Examination of Marketing Strategies and Price Costs of Skydiving Services

Introduction

Skydiving is fun for people who seeks adventure and thrilling experience in sports. We the owners of the Skydiving Services Australia Ltd., after gaining reputation in providing this kind of sport in Australia, have noticed that there is also an emerging demand in other parts of the world. We desire to expand to cater the growing passion of sports enthusiasts and we have chosen Netherlands to be the place for our branch location.

However, setting up a business in skydiving far from Australia, at first we need to look at the business friendly environment of the host country, the political, legal, socio-economic standing, cultural acceptance of the business we plan to establish, the influx of tourists to the country linking to our skydive location. Netherlands signed the treaty without double taxation.(Companyformationnetherlands.com, 2019)

Moreover, The Netherlands has a high level of economic freedom. In 2017, it placed the 17th largest economy in the world, ranking as the 10th in annual economic growth (GDP). Netherlands have thrive in welcoming more and more thrill-seekers and adrenaline-enthusiasts to skydive in their many beautiful drop zones. Many of whom are single, couples, thrill-seeking tourists that are willing to spend and explore the many picturesque landscapes, food, culture and other tourist attractions in Netherlands.

Most skydiving centres located in Netherlands, are private companies with special affiliations with small privately owned charter planes. (Trendytourism.com, 2019),

However, as far as any business is concern, there are opportunities and threats that is integrated into it. The opportunities point of view is having employment to local residents, continued expansion for online sales, acquisition of additional rounds of capital while the threats are: changes in regulations can impact the business, products are controlled by major competitors and insurance costs are continually increasing. Although there have been competitors already in this kind of business in Netherlands like Skydive Texel B.V. and Skydive ENPC.

Value Analysis

It is safe to say that it is a country that can sustain any foreign investment. As of 2016, Domestic tourism had the highest expenditure with nearly 45.5 million euros spent. Many of whom are single, thrill-seeking demographics that are willing to spend and explore the many picturesque landscapes, food, culture and other tourist attractions in Netherlands. (Kamer, 2019) Whether its team building, employee bonuses, corporate events or just a group of friends celebrating an achievement, we deliver tailor-made packages to suit your needs. There are excellent prices for parties, large or small, including a variety of photo and video packages to help capture the moment and remember your skydive team. We can even provide a dedicated personal host for you on the day.

With the above number of competitors already operating skydiving services in the Netherlands, we has to face a tough competition. But despite this, we take this as a challenge, and instead, these are the service quality and price that we enhance shall be the focal point why we establish the same kind of business. Moreover, based on the number of skydiving services in the Netherlands, this shows that there are lots of tourists who are skydiving enthusiasts. Therefore, we are not deterred by the competition in the market. Although skydiving sport is risky, the tendency of the customers is to avoid risk when it comes to sport, as they don’t want to take risk. However, the only way to encourage them to this kind of sport is to launch a media advertisement that skydiving is not what everybody thought to be risky. In this case, they would make a try accordingly.

Market Segmentation and Targeting

Market segmentation is the process of dividing a market of potential customers based on various characteristics into groups or segments. Consumers who respond to marketing strategies in a similar way and share traits such as similar interests, needs, or locations are the segments created (McDonald, 2012). Nowadays, more and more tourists from different ages, regardless of gender, participate in adventure travel programs. In recent years, to satisfy the needs of their discovery, many guests have set foot in the cold Antarctic region, some tourists have spent millions of US dollars traveling the universe. Adventure tourists often have high affordability and long-term travel. The object of adventure tourism - adventure is usually the tourists with economic conditions, long stay, high spending. Therefore, in addition to the number of tourists or local people interested in skydive that are growing steadily over the years, this type will bring positive economic efficiency.

