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A Marketing Lesson from Alaska
By Joe Veneto, the Opportunity Guy

For the past several years, I have had the pleasure of traveling to Alaska in the late fall, usually when it starts to get cold & dark! It is the same time of year that Alaska residents receive their annual PFD - Permanent Fund Dividend from the state. This is a check for every state resident from the oil revenues and profits generated by the state.

Every fall, savvy business owners such as car dealers, travel agents, home improvement stores and big box retailers flood the market with special promotions. They want to help their fellow Alaskans spend their PFD checks and provide a multitude of opportunities.

For tourism suppliers throughout the U.S., the upcoming release of Federal Government rebates to consumers at the front-end of the vacation season provides a similar situation. In order to take advantage of this opportunity, each travel supplier must position their business to capitalize on the opportunity.

Given the market and consumer sentiment, the operative word to attract consumers' attention will be "ESCAPE". While the length of vacation time may vary, depending on resources, consumers want to get away. Vacation research, even in tough economic times, continues to bear this out. Americans see their vacations as a birthright and will get away no matter what.

Rebates:

Depending on household circumstance, tax rebates will be $300-600 for individuals and up to $1,200 per couple. Children under 18 are also eligible for additional rebates of up to $300 each. This means a family of 4 might receive up to $1,800 total. Nobody knows how the money will be allocated. For some, it may be split between expenses for household necessities and/or a vacation getaway. While I believe others may see the rebates as additional money to spend beyond what they were planning for an upcoming trip.

Two Ends of the Market:

It is also important to note there are two very different ends of the market. According to data released by the Conference Board and recently cited in Travel Indicators newsletter, there are 22.5 Million U.S. households (19%) with annual income over $100K. These households control approximately 82% of discretionary income. There are also 81% of households below the $100K threshold. The affluent households will be less affected than those with incomes under $100K. However, when creating offers, it is important to provide options for both ends of the market. Everyone is looking for value, regardless of where they sit in the market.

Traveler Segments:

Identifying the traveler segments to generate results is essential. The family market continues to be especially strong. Y Partnership's "Togethering" trend identified back in 2003 is still driving traveler motivation. In tough times, people want to reconnect with family members and friends to relax and escape the pressures of daily life.

In addition, trips for women to get away with the girls or a guy's getaway, sometimes known as a Mancation, are also popular target markets. Finally, don't forget couples of all ages - those without children and the ones that want to leave them with relatives for a real break. Providing different options to target customer groups creates special appeal in buyers' minds.

Geographically, a majority of travelers are retrenching to regional destinations within a half day's drive, no more than 4 hours away from you. You might also look at the distance a tank of gas will bring visitors to you, from your target regional markets. The local, in-state and regional markets will hold the greatest potential for travelers in the next six to twelve months.

Seamless Value:

Consumers will be looking for ease and value when making buying decisions. Suppliers that wrap up products, services and experiences into easy-to-purchase vacation packages will be winners. As suggested earlier, packages should be targeted to both ends of the market - the price-conscious and also the upper end, though stay away from anything that conotates luxury. Simple and seamless vacations that are easy will be the best offerings for the marketplace.

You might also look at price points and positioning to provide a special level of marketing attraction. Since rebates are in $300 increments, perhaps looking at $299, $599 and $1,199 as amounts to use as sell-at prices will be incentives for customers.

In addition to price points, what types of special value add-ons can you incorporate in your offer? For lodging properties, a complimentary in-room movie, or a partnership with a local attraction or restaurant. An attraction might provide a special offer tied to admission or perhaps a visit to the gift shop. Consumers are looking for a little something extra that will help them make or justify their purchasing decisions.

The Alaskan businesses that are the most successful each year when PFD checks arrive are those that take a proactive approach to the market. They look at positioning offers to customers that will get their attention and make a buying decision.

This year, despite the economic uncertainty, consumer confidence sentiment and other issues of concern, there is a lot of opportunity. Each travel organization needs to make the time to create value-added products, services and experiences that will resonate with consumers. Your window of opportunity is still open, and it's not even cold or dark!

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