Case Study #28
Presented to: Professor Linda Blakney
Presented by: Sparkle Smile Marketing
Wing Yu Cheung
Marketing II: MKT 2302-070
Table of Contents
1. Executive Summary3
2. Situation Analysis4
4. Core Problem9
6. Evaluative Criteria11
7. Analysis of Alternatives11
8. Decision and Justification14
1. Executive Summary
Wilderness Newfoundland Adventures' high quality adventure tourism product presents a unique business opportunity. The demand for adventure tourism is growing throughout the world. The location of the operation in a pristine environment with strong natural attractions of whales and icebergs, as well as other wildlife gives us an advantage of other outfitters. The total market of adventure tourism products is growing and projected to grow into the next century. Because of our limited resources and the strength of international competitors, our recommendation is to enter into the market of the United Kingdom as the focus for our marketing strategy. The recommended strategy allows us to exploit our environmental advantage and limit the possibility of excessive demand. The market for adventure tourism is estimated at 787,000 Britons. Our conservative goal of reaching 0.35% of this market will result in 2754 new customers. This combined with a strong local market will result in approximately $286,450 in revenues in the first year. These numbers are less than current capacity projections of 3600 customers served in a season. International customers would also be more likely to take extended visits in the region, offering incentive to other local industry members to enter into agreements with us to present a package of services to international travel wholesalers. This maximizes our resources and product offerings. We estimate revenues from year one will be increased by approximately 573%, generating needed capital to expand capacity and increase marketing activities in year two to sustain our continued viability and growth. The recommended strategy has three strategic imperatives. 1) The hiring of a dedicated sales/marketing person. 2) Meeting with and developing local tourism package with other industry members. 3) Creating a relationship with travel wholesalers in the United Kingdom.
2. Situation Analysis
External Environmental Analysis
Baby Boomers are an opportunity for market growth. They as a group have large disposable incomes and are looking for new experiences. The North American market is an opportunity for market growth. The market for adventure and ecotourism numbers 30-40 million Americans and 1.3 million Canadians. International Markets are an opportunity for market growth. Statistics from the United Kingdom alone reveal 787,000 potential customers. Competitive
The market for adventure tourism in North America is growing; but is underserved. Quality outfitters are underrepresented in North America in general and in Newfoundland in particular. Those already serving the marketplace have an advantage competitively including knowledge and experience in the sector. Market Factors/Customers
Life Styles: There is a growing shift in focus of tourists from the traditional leisure focused vacations to specific activity or activity focused vacations. Adventure and Ecotourism activities are a growing trend. Adventure tourism is divided into two segments: Soft Adventure and Hard Adventure. Soft Adventure is defined as providing unique outdoors experiences with limited risk, physical exertion and skill. All ages and fitness levels can participate. Hard Adventure is defined as providing unique outdoors experiences with excitement and risk, which demands physical exertion, a level of skill and often requires specific preparation and training. Ecotourism is defined as purposeful travel to understand a region's culture and natural history, while safeguarding the ecosystem and producing economic benefits that encourage conservation. This can be soft or hard adventure. There is also a trend to visiting specific locations or cities for history or location. These urban touring visitors are closely linked to casual adventurers in characteristics, and may be enticed from their urban tour to adventure tourism markets. Needs
The tourism market shift from leisure to activity based vacationing is causing the demand to grow for more active vacations Adventurers
There are three major types of Adventurers; each has different buying behaviors. These types can be classified as Casual, Committed and Expert Adventurers. Casual Adventurers take short trips to get a taste of adventure. They provide the greatest short term growth potential. Committed Adventurers are the most affluent segment. They are fitness conscious and between 30 to 55 years of age. Generally they are well educated and urban dwelling. They demand and will pay for quality accommodations. The opportunity for longer term growth is presented here. Expert Adventurers are looking to master a sport-related skill or improve their knowledge on natural sciences. They tend to be younger than the Committed Adventurers segment and more willing to rough it. They have less disposable income. This segment is drawn from through out the whole of the population. Product Knowledge
There is a lack of exposure to the sport of sea-kayaking. Sea kayaking is safer and uses quite different vessels than fresh water kayaking. Competition
