To doread case study, look over the recommended marketing strategy, and then come up with a pro forma financial implications for recommend strategy.
Lake Pukati Lodge
Nestled in the high country of New Zealand’s South Island is a getaway adventure playground unashamedly aimed at the world’s very wealthy. Presidents, movie stars, and other such globe-trotters are the prime targets of this fledgling tourism business developed by Lake Pukati Lodge. The lodge offers this exclusive niche the opportunity of a secluded holiday in a little-known paradise. Guests, commonly under public scrutiny in their everyday lives, can escape such pressures at a hunting retreat designed specifically with their needs in mind.
A chance meeting between a New Zealand Department of Conservation investigator and the son of the former Indonesian president marked the beginning of this specialty tourist operation. Recognizing that “filthy rich” public figures are constantly surrounded by security and seldom have the luxury of going anywhere incognito, the New Zealander, Peter Slater, suggested that he and his new friend purchase a highcountry station and hunting-guide company that was for sale. Slater believed that the facilities, and their secluded and peaceful environment, would make an ideal holiday haven for this elite group. His Indonesian partner concurred.
Slater, who was by now the company’s managing director, developed a carefully tailored package of goods and services for the property. Architecturally designed accommodations, including a game trophy room and eight guest rooms, were constructed using high-quality South Island furniture and fittings to create the ambiance necessary to attract and satisfy the demands of their special clientele.
Although New Zealand has an international reputation for being sparsely populated and green, Slater knew that rich travelers frequently complained that local accommodations were below overseas standards. Because the price (NZ$700 a night) was not a significant variable for this target market, sumptuous guest facilities were built. These were designed to be twice the normal size of most hotel rooms, with doubleglazed windows that revealed breathtaking views. Ten full-time staff and two seasonal guides were recruited to ensure that visitors received superior customized service, in keeping with the restrained opulence of the lodge.
The 28,000 hectares of original farmland that make up the retreat and back onto the South Island’s Mount Cook National Park were converted into a big-game reserve. All merino sheep on the land were sold, and deer, elk, chamois, and wapiti were brought in and released. This was a carefully considered plan. Slater, the former conservationist, believed that financially and environmentally this was the correct decision. Not only do tourists, each staying for one week and taking part in safari shooting, inject as much cash into the business as the station’s annual wool clip used to fetch, but the game does less harm to the environment than sheep. Cattle, however, once part of the original station, were left to graze on lower river-flat areas.
For those high-flying customers seeking less bloodthirsty leisure activities, Lake Pukati Lodge developed photographic “safaris” and other product-line extensions. Horse-trekking, golfing on a nearby rural course (with no need for hordes of security forces), helicopter trips around nearby Lake Tekapo, nature walks, and other such activities formed part of the exclusive package.
While still in the early stages of operation, this retreat has already attracted a steady stream of visitors. To date, the manager has relied solely on positive word-of-mouth, publicity, and public relations to draw in new customers. Given the social and business circles in which his potential target market moves, Slater considers these to be the most appropriate forms of marketing communication. The only real concern for Lake Pukati Lodge has been the criticism of at least one New Zealand lobby group that the company is yet another example of local land passing into “foreign” hands, and that New Zealanders are prevented from using the retreat and excluded from its financial returns. However, this unwelcome attention has been fairly short-lived.
Final overall marketing strategy recommended:
Raise price 3x from before, shift target market up to Mid-tier millionaires and ultra-HNWI, offer more luxurious services with discount promotions. Specifically, here are some changes we will make:
Shift target market up to Mid-tier millionaires and above, based on the fact that the current price is NZ$700 per night, Lake Pakati Lodge is focusing on millionaires and above, which is a group far bigger than globe-trotters like presidents and movie stars. As Exhibit 1 shows, based on the fact that globe-trotters most likely are mid-tier millionaires and above, we suggest shifting the target market. We do not suggest to shift target market to ultra-HNWI, however, since they only consist of 1% of all HNWI, and target towards mid-tier millionaires and ultra-HNWI would increase the target market volume to around 2 million people, which is 10 times more than before.
Diversify the luxurious services in cuisine, wellness, and special events to satisfy various customer needs. Currently, Lake Pakati Lodge offers activities related to the South Island. Due to the fact that its target customers are globe-trotters with various backgrounds, some of them may not feel excited about outdoor activities or might have other needs. Therefore, we suggest expanding the service line by offering delicious cooking, wellness services, and special events planning.
Raise price 3x from before to fund better services. Based on the fact that the price was not a significant variable for this target market, we suggest raising the price by 3x to improve service level. Meanwhile, offer discounts on low seasons to fill the empty rooms.
Set up programs to support research, education, and outreach aimed at increasing the knowledge of and appreciation for the natural and cultural heritage of New Zealand. Purchase local products to improve public image. Because Lake Pakati Lodge is facing criticism from at least one New Zealand lobby group that the company is yet another example of local land passing into “foreign” hands, we need to support the local education and economy to gain a better public reputation.
Utilize famous people and modern social media to build a positive public image. Facing criticism from local lobby groups, Lake Pakati Lodge will not only want to set up the programs but also want to publicize them. Besides the original promotion channels, we suggest to utilize modern social media like Instagram and TikTok, invite New Zealand influencers, to tell the public that Lake Pakati Lodge supports local
What are the pro forma financial implications of what you recommend?