daniel-j-lee.com  · Web viewUpon acceptance of our proposal, Norris Hot Springs will see an increase in clientele and revenue as well as visibility and awareness. Current Situation

NORRIS HOT SPRINGS

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Table of Contents

Executive Summary ………………………………………………………………………….3

Macroenvironment……………………………………………………………………………4

Overall Market Analysis……………………………………………………………………...9

Current Situation – Internal………………………………………………………………….11

Summary of Situational Analysis……………………………………………………………13

Marketing Research (Segmentation)………………………………………...………………16

Product…………………………………………………………………………………….....22

Promotion………………………………………………………………………………...….24

Price……………………………………………………………………………………....….30

Place…………………………………………………………………………………………31

Appendix…………………………………………………………………………………….32

Sources……………………………………………………………………………………….38

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Executive Summary

Through extensive research, we analyzed Norris Hot Springs. While doing so, we

focused on a few key points to help propel our marketing efforts:

Its external environment

o Market details

o Competitors

o Hot Springs specific environment (e.g. sociocultural and political factors)

Its internal environment

o History

o Seasonality

o Current situation

Once this research was completed, we developed goals that pertained to our chosen market

segments. We chose our segments carefully and based them off a few specific criteria:

Ease of reach

Cost of reach

Likelihood of success

Using our research and chosen market segments, we then put together a marketing mix. Should

Norris Hot Springs choose to utilize our proposed mix, it can expect to see 342 new customers as

well as a significant return on investment for the marketing efforts.

Though Norris Hot Springs finds success in its current efforts, there is always room for

improvement. Upon acceptance of our proposal, Norris Hot Springs will see an increase in

clientele and revenue as well as visibility and awareness.

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Current Situation - Macroenvironment

Every business functions within a certain environment. Here, we break down

that of Norris, discussing the sociocultural, technological, economic, ecological,

political, legal, ethical and competitive components. Each of these factors affect a

business in different and often significant ways. It is important to a business’s

success that it be aware of such factors. It is these factors that will build the

foundation on which we will develop a marketing platform.

Sociocultural: Balneology, the study of the therapeutic benefits of naturally occurring mineral

waters, is not yet well-known within the United States. However, as it becomes more prominent,

businesses such as Norris Hot Springs could benefit greatly, if the concept is embraced and

utilized appropriately. Further, as balneology gains ground, we may see a shift towards FDA

(Food & Drug Administration) approval. Currently, the FDA prevents unsubstantiated claims

regarding the health benefits of such waters. As studies achieve greater depth and awareness, the

FDA may reevaluate its stance.

Norris provides an excellent opportunity for social relaxation, perfect for a college town

such as Bozeman. However, this could be encouraged by offering group packages/deals, further

appealing to the average broke college student. While being a social and therapeutic experience,

Norris maintains the outlook of a community health conscious business that strives to preserve

natural resources. In a town such a Bozeman, Norris could profit from advertising this aspect of

its business, thus drawing in the more community health-oriented and ‘green’ members of the

community.

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Technological: Norris Hot Springs employs the use of very basic technology. As technology

advances would most likely be used in the restaurant portion of the business and not the water

process of the hot springs. Norris can also harness the use of social media to draw people to the

hot springs, by utilizing promotions, or pictures of people having fun. However, as technology

develops in terms of the imitation/reproduction of natural mineral waters, Norris could face the

threat of imitating competitors. On the other hand, geothermal technologies are on the rise,

gaining efficiency every day. As this continues to happen, Norris could become an even more

self-sustained and eco-friendly facility by using the heat from its natural hot springs water to

generate power. Another option for incorporating new technology into the establishment is to

enhance the experience of handicapped customers. Norris could make the hot springs more user

friendly for the handicapped by adding lifts to aid them in and out of the springs.

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Ecological: The springs at Norris flow at 60 gallons per minute. Norris drains the springs back

into the wetlands where it flows into the Madison River, which is the spring’s natural course.

Further, this water from the natural springs does not have chemicals added to it and is eventually

returned back to the Madison River, without harm to any plants or animals. So the environment

surrounding Norris is not being negatively affected. Allowing the warm spring water to continue

on its natural course actually helps fish and birds thrive throughout the harshest winters by

keeping water sources open. In addition to maintaining a minimal impact the Madison River,

Norris also promotes a minimal carbon footprint. It does this by sourcing much of its restaurant

food in Montana, as well as growing its own organic gardens, and producing organic

microbrews. Norris drains the springs back into the wetlands where it flows into the Madison

River, which is the spring’s natural course.