Target Markets: Competing outfitters target the same markets; most are international. There is an opportunity to market the outfitter that is in the consumer's back yard' Finances: Competing international outfitters generally have more money allowing them more freedom to invest in programs to attract consumers Marketing: The large international outfitters have a significantly larger marketing budget. This allows them to invest in larger marketing campaigns. Marketing Intermediaries
Travel Wholesalers: Travel Wholesalers promote an outfitter's operation in exchange for a mark up of 10-15% above the outfitter's rates. This gives smaller operations an opportunity to promote their product despite limited marketing budgets. However, wholesalers tend to leave outfitters without control over how their destination is being promoted Regional Promotion Organizations: In Newfoundland, the province promotes itself, as does the St. John's. Newfoundland promotes itself through a provincial travel guide and television commercials depicting the rugged natural beauty of the province. St. John's produces a travel guide listing tourism operators in the vicinity of the city. It also promotes itself to individuals and companies as a convention location. Internal Environmental Analysis
Wilderness Newfoundland Adventures
Company Goals and Management Philosophy: Wilderness Newfoundland Adventures goals include growing their market share and increasing exposure in sea kayaking. Further, they wish to expand their operations and generate greater profits. Management philosophy is very hands on. Its origins as a family business has continued to filter down as a tight family approach in its operations Target Market: Wilderness Newfoundland Adventures target markets include adventurers from casual to expert and those with an appreciation for the outdoors, exercise and the beauty of their location. They have targeted the local market well and established a good reputation. To grow further they are starting to look into the North American and International markets. Market Share: They have a small share of the available market. They have done well locally. Finances: Money at Wilderness Newfoundland Adventures is tight. We Estimate average 1998 gross revenue at just over $50,000, with their marketing budget for the same period as $26,775. Operations: Wilderness Newfoundland Adventures has a year round staff consisting of Stan Cook sr., Stan Cook jr. and Cori-Jane Radford. WNA is a seasonal operation, open from May to early October Organization: Stan Cook sr. is the owner/founder of WNA. Stan Cook jr. is in charge of day to day operations and marketing, and answers to Stan Cook sr. Cori-Jane Radford was in charge of marketing, but is pursuing her MBA and her involvement in the business has diminished. Marketing:
Product: Sea Kayaking guided tours. WNA is a complete outfitter, customers need only to bring appropriate clothing Prices: Sea Kayaking prices: Full day cruises are $100 per person, Half-Day and Sunset Cruises are $65 per person Promotion:
Word of Mouth: The management of WNA frequents local events looking for potential customers. They also utilize good experiences from previous customers in the local area. Brochures: WNA produces a small brochure which is left throughout the local area to attract customers. The large one is mailed out to interested potential customers throughout North America. Travel Guides: WNA has a listing in Newfoundland's travel guide. They also had a listing in the St. John's Visitor guide. Road Signs: WNA has commissioned the building of three road signs. Radio Advertising: WNA ran a campaign on OZ-FM (94.7).
Magazines: WNA ran ads in Newfoundland Sportsman Magazine. Tradeshows: WNA attended the Newfoundland Sportsman Tradeshow in St. John's. WNA sent two representatives to Toronto, Ontario to the Outdoor Adventure Show in February. Gift Certificates: Gave away 25 pairs of Half-day Sea Kayak Adventures for two.' Phone Listings: WNA had a large listing in the Yellow Pages of the area phonebook Web Site: WNA maintains a web site on the internet
Television: NWA was featured on The Great Outdoorsman' twice. Personnel: During the summer of 1998, WNA employed 5 seasonal employees. These employees consisted of three full-time guides, one part time guide and one junior guide Policies: To give employees bonuses for every customer they bring on tours. This bonus is $10 for full day or $5 for half-day or sunset tours Location
Natural Features: WNA's location in Cape Boyle is sheltered in a 5km fjord. This fjord blocks most of the strong winds natural for this area of Newfoundland. This location is known for its pristine beauty and rugged features. Whales make a regular seasonal migration through the area of the tours and ancient icebergs float through the vicinity of the tours Infrastructure: The location is served by good roadways in and out of St. John's approximately 55 minutes away. St. John's is home to a fully serviced international airport 3. Assumptions
Growth: The market for adventure and ecotourism will continue to grow into the next century. Resources: WNA's budget will continue to be small during the beginning stages of this plan, and unable to quickly increase the marketing budget or equipment. Brand: WNA will continue to maintain reputation of experienced guides and incredible experiences. 4. Core Problem
To expand Wilderness Newfoundland Adventures market share.
