S ociocu T echno
3) Adventure Tourists
shopping. 22% of them go to the cinema, 21% go to a KTV and 8% take on photography. As the age bracket increases cinema attendance significantly decreases, shopping slightly
decreases, KTV and photography are almost not practiced anymore, and tea culture related activities increase four fold!
Behaviour
This segment’s principal behavioural motivation is to escape boredom.
Buying Patterns:
The lower income bracket conformed mainly by students is expected to be price sensitive or with a limitation on the number of times a month they can engage in an entertainment activity.
The middle-aged bracket, which will include currently working people, is less price sensitive but more time constrained. The higher range of the age bracket, which includes the retirees, is expected to be financially stable and with plenty of time; however, due to their lower level of energy they are not ideal candidates for zip-lining. This segment is an ideal segment for the canopy’s tour packages service.
3) Adventure Tourists
Adventure Tourists do not come from a monoculture; these tourists will be involved in many different kinds of activities around the globe, ranging from trekking to white water rafting.
The average American adventure travellers are single women approximately in their forties, they are affluent and well educated. Adventure travellers are less influenced by political risks and understand that there is a certain level of risk involved in the areas they visit. In Europe, studies have profiled ecotourism travellers as being experienced travellers with higher levels of education and coming from a higher income bracket. They are also profiled to be in the middle age to elderly. They are considered opinion leaders who ask and tell their friends and colleagues about their planned trips. Primary customers fit for adventure travel and
ecotourism can be summarized in the following dimensions:
Geographical
From urban and suburban areas Main Source Markets
U.S., Europe (Germany, U.K., France, Italy, Scandinavia) and recently China
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Age: 30 to elderly, with 32% being 45 and over
Gender: 58% are male with growing trend coming from female travellers Marital Status: 52% are married and 52% have children under 18
Income group: Higher bracket, 42% ranging $40,000-$79,000 (OIA, 2005) Profession: Mostly professionals with higher education
Life Style
Multi-cultural, opinion leaders, active both in their community lives and their travel lives (The Travel Institute, 2005), with a strong sense of environmental respect and sustainability.
Behaviour
They feel that their travel experience is enhanced when they learn as much as possible about local customs and culture. Willing to commit time and resources to organizations they believe in. Increased awareness of sustainable tourism suggests these consumers are likely to commit time/resources to sustainability and will seek companies aligned with their values.
Buying Patterns:
Less price sensitive for as long as they perceive a company they deal with is aligned with their own values, is socially responsible, and there is no impact to the environment. Because of their interest in responsible travel and sustainability they are willing to spend an average of 10% more on their excursions (Adventure Collection Survey, 2005).
Competitors Direct Competitors
Despite carrying out an arduous web search for other canopy courses in Taiwan, it appears that there are currently no commercial canopy courses in Taiwan yet. The searches were performed both in English and Chinese but no significant results were found. Quite likely there are amateur/home built level zip-lines installed in private properties or perhaps even as a complimentary attraction in ropes courses, but at this level none of these possibilities classify as competitors. As a matter of fact both alternatives are more likely to act as complementors that may help boost the buzz and hype for the Taiwan Canopy course. Home-built zip-lines are usually installed in the backyards of houses that are large enough. Seeing that most of
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Taipei inhabitants live in apartments or condos with very limited space, the only alternative that remains is for zip-lines in areas far away from the city, where property value is lower and people can afford to have houses with more space. Even in this instance, the length of any of these zip-lines could not compare to a multi-platform commercial level canopy course.
Homeowners with their own zip-lines would be probably very happy to have another alternative to expand their experience. Finally zip-lines installed in rope courses are also usually short in length, and would also help raise awareness of the activity further addicting new users to seek for more thrilling experiences.
Indirect Competitors
Two types of indirect competitors exist:
1) Canopy courses in neighbouring countries
Currently the Philippines and Thailand both count with a growing amount of canopy courses.
Thus far Thailand is leading the way being the first country to introduce this concept and an estimated 20 to 40 courses located throughout the country. Development of canopy courses in the Philippines only began approximately two years ago. A list with the existing number of courses and a brief description of their features is presented in the Appendix C
2) Alternative entertainment activities
The second type of indirect competition includes a variety of activities that also can be undertaken with the purpose of eliminating boredom or providing a thrilling experience.
Activities can be both outdoor and indoor, and ranging from a trip to the cinema to mountain biking. A detailed list of the activities that have been identified as potential substitutes is derived from common activities practiced by the population according to E-ICP data. The list of activities and the percentage of the population that engages in each activity is included in Appendix D.
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Alliances and agreements will be crucial for the success of this project. The most important agreement is with the government. This business idea has to be sold favourably to key people in the government to guarantee the required permits to develop the canopy in Maokong, since the government owns a good portion of the area. Prospects for a favourable decision are significant because the canopy course project is a low investment, ingenious, eco-friendly alternative that can help the government fulfil some of its plans for doubling the number of tourists, broadening the scope of tourism and fortifying existing tourism infrastructure; in this case, the occasionally visited tourist attractions atop Maokong mountain. A statement
considering the low environmental impact of this project is included in Appendix E.