Economic: The United States ended 2015 with an inflation rate of .7% which is expected to go

up to an average of 1.49% in 2016. This rise in inflation could cause decreased spending among

college students, as most of them work at least part-time during school. In this case, Norris may

have to adjust to keep customers coming. However, at this inflationary level, and over the entire

course of the year, this increase may not have a great enough effect to deter customers. Further,

as university costs continue to rise (the average increased cost of attending a four-year public

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school is 3.4% per year), college students may be deterred. More relative to Norris’s potential

customers are gas prices.

As a business that is located 36 miles outside of Bozeman, gas prices play a key role in travel

decisions. Montana has a higher than average gas price nationwide, although statewide current

prices are at a recent low. However, many other states are experiencing significant lows in fuel

prices, possibly encouraging travel to places such as Yellowstone, which is close to Norris. This

could result in a higher than average out of state attendance at Norris.

Political: Politically, a business similar to Norris Hot Springs is not a target. Since it is a self-

sufficient and somewhat isolated business it is hard to imagine any kind of political upset as a

result of the owner’s actions. Norris Hot Springs’ owners do not publicize any of their political

views which helps protect the business from potential controversy. This is not to say, however,

that Norris is completely immune from political changes. If the EPA (Environmental Protection

Agency) were to institute a ban on the use of public hot springs water, the business would be

hard pressed to remain profitable. A government agency could also pass an additional tax on the

use of public water, which could cut into profits.

Legal: Montana’s health and safety regulations regarding hot springs are very simple and brief.

According to the Montana Department of Health and Human Services, they only regard water

temperature, quality, and pH balance. In addition to maintaining safety regulations, annual

licenses are required. Compliance to these health and safety regulations is easy to accomplish

and inexpensive. One potential regulation change is liquor licensing. Montana is notorious for

unusual laws about consumption and sale of alcohol. It is still an evolving part of the state law.

In the event of a regulation change Norris could suffer from a substantial loss of profit.

Ethical: When the business came into new ownership in 2004 it also came into a new era of

sustainable living. The owner is an advocate for renewable energy, recycling, and growing the

food which is served on the premises. If the owners are unable to grow the food themselves, they

commit themselves to sourcing it locally. This attitude is an excellent message to go along with a

natural hot springs as it adds a dynamic element to the brand.

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Competitive: Norris Hot Springs does a number of things to stay competitive with other

natural hot springs in the area. Firstly, when it comes to the menu they try to grow and locally

source as much of their food as possible. The Norris Hot Springs facility also has spots to park

traveler’s campers or RVs. Another advantage it has over competitors is its prices for each

individual. The price for an adult soak at Norris Hot Springs is $7.00.  This is the least expensive

admission to a hot springs business in the area, ahead of Bozeman Hot Springs where admission

costs $8.50 and Chico Hot Springs where admission costs $7.50. Some disadvantages would be

the location, since it is approximately 36 miles away from Bozeman and right next to the

highway. Anyone considering going to a local hot springs might be turned off once they factor in

the cost of fuel to get there and the down time from the drive could take away from their relaxing

time. Another issue could be the size of the premise, it is smaller than most and people could find

it difficult to find a parking spot on a very busy day.

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Current Situation – Overall Market Analysis

In addition to being aware of its broad external environment, it is important

to analyze the consumer market and competitive market within which a business

hopes to succeed. Here, we'll discuss relevant details regarding Norris's market

such as size, segments, and trends. In addition, we look to our competitors to

determine what portion of the market share we hold and would like to hold. To

help us determine how to achieve this portion, we'll discuss our competitor’s

strengths and weaknesses in much the same way that we did our own.

Norris Hot Springs has some very tough competition that is constantly evolving to stay

competitive and adapting to meet customer’s needs. Some of the competitor’s strengths would be

convenient location, size of their facility, and the sheer amount of luxuries. Another issue Norris

faces is the fact that these competitors have a larger grasp on the hot springs market and thus

more money to spend on their marketing. This then allows them to reach more customers with

higher efficiency. Norris Hot Springs' advantage is that its scenic remote location is ideal for

those on vacation or otherwise looking in to take in Montana's beauty. Another particular edge

that Norris holds is its organic orientation. By being health and environmentally conscious,

Norris appeals to a segment of consumers that its competitors miss.