Skydive's target audience in the Netherlands market will be adventurer tourists. Extreme sports is a sport that is not for everyone. Skydiving requires good health, strong spirits and not afraid to take risks. It builds the strength of the upper arm to control the parachute as well as the large muscle groups for landing in the lower body. Lugging skydiving equipment around also burns muscles of energy and tones (Revolution, 2014). Therefore, when Skydive enters the Netherlands market, the target customers will be those who love extreme sports. Besides, another object the company targets is couples. Couples will often look for activities that can engage with each other. Daily activities like watching a movie, going to the park, etc. can be normal and boring. Therefore, participating in skydiving activities will be a great activity for couples to find new things. Skydive customers will be between 20 and 45 years old. The age of majority will be suitable for adventure sports and have the financial ability to pay for themselves

Positioning

The adventure tourism industry has grown exponentially across the globe over the past few years. In addition, for enjoyment, travelers are interested in visitinG undiscovered destinations. Moreover, a substantial increase in government initiatives in the form of private and public partnership to promote tourism fuels the growth of the global market for adventure tourism. Risk associated with unpredictable weather and adventure traveling, however, restricts the growth of the adventure tourism market. Increasing social media trends are also expected to provide a lucrative opportunity for market growth, as Facebook has become the preferred social networking site for travelers to get the best trip (Nitesh Chouhan, Himanshu Vig, Roshan Deshmukh, 2019). When Skydive was formed and developed in Australia, business leaders were familiar with the characteristics of economy, people, culture and law. When moving to a new market, the 'rules of the game' must be completely learned (or forgotten in some markets - where the rules have not been established yet) (Martin, 2014). Skydive brand story may not be fully translated into another culture. And in addition to language differences, customer communication methods can also become extremely different (Richard Newfarmer, ‎William Shaw, ‎Peter Walkenhorst, 2009).

Tourists coming to the Netherlands do not have many options to experience adventure sports because of the small number of companies offering this type of skydiving. This is a great opportunity and potential market for Skydive. Entering the market without too many competitors will give Skydive the opportunity to develop a market share and build a reputation as an affordable skydiving company. Skydive will provide a high quality but low price service for tourists. The core value of Skydive in the Netherlands market will be to provide cheap but high quality services to local customers and visitors.

Product and Branding

The company's main product when participating in the Netherlands market is skydiving. Skydive is an action sport in which you will jump off an airplane in the air and fall freely back to earth in accordance with the laws of gravity. The process of skydiving begins with a state of free fall for a certain period of time after leaving the aircraft, the speed of falling gradually increases and the skydiver parachutes out at a certain height above the ground. With the adventure game Skydive, you will be jumping with a professional skydiver, and from the expertise they call pair dancing. Often be judged as 'adventure tourism', but the specific identification for each type (adventure tourism, adventure sports... ) is essential, to avoid confusion and easy to create holes for incidents. But regardless of the genre, there must be a professional trainer who is in charge of and using specialized safety equipment while customers using Skydive service, according to international standards. To make a difference with other brands, Skydive will provide free professional coaching services. Other skydiving companies also provide professional coaching services but will charge a high fee. This will give Skydive an advantage over other brands currently in the Netherlands.

Due to the increasing need to relieve stress from customers, as well as the increasing desire for adventure, there will be many competitors in the future. So Skydive need to enter Netherlands market as soon as possible to create a reputation when there are not too many rivals. When entering new markets, especially with special services such as extreme sports, Skydive needs to build a brand as a company that provides high-quality and affordable skydiving services. This will help Skydive differentiate from competitors and increase the value of the benefits. Not only that, branding also helps customers link to Skydive and create loyalty files.

Price

The main source of revenue is the initial instruction and jump fee, which can start at $250 - $350 range. Skydive is rated as an adventure sport and has a high cost. The price is recognized quite high. However, the price may not be a factor for those sport enthusiasts who seek thrilling experience. Profitability is highly variable depending on the location and business model. Products shall be competitively priced relative to the competitors in the area. If the company wants a good share of the consuming public, it must price its products that is inviting to every customer. The two main competitors of Skydive in the Netherlands market are Skydive Texel B.V and Skydive ENPC. Skydive Texel B.V offers the price from €209 to €294 while Skydive ENPC ‘s price is €209 to €449.

To attract customers in Netherlands, the company will offer affordable prices from about €200-300. In general, Skydive offers lower prices than the average level of the Netherlands market and competitors. Price will be constant for each segmentation of customers. With a cheaper price than competitors, Skydive will have an advantage when competing and reaching new customers. Not only that, combined with preferential policies and discounts, Skydive has a special price advantage when entering the Netherlands market. Skydive may offer lower prices than competitors in the Netherlands when it enters the market. Then, once a loyal customer file is available, Skydive may consider increasing the price with the bundled service packages to earn more profit.

