CPRESORTS

FORSTER
z3291047 | Adnin Pasha Rayan Tutor: Jimmy Feng Thursday 4-5pm

CPResorts Forsters Campaign Quantitative Report | ASCS Consulting

Executive Summary
This report, commissioned by CPResorts and undertaken by ASCS Consulting, evaluates the success of the Forster Campaign in achieving its plan to position the Forsters resort as a profitable upmarket complex that would appeal to families. ASCS has undertaken this task by statistically analysing, through hypothesis testing and regression analysis, customer and expenditure data that has been collected in the past year. In particular we investigated the customer and expenditure composition as well as the two key performance indicators (KPIs) of length of stay and daily spending in the context of the business strategy. ASCS has found that the CPResorts Forsters Campaign was able to position itself as an upmarket complex appealing to families, but fails to generate considerable revenue from expenditure over accommodation costs. Our analysis shows that 69% of bookings were made by higher income individuals, a clear majority, and that they were primarily done by families. Approximately 52% of customers stayed a week, thus satisfying the first key performance indicator. Expenditure, on the other hand was extremely low, with the average person spending only $74, less than a third of the target $260 value in the second key performance indicator. The typical customer for CPResorts Forster would be one from a high income family, where the age of the person booking would be around 46 years old. Our regression analysis has found that there are various customer trends relevant for CPResorts to achieve its plan. In key is the negatively correlated relationship between number of people in a booking, and average expenditure per customer. ASCS recommends that CPResorts Forster: Continue its current strategies in marketing CPResorts as an upmarket complex that would appeal to families Urgently re-evaluate its methods of increasing customer expenditure above accommodation costs Place incentives in to increase individual spending above accommodation costs as group bookings get larger to offset the negative correlation between people in a group and individual expenditure Although the data given to ASCS is large enough to be a relevant estimator of the population, it is not large enough to be definite analysis. Furthermore, the limited number of fields collected makes it difficult to make qualitative statements; much of the report will therefore be of a quantitative nature that does not infer further upon the external environment of CPResorts Forster.

*It is of note that a customer refers to a single person staying at Forsters, regardless of the amount of people in a booking. The rationale behind this, is that the diversification of services offered by the resort is attempting to extract maximum value from each individual; thus individuals should be targeted.

CONTENTS
Executive Summary: page 1 Customer Breakdown: Page 2 Customer Expenditure: Page 3 KPI1: Length of stay : Page 4 KPI2: Expenditure per day: Page 5

consulting

ASCS

Student Project: Customers of CPResorts | z3291047 Pasha Rayan | Thursday 4-5pm Jimmy Feng

Customer Breakdown: Key features Income Levels of Booking Persons Age Distribution of Booking Persons
41 31 41 28

26 14

12 6 Greater than $60,000 Less than $60,000 69% 31% 25 30 35 40 45 50 Age 55

60 65

Relevant Information
Average Age of booking persons: 46.85 Range of the age of booking persons: 39 Percentage of Bookings made by families: 66.5% Percentage of Bookings made by couples: 33.5% Percentage of Bookings from higher income booking persons pertaining to 3 or more people: 48.5%

Size of Bookings
33% 34%

12%

10% 10%

Number of People

CPResorts Forster has been able to position itself as an up-market complex for families, as indicated by its customer base

Customer Findings
ASCS Consulting has found that the customer build-up meets CPResorts business plan statement as the primary customer comes from a higher income family. ASCS has acted upon the assumption that the sample size of 200 is a good approximation of the population, and have accepted that the findings are a useful set of point estimators to serve conclusions from. Hence, from the summary data above, we can see that Forsters appeals to higher income families, with 48.5% of bookings coming from the target demographic. Furthermore, the age of the booking persons indicate that the majority of bookings are done by middle-aged families.

Student Project: Customers of CPResorts | z3291047 Pasha Rayan | Thursday 4-5pm Jimmy Feng

Business Indicators

Customer Expenditure Summary of Customer Expenditure

Relevant Information
Average Expenditure per customer in a day: $74.90 Average Expenditure per booking in a day: $238.91

exp./people/length
Expenditure/People/Length
140 120 100 80 60 40 20 0 0 1 2 3 4 5 6 7

y = -13.96x + 123.9 R = 0.704

Days Linear (exp./people/length)

exp./people/length

CPResorts Forster has failed to extract significant value from each customer
ASCS has found that customers at CPResorts Forster are spending well below stated business goals. On average, a customer will spend only $74.90 over the accommodation costs. There is a relationship between expenditure and the amount of people within a booking.

Relationships between fields

ASCS has completed various linear regressions on numerous relationships between the data. Our key findings from this were that the average expenditure of a customer would fall in relation to the number of people in their group, and that there were weak relationships between expenditure and other factors. Of notice was that expenditure had no correlation with age of booking individual (with an R2 value of 0). Unfortunately, income levels could not be examined due to the binary nature of the data, which makes it unsuitable for linea regression methods. The information extrapolated from such findings would be incorrect, and may lead to unreliable business decisions. By examining the relationship between expenditure and number of people we find that there is a negative correlated. With an R2 value of 0.704, we can see there is a strong relationship between the two, and with the gradient of the line being negative, we can assume that as there are more people in a booking, each one will spend less per day. We recommend that CPResorts Forster urgently re-evaluate its campaign to attempt to raise customer expenditure per day. Furthermore, due to the negative relationship between number of people in a booking and expenditure, we suggest that incentives should be put in place for larger groups to offset this fall.

