24202 CB Final Report - Group Assignment - Luna Park: Proposal || Distinction PDF

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Group Assignment - Luna Park: Proposal || Distinction...

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24202 Consumer Behaviour

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24202 Consumer Behaviour

TABLE OF CONTENTS Executive Summary

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Introduction to the Company and Overview of Issues

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Overview of the Company’s Current Marketing Strategies and Tactics Target markets Consumer behaviour of target segments Positioning Marketing 4 P’s

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Overview of the Market/Industry Trends and Competition Market size Market segments Market growth and current trends

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Competitors

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Outline of the Current Issue based on Secondary Data

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Outline of the Current Issue based on Primary Data

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SWOT Analysis

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First Recommendation and Implementation

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Second Recommendation and Implementation

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Third Recommendation and Implementation

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Conclusion

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Reference List

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Appendices

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EXECUTIVE SUMMARY This report is an analysis of the marketing issues that Luna Park Sydney is facing in the Australian market. An overview of the company’s issues reveals that the company is predominantly struggling with reduced visitation and poor customer retention particularly due to COVID-19. Following this, Luna Park is undergoing new development, as well as poor exposure and brand memorability with ineffective advertising techniques. The formation of negative consumer perceptions is also harming the brand’s image. This report outlines Luna Park’s marketing tactics and strategies. Through demographic segmentation, the park targets young families with children, and parents or guardians that tend to be married, employed and mid-high income earners. Luna Park also targets the Australian Youth, as well as international and local tourists. Luna Park positions itself based on value and quality, established as a heritage-listed, multi-purpose venue adjacent to iconic Sydney landmark, the Harbour Bridge. Its product offerings are primarily its intangible rides and experiences, gift memorabilia, food and drinks. Luna Park utilises exclusive distribution as a singular entity, providing its services through direct sales channels where consumers must physically visit to enjoy its offerings. The park employs premium pricing techniques to create a consumer perception of high value and quality compared to competitors. Additionally, Luna Park uses a wide promotion mix to communicate its offerings to its target market, including social media platforms, television advertisements and digital features such as Luna Play. A competitor analysis of Luna Park revealed that the Ardent Leisure Group is the company’s largest competitor. A further analysis into trends within the amusement park industry revealed that there has been a sharp reduction in tourism and a subsequent fall in industry revenue. Technological advancements, boosting household expenditure and intellectual property are also leading theme park developments in the industry. The rise of other entertainment industries has contributed to limited competitiveness in Luna Park’s market. The report discloses secondary data research into Luna Park’s strategy, which revealed that the company’s primary issues surround negative consumer perceptions regarding its current pricing strategies, the 1979 Ghost Train Fire, and ineffective advertising methods.

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24202 Consumer Behaviour Primary data analysis was conducted through the form of face-to-face interviews to gain further qualitative insights into the issues Luna Park is facing. The report discusses the common findings from the sample of 21 respondents, namely; the park’s high pricing leading consumers not to visit Luna Park, increased negative perceptions surrounding the Ghost Train fire incident, the nostalgic value older respondents associate with Luna Park and finally, that most consumers were unable to recall any advertisements of Luna Park. A situational (SWOT) analysis was performed to capture Luna Park’s competitive position in relation to the previous research and findings. This report has constructed three recommendations to address the issues Luna Park is facing: 1. Bundle pricing: Introduce three types of bundles with special prices for park entry 2. Nostalgic advertising: Capitalise on nostalgic value through new advertisements 3. Social media competition: Implement a competition for consumers to share their experiences at the park through social media