NWA has limited resources and is competing in a growing and lucrative market. They have limited exposure of both their existence and product in the market place. They have limited capacity, and can not take on a large influx of interested customers. They need to maximize returns on investment to grow market share long term. 5. Alternatives
#1 Focus on North American Market: Hire a full-time marketing/salesperson. Focus on one geographical area every season. Contact travel wholesalers in that geographical area. Enter into agreement with them to promote Wilderness Newfoundland Adventures to that geographical area for the mark-up of 10-15%. Use the strength of the experience to generate word of mouth campaign with other potential customers. Marketing/salesperson would make calls and write letters to generate travel wholesaler's interest in promoting WNA. Incorporate e-commerce into revamped web site to allow online bookings. Partner with other local tourism industry members in the region to create a package of services. #2 Balanced Focuses on both North American and International Markets: Hire a full-time marketing/salesperson. Focus on two geographical areas every season. Contact travel wholesalers in those geographical areas. Enter into agreement with them to promote Wilderness Newfoundland Adventures to that geographical area for the mark-up of 10-15%. Use the strength of the experience to generate word of mouth campaign with other potential customers. Marketing/salesperson would make calls and write letters to generate travel wholesaler's interest in promoting WNA. Incorporate e-commerce into revamped web site to allow online bookings. Partner with other local tourism industry members in the region to create a package of services. #3 Focus on International Market: Hire a full-time marketing/salesperson. Focus on one geographical area every season. Contact travel wholesalers in that geographical area. Enter into agreement with them to promote Wilderness Newfoundland Adventures to that geographical area for the mark-up of 10-15%. Use the strength of the experience to generate word of mouth campaign with other potential customers. Focus on English speaking geographical areas such as the United Kingdom at the beginning. Capitalize on the UK's historical ties to Newfoundland. Marketing/salesperson would make calls and write letters to generate travel wholesaler's interest in promoting WNA. Incorporate e-commerce into revamped web site to allow online bookings. Partner with other local tourism industry members in the region to create a package of services. 6. Evaluative Criteria
Increase Market ShareYesYesYes
7. Analysis of Alternatives
#1 Focus on North American Market: This alternative maximizes on limited marketing budgets by focusing on a single larger market. Even with WNA spending approximately 50% of revenues on marketing, this is still a small amount in comparison to other larger outfitters. North America is a huge market and is very close to the service provider. If this alternative was successful, the demand might easily out strip current WNA capacity. If even a small percentage of the market decides to travel to NWA, it would represent a large increase in WNA's market share; although WNA capacity to accommodate this market would be limited. Even conservatively estimated at reaching 1% of the market would result in 300,000 new customers. Even if all capacity is used everyday in a 150 day season that would only be 3600 customers served in a season. Results from the surveys for 1998 indicate as many as 616 customers would return this coming season. If they can not supply the service marketed to those interested in purchasing it, there might be a backlash against them in the future. The exposure generated in the target market would be improved by having more regular contact with travel wholesalers, who would wish to move the product due to profit from their mark-ups. With the increased customers WNA's revenues would rise significantly from the approximate $50,000 to a possible $298,320. This would allow them to increase capacity and marketing budgets promoting further growth and expansion of their operations. #2 Balanced Focuses on both North American and International Markets: This alternative splits the focus on markets, which splits the overall marketing budget of WNA. Results would not be as impressive as focusing most of the resources on one market. Less money and resources would be directed at each market, which would make the chance of a successful campaign is also limited greatly by the lack of focus on one market.
