Adventure Park - a Need to Increase Customer Loyalty to Realize More Profit Margin - Report Example

Hospitality and Tourism Market Name Institution Tutor Date Executive summary Adventure Park is a water park and amusement park situated in Victoria near Geelong. The adventure park has several attractions including water playgrounds and water slides. The park has been faced with several challenges in the past years due to a reduction in the number of customers visiting the park. Consequently, the revenue gained from the park has continuously declined. The park is operating in an environment full of various marketing forces including competition, economic cycles and political forces. The park should attract more customers and retain their customers by use of various strategies. The park should adopt strategies that will ensure that the park is able to position itself effectively and target their customers. Apparently, the park management can use various recommendations to improve the effectiveness and operations of the park. Introduction Adventure Park is a water park and amusement park situated in Victoria near Geelong. The adventure park has several attractions including water playgrounds, water slides, go Karts, Jumping jets and mini golf. Adventure Park is the first park in Victoria. Several parents take their children to the park for amusements and fun. Visitors from other parts of the world also travel to Victoria to have some fun in and amusement in the water park. However, from the recent financial records of the park, it is evident that the park has not been successful in its operations. There is a massive decline in the number of customers coming to the park affecting the revenue extracted from the park. This paper seeks to provide possible solutions that the management of the adventure park can use to increase the effectiveness of the park and attract more customers. Current marketing environment Ramaswamy and Namakumari (2009) suggest that the marketing environment includes the marketing team within the business organization and the external factors of marketing that influence the ability of the marketing team to maintain and develop fruitful and efficient customer relationships with their prospective customers. Marketing environment has some factors that are beyond the control of the company. Hence, the company needs to adapt to these factors. The firms should observe ways in which the marketing environment changes for them to adapt their strategies more effectively. Adventure park management should be aware of the current marketing environment and the forces that exist in the market. Through this, the management can be able to formulate various strategies that can enable the park win the hearts of more customers. Marketing forces in the marketing environment Competition Competitors are known for their aggressive behavior of creeping in and threatening to take away customers from other firms. Competitors may compete with other firms either directly or indirectly. The consumers always benefit from competition since the prices are always low. Adventure Park may be unsuccessful due to the current competition existing in the marketing environment. The park faces competitions from other parks which offer better services and low prices to the customers. This makes the customers opt for other parks at the expense of the adventure park in Victoria. The management should be aware of the competition that exist within their marketing environment for appropriate and sustainable planning (Pride and Ferrell, 2014). Economics Business firms are always affected by economic forces in the marketing environment. One of the economic forces is the economic cycles. A business organization can be affected by the changes in the economy. Some customers may forgo certain products or activities during severe economic status. However, in good times, the firms may find it difficult to provide the customers with their needs. It is important to note that various companies are affected to varying degrees by the economic changes. The economy goes through cycles. For instance, during recession periods, the level of unemployment rises making the consumers spend less amount of money. This is a dangerous circle since most individuals lose their jobs (Pride and Ferrell, 2014). The adventure park management should be aware of the current economic cycles that exist in the marketing environment. They should realize that during a bad economy, the customers are likely to forego coming to the water park and save for other essential activities. Political forces Businesses are always influenced by changes in the political situation in their area of operation. Some industries or companies may possess some economic interests that benefit them but have adverse effect on the nation. Political influences also affect the way consumers buy product and services. When the company supports a given political party, it may alleviate prospective buyers or customers. Again, various businesses can only operate well when there is political stability within the marketing environment. Political instability hinders the operation of the enterprise organization since the consumers are not able to buy their products (Pride et al., 2010). The adventure park should be aware of these political forces that exist within their marketing environment. Other government regulations such as increase or decrease in tax are also a political element. The government may attempt to increase the tax for certain firms and lower it for other enterprises. This decision possesses a direct effect on the business firms. The companies should be