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INTRODUCTION & OVERVIEW OF ISSUES History: Luna Park Sydney is a heritage-listed amusement park based on the iconic Sydney harbour. It was established in 1935 and is currently under the operation of Luna Park Reserve Trust. Luna Park has a long and rich history, with its concept derived from the first Luna Park in Coney Island, New York in 1903. Built after the Sydney Harbour Bridge, Luna Park is home to iconic rides and attractions including the Big Dipper, Coney Island and Ghost Train, with its park consistently evolving since its beginning with artists charged to update new designs of rides ("Luna Park, Sydney", 2017). During the second world war, Luna Park was a segway for many servicemen to take their girlfriends on dates or to meet partners and followed large success when first opened (Luna Park, 2020). The park was closed in the 1970s following a fatal fire, and re-opened in 1982. After re-developments, noise-complaints, financial difficulties and multiple closures, Luna Park finally achieved long-term viability in 2010, when it was listed on the NSW State Heritage Register. Mission: Luna Park's mission is clear. They strive to attain happiness for all and encourage a fun environment where everyone is welcome. Luna Park is conscious of the fact that they hold a strong position in the community and therefore seek to involve the community in as many aspects as possible (Luna Park, 2020). Additionally, Luna park ensures that they focus on fostering a safe environment for families and friends. Ultimately, their mission aims to take people back in time to their childhood and re-experience the feelings of being a kid again. Financials: Throughout Luna Park's history its operations have remained fairly consistent only closing its mouth a handful of times, majority of which were in its earlier years of operations. In the 1990s for example, local residents filed a lawsuit against Luna Park due to the noise created by a number of the rides. This caused a number of financial difficulties, both from a reduction of visitors and the increased spending on fighting the law suit and as a result closed its doors in 1996 and sold to a group of investors (Luna Park, 2021). Currently, Luna Park only makes up 4%

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24202 Consumer Behaviour of the Australian Amusement Park Industry. In 2020, covid-19 and renovations meant that the Park was closed for the majority of the year. As a result, Luna Park experienced a loss of $14,350,000 (see appendix 1). Additionally, at the end of the 2019-20 financial year, Luna Park was predicted to have $2,751,180,000 total in assets, a $88,975,000 reduction from the previous year. This being the case however, it is predicted that after the renovations and over the next 5 years Luna Park's financial positioning will improve and increase, thus holding a much stronger position in the market. HR

Luna Park employs a diverse range of people, from different demographics, ethnicities and age groups. The company encourages and creates an inclusive environment and culture, ensuring that all employees are fully supported. In fact, Luna Park has a 3.9/5 overall rating (Indeed, 2021), implying that their hopes to create this inclusive environment are successful. During 2020, Luna Park temporarily closed and as a result of this, many employees lost their jobs. The government initiative of Job Keeper would have assisted in allowing the retention of some employees, however, not for all. Employees at Luna Park therefore felt the unfortunate effects of Covid-19. Currently, Luna Park is re-hiring, preparing for its reopening in mid June (Appendix 2).

Overview of issues Although Luna Park is an iconic and much-loved attraction to Sydney, there are also a number of important issues that have been identified and further researched on. Firstly, Luna Park has been facing low visitation rates, as well as poor exposure and consumer awareness. Secondly, a challenge Luna Park faces is the large amount of negative feedback on their ticket pricing, as it is considered unreasonable and overpriced for the value consumers are receiving. As Luna Park offers various ticket prices, consumers perceive their prices as a negative stimuli which can lead to negative attitudes. Another issue involves the 1979 Ghost Train fire incident, and recent re-investigation into the accident, where seven park visitors passed away. As a result, consumers have formed a negative perceived risk, which further contributes to the issue of reduced visitation rates. Moreover, Luna

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24202 Consumer Behaviour Park also deals with the subject of ineffective advertising where they received a notable number of complaints and reactions from a video advertisement campaign made back in 2016. This resulted in a negativity bias as consumers focused on the negative aspects, rather than the positive.

Importance, reasons and benefits of this study: Conducting thorough research and analysis into Luna Park’s issues within the Australian Market can assist the company to better understand specific consumer behaviours. Our group chose to conduct research into Luna Park, as being local ‘Sydneysiders’, we feel interested in the company’s performance. Each individual in this group has been to Luna Park at least once in their lifetime and simultaneously have had many fond memories whilst visiting and would like to see the success of the park thrive again. In addition, we hope that the study can provide a means for Luna Park to identify its major areas of improvement and subsequently work to improve its competitive position and plan corrective recommendations into its business model.

