The biggest ski resort in Colorado must figure out how to choose customer segments to concentrate its marketing efforts. Making segmentation work is dependent on reordering both pricing and "service packages."
Jeffrey Rayport; Don Bramley; Mary Callahan; Hilary Nicholas
Harvard Business Review (395019-PDF-ENG)
July 21, 1994
Case questions answered:
Please determine a cost-effective yet attractive pricing strategy that will entice new customers as well as retain the old customers for Steamboat Ski & Resort Corp.
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Case answers for Steamboat Ski & Resort Corp.
Executive Summary – Steamboat Ski & Resort Corp.
In order to prosper in a competitive business environment, a company must truly understand its market. This knowledge-based approach allows a company to adapt to industry fluctuations due to changing preferences and market trends. The ski industry is not immune to withstanding fluctuations within the market. As Vice President of Marketing for Steamboat Ski & Resort Corp. (SSRC), it is our responsibility to develop and implement marketing strategies that are aligned with the company’s mission statement of being ‘the best ski resort in the world’. Recent statistics indicate that our share of the Colorado skier market has decreased by 3%, and only 4% of our current visitors are international.
It is quite evident that the task at hand is to strategically position SSRC in the competitive market place as a resort which not only offers a great skiing experience but also promotes a friendly, family-oriented environment with international appeal.
The methods used for this objective are achieved by aligning the resort’s strategic resources (i.e. mountain range, ‘champagne powder’, ski school) with a balanced marketing mix that complements our segment profiles and the Steamboat Ski & Resort Corp.’s overall quality standards.
In creating a structured analytical framework, several perceptual maps and statistics were assessed. This process allowed us to determine that we would use pricing strategies as a differentiator. However, we would not be competing solely on price.
Instead, we would complement this strategy by leveraging our existing strengths such as our established reputation and customer base.
With this in mind, we developed four strategies that we could enact to resolve our positioning problem: no change, increase multi-day discount, implementing seasonal variance, and adopting a teen program.
Each alternative was assessed with a long-term customer retention focus in mind and consideration of variables such as timeliness to high costs.
The alternative that proved to be the most desirable was a combination of increasing the multi-day discount and the implementation of the teen program.
The reason behind this choice is its appeal to an international audience while enhancing and promoting the ‘family atmosphere’ desired by Steamboat Ski & Resort Corp. while simultaneously remaining competitively priced.
The analysis that follows proves that the execution and implementation of the decision would be best achieved through stages. As well, an increase in distribution (i.e. lift ticket availability), modern accommodations, and development of infrastructure (shuttle bus) will prove beneficial to SSRS in the long run and this will allow us to reach our goal of becoming the ‘best ski resort in the world’.
As Vice President of Marketing of Steamboat Ski & Resort Corp. in 1992, we must decide between four main pricing alternatives to best resolve the problem of SSRC’s positioning in the competitive marketplace.
By using its strategic resources (location, snowfall conditions, customer base, and established reputation), we seek to find the marketing mix (in particular pricing decision and distribution) that best matches our segments and our overall strategy of quality.
We have identified, in order of priority, the following issues to be pertinent to this case. SSRC currently lacks a truly differentiated position relative to its competitors (see Appendix A & B).
Steamboat Ski & Resort Corp. has not established a strategy of cost leadership, differentiation, or focus and this places them in a weak position of being ‘stuck in the middle’.
Firstly, SSRC has to re-evaluate its strategic segmentation, target, and positioning. Secondly, its current customer base is family-oriented whereas research shows that the majority of SSRC’s visitors are individuals without children (see Appendix C).
Thirdly, the caliber of services that SSRC offers is not adequate nor lives up to the mission statement of its parent company to be considered the ‘number one resort in the ski industry’.
This can be further split into tangible and intangible products and services, such as lodging, packages, reservation services, and customer services.
Elements of the marketing mix with particular emphasis on pricing need to be aligned with the solution to the primary problem highlighted in the above issues, namely strategic positioning.
Our SWOT analysis of Steamboat Ski & Resort Corp. will clarify where we can differentiate ourselves by building upon our strengths and taking advantage of opportunities. Most of our issues lay in our…