updated with such factors. Also, various interventions such as a shift in interest rates have an effect on the company’s demand patterns. Technology Technological changes influence the demand for services and products. Advancement in technology has significantly impacted the operations of various businesses. Various business organizations use technological infrastructures which include information exchange systems such as conferencing calling, telephones and the internet. The business firms also incorporate technological software that enables them to manage their businesses effectively. Consequently, other companies use technological appliances such as computers, mobile phones, fax machines and a photocopier to record and transmit information. Through technology in marketing, the customers have expected instant results. Due to a revolution in technology, there has been an increased rate of exchanging information between various shareholders (Pride and Ferrell, 2014). The adventure park should realize the importance of technology within their park. Technology can help them compete effectively with their competitors and provide better services to the customers. Technology can allow the park to exchange information faster; this benefits the park since they can react to any changes in their marketing environment. Social changes There exist several changes in demographics and customs that significantly influence firms. Changes in population affect the organization directly. Changes in population structure affect the demand and supply of products and services. For instance, there are few babies born today, these results in decreased demand to use the water parks for amusements. Social changes also affect the attitudes, opinions and interests of the consumers. The social forces shapes who an individual is, how they behave and what they purchase. In conclusion, the business organizations should be in a position to offer products and services that can complement and benefit their customers (Ramaswamy and Namakumari, 2009). The adventure park management should be aware of social changes within their marketing environment. They should respond adequately to such changes for them to win the loyalty of more customers. Failure to consider the social changes in the society, the adventure park is likely to lose their market share and demand for their services. Possible market segments Market segmentation is subdividing a large market into various identifiable segments that have similar wants, needs or demand characteristics. The primary objective of marketing segmentation is designing a marketing mix that matches customers’ expectation (Mcdonald and Dunbar, 2013). Adventure Park is big enough to supply the needs of the whole market. It should be broken down into segments. This will enable Adventure Park to target various customers who perceive the full value of their services differently from others. Possible market segments that adventure park can use to segment their company is as follows: Geographic segmentation This is separating the market into various geographical boundaries that can impact the promotion, price and channel to the market. Geographic segmentation is the most and common form of market segmentation where different business firms attract certain geographical areas. Adventure Park can decide to segment their business in other sectors. This can open new markets for consumers who fail to show up at the main park due to distance. The consumers will have the ability to access easily their services regionally. Individuals in certain regions may possess individual preferences, the park can provide for different services in various areas depending on the preference of such geographic locations (Mcdonald and Dunbar, 2013). Through geographic segmentation, the park may also find other means of segmentation since geographic segmentation acts as a surrogate for other segmentations. Demographic segmentation Demographic segmentation is separating the market using various demographic factors such as education level, gender, age, income and household type. The type of services enjoyed by the consumers largely depends on the demographic factors. Some services are target by women, some by men. Children also have a different preference as compared to that of men. Demographic segmentation has a significant role in the segmentation strategy (Mcdonald and Dunbar, 2013). The adventure park should consider demographic segmentation in their attempt to segment their market. They should be aware of the women’s, men’s and children preferences and provide for their needs. Through this, the park can win the loyalty of many customers since all their needs are taken into account. Lifestyle Segmentation or Psychographic This is separating the market into the lifestyle as well as beliefs and values, attitudes, emotions, behavior, perceptions and interests. Lifestyle segmentation is a legitimate way to segment a market. At this stage, there is the maximum use of qualitative research such as interviews. Various comments from consumers are evaluated to identify their emotions, interest, perceptions and behavior (Wedel and Kamakura, 2010). Adventure Park can use this market segmentation strategy to segment their market. By adopting this segmentation, the park will get information about various lifestyles of different individuals and provide for them adequately. Various customers possess different lifestyles, providing for their lifestyles will make them have more interest in the park and increase the number of customers coming to the park. This will in turn raise the level of revenue. Media segmentation This