Case Study – Montana Mountain Biking

QUESTION

Case Study – Montana Mountain Biking

Jerry Singleton founded Montana Mountain Biking (MMB) 18 years ago. MMB offers one-week guided mountain biking expeditions based in four Montana locations. Most of MMB’s new customers hear about the company and its tours from existing customers. Many of MMB’s customers come back every year for a mountain biking expedition; about 80 percent of the riders on any given expedition are repeat customers.

Jerry is happy with this high repeat percentage, but he is worried that MMB is missing a large potential market. He has been reluctant to spend a lot of money on advertising. About 10 years ago, he spent $80,000 on a print advertising campaign that included ads in several outdoor interest and sports magazines, but the ads did not generate enough additional customers to cover the cost of the advertising. Five years ago, a marketing consultant advised Jerry that the ads had not been placed well. The magazines did not reach the serious mountain bike enthusiast, which is MMB’s true target market. After all, a casual mountain bike rider would probably not be drawn to a week-long expedition.

Another concern of Jerry’s is that more than 90 percent of MMB’s customers come from neighboring states. Jerry has always thought that MMB was not reaching the sizable market of serious mountain bike enthusiasts in California. He talked to the marketing consultant about buying an address list and sending out a promotional mailing, but producing and mailing the letters seemed too expensive. The cost of renting the list was $0.10 per name, but the printing and mailing were $4 per letter. There were 60,000 addresses on the list, and the consultant told him to expect a conversion rate of between 1 and 3 percent. At best, the mailing would yield 1800 new customers and MMB’s profit on the one-week expedition was only about $100 per customer. It looked like the conversion cost would be about $246,000 (60,000 × $4.10) to obtain a profit of $180,000 (1800 × $100). The consultant explained that it was an investment; because MMB had such a high customer retention rate, the profit from the new customers in the second or third years would exceed the one-time cost of the mailing in the first year. Jerry was not convinced.

Nine years ago, MMB launched its first Web site. It included information about the company and its tours, but Jerry did not see any need to include an expedition-booking function on the site. He did think about selling caps and jackets with the MMB logo, but that idea never was implemented. The MMB logo is well known in the mountain biking community in the upper Midwest.

The MMB Web site includes an e-mail address so that visitors to the site can send an e-mail requesting more information about the expeditions. Robin Davis, one of MMB’s expedition leaders, is an amateur photographer who has taken many photos while on the trails over the years. Last year, she had those photos digitized and put them on the MMB Web site. The number of e-mail inquiries increased dramatically within a month. Many of the inquiries were about MMB’s expeditions, but a surprising number asked for permission to use the photos, or asked if MMB had more photos like those for sale. Jerry is not quite sure what to make of the popularity of those photos. He is, after all, in the mountain bike expedition business.

MMB has had the same basic website for 9 nine years, and Jim has recognized that technology has changed and become more affordable. As such, he decided that a digital marketing program should be created to attract new clients to his Montana Mountain Biking (MMB) business. With his past success and reputation, he wants to leverage his website to not only sell his mountain biking expedition packages, but to also sell mountain biking accessories and apparel items that are branded with MMB logo. MMB profits hit a new record high last year, so Jim has the funds to invest to launch his new expanded product offerings and develop his digital marketing program.

Jim has hired you as a marketing consultant to create a report that highlights what you would propose to create an effective business presence online, and the means to process payments and sell merchandise on his website. Additionally, he is also requesting that you include the web marketing strategies you will use to generate leads for his expedition service, and the social platforms that will be used to generate traffic to the website and enhance his overall branding efforts.

This week is to review the five stages of customer loyalty and prepare a report in which you classify MMB’s customers. Estimate the percentage of MMB customers who fall into each of the five categories (Support your classification with logic and evidence from the case narrative) and then develop your recommendations that address the specific material he has hired you for. You will want to convey the importance of presenting an image consistent with MMB philosophy, principles, and identity that also meets the accessibility goals and the needs of the website visitors. In addition, an outline of the elements (such as branding, product characteristics, product use benefits, and comparison to competing products) you would include in the online communication media (Web page, e-mail, social networking, and so on) that is used to introduce new customers to Jim’s MMB business.

The following requirements must be met:

The following are examples of primary and secondary sources that may be used, and non-credible and opinion based sources that may not be used.

1. Primary sources such as government websites (United States Department of Labor – Bureau of Labor Statistics, United States Census Bureau, The World Bank), peer reviewed and scholarly journals in EBSCOhost(Grantham University Online Library) and Google Scholar.
2. Secondary and credible sources such as CNN Money, The Wall Street Journal, trade journals, and publications in EBSCOhost.

