LAZY DAYS HOLIDAYS

Lazy Days Holidays is a London-based company offering packaged holidays (flights, accommodation, some meals). Its primary destinations are North Africa, where it offers beach holidays in the summer and golfing holidays in the winter, and Eastern Europe where it offers low-cost skiing holidays from December to April.

Although for the past three years the company has been relatively successful (see chart below), the management team believes that its current destinations offer little real scope for growth.

Selected sales and financial data

2009 2010 2011 2012*
Number of holiday makers (000) 69 82 87 95
Turnover (£m) 15 18 20 22
Gross margin (%) 16 15 13 11
Gross profit (£m) 2.4 2.7 2.6 2.4
Net profit (£000) 450 530 420 390
*Estimated

The company sells its holidays primarily through travel agents and its basic web site. However, because of the growth of the major tour operators and their increased share of the market, Lazy Days is now finding it increasingly difficult to achieve shelf space for its brochures in travel agent’s showrooms. It is also finding the growing levels of price competition throughout the industry difficult to manage.

Faced with these problems, the company has recently used a marketing consultant to conduct a review of the business. The consultant’s final report highlighted several issues, including the following:

The firm currently has little detailed information on its customers. What data is available suggests that customers are drawn predominantly from social groups C1 and C2, are between 38-60 years old, and see price of the holiday as being very important or the most important buying criteria.
There appears to be little customer loyalty and no real evidence of much repeat business
In the absence of a sizeable marketing campaign, the summer destinations appear to offer relatively little scope for growth. However, if a campaign was to be developed, it is felt that it might well have the effects of attracting