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Assignment Questions: Cabo San Viejo, Harvard Business Case

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  1. What are the characteristics of Cabo San Viejo‘s customer base?

In general, the customer base in summer differs slightly from the one rest of the year due to reductions in price to maintain optimum occupancy levels. 70% to 80% of the guest are female, affluent, and middle-aged. 82% of the guests base have a household income of over $150K, however, in winter the percentage of guests with HHI > 150K drops to 59%. Palm Springs summer guests also average 4 years younger.

The most common reasons for coming to Cabo San Viejo is rest and relaxation, a healthy vacation, spa treatments, pamper, and fitness.

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Their Vacation habits read as followed: The average guest takes 3-4 vacations per year if not to Cabo San Viejo, then most often to Europe and the Caribbean islands. Few Cabo San Viejo frequent guests visit competing spas and the majority of guests leave Cabo San Viejo with a strong intention to lead a healthier life. Cabo San Viejo‘s customer base gets older each year on average by one year.

004 the age of the average customer was already 58 starting from 47 years old in 1992. This means the customer base is loosing out on guests younger than 35 years which state only 4,1% in 2004.

  1. How healthy is this customer base?

The customer satisfaction level is pretty high: 74% say its Outstanding, 21% very good, and 3% satisfactory. So 95% rate their stay high and the retention is high as well. Cabo San Viejo receives about 3500 new guests each year, 32% of the first time guests return within 5-6 years and 62% of return visitors return again within 5-6 years.

  1. Should Cabo San Viejo adopt a rewards program? Why? Why not?

Competition is stiff and rising expectations amongst the customers force the management to be very careful and attentive as how to cater to the target customers. In general, a systematic loyalty program should be established since its benefits outweigh largely its drawbacks. Not having a loyalty program would mean „we are too good, we don‘t need your business and we‘ll be fine whether you come back or not“. This elitist attitude can backfire as well as it doesn‘t comply with the original vision of Cabo San Viejo which only states to deliver a healthy vacation and cater to the customer.

Since a good chunk of customers nowadays expect reward programs and even see them as standard it‘s vital to have them be competitive and retain customers. Moreover, the reward program can help to attract new customers since the customer base is aging and can give you access to younger customers. Last but not least there are tremendous cross-selling opportunities between the DaySpas and the resort. One thing which the promotional plan is lacking at the moment.

Cite this Assignment Questions: Cabo San Viejo, Harvard Business Case

Assignment Questions: Cabo San Viejo, Harvard Business Case. (2016, Nov 25). Retrieved from https://graduateway.com/assignment-questions-cabo-san-viejo-harvard-business-case/

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