A Consumer Segment in New Zealand That Could Be Interested in Standard Eco-Shack - Case Study Example

Marketing Echo-Shack Student’s Name Subject Professor University/Institution Location Date 1. A consumer segment in New Zealand that could be interested in Standard Eco-Shack An understanding of the geographical segmentation is critical considerations for a housing company. This is because; a specific group of people are inclined to live in a specific location, cities and regions through social influences. The manner of work and desired living conditions informs the geographical segmentation. For instance, most middle class customers demands houses which are related to their social category and other significant subcategories. Precisely, the level of income, education and social networks promote this trend. This makes geographical characteristic is measurable and can easily be accessible for marketing as well as strategically building the houses as per consumers demand (Steenkamp et al 2002). With such an understanding, New Zealand middle class live mainly in lower parts of towns and along highways (Ma & Cartier 2003). Considering the structural feature of Urban Echo Shack, it is recommendable for these areas due to its ability to fit under the rule of 10 square metre. As of regard to behavioristic basis, the potential buyers are segmented on the basis of behavior towards the products. Behavior segmentation groups buyers based on their response to the product, attitudes, attitudes and uses. Athanassopoulos, 2000 argues that behavioral variables make the best starting point to base market segments. According to Ma and Cartier, 2003 middle class people in New Zealand have a good taste of new products, and exhibit luxurious preferences. Urban Eco-Shack is designed with smoke alarm, wool carpet, phone data connection, wool insulation which is above minimum among other features. For that reason, Urban Echo-Shack well fit in this class level. Generally, this structure`s modular form allows buyers to request for specific individual modifications. Considering demographic segmentation, it forms the most common basis used in segmenting consumer markets. Echo Shack needs to adequately involve this segmentation it is largely used as they are easy to measure and strongly correlated to demand. This type of market segmentation is largely associated with age, life-cycle, gender, income, family, and education (Athanassopoulos 2000). In New Zealand the middle class are generally educated, have access to cars, and are employed in white collar jobs. Moreover, expansion of tax break for those working for families, means-tested superannuation elimination, healthcare subsidies, students loans that interest free (Ma & Cartier 2003). From this perspective, majority of members of the New Zealand`s middle class are well able to afford Urban Shack product. Ateljevic and Doorne, 2002 also observes that middle class in New Zealand have small family sizes, making it easy to accommodate them in smaller homes. Therefore, Urban Eco-Shack makes an adequate for a smaller family. Finally, psychographic segmentation divides potential buyers based on lifestyle, personality characteristics and social class. This type of segmentation helps marketers and business to understand attributes related to peoples behaviors, feelings and thinks (Athanassopoulos 2000). The middle class people in New Zealand are termed “the lifestylers”. They love to stay in modern houses (Ateljevic & Doorne 2002), which is readily available from modernized Urban Eco-Shack. Some middle class members also prefer renting houses (Ma & Cartier 2003) a benefit that Echo Shack is ready to offer. 2. Business segment in New Zealand that could be interested in Standard Eco-Shack Tourism is an essential industry to the New Zealand economy for the reason that multitudes of tourists usually visit her annually thus contributing to the gross domestic product. Any attempt aimed at transforming this industry for the better is usually welcome due to its importance to the national heritage and at the same time its monetary implication to the economy. Since she experiences a multitude of tourists annually, the idea of eco-shacks is welcome because it will be a welcome substitute in housing the surplus tourists and at the same time ensuring that the country’s carbon neutrality policy is adhered to. Viewed from the perspective that it is a enterprising venture, the government of New Zealand is practically doing all it can to ensure that the hospitality of its tourists is guaranteed, and to that end, the eco-shacks can come in handy at ensuring that the government is involved in a gainful venture by housing the excess tourists in the makeshift shacks. Since New Zealand majorly depends on her natural environment for her economic survival, the eco-shacks are environment friendly and thus a welcome reprieve to the government because the shacks are aimed at protecting the environment. In addition, since most of the tourist sites; for instance the mountainous landscape, the rivers, the lakes and some whale watching sites; are remotely situated and housing is needed in such areas, the eco-shacks come in handy because they are simpler to set up and are not as costly and time consuming as setting up new concrete structures for the tourists. Moreover, in the construction of the concrete structures, the environmental cycle is usually interfered with because the noises from the machineries involved usually drive away some of the wildlife in the case of carrying out constructions in the national parks. Equipped with the eco-shacks, the tourism department can easily set up camping sites thus increasing the number of tourists that can be housed at a specific time. Moreover, eco-shacks are appropriate to the tourism industry because the shacks are flexible in construction and thus can be constructed with reference to the customers’ specifications thus satisfying each tourist’s individual demands. Since New Zealand usually attract long trip tourists, having the eco-shacks in strategic tourist sites or having them at the ready will encourage short trip tourists because they will have housing facilities whenever they visit. The eco-shacks are a bonus to the tourism industry of New Zealand because the shacks are sustainable and do not require a multitude of construction workers in its setup. Using the eco-shacks will save the tourism industry millions of dollars that would have been spend in the construction of five star accommodation