To determine the size of the hot springs market, we used Hoovers to get an idea of how

much revenue is generated in the market by the competitors vs. Norris Hot Springs. According to

Hoover in this particular market, there is a total of 4.22 million dollars generated annually.

Norris Hot Springs makes roughly 130,000 dollars (about 3% of the market.) With our proposed

marketing plan we intend to grasp another 21,600 dollars of the market. This would increase

Norris Hot Springs' business by approximately 17 % and capture another 0.5% of the market.

This should be easy to do as the market is actually increasing every year. Bozeman's population

is in a trend of increasing its population by 2.35% annually.

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Norris Hot Springs' segment is comprised mostly of young adults and adults, from the

ages of 20 to 44. Most of the young adults that attend are college students at Montana State

University. The adults that attend, on the other hand, are primarily those with children, both

those who live in/around Bozeman and those traveling through the area on vacations. These

segments have two key characteristics in common: a willingness to travel out to Norris and a

preference for organically produced foods and beverages.

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Norris Hot Springs' trend would be the majority of students coming back to school in the

fall. Students will frequently visit to de-stress and relax after long days of classes and sometimes

just for a nice soak after a long day of recreational activities. Another influx of people could be

summer time when Norris Hot Springs has all of their food items available on the menu and

adults with families are traveling through the area. Some of these adults with families could be

locals who now have more time to get away since their children are on summer break.

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Current Situation - Internal

To move forward with a marketing plan, we need to understand the internal

situation of Norris, including its history, where it came from and how it functions

today.

History: Norris hot springs first became a well-known in the 1860s by miners around the area.

The miners put wood planking to surround the hot springs to make it more inviting. The gate

valve for hot springs that they came up with is still in use today. Once the town of Norris became

more populated, the hot springs were fenced in and locked. However, it was still open to the

locals without running water.

The next time Norris hot springs was put to use was in the 1960s and 1970s by locals and

students who heard of it by word of mouth. It was still fenced in and not yet a business so they

would have to climb over the fence. In 1972 the property was bought and the hot springs became

an unofficial business. The owners Doris and Mike Zankowski decided to have a nude night

every week and charged $5 admission. They were an eccentric couple that first gave Norris hot

springs a reputation for a fun and new experience for locals.

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In 2004, Norris Hot Springs was sold to the current owner, Holly Hienzmann. It now has

a restaurant, beer and wine selection, and live music. Their current philosophy is this: “Our

mission is to benefit the health of the community by protecting our land's resources while

harnessing the hot springs' potential to heat public spaces, enhance local food production, and

provide a safe, relaxing soak in all of Montana's seasons.”

Seasonality: Because Norris is an outdoor, uncovered pool, the seasons impact the business.

Summer is their busiest time. It is when all the tourists are visiting, people are camping, and

everyone is out looking for new ways to enjoy the outdoors. While Norris is still a fantastic

experience the rest of the year, summer is their most favored time. Norris Hot Springs modifies

their pool hours accordingly. In June-August they are open 10 a.m. to 10 p.m. Wednesday-

Monday. While September-May they are only open five days a week and have fewer open hours.

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Summary of Situation Analysis

Just as each business must be aware of the environment within which it

functions, it must be aware of itself. For a business, such awareness includes its

strengths and weakness and what is can do about and with each. Further, it is

important to know opportunities available as well as threats to the business. Here,

we discuss each of these aspects of Norris specifically.

Strengths: Norris Hot Springs has a major strength in its values and social/environmental

responsibility. This acts as a strength both for lowering costs and appealing to potential patrons.

The recent movement toward being self-sustainable and environmentally conscious in an area in

which Norris is ahead of the curve. Another aspect of their business that is a strength is its small

size, which enables it to give attention and service to each person that visits. Norris frequently

had live music as well, to which its size lends the feeling of a private and intimate show for each

person. Further, its competitive prices appeal to a wide range of consumers that may be deterred

by the prices of its competitors. Additionally, the secluded and far away location makes Norris

an excellent getaway destination. Those looking to get away for a weekend of even just a night in

a relaxed, quiet, beautiful, and natural setting will find all of that at Norris Hot Springs.

