Instructions: To research this product in greater detail please visit the Kiwi Experience website, Tripadvisor, and YouTube. Then study the mini-case and be prepared to undertake the activity. Please ensure that when completing this activity that you employ the language and concepts of marketing and address the learning objectives 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 states that, each year, there are 2.7 million international visitors to New Zealand. The top international markets are Australia, China, UK, USA, Japan and European countries. Each year international tourists spend $9.8 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 $14.2 billion. When both international and domestic tourism are considered tourism represents 8.7% of New Zealand’s GDP and directly employs 5.7% of New Zealand’s total workforce. Clearly, the figure is substantially higher when those indirectly employed are considered – some estimate that 1 in 10 New Zealand jobs is tourism related.
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.
Kiwi Experience: 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’.
|Exhibit: 3 The drivers are the on-the-road CEO|
Kiwi Experience position, price and promote their offerings to independent and adventure seeking backpackers, although there are no age restrictions backpackers aged 18-25 from the UK, Ireland Germany, North America, Australia, China, and Korea form the majority of passengers. 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 and a sense of adventure with 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. 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.
Kiwi Experience target independent, adventure seeking, travellers of all ages, however, their primary customers are between the ages of 18-30. Kiwi Experience recognise that backpackers are ‘price sensitive’ and this segment considers value for money 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 travel booklet 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’, therefore, they 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. 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.
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 that 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.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.
Backpackers are a social group they love to talk about their experiences and show their holiday photographs to other backpackers; consequently, word-of-mouth/pass it on through social media is the main form of advertising. There are a number of key success factors; however, Kiwi Experience believes 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.
Please ensure that you employ the language and concepts of marketing and that you address the learning objectives of the e-book when completing the following activity.
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.
Task: Using the example provided demonstrate your understanding of the first-time zone and the steps a consumer may take when selecting [or not selecting] this product.
Statement: The expectations a customer forms in the first-time zone are assessed and evaluated in the second and third time zones.
Task: Discuss, relevant to this example, how expectations are formed and 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: Given this statement, demonstrate your understanding of the total product relevant to the example.
Statement: The components of the total product are goods, services, ideas, experiences, people, and places.
Task: Employ this example to demonstrate your understanding of the product components. Then detail how a marketing practitioner may employ the 6 product components to achieve a design and develop a product.
Statement: The circle of satisfaction outlines the outcomes of the exchange between the organisation and the customer.
Task: Employ this example to demonstrate your understanding of the circle of satisfaction and the effects on the financial objectives of the organisation.
Statement: There are a number of product considerations that would be of importance to the marketing manager of this business.
Task: Make a list of important [relevant] product considerations and then discuss the implications of each consideration.