North America and the international markets represent a huge untapped market for NWA. While North America is close to the service provider, the international market is further away, which would limit the actual size of the market's response by increasing travel costs. International market customers would be more likely to stay longer and take part in more local services to maximize their experience
Successful campaigns in these markets could easily out strip capacity of WNA which is estimated as having a 150 day season and a total capacity of approximately 3600 customers a season. The risks of turning away customers are even higher with this alternative. #3 Focus on International Market: This alternative maximizes on limited marketing budgets by focusing on a single larger market. Even with WNA spending approximately 50% of revenues on marketing, this is still a small amount in comparison to other larger outfitters.
The international market is huge, but is located further away from WNA's operation. By following the outlined plan of focusing on one geographical area to begin with, the United Kingdom in the outlined plan, this will limit the demand for a couple of reasons. Firstly, due to the extra traveling expenses, few potential customers will have the means to make the trip. Secondly, the Untied Kingdom's total projected market is vastly smaller in comparison to North America's. This coupled with WNA's limited capacity in the first year of the plan will assist in avoiding the overcapacity issues.
Conservatively estimated at gaining 0.35% of the total market of 787,000 customers, would result in 2754 new customers. Even if all capacity is used everyday in a 150 day season that would only be 3600 customers served in a season. Results from the surveys for 1998 indicate as many as 616 customers would return this coming season.
The international customers could be expected to remain in the region for extended visits to maximize their experience. These customers would utilize other tourism services in the region, giving incentive to other industry operators in the region to join in a cross promotion packages as detailed in the implementation. With the increased customers WNA's revenues would rise significantly from the approximate $50,000 to a possible $286,450. This would allow them to increase capacity and marketing budgets promoting further growth and expansion of their operations 8. Decision and Justification
#3 Focus on International Market: The strengths of focusing on the international market is that it maximizes resources by focusing on one region a season, generating exposure in new international markets. The overall costs are low, as the brunt of the promotion is performed by organizations outside of Wilderness Newfoundland Adventures. The potential long run profits and the slow pace of the campaign will allow WNA to begin to increase both resources and capacity to match future increased demand. By beginning with the United Kingdom, WNA can maximize the historic link between the nation and Newfoundland. The seasonal switch approach, while maximizing resources, allows only a limited time for the message to be heard and acted on, which may not generate enough exposure. Further this approach allows WNA limited control over the message. This alternative satisfies Evaluative Criterion #1 by maximizing resource use by focusing resources for a seasonal campaign in one area. Evaluative Criterion #2 is satisfied by using all resources to generate exposure in one targeted area. Evaluative Criterion #3 will be satisfied by gaining a presence in an untapped market; while Evaluative Criterion #4 will be satisfied as market share increases and WNA begins to realize greater revenues with which they can expand operations. 9. Implementation
Step 1: NWA's ownership hires a marketing/salesperson as soon as possible this off season Step 2: Instruct this new salesperson to contact other regional tourism industry members with the aim of creating a package of services to offer and pool resources. Step 3: After meeting with representatives of the industry to create this package, the salesperson should contact travel wholesalers in the United Kingdom during the off-season and offer the package. Step 4: To deal with possible international traffic generated by this, the Web Site project should begin as soon as a suitable web designer with e-commerce expertise is found. Step 5: Enter into a promotional agreement with the wholesalers. Salesperson should follow up on this frequently. Step 6: Management should decide on how much revenue to use to expand operations and for the marketing budget. Based on results of the program, management can examine further marketing opportunities. Step 7: After the season, the salesperson and ownership should evaluate results of the program and select a new market to focus on, and immediately act beginning at step 3, only in a new geographical area.
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