Weaknesses: Norris needs to work on its social media presence. Though it does have a

Facebook page, only 1,200 people have liked it, compared its competitors which have either

2,200 or 30,200 likes. Having a smaller customer population certainly takes away from funding

that can go toward marketing. Another weakness lies in the fact that Norris is not open as many

hours as its competitors, being open 12 hours a day as opposed to 18 or 24. Due to its somewhat

remote location, some people could also be hindered from travel to Norris. Finally, competitors

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have diversified themselves in the market by offering rooms for customers to stay in, fitness

areas, spas, and luxurious dining options.

Opportunities: Perhaps most important are the opportunities that Norris has, and there are

many. As a music venue, Norris could reach out to arts and entertainment associations for

partnerships. This could allow for better known artists which could in turn draw in more and

different crowds. This is not the only opportunity for partnerships, though. Due to its remote

location on the route to the mountains, Norris could look to Big Sky for partnerships as well.

From promoting one another to sponsorships of various sorts, the options in this area are great.

Further, partnerships with Big Sky could draw in some of the wealthier parts of the market,

helping Norris expand its market share in a new direction.

In terms of who to target, there are several choices as well. Specifically, Norris could

exercise efforts explicit to wealthy part-time residents (such as those with time shares or seasonal

homes in the area), similarly situated permanent residents such as those near Gallatin Gateway,

or tourists who frequent the area on trips to Big Sky or through Yellowstone Park. Tourism

offers an abundance of potential customers both as a reservoir of ever-new customers and

potential long-term customers (those who may come back year to year). Because of this variety,

Norris could extend its marketing efforts throughout the park as well as in several other

directions again seeking potential partnerships.

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Threats: Though a strong business, Norris Hot Springs faces its share of threats. Local

competitors, for one, will always be a factor, with both Chico and Bozeman Hot Springs nearby

and competitive on several fronts. Further, although a hot springs business is an effective year-

round attraction, seasons do affect business. Because of Norris’s location, the summer season is

important for traffic. Most tourists do their traveling to/through Yellowstone in the summer

months. It is these people that comprise a large portion of Norris’ clientele. Along with

Montana’s summer season comes wildfires. At times these fires are rampant enough to cause

high and unhealthy particulate levels in the air. During such years, many people may opt for an

indoor option over Norris. Likewise, a particularly harsh winter could affect winter traffic.

People may be deterred by things such as bad roads and other poor driving conditions.

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Marketing Research

At this point in any marketing plan, a business must evaluate and choose

which market(s) it would like to target. To do so, the general public must be

broken up into smaller and more specific segments. After analyzing these segments

and deciding which would be most profitable to pursue, a business will develop a

specific way to do so (called the marketing mix.) Here, we'll describe a few

segments that we have chosen for Norris to pursue along with the marketing mix

for each. In addition, we will list segments that we passed over.

To begin segmenting Norris Hot Springs’ market, we broke the market as a whole into

age segments and income segments. After doing so, we considered where they live and how they

travel, as well as more qualitative factors such as whether or not they enjoy live music. First we

take into consideration the children and teenagers group, aged 5-19 and living within 49 miles.

They are looking for a fun get away with their families but they aren't as picky when it comes to

which hot spring they visit. This age group tends to want to go to the closest hot spring.

Age Segment Size (2010) Growth 2000 to

2014

% of Total Ease of Access

Children (5-14) 10907 15.35% 12% Hard

Teenagers (15-19) 6877 5.54% 8% Hard

Young Adults (20-

29)

19339 24.35% 21% Easy

Adults (30-44) 19330 11.49% 21% Easy

Middle Aged (45-

64)

24544 34.76% 27% Easy

Elderly (65+) 10077 31.07% 11% Hard

Table 1: Age Distribution of Gallatin and Madison County

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12%

8%

21%

21%

27%

11%

Age Distribution

5 to 1415 to 1920 to 2930 to 4445 to 6465+

Chart 1: Age Distribution of Gallatin and Madison County

The second segment is young adults who are 20-29 years old. These customers are people

who are looking for a hot springs business that is cheaper than others but still provides the same

services. Most of these young adults are people attending college at MSU and make less than

24,999 dollars annually. They will also live within 49 miles of the hot springs. This group will

also be very active with outdoor activities such as camping, skiing, snowboarding, hiking and

hunting. After a long day of playing on the mountain they are going to be looking for somewhere

to go that will help soothe their aching bodies.