is not a common type of market segmentation. This market segmentation is based on the idea that the media can reach various audiences. If the firm invests funds on media, advertising, then it can dominate the market segment that listens to the radio or reads newspapers and magazines. Adventure Park needs to create awareness to its customers; the best way to create awareness is to use the mass media. Through this, the park can reach a wide range of prospective customers (Wedel and Kamakura, 2010). Consequently, if the park directs funds to media segmentation, it can win the loyalty of more consumers. Through this, the park will increase the number of customers visiting their parks. Time Segmentation Adventure Park can also use time segmentation. This is a situation where firms open their business for longer time periods including weekends. Some products and services can only be sold at certain times. Time is an important aspect of segmentation. Adventure parks can use time segmentation by providing more of their services during holidays when children are at home. They can also plan their activities during festive seasons like Christmas when parents take their children out for fun. The park can as well open up to late hours in the evenings and over the weekends when the parents are out of work. Through this, the park can realize an increase in their revenue. The management should plan effectively for time segmentation and provide services at the appropriate time of the year. Strategies for positioning, targeting, building loyalty and attracting new customers Successful development of profitable and growing customer base is a very crucial requirement for any business organization to survive in economically challenging and highly competitive environment. Adventure Park should have an integrated approach that they can use to position, target, build the customers loyalty, attract new customers to their new market segments and maximize profitability and revenue from the existing ones. The strategies the Adventure Park can use include the following: Strategies for targeting Undifferentiated Market targeting This is also considered as mass marketing strategy. The approach is appealing to many individuals. The primary focus of the strategy is on the similarities between the prospects rather than their differences. Under this strategy, the firms designs products and services that can be appealing to many consumers. If the policy becomes successful, then the business can be efficient, specifically since research, production and cost of promotion benefits arise from economies of scale. In using undifferentiated marketing, the firm is suggesting that individuals have similar needs or that the difference between the customers is minimal and that it does not matter if a given product is likely to appeal to many prospects. Adventure Company can use this strategy to target their market segment (Lamb, et al., 2010). Differentiated Market targeting This is providing more products for every group and ensuring the product or services are separate in the marketplace. The firm may opt to target various segments and designs different offers for every segment. The differentiated strategy can be used where the prospects are choosing among different services and products that are well known. By providing marketing and service variation in different segments, the firm hopes for a stronger position and higher sales in every market segment. Adventure Park can use this strategy to target their market segment (Lamb, et al., 2010).  Concentrated Market targeting This is the ability for the firm to offer one or more services to one segment. This strategy is effective for businesses that lack enough resources to satisfy all the customers. Concentrated marketing is very profitable. However, it is accompanied by high-risk level. Companies relying on one segment, as a result, the business can suffer if the company in that particular segment declines or when the same segment is targeted by larger competitors (Lamb, et al., 2010).  Micromarketing This is the practice of making marketing programs to meet the wants and needs of various customers. It encompasses individual marketing and local marketing. Individual marketing is tailoring marketing programs and services to meet the wants and preference of individual customers. Through this marketing strategy, the firm is capable of marketing more effectively concerning the local and regional differences that exist in the lifestyles and demographics. Adventure Park should consider using this strategy in reaching their target market. They should satisfy the needs of the local customers (Pride and Ferrell, 2014).   Strategies for positioning Adventure Park should position its activities based on the competitive advantages it has. Positioning of services is arranging for the services to occupy distinctive, clear and desirable place than the competing services. For Adventure Park to adequately develop a clear strategy for positioning, they should first analyze the position of the competitors in the market. After realizing the position of their competitors, then they can decide on which position to take in the marketplace. Again the park should offer services that have a competitive advantage over that of their competitors, this will make the customers like their services and improve their loyalty. After setting position strategy, the marketers should finalize marketing mix by placing all the pieces in place. Service positioning should be supported by all elements of marketing mix (Lamb, et al., 2010).  