Saturday, December 09, 2006

Puzzlingly low prices at THEWI THAI MASSAGE

Thewi Thai Massage is a spa chain with two branches in Cebu, and they opened their first branch in Metro Manila just two months ago. To get the obvious question out of the way, 'Thewi' means "angel" in Thai, according to their receptionist.

Their prices are really cheap: PHP200 for full body massage (60 min.); PHP 150 for foot reflexology / back massage / head massage (60 min), and PHP 75 (30 min).

Upon entering this establishment, the first thing that hits you is the menthol scent. . . great with clearing the nostrils and invigorating the mind, but it does get overpowering after a while.

The foot reflex area is separated by a wooden partition from the reception area. The soft leather chairs are quite comfy, although it can be a little noisy as people chitchat and use their phones in the reception.

Nevertheless, i felt the foot reflex was above average, as my masseuse can really put on the pressure with her fingers. Quite cute is that she even does a wai before and after the massage!

So, i'm thinking, why are Thewi's prices so low? Off-hand, comparable prices for other nearby spas would be PHP350 - 450 for body massage, and PHP 250 - 350 for foot massage. Were Thewi's owner to raise its prices by 50%, they would just be around (or even still under) the same level as their competitors.

Further, i think this would hardly have any effect on the number of people patronizing Thewi, since at these low price levels, the demand curve is probably quite steep (i.e. demand would be mostly price-inelastic, and most customers would not mind the increase) So why don't they go ahead and raise prices and make more money?

Possible reasons i've thought of:

Could it be Thewi skimped on training the masseuses and are implicitly admitting they are not authentically Thai? But my masseuse informed me they were trained for 4 months prior to opening.

Could it be due to Thewi's flat compensation scheme (each masseuse gets a fixed amount per day, regardless of number of customers served; whilst most other spas give no fixed salary, and the masseuses get a fixed amount per customer served) , which gives them a low-cost advantage? Not necessarily. On slow days, this payment scheme would not be optimal for the owner.

Could Thewi be pricing low as an intro offer only, and will increase prices by, say, next year? Possible, but all those foregone revenue is really sayang. Besides, if they think their low prices would make their nearby competitors close down, that's unlikely. And the concept of Thai massage is already well-known, so it's not as if they have to offer low prices just to educate the market.

Since the spot where Thewi is located is considered rather unlucky (due to the establishments who have opened and closed down there over the years), could the owner be hoping (or praying) that low prices would offset the bad karma / feng shui / evil spirits of the place?

So, basically i'm stumped for a really satisfying explanation. Whilst this dismal economist enjoys the pain and pleasure a foot reflex massage gives, it unfortunately does nothing for my little grey cells. :D

(Thewi Thai Massage's first Metro Manila branch is located along D. Tuazon Ave., Quezon City. It is across St. Theresa's College)

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