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5. CURRENT MARKETING STRATEGY & TACTICS TARGET MARKET Luna Park Sydney’s current marketing strategy in relation to its target market involves the definitive process of market segmentation. Luna Park has a broad audience mix, and has segmented the market using demographic segmentation and geographic segmentation. Luna Park uses demographic segmentation to appeal to a specific group of consumers based on characteristics such as age, income, and occupation. The park’s primary target market consists of families with young children. The parents or guardians of these families tend to be mid to high income earners and fully employed, with ages ranging from late 20s to 50s, including Xennials, Generation X and the Baby Boomer generation. The children of these families typically range between the ages of 8-14. Additionally, the families are predominantly Australian residents located in the Sydney region, who are able to visit the park multiple times a year. Luna Park also targets the Australian youth, generally Millennials; between the ages of 14-30 years old, low to mid income earners who may be students, or hold part-time employment. In addition, Luna Park has geographically segmented its market, as it targets both local and international tourists visiting Sydney. The park is well-known as a tourist destination for travellers.

Establishing a wide target market is a strategic and beneficial marketing approach for Luna Park, which welcomes over 1 million visitors per year. Moreover, this approach enables them to target a vast number of prospects with their marketing efforts, reaching out to a higher number of consumers and in turn, increasing the likelihood of consumer awareness and sales. Luna Park’s specific tactics in targeting these segments include its variety of rides and offerings, its digital presence and current upgrading and renovation process; where the company is working on providing new experiences to appeal to a wider audience. Additionally, the park enables its target market to enhance their experience through the offering of Luna Play, a digital feature that allows users to ‘plan their day’ at the park, earn rewards and utilise a 3D map of the park.

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CONSUMER BEHAVIOUR OF TARGET SEGMENT The typical consumer behaviours and patterns of Luna Park’s target segments differ from one another and can be observed individually. Young Families: Luna Park’s target segment of families with young children interact with Luna Park on a frequent basis. Typically, this segment resides in Sydney, being local residents that visit the park multiple times a year. The family-friendly park encourages the segment to thoroughly engage with the company’s offerings and experiences by placing a strong emphasis on family rides, coupled with the provision of annual family passes with unlimited access to rides, that can be used throughout the year. As aforementioned, Luna Play, the digital feature assists in allowing such users to interact with the park. In addition, the park offered around 10 children rides including the Coney Island funhouse before its recent upgrading process, and continues to appeal to this segment as it is currently constructing six more, including a family rollercoaster. Furthermore, this segment engages with Luna Park during the popular period of school holidays, where extra rides are brought in to increase attraction. Children may also visit and interact with the park through organised visits through their school or educational institute. The company also has areas to park strollers and prams to further accommodate young families. Australian Youth Luna Park’s Australian youth audience heavily interacts with the popular venue within Luna Park, called ‘The Big Top.’ Sean Pickwell, Waterfront Director describes how the 2500 capacity multi-use venue holds over 75 events per year, offering a range of experiences including pop, ballet, dance, rock, gaming and family entertainment (B&T, 2018). The park also offers a range of discount tickets to appeal to Australian residents, including the ‘Spin & Swim’ promotion which combines free entry to the Sydney Olympic Pool next to the park, and 20% discounts for NRMA members. This illustrates how the segment engages with Luna Park’s myriad of offerings.

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24202 Consumer Behaviour Tourists Additionally, Luna Park’s secondary target segment, being international and local tourists, engages heavily with the company as it is considered as one of Sydney’s most iconic and leading tourist destinations. The park overlooks Sydney Harbour and the Harbour Bridge, hence its iconic location attracts tourists to visit the park and consume its offerings. Typically, this tourist segment engages with Luna Park as a one-time visit. Luna Park’s current upgrading process can be viewed as a tactical strategy to increase NSW tourism.

