Activity: backpacking New Zealand
To better understand this product and the COMP factors, it is suggested that you visit the Kiwi Experience website, Tripadvisor, and YouTube. Then have a quick read of the article, then, read and unpack the statements and tasks at the end of the article, then, re-read the article in greater depth and undertake the tasks. If you are undertaking this activity as part of an assessment it is critical that you employ the language and concepts of marketing. The activity is designed to consolidate your knowledge of section 2 of the e-book.
Background: New Zealand is a country of pristine natural beauty, friendly people, and a pleasant climate and is therefore on the ‘bucket list’ of many tourists.
Within the tourism sector there are a number of market segments; one segment is ‘backpackers’.
Tourism is important to New Zealand’s economy. A recent government report [May 2018] states that, in 2017 there were 3.97 million international visitors to New Zealand [an increase of 9%]. The top international markets are Australia, China, USA, UK, Japan and European countries. Each year international tourists spend 14.5 billion dollars; this represents 16% of New Zealand’s total export earnings. Although international tourism is important – domestic tourism is also important. In fact, domestic tourists spend considerably more at $21.4 billion. When both international and domestic tourism are combined tourism represents 10.5% of New Zealand’s GDP and directly employs 230,793 people or 8.4% of New Zealand’s total workforce. Clearly, the figure is substantially higher when those indirectly employed are considered – some estimate that more than 1 in 10 New Zealand jobs is tourism related.
HINT: The backpacker segment is often considered as exclusively ‘young and single’ – however, this is not entirely accurate – the VALS segmentation typology, in the e-book, may provide an insight [i.e., values, attitudes, and lifestyles].
Backpackers are attracted by New Zealand’s pristine beauty and by the range of specialist service providers of outdoor adventure activities. The backpacker segment is an important market segment. It is growing at an annual rate of 8%, a rate that is greater than other segments.
One major player in the New Zealand tourism industry is Tourism Holdings Limited [THL] this company is listed on the New Zealand stock exchange and has a broad portfolio of products. One product within their portfolio is the tour bus operator ‘Kiwi Experience’.
Kiwi Experience position, price and promote their offerings to independent and adventure seeking backpackers, although there are no age restrictions, the majority of the customers are backpackers aged 18-30 from the UK, Ireland Germany, North America, Australia, China, and Korea. Kiwi Experience has been established for over 25 years. Initially, founded by three ‘Kiwis’, who, as experienced backpackers, saw a gap in the market for a coach operator that combined the scenic beauty of New Zealand, a sense of adventure, and a ‘hop-on hop-off’ option? Hop-on hop-off means that backpackers have the flexibility to undertake the tour in one continuous journey [like traditional tour operators], or, hop-on and off the bus and break the tour into a series of experiences – hence the ‘hop-on hop-off’ description. This option allows backpackers to customise their tour and co-produce value. Additionally, Kiwi Experience recognise that different backpackers have different time constraints and therefore offer around 25 different pass options [products]. Each pass option is promoted with its own unique product name and with a sense of mischief the name is often a New Zealand slang expression [e.g., the whole kit and caboodle, the kitchen sink, sheep dog, fush N chups, the long drop, jandal – etc]. Prices range from $109NZ to $1845NZ for the ‘full kit and caboodle’. Each pass is valid for 12 months.
Strategically, Kiwi Experience recognise that backpackers are ‘price sensitive’ and this segment considers value in the experience rather than augmented luxuries. To enable them to meet the demands of ‘price sensitive’ backpackers Kiwi Experience keep operating costs to a minimum. One way is to have one driver/guide [DG] per bus. The DG is critical to the success of Kiwi Experience and drivers are chosen for their driving skills, outgoing personalities and their love of New Zealand. Driving a tour bus can be stressful, therefore, the DG selection process and training process is rigorous. During the selection and training process the trainee DG is often assigned to a more experienced DG this allows them to observe the skills of a more experienced DG. Trainee DGs are regularly asked to take over a bus tour to enable a more experienced DG to assess their abilities and help them improve. The Kiwi Experience literature states that DGs are inducted into the company through a month-long training program “so their passion, commentary, insights and advice ensure that you have the trip of a lifetime.”
Kiwi Experience describe their DGs as an on road ‘CEO’ [chief executive officer], therefore, DGs are a major part of the product and are often challenged to assist backpackers to get out of the comfort zone, join in the fun, and interact with other like-minded adventurers. The DGs also span the boundary between the Kiwi Experience management and the backpackers – they must represent the organisation, however, often they have to represent the backpackers. DGs need to be on the lookout for dissatisfied passengers and where appropriate undertake recovery strategies.
