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Monday, July 11, 2011

Case Analysis: Victoria Court Sales Promotion Plan


VICTORIA COURT SALES PROMOTION PLAN


SUMMARY OF FACTS
Victoria Court group of drive-in hotels is a unique business in the hospitality industry that caters to couples, individuals, groups and families in need of a private place for the purpose of having a good rest, private conversation, or clandestine romance.
It also offers the following amenities: KTV, cinema, bar, leisure and restaurant business.
Victoria Court’s vision for the next five years is to be the leader in terms of market share in:[1]
·       Total number of guests
·       Type of rooms
·       Sales within the Pasig Area
Due to an increase in competition, Victoria Court management decided to focus on Product Development as a strategy instead of competing head-on in lowering prices. Product development includes upgrading facilities and introducing themed motifs to target a different segment of the market.
Industry Situation:
The entire industry jumped by 136% from 2003 to 2005. The total number of guests in the Pasig area in 2005 neared 3,500 per day of which 15% (525 guests) is the combined shares of the Victoria court hotels in Pasig which is smaller than those of the sales leaders Dahlia and Daisy.
  
Internal Data shows the following influx of guests:
Shift
Time
Total Number of Guests

Shift 1
Midnight to 7am
1,440

Shift 2
8am to 3pm
1,420
Lowest
Shift 3
4pm to 11pm
2,800
Highest

Data also shows the following peak/off-peak months:
·       January and February -  peak season
·       March or April – off peak due to holy week
Competitors
Competitor Type
Type of Business
Feature
Target Customers
Direct
Walk-up and Drive-in hotels
Equipped with Taxi rooms or parking area
Free-traveling guests
Direct
Drive-in hotels
Suite rooms
Free-traveling guests
Direct
3-star and 5-star hotels

Party groups
Indirect
KTV bars, massage parlors, parks, condotels and high class bars with VIP rooms

Party groups

Target Market
·       Couples (Married or not, Same sex or not)
·       Not below 18 years old
·       Travelers or Foreign
·       Car or vehicle riding, walk-in, and pedicab riding couples
·       Families

Victoria Court Product Offerings:
Room Type
Features
Target Market
Super Suites
Unique Interior D├ęcor and amenities like a spa and Jacuzzi. It is equipped with a sound system for videoke and other purpose.
Parties and company functions
Mini Suite
Themed rooms but NO sauna.
Couples
De Luxe
Equipped with garage, ACU, cable TV, karaoke and mini ref with drinks
Middle market
Standard
Affordably priced accommodations
Taxi riding guests and couples

Room Rates:
Room Type
Hours
Rate
Overtime
12 Hours
24 Hours
Super de luxe
3
1,075
355
1,785
2,685
Suite





Mini
3
995
N/A
N/A
N/A
Regular
4
1,595
525
2,645
3,190
Super 1
5
2,830
705
3,885
4,245
Super 2
5
3,395
845
4,665
5,095
De luxe





Mabuhay
3
435
N/A
N/A
N/A
Regular
3
895
295
1,485
2,235
Standard





Mabuhay
2
215
N/A
N/A
N/A
Regular
3
555
195
945
1,385

Food and Beverage:
Victoria court offers reasonable priced Food and Beverage and room service is available 24 hours with a 30 minutes serving time guarantee.
Income Statement
Revenues
2005
2004
Room Rentals
46,964,022
44,263,458
Kitchen Sales
8,699,942
9,672,286
Total Revenue
55,663,964
53,935,744
Cost of Kitchen Sales
3,465,810
4,578,135
Operating Expenses


Salaries, Wages, and Allowance
18,062,740
16,202,252
Employee Benefits
7,296,765
5,575,701
Depreciation
4,429,855
4,201,370
Repairs and Maintenance
1,030,880
1,057,942
Laundry
1,802,096
1,763,554
Guest Room Supplies
685,581
925,937
Commissions
128,190
224,448
Housekeeping Supplies
252,015
230,641
Kitchen Supplies
134,169
178,566
Kitchen Utensils, Silverware
43,347
139,810
Linen
501,245
485,835
Cost of Sales and Operating Expenses
37,832,693
35,564,191
Selling and Administrative Expenses


Power, Light and Water
8,132,846
7,876,330
Communications
2,151,60500
1,690,635
Advertising and Promotions
471,915
552,918
Personnel Training and Development

964,846
Transportation and Travel
200,665
360,826
Taxes and Licenses
1,455,147
1,370,625
Professional Fees
773,740
180,000
Donations and Contributions
435,700
802,565
Stationery and Office Supplies
216,300
164,028
Miscellaneous
320,652
359,181
Total Selling and Administrative Expenses
14,158,570
14,321,954
Total Expenses
51,991,263
49,886,145
Net Income
3,672,701
4,049,599



PROBLEM STATEMENT
How can Victoria court increase its sales despite the increase in competition in the Pasig area?
PRIMARY TARGET
The primary target market of Victoria Court is walk-in, free-travelling guests and couples that seek a place with privacy for the purpose of rest and recreation.
SALES PROMOTION OBJECTIVE
To increase the revenues coming from sales promos by 30% by the end of 2006.[2]
SALES PROMO OPTIONS
Daytime Discount
Promo Idea: 20% off on standard, de luxe and suites
Promo Duration: Monday – Sunday, from 8am – 3pm (Shift 2)
Target market: Free-travelling guests, night-shift workers (i.e. call center agents)
Rationale: Since there is an increase of establishments in the area and night-shift workers, introducing discounts in the slow-moving timeslot would significantly increase walk-in guests. Primary objective is to provide a venue for sleep.