The Maokong Gondola
An alliance held with the Maokong Gondola administration would be mutually beneficial.
Even though it is possible to reach the top of Maokong Gondola via 3 bus routes, the most spectacular way of reaching the top of Maokong is without any doubt using the gondola. The 2008 typhoon season brought with it some unexpected structural damages to the bases of at least one of the platforms of the gondola. Following this, the gondola had to be closed for serious repairs until January 2010. It is believed that despite large governmental investments aimed at normalizing the number of people visiting the gondola (public advertising and investments benefiting surrounding businesses, i.e. the Zoo mall), numbers are still far below what they used to be before this event. Canopy Taiwan provides a way to help boost the number of visitors to the gondola by offering an additional point of attraction catering to an entire new market segment than the one the gondola usually receives. Also with the inclusion of tour packages to the neighbouring attractions, Canopy Taiwan provides a way to
reinvigorate the economy in this area and boost awareness of tourist attractions not often visited. Inversely, the gondola could offer discounted fares, one day unlimited travel and/or even season passes to membership holding and season pass holding customers of Canopy Taiwan.
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Tea Houses and Tea Plantations
Another possibility for alliances lies with the Maokong teahouses and tea plantations.
Maokong is traditionally known for small tea plantations and numerous teahouses offering breathtaking views of Taipei city. With the 2008 closure of the gondola, these businesses also saw a decrease in their customer numbers. An agreement with a few teahouses and plantations is in the best interest of Canopy Taiwan because planned tour attractions include visits two these two types of business. Selection of the teahouses and plantations will be done selecting those facilities that are close or in the way of the course. Canopy Taiwan would bring tour customers to the selected locations, which would surely result in increased sales and exposure for those businesses. In return, the teahouses and tea plantations would allow visitors to enter and observe their facilities and perhaps offer them small demonstrations of the tea farming operation in the case of plantations, and sampling teas in the case of teahouses.
Taipei Zoo and Taipei Zoo Mall
Working together with the Taipei Zoo and Taipei Zoo mall businesses can create mutually beneficial opportunities. For instance, an area of opportunity is to create “combo” coupons combining a trip to the zoo, with a trip to the canopy and a meal in any of the restaurants in the mall at a lower price than when purchased by itself. Advertising campaign efforts could be carried out as communal campaigns drastically reducing the price paid by each business while increasing the level of exposure. Because of its closeness to the zoo, the canopy could even reconsider its name and switch it to a name that can be associated with the zoo, like The Zoo Canopy, or other variations. The general idea is to pursue opportunities that have better chances of success if taken collectively while aiming to unify a concept.
The Marketing Mix Product
The Canopy Course Tour will be an innovative service that has been carefully adapted to meet the needs of three market segments. Visitors will be offered a unique, thrilling and rewarding experience that in turn will immerse each visitor into Taiwan’s ecological beauty, landscape, its people and its culture.
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Prices have been set after carrying out a thorough analysis of each market segment.
Demographics, psychographics and activity (usage) levels have been taken into account in the formulation of pricing. Additionally, multiple target market penetration scenarios have been calculated at different prices. Other factors that were taken into account before setting the price include prices charged for zip-line rides in Central America, the United States and Thailand. Ultimately, a descriptive study of the main market segment indicates that customers of this service range from an above average income to high income, with high levels of involvement, used to spending significant amounts in their sports related expenses, and therefore are not likely to be price sensitive.
Place
The location selected for the development of the canopy is strategically located and it possesses both features required for a zip-line location to be considered “sweet spot” within this industry. The area is accessible to everybody, and an existing tourism route with a steady flow of visitors already exists. The existing gondola nearby and over twenty previously not frequented tourist attractions nearby present opportunities to forming alliances and hence increasing the number of visitors in the area.
Promotion i) Advertising
A preopening campaign is programmed for mid December 2010. It will include:
• Medium sized ads in sports related magazines, travel & leisure magazines
• Printing of leaflets & brochures. The brochures will be distributed through visitor information centres in Taipei, allied businesses within the area, and adventures sports organizations throughout Taiwan.
ii) Public Relations
Canopy Taiwan will greatly depend on social networking e-tools such as:
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At the same time the company should launch its own website making sure to include
information vital for potential customers (maps, photos of the premises, information about the bio-diversity, and possibly even the opportunity to book a visit using the website’s interface).
Furthermore, articles and visitors testimonials will be contributed to sports and tourism &
leisure related publications whenever possible to increase exposure. Each guide at the canopy course will be given the responsibility to maintain a consistent and adequate image in the eyes of the visitors.
iii) Personal Selling
Canopy Taiwan’s personnel will include a full time sales associate whose objective will be to reach out to heavy users of the service and sell them membership services. Furthermore, this sales associate will also work in conjunction with the Nearby Visitor Information centers to identify potential customers for the services.
iv) Sales Promotion
Attractive and visually appealing posters will be placed in the entrance and exit of the canopy course to stimulate by-passers in the area. Communal coupons will be printed with the
cooperation of nearby businesses and allies offering discounted prices for patronage in more than one business (for example, 15% off with your proof of purchase at a teahouse, or the Taipei Zoo, Maokong Gondola and vice versa).
