Rollercoaster Tycoon is often used as a teaching tool in graduate and undergraduate business strategy classes. Usually students are given dual assignments: (1) create a park with a focus differentiation strategy (that is, a park that targets a certain market segment and attempts to profit by exploiting that segment), and (2) create a park with a low-cost strategy (aka the "Wal-Mart strategy;" students are limited in what they can charge for ticket prices and such and must make up the money on volume of customers).
The game is quite enjoyable as a learning tool, though I'm not certain that it's extremely realistic. For example, whenever it rained, we jacked up the prices of umbrellas at all of our gift shops by about 800% and people still bought them...ah, price gouging at its best!
Each team was evaluated as to how well their park was performing at the conclusion of Year 3. Naturally, your venerable author and his 1337 krew came in first... (insert humble statement here)
Our team attacked the game thusly:
Mission 1: Focus Differentiation
In this simulation, we attempted to construct a differentiated strategy, focused on a market identified by the Rollercoaster Tycoon instruction manual. The manual (on page 1 of the introduction) enumerates three major market segments: "families with young children," "white knuckle terror," and "everybody else." We chose to target the "white knuckle terror" segment.
Having selected a focus differentiation strategy, as well as a target market, we set out to define the functional strategies that would support our overall plan. These included:
Superior research and development. From the very beginning of the simulation, we increased our R&D spending to the maximum amount allowed, focusing our efforts on roller coasters, thrill rides, and shops/stalls. This eventually allowed us to invent and construct several "cutting edge" rides, allowing us to charge a premium price for newer, more exciting attractions. Our R&D efforts also allowed us to quickly gain access to shops such as the Information Kiosk, Balloon Stand, and Souvenir Shop, shops that the earlier practice runs had shown to be highly profitable.
Increased reliability, cleanliness, and guest happiness. We took great lengths to ensure that our guests were kept happy, so they would continue to stay in our park and spend more money. We increased reliability by hiring throngs of mechanics, who kept the rides in tip-top shape and quickly responded to repair calls (this also allowed us to reduce the "inspection time" interval on problematic rides). To increase cleanliness, dozens of garbage cans and handymen were placed strategically throughout the park to clean up any messes that appeared. And finally, we kept an eye on queue lines and hired entertainers to increase the happiness of guests who were forced to wait in line for long periods of time.
Intense marketing efforts. Rarely did a week go by that we were not running some type of marketing campaign for the park. We countered dips in the number of guests with park-wide advertising. Whenever a new ride was built, a marketing campaign was initiated to increase awareness and draw people to the attraction. And rides near the back of the park were routinely the subject of marketing campaigns to encourage guests to walk farther back, since they otherwise tended to congregate near the entrance of the park.
Avoiding the urge to broaden our focus. Since our strategy was to provide thrill rides and roller coasters to the "white knuckle terror" segment, we rarely built any gentle rides. We were forced to build a few non-thrill rides, however. First, the game requires opportunities for individuals to "work their courage up" to get onto the scarier rides, so some gentle rides (strategically placed around the thrill rides) were necessary to accomplish that purpose.
Also, to keep customers from leaving the park during a rainstorm, a select number of covered attractions were needed—and these attractions were usually gentler rides (e.g. merry-go-rounds and the like). Beyond these two exceptions, however, the park consists only of roller coasters, thrill rides, and support facilities (i.e. bathrooms, shops and stalls).
These strategies, as implemented throughout the simulation, proved successful in meeting the objectives of the scenario. At the conclusion of Year 3, our park was valued at $27,020.00 with cash reserves of $34,919.20, resulting in a total company value of $61,371.80. We also achieved an approval rating of 999 with 1430 guests. Our final weekly profit was $3736.60.
Mission 2: Low Cost
Many of the parameters of our low-cost strategy were determined beforehand by the rules of the game. As required by the assignment, our park's entry price at no point exceeded $30 and individual rides were priced at $2.00 and below. Due to these restrictions, our park's profit margin depended on our ability to effectively—and efficiently—execute a cost leadership strategy.
To reach our desired level of profitability, we determined that it would be best to select an overall low-cost leadership strategy (rather than a focused low-cost strategy). This decision came as a result of our experience thus far with the game: we believed that a low-cost, focused strategy would be difficult to champion because it is difficult to capture a niche in the market without making large purchases (e.g. the newest and fastest roller coaster, the latest and greatest bumper cars). But with individual rides priced at $2.00, it would be difficult to make a reasonable ROI on such large purchases. We therefore concluded that a large selection of lower-cost attractions (with the potential for wider audience appeal) might serve to bring more visitors to the park, thus increasing our total number of guests and, thus, our revenue from incidental purchases such as umbrellas, balloons, food, etc.
Upon settling on the low-cost leadership strategy, we set forth to determine the functional strategies that would underlie such an effort. Since we were told that the main grading criteria for this exercise will be profits, we attempted to identify anything that would lessen profits and create strategies to eliminate or minimize the effect of such profit sinks. These strategies included:
Minimize recurring costs. Costs such as staff salaries, loan interest, and the like were to be minimized as much as possible. Staff salaries were minimized by carefully mapping out paths for staff members (rather than have them wander around aimlessly) so to better utilize their time and area covered, thus reducing the total number of staff members needed. Loan interest was minimized—or rather, eliminated—by paying off the loan early in Year 2. Additionally, we minimized R&D expenses, since we weren't always looking for the "next big thing" to install in our park.
Eliminate unprofitable attractions. All attractions, food stands, etc., were expected to make a profit. Any attraction that failed to turn a profit for a substantial amount of time was given a bit of help—a drop in price, or perhaps a marketing campaign geared to draw customers to that attraction—in the hopes that it would become profitable again. If these gimmicks failed to bring the attraction back out of the red, it was shut down and eventually demolished to make way for more profitable ventures.
Pay careful attention to customer trends. Fortunately, RollerCoaster Tycoon gives us the opportunity to "get into the heads" of our customers and learn what they are really thinking. Each month, we were careful to check these tallies and see what customers thought of our park. This served a dual purpose: first, it helped us to bolster the park in areas where customers thought we lacked. Second, it helped us to avoid spending money in areas where customers were currently fairly content.
These strategies, as implemented throughout the simulation, proved successful in meeting the objectives of the scenario. At the conclusion of Year 3, our park was valued at $21,816.00 with cash reserves of $47,204.60, resulting in a total company value of $69,020.60. We also achieved an approval rating of 999 with 1474 guests. Our final weekly profit was $2203.70.