facilities. The inclusion of these housing facilities diversify the tourism industry by enabling both the low income earners to enjoy the natural heritage at the same level with the propertied because the shacks will be rented out at a price lower than the highly placed tourist hotels. This will ensure that the competitive nature of the tourism industry is on the rise (New Zealand Tourism 2012). Having the shacks in place will also help diversify the accommodation facilities available for the selection of the tourists because some prefer spending their nights in the open or in the wild, and in such cases, the eco-shacks come in handy. Ensuring that the tourist’s interests supersede their expectations is usually essential in guaranteeing the hosts a boom in business, and in this regard, embracing the eco-shacks will ensure that the New Zealand tourism industry is where they desire it to be. 3. Branding and positioning the Eco-shack product The environmental conservation model that the tourism industry wishes to put in place can only be conceptualized by the bringing into use of the eco-shacks because they are environmentally user friendly, and that is the main objective of the tourism sector, protecting the environment. Ensuring that they buy the idea of its user and environment friendliness will help in marketing the product. In the construction of the tourist facilities, the health and safety of the tourists is of great importance to the image of the New Zealand tourism industry, and thus, to meet this end, the eco-shacks come in handy. Since the construction of the eco-shacks meets the building regulations, this will guarantee the safety of the tourists at a cost lower than the construction of concrete housing facilities that will require more funding to see their completion. Moreover, the mobility and reusability of the eco-shacks will also save the tourism industry millions of dollars because they can be easily decamped and taken elsewhere for the same usage thus saving on resources. As a branding tool, the durability of the eco-shacks is a factor to be considered by the New Zealand tourism industry in their bid to house the tourists. The resilience of the eco-shacks will ensure that the tourism industry maximizes on their profits because the shacks can be reused over and over again and in so doing ensuring that the short and long term objectives of this industry are adequately met. Equipped with an under floor water tank, the water needs of the tourists in the wild will be adequately met thus saving the industry the funds that could have been used to ferry in the water to carter for their needs. The tourists will also be well cared for because the shack has been constructed in such a way that it meets their individual needs through inbuilt fit-ins that ensure that the comfort of the tourists is guaranteed. Advertising the eco-shacks on the tourism industry’s homepage will grab their attention into wanting to know more about the shacks so that they can be included in their housing agenda. By clearly outlining the benefits of the shacks, the tourism industry will deliberate on how to cut down their budget because this will be giving them that opportunity. Moreover, basing the argument on the government’s policy to protect the environment through the use of reusable materials, environmental organizations can be drawn into the debate thus encouraging sectors like the tourism industry to embrace the eco-shack and thus show their solidarity for the environmental protection. Delving into tourist sites and enumerating the advantages of the shacks to prospective tourists will ensure that those visiting New Zealand will want to have an experience with the shacks because tourism is all about encountering new experiences that last a lifetime. Such a move will pull the tourism industry into the fold because the request for the eco-shacks will be made by the visiting tourists and thus the industry will embrace the eco-shacks idea. 4. Advantages and Disadvantages of Cost Base Pricing Cost based pricing takes the cost incurred in producing a product or service, then tops up an amount that is intended to make as profit (Kardes et al 2004). The profit is mainly articulated as a percentage on and of the total cost. Once all costs attributable to the service or product have been determined, a profit margin is added to each unit as mark up. For all intents and purposes, cost based pricing aims to cover the entire cost incurred for the production and delivery of a products or service, and to attain targeted profit level (Banker & Hansen 2002). This pricing approach is advantageous in various ways. Generally, this method is straightforward and easy. Being an age old method relying on internal information, managers will only revise accounting or financial reports to set the price. It does not have to examine the market nor does it consider competition to dictate the price. Secondly, Banker and Hansen, 2002 assert that cost based pricing approach helps firms to defend prices of their products based on costs, thus, they are able to demonstrate how their prices cover the costs and the percentage profit from the mark up. Another main advantage of cost based pricing approach is that companies rest assured their cost is being covered. Banker and Hansen, 2002 further asserts that, by using this strategy, a business may attract consumers interested in inexpensive services or products. Cost based pricing may lead to competitive prices. Essentially, once the incurred cost is covered, the business may not be interested in exaggerated profits. In turn, there price may be much lower in the market. Moreover, at times prevailing economic status may dictate drop in prices. At this point, in case an organizations products or service is a necessity in the market, then it could be advantageous (Kardes et al 2004). On the other hand, cost based pricing can be disadvantageous. Various reasons prove that cost based pricing is not advisable for some businesses (Smagalla 2004). Firstly, this form of pricing products and services does not consider how demand by customers affects the price. Generally, demand for a particular product affects the much person is willing to pay for it. For instance, in case the demand is high and customer believes the supply of the product is limited; they are willing to pay more for it. Secondly, cost oriented pricing does not include competition in it. Competition should affect how the product is priced. The pricing method based on cost just adds profit level or the percentage to the price of product is only likely to work in industries where competition is limited. In case the product is introduced in market that is highly competitive, cost based pricing is likely to promote entry of competitors in the market with a lower price (Potter 2004). Thirdly, some analysts argue that the cost based pricing fails to offer effective pricing policy (Kardes et al 2004). Particularly, determining the cost of a unit in a cost plus strategy prior to its pricing seems difficult in various industries. This is due to the fact that unit costs may well differ depending on volume. Fourthly, this method pricing may cause consumers to turn to products which are un-competitively priced (Potter, 2004). 