A Case Study of Deep Discount Season Passes in the Colorado Ski...

A Case Study of Deep Discount Season Passes in the Colorado Ski Industry

In September 1998, selected ski resorts in Coloradoiniti-at a deeply discounted season pass program, offering a75% discount from the previous year's prices to Front-Rangeskiers(Colorado residents). The purpose of this study was to assess the effects of this discount program on skier behavior. Specifically, the influence of the discount programs skier behavior, cross-product elasticity, and market alienation was assessed, comparing the 1997-1998 and1998-1999 seasons. While the results are somewhat confounded by the poor snow conditions of the 1998-1999 season, the discount programs appear to have significantly influenced skier loyalty to their respective resorts. Finally, while declines in destination skier satisfaction with the levels of lifeline and slope crowding were also identified, the discounted pass programs do not appear to have directly influenced the destination skiers' overall satisfaction. The evolution of tourism marketing theory and strategy is predicated on understanding the distinguishing characteristics of the tourism experience  (Pine and  Gilmore  1999). Building on the services marketing literature  (Shostack1977; Berry 1980; Fisk, Brown, and Bitner 1993), intangibility and perishability are clearly two of those characteristics. Intangibility,  the inability to effectively sense the service product  (particularly prior to purchase and consumption), has been described as "the most basic and universally cited difference between goods and services" (Zeithaml and Bitner2000, p. 12). Due to service intangibility, in combination with the related concepts of heterogeneity and simultaneous production and consumption, service quality has evolved as the central or core research topic in services marketing (Fisk, Brown, and Bitner 1993; Rust, Zahorik, and Kenningham1996; Lovelock 2000; Zeithaml and Bitner 2000). Numerous researchers have extended this service quality focus to tourism experiences  (i.e.,  Bejou,  Edvardsson,  and  Rakowski1996; Baker and Fesenmaier 1997; Childress and Crompton1997; Augustyn and Ho 1998). Perishability, the inability to inventory unsold services,  has received substantially less attention from services researchers but is equally if not more important to tourism marketing strategy. By itself, the perishability of the tourism experience is a relatively benign characteristic.  However,  in combination with the high fixed costs and cyclical demand patterns of most resorts, perishability is a key marketing strategy issue(Relihan  1989;  Lieberman  1993;  Lewis,  Chambers,  and Chacko 1995). Specifically, if demand is relatively constant and predictable, production can be tailored to meet the level of demand. However, the demand for most tourism destinations, particularly resorts, varies widely on both weekly and seasonal cycles (Allcock 1989; Williams and Dossa 1998). Furthermore,  most tourism products are characterized by high fixed or sunk costs for infrastructure such as lodging units and attraction venues (Moutinho 1989). Consequently, tourism marketing strategy focuses heavily on attempting to manipulate demand to fit the available capacity. Yield management is the underlying conceptual basis of these strategies. While pricing and discounting have historically been the predominant marketing strategies of yield management, virtually all aspects of marketing strategy are increasingly being focused on the problem.In September 1998, selected ski resorts in Colorado initiated a deeply discounted season pass program, offering a75% discount from the previous year's prices. The purpose of the research reported in this article was to assess the effects of this discount program on skier behavior.  Yield management was used as the conceptual framework to guide this assessment. The following sections first will present a conceptual discussion of yield management, identifying the key variables to be included in the study. Next, a historical perspective on the season pass program will be presented, followed by the research methodologies and results.  The conclusions will focus on both an assessment of the season pass programs and their implications for yield management in the ski resort industry.YIELD MANAGEMENTInitially developed by the airline industry, yield management is commonly defined as "the application of information systems and pricing strategies to sell the right capacity to the right customers at the right time"

1. The study found that the discounts increased loyalty but did not increase satisfaction. Why do you think this happened? Please share evidence from the case study as well as sharing your own opinion.
2. Look at table 2. What does it tell you about the differences in demographics between the skiers who bought the buddy pass and those who did not? 
3. Briefly describe the conclusions from the study. What do these tell you about success of this program? What recommendations do they make for the future?