Mid Shift Madness Promo
Promo Idea: 10% off on standard and de luxe rooms with one Free Meal
Promo Duration: Monday – Sunday, from midnight to 7am (Shift 1)
Target market: mid-shift workers
Rationale: Since call center operations are shifting in nature, this will target mid-shift workers whose work ends around midnight to 4am and who lives far away from their workplace. This will mostly target women who feel unsafe going home at an ungodly hour.

Free Meals for Two 
Promo Idea: Free breakfast and lunch for two for longer staying clients (rooms: Suites and de luxe)
Promo Duration: Monday – Sunday, exclusively for 24 hours stay-in customers
Target Market: travelling guests
Rationale: Free meals will be offered for Suites and De Luxe customers for a 24-hour stay in Victoria Court. This is not available for standard rooms since this will primarily target value-for-money conscious guests. This will also avoid filling up all the standard rooms during peak hours in order to maximize room usage.

Holy Week Special Pricing
Promo Idea: 60% off on Suites, De Luxe and Standard rooms for off-peak season
Promo Duration: Holy Week
Target Market: In-transit travelers
Rationale: Since metro manila is a gateway from all travelers coming from the provinces and international flights, the Holy Week Special Pricing will target those who are in transit to either the province or going abroad. The aggressive pricing will help encourage travelers to check-in instead of the pricy hotels near airports, bus terminals and sea ports.

 Succeeding Visits Rebates
Promo Idea: 5% off on second visit, 10% off on third visit, and 15% off on 4th visit within one month in all rooms
Promo Duration: May - December
Target: Couples, families and groups.
Rationale: This will generate a database that can be used to send promotional items and ads. The concept is to generate repeat “purchase” in a month period. This can be done during lean months.

Peak Season Price Reductions (PSPR)
Promo Idea: 15-20% off limited to 40% of entire room capacity (suites, de luxe and standard rooms)
Promo Duration: January – February
Target: Couples
Rationale: Since this is the peak season where guests are guaranteed to check-in, a limited-room discounts structure will be implemented to acquire more bookings versus the competition. 40% of the hotel’s capacity will be offered for discounts, first come first serve basis with a non-refundable down payment.

RECOMMENDATIONS
In order to achieve the business objective of increasing revenues, the sales promo that would most likely help achieve it are the following:
·       Daytime Discounts
·       Mid-shift Madness Promo
·       Succeeding Visits Rebates
The reason behind the recommended promos is that it can run during the lean season as well as target the insufficient usage of rooms during off-peak timeslots. Since there is already an indicator that the 4pm to 11pm shift has a steady flow of customers, targeting the slow-moving timeslots will definitely add to the overall revenue.

PROGRAMS
1.     Daytime Discount Mechanics
a.      20% off on standard, de luxe and suites (mini and mabuhay rooms excluded)
b.     Discount applies between 8am to 3pm
2.     Mid-Shift Madness Promo Mechanics
a.      10% off on standard and de luxe rooms with one free meal.
b.     Promo applies between midnight to 7am.
c.      Can be advertised through call center offices
3.     Succeeding Visits Rebates
a.      5% off on second visit, 10% off on third visit, 15% off on 4th visit
b.     Promo applies between 4pm to 11pm
c.      Guests must register name, contact number and email for verification (can be used for data base in the future)
d.     Guests must redeem the promo offer in one month.
e.      Promo expires after a month.
Operational Plan
KRA/KPI and Operational Objectives
Key Result Area
Key Performance Indicator
Operational Objectives
Revenue
·        Total number of checked-in guests during the indicated time frame.
·        Percentage of booked rooms during the promo period
·        To increase checked-in guests by 100% from May to December 2006.
·        To increase room usage by 100% maximizing short-time checked-ins by last quarter of  2006.


Action Plan
To Dos
Time Frame
Budget (PHP)
Person Responsible
Feedback Mechanism
Staff Briefing and Training for upcoming promo
March to April
25,000
HR
Performance Reviews
Marketing Commun cation Materials Production
Feb to April
100,000
Marketing and Purchasing
Materials produced on time
Merchandising Materials Production (give aways, calendars, premium items)
Feb to April
100,000
Marketing and Purchasing
Materials produced on time
Pre-Announcement of promo
April
150,000
Marketing
Announcement in radio and print
Full blown announcement
May to December

Marketing and Admin
All marketing communication materials installed and distributed (banners, flyers)
Promo Period
May to December

Marketing
Monthly revenue checks
Monitoring
Monthly (May to December)

Marketing and executive team
Revenue growth or decline rate
Budget is based on 2005’s Advertising and Promotion budget not exceeding the amount of Php 471,915.
Gantt chart:

Jan
Feb
March
April
May
June
July
August
Sept
Oct
Nov
Dec
Staff Briefing and Training for upcoming promo












Marketing Commun cation Materials Production












Merchandising Materials Production












Pre-Announcement of promo












Full blown announcement












Promo Period












Monitoring
















[1] Assumption: The analysis and plan will assume the year indicated in the case (2006)
[2] Assumption: The target increase is subjective since the case did not specify any revenue targets for 2006.
[3] Since the case didn’t  mention if May to December is peak/off-peak season, this will be classified as lean season. 

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