Extra Offer Meal Meal

In the next 5 years, revenue forecast of Skydive will be as follow. First-2-year will be difficult for Skydive when entering in Netherlands but revenue will grow dramatically in 3 years later.

Promotion

Discounts strategy will be used to increase sales, expand market share and develop new customers (Michael Moesgaard Andersen, ‎Flemming Poulfelt, 2009). Setting sales discount is a strategy that can attract more sales to Skydive, bring in new customers and also benefits. One advantage is that discounts make customers feel better for a new player such as Skydive in Netherlands. This can have long-term benefits if these positive feelings can be associated with Skydive. Besides, this can help new customers choose Skydive other competitors, giving Skydive an advantage. Skydive may this type of promotion when entering Netherlands:

• Discount by event/season: Discounts on event platforms tend to occur around a particular day or season, and they often happen over and over. It includes discounts during holidays, such as New Year's or Valentine's Day promotions for couple.
• Discount on quantity: When offering volume discounts, customers end up paying less for each item, as long as they buy a larger number of items. Skydive can have discount 10-20% for group register to increase sale and approach new customers.
• Discount for prepayment: Skydive can also offer a small discount to customers who can prepay, be it months or weeks before. Prepaying can help build cash flow, since customers are encouraged to pay earlier. This means that Skydive can use these prepayments to buy more storage, buy more inventory (maybe during a sale), or make more investments. Pre-launch discount promotion is used to help increase visits and attract potential customers.

To promote for Skydive when entering Netherlands, Marketing Department can use different platform. Skydive should invest in multi-channel communications to reach new markets. With offline media channels, Skydive should prepare communication plans at mass media channels such as banners in commercial centers, TV commercials on sports channels,... Target customers are customers aged 20 - 45 years, so Skydive can use social media channels to communicate with the company. Besides, Skydive's target customers are young couples. People tend to use at least 1 social network daily. Therefore, using social media channels like Facebook, Instagram,... will help Skydive reach the target customers. Skydive can set up a separate fanpage on Facebook to connect with customers. Skydive can introduce special offers and discounts for customers on Facebook and Instagram. In addition, social networks allow businesses to use advertising to reach potential customers. Besides social networks, Skydive can run ads on television and outdoor billboards. Not only that, Skydive can collaborate with local companies to communicate. For example, sports drinks companies, sports products, … Combining with local companies will help Skydive access the company's existing customer files. Skydive may consider sponsoring sports programs in the Netherlands to reach the right customers.

Place

The Netherlands is a small and flat country, with only around 50% of the land 1 m above sea level. The country can be divided into two areas: low and flat land in the west and north, and higher land with small hills in the east and south. Only in the southernmost part of this country is the land accrued to a significant extent, as in the foothills of the Ardennes. The place Skydive should set up is a large and beautiful area, especially with lots of tourists to target the curiosity and want to discover Netherlands view. Skydive will prepare parachutes in the high mountains with high views so that visitors can enjoy the beautiful scenery in the Netherlands from above and then will land on the flat area that our company had previously planned.

For distribution in the Netherlands market, Skydive can develop its own distribution system and through travel agency channels. Skydive can develop ticket distribution systems at skydiving locations. The direct ticket distribution system will help Skydive accurately and quickly manage the revenue situation and make appropriate adjustments. When entering the Netherlands market, Skydive may consider selling tickets through travel agency channels and advertising at ticket sales locations. Travel companies often have a customer base available and will help Skydive reach the right customers. Besides, the cooperation with travel agents will help Skydive get stable and long-term revenue. Not only that, the combination of skydiving services and travel agency travel packages can increase revenue. Building your own distribution system will cost a lot of money, but Skydive will not pay commissions. When providing tickets to customers through cooperation with travel agents, Skydive will lose a commission for each ticket sold. Each delivery method has its own advantages and disadvantages. Skydive should combine both methods to reach the most customers during the launch.

Expected Outcomes

As an owner of the Skydiving Services in Australia, we have seriously drawn up our decision in establishing our skydiving branch in the Netherlands after series of thoughts and searches in the internet about the viability of this business in our chosen location. The only way we can compete and make known to customers compared with other players is to provide discounts much lesser than the current market price, however not to the point of risking the minimal margin for the company.

If we try to establish and determine the future of the company for the next 3 years, it is a scenario to put a 10% increase from the previous year for the and 30% for next to years.