Paradise Resort is a top-end 50-unit resort located Phu Quoc.
Rooms rent for
$200 to $2,000 per night, depending on the season and the type of
accommodations. Paradise’s clientele are well-to-do; many are famous
entertainers, sports figures, and business executives. They are accustomed to,
and demand, superior service. Paradise resides in a gorgeous mountain valley
and is situated a few hundred yards from a serene mountain lake. It prides itself
on superior accommodations; tip-top service; delicious, healthful, organic meals;
and exceptional wines. Because it has been so successful, Paradise is 90 percent
occupied except during the “shoulder seasons” (October-November, when
children are in school, and March, when Tet holidays are finished but the big
holidays like Reunification day or the summer are still months away).
Paradise’s owners want to increase revenue, but because the resort is nearly
always full and because its rates are already at the top of the scale, it cannot do
so via occupancy revenue. Thus, over the past several years it has focused on
upselling to its clientele activities such as fishing, river rafting, scuba diving, art
lessons, yoga and other exercise classes, spa services, and the like.
To increase the sales of these optional activities, Paradise prepared in-room
marketing materials to advertise their availability. Additionally, it trained all
registration personnel on techniques of casually and appropriately suggesting
such activities to guests on arrival.
The response to these promotions was only mediocre, so Paradise’s management
stepped up its promotions. The first step was to send emails to its clientele
advising them of the activities available during their stay. An automated system
produced emails personalized with names and personal data.
Unfortunately, the automated email system backfired. Immediately upon its
execution, Paradise management received numerous complaints. One long-term
customer objected that she had been coming to Paradise for 7 years and asked if
they had yet noticed that she was confined to a wheelchair. If they had noticed,
she said, why did they send her a personalized invitation for a hiking trip? The
agent of another famous client complained that the personalized email was sent
to her client and her husband, when anyone who had turned on a TV in the past
6 months knew the two of them were involved in an exceedingly acrimonious
divorce. Yet another customer complained that, indeed, he and his wife had
vacationed at Paradise 3 years ago, but he had not been there since. To his
knowledge, his wife had not been there, either, so he was puzzled as to why the
email referred to their visit last winter. He wanted to know if, indeed, his wife had
recently been to the resort, without him. Of course, Paradise had no way of
knowing about customers it had insulted who never complained.
During the time the automated email system was operational, sales of extra
activities were up 15 percent. However, the strong customer complaints
conflicted with its competitive strategy so, in spite of the extra revenue, Paradise
stopped the automated email system, sacked the vendor who had developed it,
and demoted the Paradise employee who had brokered the system. Paradise was
left with the problem of how to increase its revenue.
Your task is to develop two innovative ideas for solving Paradise’s problem. You
can think about the Potter’s models to help you develop the ideas. At the
minimum, include the following in your response:
a. Describe what problem that Paradise is facing.
b. An analysis of the five forces of the Paradise market. Make and justify any
necessary assumptions about their market.
c. A proposal of Paradise’s competitive strategy.
d. Document in a general way (like Figure 1) the process of up-selling an
activity. At the minimum, describe the main activities as in the first row of
Figure 1.
Value- R eturn
Greet Determine Rent
G enera ting Bike &
Activity Customer Needs Bike
Pay
Message "You wanna "Bikes are over "Fill out this form, "Show me the
that im plem en ts bike?" there. Help and bring it to me bike."
competitive yourself." over here when "OK, you owe
Low - cost strategy you're done." $23.50. Pay up."
rental to
students Supporting None. Physical controls Printed forms Shoebox with
business and procedures and a shoebox rental form.
process to prevent bike to store them in. Minimal credit
theft. card and cash
receipt system.
Message "Hello, Ms. Henry. "You know, I think "Let me just "How was your
that im plem en ts Wonderful to see the WonderBike scan the bike's ride?"
competitive you again. Would Supreme would number into "Here, let
strategy you like to rent be a better choice our system, and me help you. I'll
the WonderBike for you. It has . . . " then I'll adjust just scan the
4.5 that you the seat for bike's tag again
rented last time?" you." and have your
paperwork in just
a second."
"Would you like
H igh -service a beverage?"
rental to "Would you like
business me to put this on
ex ecutives at your hotel bill, or
conference would you prefer
resort to pay now?"
Supporting Customer tracking Employee training Automated Automated
business and past sales and information inventory inventory system
process activity system. system to match system to check to place bike
customer and bike out of back in inventory.
bikes, biased inventory. Prepare payment
to "up-sell" documents.
customer. Integrate with
resort's billing
system.
Figure 1
e. Develop two innovative ideas for solving the Paradise problem. For each
idea, provide:
• A brief description of the idea.
• A process diagram (like Figure 2) of the idea. You can use Microsoft Visio to
produce such diagrams. Or you can sketch on papers and attach a picture of your
diagram.
• A description of the information system needed to implement the idea.
f. Compare the advantages and disadvantages of your alternatives in part e
and recommend one of them for implementation.
Figure 2