Student Project: Customers of CPResorts | z3291047 Pasha Rayan | Thursday 4-5pm Jimmy Feng

Business Indicators

Key Performance Indicator 1: Customers staying for a full week

There is sufficient evidence to suggest CPResorts Forster did not fail to achieve the target of having 50% of customers stay a week
Sampling Distribution for % staying a week
H0 = 0.5 and H1 <0.5 ;n = 702, p = 0.5, q = 0.5

Rejection Region

Sample Proportion

^ 366 p= 702

then P ~ N(p,

pq ) n

If is set to 0.05 then we reject H0 if z < -1.645

z=

366 - 0.5 ) 702 0.25 x 0.25 702

-1.645

1.13

= 1.13227..

Hence we do not reject the null hypothesis

Testing the Statements

To measure if KPI1 was achieved in the past year, ASCS examined sample booking length of stay data and applied hypothesis testing to find if at least 50% of customers stayed for a week. Statistical hypothesis testing is the best method in measuring the success of Forsters to meet KPI1. It allows us to interpret the observed customer data and make inferences about the whole customer base against a hypothetical claim. Furthermore, population proportions can be tested through this method as our data set is of nominal and categorical values. In analysing this data, ASCS consulting have made numerous relevant assumptions. Because the sample size is sufficiently large (200) and that the data collected consists of random variables, we can approximate that the data is normally distributed. This allows us to place the data into a comparable perspective of probabilities of events occurring. In addition, due to the large sample size we can infer that the sample standard deviation is a strong approximation of the population standard deviation, thus allowing us to test our claims.

Hypothesis Testing
This experiment is framed to examine if Forsters failed to reach their KPIs. ASCS believe that this angle is the most effective way to evaluate the situation with incomplete data, as it allows us to observe the information in relation to the stated business plan. This perspective can lead us to two conclusions, one where reject the null hypothesis in favour of the alternative, which reinforces the view that the campaign for this factor was not a success and that a change in direction is necessary. Otherwise we find that there is insufficient evidence to reject the null hypothesis and if there are indicators that are more urgent, they should take precedence. Hence we state the null hypothesis is 0.5, the alternative as less than 0.5 (<), and that this is a one-tailed test. An value of 5 is used as it allows us the results of the test to be statistically significant.

Interpretation of Results
Our hypothesis testing has shown us that from the sample data there is not enough information to infer that Forsters has failed to reach its KPI. The sample proportion, with a relatively high p-value of .1292, reinforces this view as there is no evidence to infer that our alternative hypothesis is true. It is the view of ASCS Consulting that the current Fosters campaign is sufficient to meet stated customer-length of stay objectives.

Student Project: Customers of CPResorts | z3291047 Pasha Rayan | Thursday 4-5pm Jimmy Feng

Key Performance Indicator 2: The average customer spends at least $260 a day in excess of accomodation costs

There is strong evidence to suggest that CPResorts Forster failed to reach its KPI of having customers spend at least $260 per day.
Sampling Distribution for Average daily expenditure for a person

Rejection Region

-1.645

Sample z-score = -224.23

Testing the Statements

In order to examine if Forsters was able to achieve its second KPI, ASCS Consulting examined the expenditure, length of stay, and number of people per booking. Keeping constant with our interpretation of a customer, ASCS has taken the average expenditure of a person within a booking, per day (expenditure/people/length) and applied hypothesis testing to see if the KPI was reached. We believe that examination upon this value is most relevant to Forsters. The resorts diversification of facilities and services (which ranges from boat hire, massages and boutique shops) indicate that the business is attempting to extract maximum value from each individual person. Hypothesis testing with this value creates the most useful information for Forsters to act upon. ASCS has taken the same assumptions as in the first KPI test about the distribution and the data as the conditions are the same. Furthermore because the sample size is large enough, we can assume that the sample standard deviation is a good approximation of the population standard deviation.

Student Project: Customers of CPResorts | z3291047 Pasha Rayan | Thursday 4-5pm Jimmy Feng

Hypothesis Testing
This experiment is framed to examine if Forsters failed to reach their KPI. From this point of view, we can come to two conclusions; that we reject the null hypothesis and claim that the resort has failed to meet its KPI or that there is insufficient evidence to suggest so. Hence we state the null hypothesis as the mean being equal to $260 ( = $260), and the alternative as the mean less than $260 ( < $260). We use an alpha value of 5 to ensure that the results of the test are statistically significant.

Alternative Analysis
ASCS recognise that another way to measure the KPI is to find out the average expenditure a day by a booking group (expenditure/length). We have determined that this approach of measuring the KPI is less useful in determining the success of the Forsters resort as it inaccurately portrays customer expenditure, although an examination of the same calibre was applied to that data. The experiment, with the same null and alternative hypothesis, but with different sample mean (of $238.91) and z-value of-6.42 comes to the same conclusion to reject the null hypothesis in favour of the alternative hypothesis. Hence, regardless of the interpretation of customer it is clear that Forsters failed to reach KPI2, and that the severity of the distance between the target and sample means indicate that the current campaign is insufficient for the resort stated expenditure plans.

Interpretation of Results
Our results overwhelmingly show us that Forsters has failed to achieve its KPI2 of having customers spend at least $260 a day. The sample data indicates that the average expenditure of a customer is three times less than the target, and when applied to hypothesis testing, clearly falls in the rejection region.

Student Project: Customers of CPResorts | z3291047 Pasha Rayan | Thursday 4-5pm Jimmy Feng