ANSWER

Montana Mountain Biking

The Five Stages of Customer Loyalty

The various stages of customer loyalty show the process by which a customer develops loyalty for an organization’s products and services (Griffin & Herres, 2002). The first stage is the awareness stage, where the customers or consumers start recognizing the product, the company’s name, and how they can get the product. At this stage, the customers know that the company and its product exist. However, the customers have not yet interacted with the company or its product. Customers at the awareness stage in the case study would be the friends and family members of people that have tried the Montana Mountain Biking (MMB) excursions and products. The second stage of loyalty development is the exploration stage. At this stage, the customers have learned more about the product and the company. They may have visited the company’s website, communicated with the company through email or telephone, and seen the product on sale.

The exploration stage is mostly about the exchange or interchange of information. The website that MMB had launched years ago is a great way of improving the exploration stage as most of the company’s customers are from the neighboring states. The third stage of the process is the familiarity stage, where the customers have already completed some transactions with the company. At the familiarity stage, the customers are fully aware of the uses of the product, its unique features, the credits and returns policies of the company, and the pricing of the product (Griffin & Herres, 2002). However, the customers are likely to be still shopping from the competitors, despite having information about the company. The customers at this stage are not many for MMB as the majority of its customers are repeat customers. The fourth stage of the loyalty development process is the commitment stage. At this stage, the customers have already experienced encounters with the company’s products, highly satisfactory encounters.

The customers are satisfied with the level of service and the product, making them repeat customers. The customers are very willing to inform others about the product and service. Additionally, as a result of the highly satisfactory experiences with the product or service, the customers develop a strong preference and loyalty towards the product or service (Aaker, 2009). The vast majority of the customers of MMB exists in this stage. The final stage of the process is the separation stage. At this stage, the conditions or attributes that made the customers loyal to the product, such as the value of the product and its ability to meet the customers’ needs, change. The preference of the customers seizes to exist.

MMB Customers

A huge portion of MMB’s customers is at the commitment stage since the company enjoys repeat purchases. The following are the estimates of the percentages of customers at each stage: awareness 15%; exploration 10%; familiarity 15%; commitment 60%; and separation 0%. The case study states that at least 80 percent of the company’s current customers are repeat riders, which means that a majority of the company’s customers have a strong preference for the company. These customers are at the commitment stage. The remaining 20 percent of the current customers have to be in the familiarity stage since they are experiencing the services of the company. However, since the current customers of the company cannot occupy only two stages, the percentages of the familiarity and commitment stage customers have to be decreased to assign proportionate percentages to all the stages.

I assigned 15% to the awareness stage because of the advertising that the company carries out in magazines and the popularity of the MMB logo in the upper Mid-West. It is highly likely that many customers are aware of the existence of the company but have not yet had an interaction with it. I assigned 10 percent to exploration because of the increasing traffic on the company’s website and the email inquiries that the company has been receiving. There are no customers assigned to the separation stage since many customers that had experienced the company and its services stuck with it. This explains why I assigned 0 percent of customers to the last stage of customer loyalty.

Creating an Effective Online Presence and Effective Web Marketing Strategies

As the marketing consultant for the company, I would recommend that the company combines advertising and content to make email marketing more effective. Since the photos and logo of MMB are popular, the inclusion of these images in the letterheads of emails and including them on the website would be great. By doing this, the company would share experiences and images with customers while providing them with an opportunity to interact with the company. Customers would easily associate the company with the website with the presence of the images. A company newsletter is a great way of marketing. I would recommend that the company includes a biking tour registration link and details in the newsletter. Also, a link to the company’s website should be provided in the newsletter (Schneider, 2011). Both the newsletter and the website should include the mission and vision statements of the company to inform customers of the objectives and strategic direction of the company.

Using newsletters with a website link would allow for increased website traffic. Sticking with print forms of advertising would mean that the company would spend a lot of money and time printing ads and not gain profits from the advertising within a short period. With email and web marketing, however, there are no printing costs and more customers would be reached (Schneider, 2002). Advertising costs would be lower, posing a lower risk for the company. MMB should not just depend on emails, as this would cripple the company’s ability to expand. I would recommend using website marketing and the affiliate website marketing strategy to increase the market reach of the company and achieve growth. An affiliate website promotes another company’s products to earn revenue through clicks to sales (Schneider, 2002). MMB only sells a single product, Mountain Biking Expeditions. Therefore, the company could use its website as an affiliate website for other related products such as apparel, bike gear, and accessories.

Conclusion

Technological development and the internet provide a huge opportunity for companies to expand their horizons and achieve wider market reach. Through website marketing and utilizing innovations to inform customers of the existence of products, MMB can reach more customers and achieve increased sales. By using website marketing and affiliate website strategies, the company would increase traffic on its website and cut down advertising costs incurred when using print media advertising. Capitalizing on online marketing would be the best move for the company.

References

Aaker, D. A. (2009). Managing brand equity. Simon and Schuster.

Griffin, J., & Herres, R. T. (2002). Customer loyalty: How to earn it, how to keep it (p. 18). San Francisco, CA: Jossey-Bass.

Schneider, G. P. (2002). New perspectives on e-commerce: Comprehensive. Course Technology.

Schneider, G. (2011). Electronic Commerce (pp. 197-199) Ohio: Cengage Learning.