POSITIONING Luna Park employs value-based and quality-based positioning tactics within its marketing strategy. The company’s positioning within the theme park industry in Australia is unique due to its iconic views, historic architecture and location. Luna Park is also separated from its competitors as it is the only theme park in Australia that is heritage listed (Luna Park Sydney, n.d.). Whilst the theme park is not positioned as being at the forefront of the industry due to their limited land size and subsequent lack of rides, the venue is available for hire for a wide variety of events such as concerts, corporate, birthdays and weddings (Event Venue Hire In Sydney, n.d.), thus positioning itself as an multi-purpose event venue rather than solely an amusement park.

MARKETING 4 P’S Product: Luna Park provides customers with a range of product offerings and unique experiences. As a service provider, the park’s main offerings include its theme park rides and subsequent intangible experiences such as fun, enjoyment, thrill, entertainment and amusement. The park also invites consumers to enjoy various events through their venue hire, as well as onsite food and drinks. Physical products that Luna Park provides include memorabilia offered through their gift shop.

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24202 Consumer Behaviour Promotion: Luna Park utilises a variety of promotion strategies to communicate with its target market. This is done through TV advertisements, Video campaigns like 'Love is a Rollercoaster' in 2016, and through multiple social media platforms such as Instagram, Youtube, Facebook and TikTok. The park’s features, Luna Play and Luna Perks are also used as a means to enable consumers to further enhance their experience at the park.

Place: Luna Park is located at Milsons Point, under the northern end of the Sydney Harbour Bridge. As a service provider, Luna Park distributes its offerings through direct sales channels. Consumers must directly engage with the park at its physical location in order to consume its offerings. The park also utilises the distribution strategy of exclusivity as it acts as its own entity with individual offerings.

Price: Luna Park employs a prestige pricing strategy, to convey an image of high quality and exclusivity for its offerings compared to competitors. This strategy enables Luna Park to create a consumer perception of high value, as well as increase profit margins due to the enhanced brand reputation and image. It also assists the company to deter competitors from entering the market at lower prices. The company offers a variety of ticket options for consumers; that being, the Flexi Pass (unlimited rides any day you like), Day Pass (unlimited rides for 1 day) and Annual Pass ($199, unlimited rides everyday the park is open).

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6. MARKET TRENDS AND COMPETITION Industry/Market Definition: Amusement/theme parks are parks that feature a large variety of attractions, ranging from rides, to food stalls, games, water slides and much more. Many amusement parks are fairly large, offering a large variety of rides and attractions. Luna Park is one of the smaller amusement parks however its small nature is one of the aspects that appeals to its customers. The majority of market and competition analysis was derived from Ibisworlds 2020. Market Size The amusement park industry has been hit hard in the past five years. In 2016, a fatal accident in the Gold Coast Dreamworld led to a sharp drop in the number of tourists, and the industry’s annual revenue fell by 8.2% in 2016-2017. Subsequently, the rise of other entertainment industries reduced the competitiveness of the amusement parks. In 2020, the outbreak of the covid-19 directly pulled the amusement park industry to the bottom. According to the industry report, the total industry revenue in 2020 was only 1,447 million. In the next five years, operators will invest in new products to achieve the increasing number of visitors. And as the economy recovers from the negative impact of the epidemic, industrial revenue will grow at an annual rate of 6.3%.

Figure 2 - Amusement Park Industry Yearly Revenue (Source: IBISworld)

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Figure 3 - Revenue Segments in Amusement Park Industry

Market segment The amusement parks market has been divided into domestic visitors aged 18 and under, domestic visitors aged 19-39, domestic visitors aged 40 and over and international visitors. Domestic visitors aged 19-39 make up the highest proportion of the Amusement Park industry segments as it is responsible for 40.6% of the income generated. A potential reason for this could be since this age demographic are typically adventurous, have young kids and still have the desire to feel like a kid ....