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Cabo San Viejo

Hi there:

There involves reading a case and answering some questions. There's not too many calculations-- mostly good marketing ideas with logical thinking and data and marketing strategies to back up your answers.

The case is: “Cabo San Viejo: Rewarding Loyalty” by Youngme Moon and Gail J. McGovern
Harvard Business School case, no. 9-506-060

1. Describe the strength and weaknesses of Cabo San Viejo's existing customer portfolio.

2. What are the pros and cons of Cabo San Viejo implementing a loyalty rewards program?

3. Segment and label their customers into different "customer groups" and for each:

a. Should they launch a reward program targeted to this group, why/why not?

b. If yes, what should be the objective of the program?

c. Should the program focus on increasing value, brand, or relational equity?

d. Generate a few ideas of programs that would achieve this objective.

4. Outline a research and analysis plan that would help you make a more informed decision (i.e., 4 to 6 steps).

Solution Preview

Please read the case and answer the questions listed below. The write-up should be no more than two pages single spaced.

1. Describe the strength and weaknesses of Cabo San Viejo's existing customer portfolio.
Cabo San Viejo's customers have important strengths. These customers are satisfied, and a large number of the customers are loyal to Cabo San Viejo. In addition, these customers have been acquired through very low cost promotions,. They have come here through bookings from travel agents, or have come through word-of-mouth.
The weaknesses of the Cabo San Viejo existing customers are that there are special seasons when the customers tend to go there. However, Cabo San Viejo needs a high occupancy rate throughout the year. The weakness of customers that visit Cabo San Viejo during the summer months are bargain seekers and pay 35% less. Another weakness of Cabo San Viejo customers is that they have very different objectives in booking a stay. Some want to lose weight, another wants to take advantage of medical facilities, and another is looking for peace of soul.

2. What are the pros and cons of Cabo San Viejo implementing a loyalty rewards program?
Pros of implementing loyalty programs is that the programs will help counter competition and help retain customers. In addition, the program will reward the best customers. Further, a loyalty program will increase customer satisfaction and even induce word of mouth publicity for Cabo San Viejo. The use of loyalty programs can be used to increase the use of other Cabo San Viejo properties and can make the loyalty fiercer. The program will appreciate the customers for their loyalty to Cabo San Viejo. These programs have the potential of building lifetime affinity.
3. Segment and label their customers into different "customer groups" and for each:
Cabo San Viejo First ...

Solution Summary

Cabo San Viejo is discussed in great detail in this solution.

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