As one driver with many years experience stated ‘Sure there are moments – I love my job – every day is different – how could being a middle level manager working in an office compare with this?’
Additionally, there are many 3rd party service providers that provide services independent to Kiwi Experience and the DGs must span the boundary between these channel partners and the backpackers on the tour.
Generally, backpackers desire to become immersed in a local environment and culture, however, backpackers also seek-out other backpackers. Having a busload of like-minded target backpackers ensures that other backpackers are part of the total product. And whilst other backpackers may improve the quality of the trip, there are times when backpacker misbehaviour may have a negative impact on the experience of other passengers. On occasions, the DGs must also act as a boundary spanner between one passenger and another and when a situation cannot be resolved the DG has the authority to evict the misbehaving passenger from the bus.
It is also important for back-stage staff to be on the lookout for potential problems and to try to avoid unsuitable passengers [e.g., perhaps people travelling with children or people without the adventurous spirit may be better with one of Tourist Holding Limited’s self-drive products]. With 25 years’ experience as a tour bus operator a read through the frequently asked questions and the terms and conditions helps to provide passengers with realistic expectations and expected behaviours. Kiwi Experience believes that interaction between back-stage staff and customers is an important part of the customer’s overall evaluation of satisfaction; therefore, internal marketing is given a priority. Internal marketing programs are implemented to ensure that the staff are aware of and adopt the organisation’s customer centric philosophy. As part of their professional development back-stage staff are encouraged to undertake the tours to enable them to better understand the needs of the customers, provide quality service, and communicate the product value proposition more effectively.
Backpackers are a social group they love to talk about their experiences and show their holiday photographs to other backpackers; consequently, word-of-mouth [or eWOM as it is sometimes referred to] or pass it on through social media is the main form of promotion and an important source of information during the buyer decision process.
There are a number of key success factors; however, Kiwi Experience believe that a focus on customer satisfaction is the primary factor. Interestingly, since the operation began management have surveyed the satisfaction levels of each customer; this they believe has continuously improved the quality of the total product and maintained a competitive advantage.
Keep in mind: The product that Kiwi Experience offer to their customers is referred to as a ‘total product’
themarketingconcept [e-book] defines the total product as: the totality of what an organisation delivers to the customer – what is promised, therefore, what is expected, what is delivered, and what are the total costs to the customer.
If the Kiwi Experience product is one component of a New Zealand experience and there are a number of other total products then these will be mentally bundled to form an aggregate product.
themarketingconcept [e-book] defines the aggregate product as: a bundle of distinct and distinguishable businesses that may appear to be disparate and independent; however, on another level success is dependent on the cumulative evaluation of the customer and the collective evaluations of all customers.
Ministry of Business, Innovation and Employment: Key Tourism Statistics (May, 2018) available at http://www.mbie.govt.nz [June 2018]
Official Tourism Holdings website http://www.thlonline.com/ and Kiwi Experience website https://www.kiwiexperience.com/
Learning objectives: To ensure that students study and understand the marketing concept, a marketing philosophy, the buyer decision process, the total product, and the circle of satisfaction.
Please ensure that you employ the language and concepts of marketing and that you address the learning objectives when completing the following tasks.
Statement: The buyer decision process varies according to the customer, the organisation, the market, and the product. The buyer decision process has 3-time zones; the first-time zone is purchase behaviour. It is often overlooked that after selecting a product a customer will form expectations which will be assessed and evaluated in the second and third time zones.
Task 1: Using the Kiwi Experience product demonstrate your understanding of the first-time zone and the steps a consumer may take when selecting [or not selecting] this product. Ensure you also discuss how expectations influence customer satisfaction.
Statement: The total product is the totality of what an organisation delivers to the customer – what is promised, therefore, what is expected, what is delivered, and what are the total costs to the customer.
Task 2: Given this statement, holistically, demonstrate your understanding of the total product relevant to the example.
Statement: There are a number of product considerations that would be of importance to the marketing manager of this business.
Task 3: Identify the most important [relevant] product considerations [select 6 of the most important] and then discuss the implications, from the perspective of a marketing practitioner, each selected product consideration.
Statement: There are 6 product components in the total product [goods, services, ideas, experiences, people, and places].
Task 4: Identify the product components within the Kiwi Experience product; rank them by importance; justify your decisions. [Note it is expected that ranking will vary between students].