Case 8 – Alternative Solutions to problems/issues

Section 3 is the only part that needs to be done:
Alternative Solutions to Problems/Issues
This section of the report identifies 3 or more viable alternatives the company could pursue to solve the problem or address the issues. Do nothing is not normally an alternative.
A. List of 3 or More
B. Pros and Cons of Each Alternative

ANSWER

Case 8 – Alternative Solutions to Problems/Issues

Repositioning Park to 100-Site Destination and Implementing a Marketing Plan

Mark has an option of repositioning park to 100-site destination to increase occupancy rates to at least 65%. This is done while simultaneously implementing a marketing plan to increase occupancy. This expansion will increase the number of people that can be accommodated in the facility. An increase in the number of people accommodated will increase occupancy rate and revenue simultaneously. Mark will need an elaborate marketing plan to accompany this expansion drive. Customers will need information on the new capacity of the facility to ensure an increase in occupancy rates (Labanauskaitė et al., 2020).

Pros: An increase in the rate of occupancy due to accommodation expansion will increase profits from the facility. Increasing capacity will increase the park’s position among its peer and competitors.

Cons: the process of repositioning the park will be tedious and highly involving. The risk involved in the new venture will be high for Mark because a slight mismanagement may lead to high losses and possible business collapse.

Stick to The Current Model but Add Effective Promotional Campaign to Increase Occupancy

Mark can also consider sticking to the current business model while increasing promotional budget to increase occupancy. Last year’s records indicate that Mark spent $9,000 in advertising. This led to an occupancy rate of 45% and gross profit of 140,958.  Increasing the amount spent on advertising and promotion by 34% to $12,000 will have a positive effect on occupancy rate of the facility. Going by current statistics, the occupancy rate can possibly increase to 60% if such a move is implemented. This is applicable if promotion and occupancy rate are directly proportional. The low occupancy rates can be attributed to lake of awareness of the business. It can also be as a result of weak branding among competitors. Therefore, Mark should consider increasing his promotion and advertising budget to increase potential customer awareness (Arromba et al., 2020).

Pros: Sticking to the current model will ensure that Mark does not take more loans that will burden him with repayment. Increasing the cost of promotion will not significantly affect Mark’s budget because it is marginal.

Cons: Promotion does not physically change the park hence customers do not experience any improvement. The feeling of same environment may lead to same poor results.

Adopt A High Amenity Park by Increasing Amenities

Currently Mark’s RV Park offers few amenities and charges a flat rate of $25 per night. Mark has an option of adding to his amenity list to offer customers more services. Mark may consider adding amenities like Wi-Fi to his customers. This will mean that Mar will increase the prices charged for the park to cater for the cost of investment. The cost of increasing amenities like Wi-Fi for instance will cost mark $60,000. For instance, by adding some amenities and positioning the park close to KOA-Safari position the business can register an increase in occupancy to 55% at an investment cost of $744,500.

Pros: An increase in amenities will attract more customers because they can enjoy the benefits that they get from other parks in Mark’s park. This will increase the competitive advantage of Mark’s park and increase its market share. Customer retention will increase with an increase in new attractive amenities.

Cons: The cost of increasing the amenities will be passed on to the customers hence increasing the cost of services at the park. This will lock out customers who can only afford low cost services (Armenski et al., 2018).

References

Armenski, T., Dwyer, L., & Pavluković, V. (2018). Destination competitiveness: Public and        private sector tourism management in Serbia. Journal of travel research, 57(3), 384-398.

Arromba, I. F., Martin, P. S., Ordoñez, R. C., Anholon, R., Rampasso, I. S., Santa-Eulalia, L. A.,             … & Quelhas, O. L. G. (2020). Industry 4.0 in the product development process: benefits,         difficulties and its impact in marketing strategies and operations. Journal of Business &          Industrial Marketing.

Labanauskaitė, D., Fiore, M., & Stašys, R. (2020). Use of E-marketing tools as communication    management in the tourism industry. Tourism Management Perspectives, 34, 100652.