Strategies for building customer loyalty and attracting new customers Adventure Park can win the loyalty of the customers by understanding their marketplace and the wants and needs of their customers. The park should identify the wants, needs and demands of their customers. They should create a marketing mix and find ways that they can use to satisfy their customers. Additionally, the park should maintain and build desirable relationships with their prospective customers involving services and ideas. This will help attract new customers and retain the already existing customers. The park should manage their market and create a profitable relationship with their customers. Through this, the park can build the loyalty of their customers (Lovelock et al., 2015).  The park can also design marketing strategy that is customer driven. They should first identify the customers they intend to attract. Secondly, the park should create a plan of how they are to be differentiated from their competitors and build various strategies that can create a sound and profitable customer relation. The approaches focuses on fulfilling the needs of the customers. The park cannot satisfy the needs of all the customers as a result, they need to identify their target customers and provide for their need more effectively. This increases the loyalty of the customers since their needs and wants and adequately addressed (Pride and Ferrell, 2014). The other strategy that the park can use is constructing marketing programs that can deliver superior value to the customers. Customers need excellent services. For the park to gain a competitive advantage over its competitors, it should offer excellent services to the customers. When the conditions become desperate, the park can regulate its prices as a competition weapon. Through this, the company is at a position of attracting more customers and retaining already existing customers. The park will eventually win the loyalty of its customers by use of this strategy (Lovelock et al., 2015).  Recommendations Adventure Park needs to increase their customer loyalty for it to realize more customers and to realize more profit margin. The management of the park should be aware of the current marketing environment. They should have in mind various forces in the marketing environment that affect their marketing activities. Such forces include the competitors, economic cycles, political factors and social factors. Such factors may adversely affect the smooth operations of the park. The management should come up with proper guidelines for understanding the current marketing environment and formulating various policies that can help the park operate efficiently in the current marketing environment. Additionally, there exist several possible market segment options that the park can use to increase their operation to their customers. These market segments encompass geographical segment, demographic segments, time segment, media segment and lifestyle segment. Various segments require different types of service. The management should have vast knowledge of the marketing segment and formulate ways and strategies of segmenting their market in such a way that the park cannot incur any loss. In addition, there exist several sets of strategies the park can use for targeting, positioning, attracting new customers and winning the loyalty of their customers. The strategies the park can use for targeting includes undifferentiated marketing, differentiated marketing micro marketing and concentrated marketing. The management should be aware of these strategies and use them effectively in targeting their market segments. In positioning their services, the park should position their services according to the position of their competitors; they should have a clear understanding of their competitors’ position and plan effectively for their positioning. The park can also use various strategies to win the loyalty of their customers and win more customers into their park. This can be achieved through understanding of wants and needs of the consumers and providing for them more effectively. The park should also develop a customer-driven strategy, their aim should be to satisfy various desires of the customers. Finally, the park should come up with different programs that can deliver quality services to the customers. This increases the customers’ loyalty. Conclusion In conclusion, the adventure park can achieve success with proper integration of all marketing strategies as found out in the market research. The park needs to be aware of all the forces that exist in their marketing environment and respond to the forces more effectively. It is through identify the right segments that the park can reach a wider market. Additionally, the park should develop several strategies to position their market segments, attract and retain more customers. Through this, the park is capable of winning the loyalty of most customers. References Lamb, C. W., Hair, J. F., & Mcdaniel, C., 2010, MKTG4: student edition. Mason, OH, South- Western Cengage Learning. Lovelock, C. H., Wirtz, J., and Patterson, P ,2015, Services Marketing Mcdonald, M., & Dunbar, I., 2013, Market segmentation how to do it, how to profit from it. Chichester, John Wiley & Sons. Pride, W. M., & Ferrell, O.,2014, Marketing. [S.l.], South-Western Cengage Learning. Pride, W. M., Kapoor, J. R And Hughes, R.,2010, Business. Australia, South-Western/Cengage Learning. Namakumari, S, and Ramaswamy, V. S., 2009, Marketing Management: Global perspective, Indian context. Delhi: Macmillan. Wedel, M., & Kamakura, W.,2010, Market Segmentation Conceptual and Methodological Foundations. Boston, MA, Springer US. Read More