5. Alternative Pricing for Eco-Shark Value based pricing can be an effective pricing method for Eco-Shark. Value based pricing mainly considers the value contained in a product or service, as opposed to focusing on the cost incurred by the company in production. Essentially, the business considers how much value the product ought to offer to the customer. Moreover, having focused on the value customers gets from the product or service, then, the company is able to set a price determined by what customers are willing to pay. Simply put, unlike cost based pricing method reliance on company situation, value based method`s main focus is the customer. Value based pricing involves the setting of price relying on the customers, financial resources and the competitors offering. It also constitutes price setting to increase profitability through tapping into more value attributes of a product or a service. This pricing approach also relies heavily on advertising to communicate the products value to customers as well as motivate them to pay more the value provided. With this understanding, Eco-Shack is in a capacity to employ this pricing approach. From the case study, New Zealanders love outdoors activities such as summer vacations to remotes areas such as the beaches, rivers and mountains. Considering the portability of the Eco shack houses they are effective for these activities. Standard eco-shack also offer decent housing for off-the-grid living. They are easily movable, sited and ready to operate. Other firms in the business did not add this value to their product. In this regard, Echo Shack can base their pricing off-the-grid living value. As of regard to Urban Eco-Shack, it conveniently fits in the 10 square rules. Hence, a permit is not needed in setting this structure. This means, they are convenient in setting them any almost any available area. Therefore, Eco shack products are providing value for New Zealanders. According to Christopher and Gattorna, 2005 value based pricing exhibits the value in terms of increased stability, efficiency, happiness among other things. From this perspective, Eco shack is justifiable in setting their prices based on value. Moreover, the case study shows that the New Zealand building regulations have found that existing homes especially those built previous to year 2000 are not well insulated. This incomplete insulation has resulted to health problems, wet environments and cold. In addition, new developments on building require insulation on the buildings. The case study shows that sufficient insulating, use of bulbs with low voltage, and solar hot water not as much of power is consumed. The case study proves that both standard and urban Echo-Shack are well supplied with these devices. The urban Echo-Shack is equipped with standard wool insulation which is above minimum and solar power. Howden-Champan, 2007 expresses the same opinion that adequate insulation offer families an energy sufficient, maintain consistent temperatures, and control moistures at homes. On the other hand, has sensor light and standard wool insulation which is above minimum. Considering availability of these necessity in Echo-Shack buildings, value based pricing is acceptable. Moreover, some local authorities in the case study recommend the installation of tanks to harvest run-off water from the roof as well as the reuse of grey water which can be useful in watering plants. The two measures are essential in easy the demand on water supply and treatment (Ward et al 2010). The design employed by Echo-Shack help in reducing effects and conserving the environment. The standard echo shack facilitates water catchment through their fitted water tank under floor. Thus, value based pricing can work well with this company. Another feature that makes a standard eco shack valuable is its modular form. This allows modification of as per clients needs. As well, this structure is generally eco friendly. For environmental concerned individual would go for it due to its capacity to conserve the environment and curb further effects of climate change. In this regard, the pricing can be based on the value of the final product the client settles on. References Ateljevic, I., & Doorne, S 2002, Representing New Zealand: tourism imagery and ideology. Annals of Tourism Research, 29(3), 648-667. Athanassopoulos, A, D 2000, Customer satisfaction cues to support market segmentation and explain switching behavior, Journal of Business Research, 47(3), 191-207 Banker, R. D., & Hansen, S. C 2002, The adequacy of full-cost-based pricing heuristics. Journal of Management Accounting Research, 14(1), 33-58. Christopher, M., & Gattorna, J 2005, Supply chain cost management and value-based pricing. Industrial Marketing Management, 34(2), 115-121. Kardes, F. R. (2004). The Role of Selective Information Processing in Price-Quality Inference. Journal of Consumer Research, Volume 31, No 2 , Pages: 368–375. Ma, L. J., & Cartier, C. L (Eds.) 2003), The Chinese diaspora: Space, place, mobility, and identity. Rowman & Littlefield New Zealand Tourism 2012, Tourism New Zealand: A Statement of Intent 2012-2015. Retrieved 19/4/2013 http://www.tourismnewzealand.com/media/739824/tourism_new_zealand_statement_of_ intent_2012-2015_-_final_draft_2_.pdf Potter, D. (2004). Confronting Low-End Competition. MIT Sloan Management Review, Volume 45, No 4 , Pages: 73–79. Smagalla, D. (2004). Does Promotion Pricing Grow Future Business? MIT Sloan Management Review, Volume 45, No 4 , Pages: 9-21. Steenkamp, J. B. E., & Ter Hofstede, F 2002, International market segmentation: issues and perspectives. International Journal of Research in Marketing, 19(3), 185-213. Ward, S., Memon, F., & Butler, D 2010, Rainwater harvesting: model-based design evaluation. Read More