Adrenaline Air Sports BUS 660 Case Study

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Adrenaline Air SportsBUS 660 Case Study

• Constanza Asfura
• Audra Furukawa
• Alex Handler
• Enriqueta Tuason
• Florian Webber

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Sky Diving Humor
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Presentation Outline

• Case Overview
• Skydiving Facts
• SWOT Analysis
• Critical Issues and Recommendations
• Equipment
• Marketing
• New Customers
• Repeat Customers
• HR Issues
• IT Issues
• Long Term Strategies
• Conclusion

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Case Setting

• Case takes place at end of 2001
• Small grassroots skydiving company which opened
  for business in November 1999 in rural Virginia

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Adrenaline Air Sports Company Background

• Service provided Adrenaline through skydiving
• Tandem jumps for uncertified skydivers (connected
  to an instructor)
• Instruction to become a certified skydiver
• Inexpensive flight service for certified
  skydivers
• New Company open only on weekends
• Completely operated by part-time employees

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Skydiving Fun Facts

• 1960 Highest parachute jump ever made 102,800
  ft. (approx. 20 miles, 16 of which were freefall).

• 1972 Highest fall without a parachute 33,330
  ft over Czech Republic

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Skydiving Statistics

• 3.2 million dives were made by the 18,000
  certified skydivers

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SWOT (Internal Environment)

• Strengths
• Location
• ½ mile from Smith Mountain Lake
• Closest Competitors 140 miles away
• Proximity to college town
• Low Overhead
• Loyal Customers (Certified Skydivers only)

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SWOT (Internal Environment)

• Weaknesses
• Lack of clear differentiation between competitors
  no overall vision
• Less passenger capacity than all other
  competitors
• Skydiving Equipment and certification expensive
• Only one videographer and video production slow

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SWOT (External Environment)

• Opportunities
• Drop zone located ½ mile away from the beautiful
  and large Smith Mountain Lake
• boating, sailing, water skiing, swimming,
  fishing, golf, and parasailing offered
• up to 10,000 new people come to stay at the lake
  each week during the busy warm months

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SWOT (External Environment)

• Threats
• Seasonality (cold or rainy weather during part of
  year)
• Extreme sport image most people think activity
  is DANGEROUS
• Competition located closer to large metropolitan
  areas

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Critical Issues

• How can we increase revenue?
• How can we increase profit?

Limited Passenger Capacity
Attracting New Customers
Attracting Repeat Customers
Human Resource Issues
Information Technology
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Limited passenger capacity

• Currently own two Cessna 182 airplanes
• Each plane can hold only four people and the
  pilot
• Takes about one hour to fly passengers to 10,000
  feet and return to the ground

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Twin Otter

• Can seat up to 14 passengers and the pilot
• Can climb to 14,000 feet in 20 minutes
• Costs 425,000 compared to 45,000 for a Cessna
  182

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Additional Costs

• Fuel uses about 200 of fuel per hour compared
  to 30 per hour for each Cessna
• Three additional tandem canopies will cost about
  4,000 each or 12,000

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Projected Gross Revenue
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Projected Net Cash FlowsBefore Taxes
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Attracting New Customers

• Largest possible amount of revenue per person
  comes from a first-time skydiver
• Potential revenue of 249 per person
• 189 for the tandem jump plus 60 for the video

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Mediocre Marketing Skills

• 18 ½ X 11 inch posters
• Yellow Page Ads
• Ad in monthly Parachutist magazine
• Bumper stickers

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Marketing Focal Points

• ? ½ mile from Smith
  Mountain Lake boating, sailing, water
  skiing, swimming, fishing, golf, and
  parasailing
• 35 miles from Roanoke (pop. 94,911)
• Roanoke is adjacent to the city of Salem (pop.
  24,747)
• 43 miles from Blacksburg (pop.39,573) home to
  Virginia Tech (student pop. of 25,000)
• Closest competitor 140 miles away
• Untapped female market only 14.7

