Blue Mountain Resorts: The Night Skiing Decision
4P-based recommendation for Gord Canning. Should Blue Mountain invest in night skiing? Reads the survey, the cost structure, and the brochure deadline to recommend a year of additional research instead.
Blue Mountain.
Blue Mountain is Ontario's most popular ski resort. They have 27 different ski trails which cover 250 acres of land. I have personally been to Blue Mountain in the past. It was very fun and certainly a highlight of my winter break. The ski slopes are nice and I had a great time during my stay.
During the case analysis I found that this is a decision case. Gord Canning had to decide whether night skiing should be introduced to the public. The case states there is a time limit. The case takes place in mid-June, and the decision has to be made by July 1st. The reason being that promotions for fall brochures have to be added, and that includes the night skiing.
What night skiing offers.
The "product" being shown is night skiing, not really a product but more of a service. Night skiing is an idea where the hills would be lit up by artificial lighting, so skiers can stay on the hill while it is dark. If Blue Mountain were able to introduce night skiing, they would be able to offer the longest run, highest vertical, and best snow conditions for night skiing in southern Ontario. Though in theory this may sound like a good idea, the marketing division was not sure if skiers would be interested in night skiing at Blue Mountain.
Capex, opex, and pass structure.
- The cost of adding an entirely new system is roughly $135,000. This only includes the necessary equipment and the lighting on the ski slope.
- Total operational costs are approximately $1,000 per night plus $20,000 for fixed costs.
- Promotional costs to gather customers were nothing more than $5,000.
Gord Canning was also thinking of creating a new system for the passes. Three separate passes: a day pass, a night pass, and a combined pass.
Where Blue Mountain customers live.
Blue Mountain is located approximately 136km north of Toronto near Georgian Bay, and a few miles from Collingwood. According to Exhibit 3:
- About 40 to 50% of skiers live in Toronto.
- About 20% live near Toronto.
- 11% live in Southwestern Ontario.
- 13% in the Collingwood area.
- 11% are tourists from the United States.
Survey demand.
The promotions would be placed in advertisements, but mainly in the fall brochures. Costs of promotions are no more than $5,000. Surveys were done to find the age, marital status, and place of residence, which makes it easier to segment the audience and target specific people.
According to Exhibit 4, the majority of respondents were ages 18 to 34 and 60.8% are male. Customers were not fully interested in night skiing facilities. Only 14.1% said they would definitely use, and 15.9% said they would probably use it. Most people were against the idea of night skiing. They were hesitant even thinking of using the idea.
Strengths, weaknesses, opportunities, threats.
Strengths
- Night skiing allows customers to ski at any time. It does not have to be during the day.
- The owners of Blue Mountain have been providing their ski service for many years and have lots of experience. This shows in the idea of day and night passes. If somebody arrives late they could get their full value by purchasing a combined pass.
Weaknesses
- According to the survey, many customers were not interested in the idea of night skiing.
- Only about 30% of respondents stated they would likely use it. With the lack of interest, Gord Canning could potentially do more market research to get a better understanding.
Opportunities
- Many of the younger generations were spending more time doing outdoor activities. Sporting activities were becoming much more popular around the world.
- Gord Canning would have to decrease the prices of skiing during night time. This allows people who have no preference to ski whenever they want.
- Blue Mountain should also operate other ventures during the night as well. For example, rental and repairs, food and beverage, and ski shops. This allows Blue Mountain to potentially pull profit from night skiing.
Threats
- There may not be enough interest in night skiing. This may mean Blue Mountain would not make enough money to continue. With the costs of $135,000 and $1,000+ per night, it may be difficult to maintain the service.
Survey bias
A survey was given to roughly 200 people at the end of a season. This may create bias. The survey may not be showing the entire picture. Some people may be bored of skiing and answer differently than they should have.
Wait a year and do more research.
There was limited time to conduct proper research. They obviously had not fully prepared for the new idea. Blue Mountain could think about operating their other ventures during the night as well. For example, rental and repairs, food and beverages, ski shops.
Gord Canning should probably wait a year and do more market research. There is not enough information provided to prove night skiing is a good idea. There needs to be more data. Profit is limited for night skiing. Blue Mountain may not be able to pull a profit unless other measures are made.