An Analysis of DGDH's Promotional Strategies in Regards to CCResort

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Executive Summary

The Business Analytics Department (BAD) have undertaken statistical analysis . to evaluate the success of strategies adopted by DGHG used to promote their new holiday resort and spa facility CCResort, as well as positioning it as an upmarket complex, relative to competitors. This report will base the success of DGHG’s promotional strategies by assessing achievement in the following key performance indicators:

  1. Having more than 40% of customers staying for a full week at CCResort
  2. Having the average customer exceed daily expenditure of $255 in excess of accommodation costs

Achievement in these key performance indicators will be assessed via statistical analysis of a sample of 200 customers, whom have filled in surveys. Additionally, key performance indicators will also reveal to DGHG what type of customers are attracted to CCResort and how much these customers are spending over their accommodation costs. Key Findings Data Analysis has revealed that most customers, book for four people, closely followed by those who book for two people. Furthermore the mean-age of customers whom make the bookings is 46.665. When placed in conjunction statistics revealing that majority of customers (69%) have family incomes of over $100,000, this may imply that CCResort’s customer composition, mainly consist of wealthy families or middle aged couples. Key Production Indicators Statistical analysis has revealed the following relating to DGHG’s success in achieving KPIs set for CCResort:

  • More than 40% of customers stay for a full week, meaning that KPI 1 has been successfully met.
  • The average customer has a daily expenditure level equal to $236.54, meaning KPI 2 of having daily expenditure levels exceed $255 have not been achieved

Recommendations

  • Increase the price of using facilities at the resort. Since CCResort has been successful at

positioning itself as an upmarket complex, customers should still continue to use facilities despite the rise in price. This would help CCResort achieve KPI 2, to have the average customer spend over $255 daily.

  • Adjust promotional strategies to attract larger groups of customers. This may be effective as there is a relatively strong correlation between daily expenditure and number of people in a customer group.

Key Features of Data

"http://puu.sh/8O9w0.png"Table 1.1 – Summary of descriptive statistics of data Table 1.1 reveals the modal class of income for customers staying at the resort is above $100000. highlighting CCResort’s achievement in positioning themselves as an upmarket complex, attracting wealthier customers.

""Individual Variables Figure 1.1 – Daily Expenditure ""

Figure 1.2 – Length of stay

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""Figure 1.3 – Age of customers booking the stay

"""http://puu.sh/8NgH9.png""" Figure 1.4

Relationships between variables Scatterplots have been used to reveal to DGHG what the main factors affecting daily expenditure of customers at CCResort are. Figure 2.1 – Daily Expenditure vs Length of Stay

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Figure 2.2 – Daily Expenditure vs Number of People

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""Figure 2.3 – Daily Expenditure vs Age of Person Making Booking""

KEY PERFORMANCE INDICATOR 1

KPI1 : “MORE THAN 40% OF CUSTOMERS STAY FOR A FULL WEEK” There are sufficient levels of statistical evidence from the statistical data to infer that DGHG has been successful in achieving its goals of having more than 40% of customers stay at CCResort for a full week. Hypothesis Testing

Let the null hypothesis be that 40% of customers stay for a full week (7 days) H­­0: "" Let the alternative hypothesis be that more than 40% of customers stay a full week H1: ""

This hypothesis test will be conducted using a 5% significance level (α = 0.05) and an upper tail test, meaning we reject the null hypothesis where Z>Zα = z0.05 = 1.645 (Z>1.645). As the sample of 200 is sufficiently large, by central limit theorem, the test statistic is approximately normally distributed. Given data: "" """" ""Test statistic = "" = 3.175

Therefore as 3.175 lies within the rejection region as shown in Figure 3.1, there is sufficient statistical evidence to reject the null hypothesis.

Using the p, value we are able to create supplementing evidence whether we should reject, or fail to reject the null hypothesis. Figure 3.1

""

= ""

""

Since the p-value 0.0007 is lower than the significance level 0.05 and 0.01, there is overwhelming evidence to reject the null hypothesis in favour of the alternative hypothesis.

Thus, since we reject the null hypothesis, we can conclude that DGHG has been successful in achieving their KPI of having over 40% of customers stay for a week.

KEY PERFORMANCE INDICATOR 2 KPI 2: “THE AVERAGE CUSTOMER SPENDS OVER $255 PER DAY IN EXCESS OF ACCOMODATION COSTS” There are insufficient levels of statistical evidence from statistical data to infer DGHG has achieved having the average customer have a daily expenditure that exceeds $255.

Hypothesis Testing Let the null hypothesis be that the average customer spends $255 a day

H­­0: ""

Let the alternative hypothesis be that the average customer spends over $255 a day

H1: ""

This hypothesis test will be conducted using a 5% significance level (α = 0.05) and an upper tail test, meaning we reject the null hypothesis where Z>Zα = z0.05 = 1.645 (Z>1.645). As the sample of 200 is sufficiently large, by central limit theorem, the test statistic is approximately normally distributed. Thus, we may also infer that the population standard deviation is approximately equal to the sample standard deviation 50.346. Given data:

""""""

The rejection region occurs when Z>1.645, thus where "" > ""1. Solve for ""1: Figure 3.2

"" = z­0.05

""

""1 ""

Therefore, as the rejection region occurs where "" >260.86, our sample mean for daily expenditure 236.54, lies outside the rejection region as shown in figure 3.2, meaning we do not reject the null hypothesis. DGHG has thus been unsuccessful in meeting its KPI of having the average customer spending over $255 in daily expenditure at CCResort.

Conclusion

From the statistical analysis undertaken by BAD, it can be concluded that DGHG has been unsuccessful in achieving all goals. DGHG has been successful in positioning CCResort as an upmarket complex, showcase via the modal family income exceeding $100 000. Furthermore, although achieving KPI 1, to have more than 40% of customers stay the whole week, KPI 2 was not met, with the average customer spending below $255 a day. Although DGHG has not failed in all areas, there is still room for improvement, especially in regards to KPI 2.

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