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How to Reach the Smith
Mountain Lake Market

• ? at their hotels, motels,
  timeshare, BBs, campsites,
  and hostels
• ? Offer front
  desk/concierge 10 referral
  incentive
• ? Stock their info centers/front
  desks/recreation rooms with our brochures,
  discount coupons, and posters
• ? Reciprocate with advertising at our site
  location and on our websites (with direct
  links/and or reservation info)

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Smith Mountain Lake Continued

• ? in exchange for advertisement space at their
  locations/websites (posters, brochures, coupons)
  and 10 referral
• ? Join Virginias Best Kept Secret!!.com.
  Virginias official premier Web-Hub receives
  thousands of hits a month

• ? through agreements with the boating, sailing,
  water skiing, swimming, fishing, golf, and
  parasailing companies at SML.
• ? Offer advertising space at our location site
  and on our websites with direct links

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How to Reach Local Community Market

• Partner with SML companies to create an
  Entertainment Book that is mailed directly to
  people (age 20-50) in Roanoke, Salem, and
  Blacksburg
• Entertainment Book contains information and
  discounts for all activities 40-off first-time
  jumpers
• 60-off discount for female first-time jumpers
  (posters and baby-tees)

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How to Reach the Virginia Tech
Market

• Increase presence of posters at college, bars,
  movie theaters, supermarkets, and restaurants
• Offer 20 discount w/ student ID and a
  two-for-one discount to first-time-jumpers
• Group discounts
• Virginia Tech Radio Ads (WVTF)

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Advertise through existing customers

• Options for bragging rights
• In addition to videotapes, we will offer mens
  tee-shirts, baseball caps, womens baby-tees (20
  markup price)
• Give away pens stickers

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Attracting Repeat Customers

• Only 3 of first time parachute jumpers come back
  for a second jump
• Approximate cost of first nine jumps is 1,582,
  or 175 a jump
• Most customers see skydiving as a once in a
  lifetime experience

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Recommendation 1 Offer First Time Jumpers a
Coupon

• Offer customer a 25 off coupon for their next
  jump
• Gives monetary incentive and provides
  advertisement
• If costs do not outweigh benefits, increase to
  40 off

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Recommendation 2 Create Skydiving Clubs

• Helps redefine his product
• Skydiving is more than an experience but a
  competitive sport
• Allows first time jumpers to meet experienced
  skydivers

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Recommendation 3 Offer repeat customers 2 for 1
deals

• Give repeat customers 50 off if they bring a
  first time jumper
• Significant monetary incentive for repeat
  customer
• Additional word-of-mouth advertising

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Human Resources

• Should Billy (the founder and owner) quit his day
  job?
• Should Adrenaline Air Sports hire full-time
  employees?

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Human Resources

• Billy should keep his job at Luna Innovations
• Continue to have part-time employees so the
  company does not need to worry about benefits

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Information Technology

• What can the company do to increase its
  competitive advantage and revenue through the use
  of information technology?

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Videography

• Train instructors how to video tape
• Purchase new equipment
• 3 digital video cameras
• Computer with digital editing software, CD and
  DVD burner, color printer

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Available Souvenirs

• Customized Video
• DVD or VHS
• Digital picture files
• Digital video clip
• Prints

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Company Website

• Online reservations
• Tracking of appointment request times
• Tracking of marketing promotions
• Partner tracking and reservations

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Accounting System

• Financial Accounting
• Managerial Accounting

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Summary of Recommendations

• Purchase Otter Airplane
• Implement new Marketing strategies
• New customers
• Returning customers
• Continue to have part-time employees
• Implement new videography methods
• Develop website
• Advertisement
• Marketing tracking system
• Implement Accounting tools

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Cash Disbursements
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Net Income
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Long Term Strategies

• Diversification to other opportunities relating
  to Smith Mountain Lake
• Purchase a property
• Billy could live there
• Hostel
• Campground
• Open up a bar / night club
• Partner with existing Parasailing Companies

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Join us for a dive!