 89 85 70 94 167 87 6663h 53 82 73 64 88 129 84 5733h15min 42 81 58 73 77 123 61 5153h30min 32 51 42 43 54 72 42 3363h45min 18 26 26 35 40 46 18 2094h 21 29 28 32 18 36 15 1794h15min 12 21 33 29 24 36 8 1634h30min 13 19 22 22 13 13 7 1094h45min 2 9 18 12 24 12 7 845h 3 4 12 10 7 11 3 505h15min 2 8 11 2 7 10 1 415h30min 0 15 5 6 5 5 6 425h45min 0 7 5 0 5 3 3 236h 1 4 3 10 3 2 1 246h15min 4 1 3 4 5 3 4 246h30min 2 10 3 6 9 4 1 356h45min 0 6 9 7 7 2 3 347h 1 5 9 4 10 2 2 337h15min 2 2 7 6 10 3 2 327h45min 0 8 8 7 9 2 1 358h 0 7 12 13 6 0 2 408h15min 1 2 9 8 7 0 1 288h30min 0 7 10 15 7 2 0 418h45min 0 11 14 18 9 7 2 619h 0 50 51 43 32 8 2 186Total 4336 5088 4964 5284 6204 6397 4335 36608

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0.50 1.0 1.5 2.0 2.5 3.0 3.5 4.0 4.510532 10567 6334 3508 2078 1239 851 388 27229% 29% 17% 10% 6% 3% 2% 1% 1%5.0 5.5 6.0 6.5 7.0 7.5 8.0 8.5 9.0134 83 47 59 67 58 75 69 2470% 0% 0% 0% 0% 0% 0% 0% 1%


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Documents

Parking Pricing for shopping centre - Täby Centrumkth.diva-portal.org/smash/get/diva2:730841/FULLTEXT01.pdf · Parking Pricing for shopping centre - Täby Centrum NESSRIN QATTAN