People
Jose Antonio Rivera will head canopy Taiwan’s staff as its CEO. Jose possesses over 10 years of professional management experience in renown companies such as Citigroup. He has 2 undergraduate degrees obtained in Canada, and has recently graduated from NCCU’s IMBA in Taiwan. Jose has been zip-lining for over 8 years, and has visited many canopy tours around the world including El Salvador, Honduras, Thailand and Singapore. His managerial and real life experience in zip lining will be an asset facilitating proper guides and staff identification/training.
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Another key player in the business will be Ms. Sophia Chen. Sophia has a B.A. in the English Language and has worked for many years in a Travel and Tourism agency in Taipei. She will be in charge of perfecting and increasing the scope and size of the tourism operation.
Process
Staff will be trained to be expert zip-liners who in turn are capable of coaching visitors regarding right zip-lining techniques. The canopy course will have a manual on operating guidelines for all staff, to ensure a smooth operation. Additionally staff will be taught rescue techniques in case they should be required during any emergency. However, accidents will be avoided by practicing rigorous maintenance programs of zip-lines and platforms according to the maintenance manual of the canopy course (Appendix F).
Physical Evidence
The fact that the canopy course is located in a set of mountains, rich in biodiversity, plentiful landscapes, and with authentic forests will help create the right atmospherics, which in turn will brand the whole experience in the eyes of visitors. Furthermore, the design of the canopy line and its platforms will be carried out using superior safety standards, but in a way that will make it feel as if it is blended with nature.
Investment Requirements
RIFERSA S.A. de C.V. will provide the necessary funds for the start-up and development of the “Canopy Taiwan” project. The investment represents an opportunity to diversify into a new market using an increasingly profitable business model that has high chances of success in Taiwan. An account will be created in a local bank for the purpose of transferring funds according to each phase of the project.
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Total Capital Equipment List $40,457
Location and Admin. Expenses
Consulting Fees $5,000
Business Incorporation & Registration Fees $1,000
Land Permits $3,000
Rent $4,000
Legal Fees $500
Opening Month Salaries $8,502
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Total Location and Admin. Expenses $22,002
Advertising and Promotional Expenses
Pre-Opening Campaign $5,000
Total Advertising and Promotional Expenses $5,000
Reserve for Contingencies $5,000
Working Capital $10,000
Summary Statement Sources of Capital
Initial Investment $155,555
TOTAL SOURCE OF FUNDS $155,555
Start-up Expenses
Buildings/Real Estate $73,095
Capital Equipment List $40,457
Location and Admin. Expenses $22,002
Advertising and Promotional Expenses $5,000
Reserve for Contingencies $5,000
Working Capital $10,000
TOTAL STARTUP EXPENSES $155,555
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The financial calculations presented are based on a set of assumptions and an estimation of the market size of each target market. Different market penetration levels for each target market have been considered to dimension the market. Additionally, we created a scenario for simulating maximum capacity for each offered service and adapted operational expenses and sales forecast based on a realistic combination between these two factors (desired market penetration level versus maximum operating capacity of the facility). Market size, frequency of activity simulations and penetration level scenarios are included in Appendix G. Scenarios of maximum capacity operation of the canopy course and tour services are included in Appendix H.
Based on these assumptions and scenarios analysis, we have prepared the following financial information:
• Monthly Sales Forecast
• Three Years Sales Forecast
• Operating Costs, Administrative Expenses and Payroll forecasts
• Profit and Loss Statement and Free Cash Flow Statement
• Financial Assessments -Net Present Value (NPV) -Internal Rate of Return (IRR) -Payback Period
-Break Even Analysis
It should be noted that the results of all financial assessments are extremely high and thus very encouraging. The reason for the NPV and IRR to be so high (US$1.3M and 271%
respectively) is because the low required start-up cost and ongoing operating expenses are easily recovered with high profit margins that lack any variable expenses. The fact that there are no variable costs is not a mistake, but a specific characteristic of this type of business.
This particularity limits all operational costs to fixed costs, which as mentioned before are relatively low and allow for an ample profit margin.
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First Year Monthly Sales Forecast Table 7 – 2011 Monthly Sales Forecast
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3-Year Sales Forecast
Table 8 – 3-Year Sales Forecast
Forecasted Payroll
Table 9 – 3-Year Forecasted Payroll
Yearly Operating Direct Costs Forecast
Table 10 – 3-Year Operating Direct Costs Forecast
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Yearly General and Administrative Expenses Forecast
Table 11 – 3-Year General and Administrative Expenses Forecast
Income Statement /Profit and Loss Statement
Table 12 -3-Year Incremental Earnings Forecast and Free Cash Flow Statement Forecast
Financial Assessment
Table 13 –Financial Assessment Measures
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Payback Period
Table 14 – 3-Year Payback Period Calculation
Break Even Analysis
Table 15 – 3-Year Break Even Analysis Calculation
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