Contiki Tours is an organisation that offers packaged holidays to a variety of local and international destinations. Their targeted market is limited by age. Clients must be between 18 and 35 years old. The analysis will focus on Contiki *s Australian market for international holidays. Contiki have adopted a concentrated marketing strategy in identifying market segments. This means that they have elected to focus their marketing efforts on gaining a high share of one particular segment of the market (i.e. 18-35 year olds). The advantage of such a strategy is that it allows specialisation which may produce economies in production, distribution and promotion. However, it does entail some risks in that market needs can change or competitors may enter the segment. The risks and benefits of this strategy will be examined more closely in the analysis of the marketing mix. Product In order to assess the effectiveness of Contiki’s marketing strategy it is important to understand the nature of the product offered by the organisation in terms of the benefits that it provides. Broadly, it is a service product (eg. flight, bus trip, food preparation) although elements of the product are physical (eg. food, t-shirts).
It is a specialty product given that it meets a specialised need and consumers are willing to spend quite some time searching for and evaluating. It is also purchased infrequently. It would also be considered a high involvement product due to the relatively high risks of purchase. The notion of purchase risk will be explored in more detail in an analysis of consumer behaviour. Price The nature of the product, characteristics of the target market, and consumer behaviour each have important implications for pricing. It should be noted that the price paid for the product by the consumer involves more than the nominal price (i.e. the ‘price tag’). As well as the money paid for the product, consumers endure time costs and must expend behavioural and cognitive effort. Cognitive effort may involve the customer dealing with some of the risks of purchase (Ross, 1984). There are a number of implications of this analysis for Contiki. Firstly, the organisation can manage the price that consumers pay by minimising the time, behavioural and cognitive effort that is used purchasing the product.
By decreasing the costs to the consumer, Contiki is able to increase the perceived value of their product to consumers. Over-the-phone or internet information and booking services would decrease the time taken in actually purchasing the product, and therefore the cost of the product to the consumer. Also, convenient agent locations would minimise the behavioural effort for consumers. Contiki attempt to coordinate with a wide range of travel agencies who are educated by Contiki sales staff on product attributes (the distribution channel and its implications for pricing with be covered more thoroughly in a later section of this analysis). It should be recognised, however, that many consumers derive utility from extensive cognitive involvement in the purchase process.
For example, some customers may enjoy discussing at length with consultants, their itinerary and travel options. To the extent that this occurs, friendly and knowledgeable travel consultants should be an integral part of Contiki’s product offering. In order to achieve this, promotion (i.e. personal selling) to the distribution channel should be emphasised. From this discussion it is evident that the interaction between consultant and customer is a key aspect of the value delivery sequence. Increasing perceived value involves managing the people or participants in the consumption process (Berry, 1980; Booms & Bitner, 1981).