The third segment will be adults that are 30-44 years old. These people are most likely to

be married and have families. And have an average annual income of 50,000 to 99,000 dollars.

These families are going to be looking for an easy get away with their kids to relax. Family

oriented people are going to be looking for healthy ways to feed their kids. Norris Hot Springs'

organic menu will be very appealing to them. This age group will also appreciate local artists

that are likely to be playing at Norris Hot Springs.

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Income Segment # of Households Growth from

2013 to 2014 (%)

% of Total Ease of Access

Less than $10,000 1302 -0.19 8% Very Hard

$10,000 to $14,999 1045 -0.79 7% Hard

$15,000 to $24,999 2170 0.77 14% Hard

$25,000 to $34,999 1768 -2.22 11% Medium

$35,000 to $49,999 2218 0.10 14% Medium

$50,000 to $74,999 3102 2.73 19% Easy

$75,000 to $99,999 2138 13.25 13% Easy

$100,000 to

$149,999

1430 -1.07 9% Very Easy

$150,000 to

$199,999

402 -1.69 3% Very Easy

$200,000 or more 482 8.74 3% Very Easy

Table 2: Income Distribution of Gallatin and Madison County

8%7%

14%

11%

14%19%

13%

9%3%3%

Income Distribution

< $10,000$10,000 - $14,999$15,000 - $24,999$25,000 - $34,999$35,000 - $49,999$50,000 - $74,999$75,000 - $99,999$100,000 - $149,999$150,000 - $199,999> $200,000

Chart 2: Income Distribution of Gallatin and Madison County

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The fourth segment will be middle aged adults in the age range of 45-65 years old. These

people will have income in excess of 100,000 dollars. Most of these people will be just traveling

through Montana or visiting for periods of time to stay at their vacation homes. These people are

in Montana just to get away and enjoy its scenic, slower paced lifestyle.

The fifth and final segment is our elderly group that is 65 years or older. This group will be

retired and more than likely not bringing in much income. These people will be looking for

locally produced food and will appreciate the local artists. Further, those in this segment will be

very attracted to the waters medicinal purposes that will help soothe their aching backs and

joints.

Table 3: Population by Range from Norris Hot Springs

Miles From Norris Population In

Radius

Marginal

Population

Major Cities

Added

Gas Cost (20 mpg

@ $2.00/gal)

0 to 9 558 558 Norris $1.80

10 to 24 10,208 9,650 Ennis $4.80

25 to 49 105,168 94,960 Bozeman $9.80

50 to 74 200,112 94,944 Butte & Helena $14.80

75 to 99 245,533 45,421 Dillon $19.80

100 to 124 328,213 82,680 Rexburg $24.80

125 to 150 700,559 372,346 Missoula & Idaho

Falls

$30.00

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0 to 9 10 to 24 25 to 49 50 to 74 75 to 99 100 to 124 125 to 1500

200000

400000

600000

800000

1000000

1200000

Population by Range from Norris Hot Springs

Population in Radius Total Population

Chart 3: Population by Range from Norris Hot Springs

Our chosen segment: adults 20-44, within 74 miles, and a household income of 50,000 to

99,000 who are health oriented and enjoy live music.

The reason we believe Norris Hot Springs should pursue these age groups is because

they are the most active groups and also make up the largest population in the area. These two

groups' populations are increasing every year. They also put the most value in what Norris Hot

Springs has to offer. These people want somewhere to go to get away, somewhere with a lot to

offer but that doesn't break the bank.

Many in these age groups have children, encouraging them to find a cost friendly

getaway that is close to home. Further, the appeal of organic and local food is high as customers

are not only looking out for themselves, but potentially their children as well. This applies to the

music factor too, live music in a family friendly environment being an incredible and rare

opportunity.

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Segments that didn't make the cut

The reasons we didn’t choose the other groups was because teenagers and children don’t

make the final decision for where the family is going. And most either don't have a driver's

license or don’t have enough money to go to Norris. The middle aged adults would be harder to

reach when we are trying to read monthly results. The people that are passing through will most

likely be on the interstate and billboard advertising is very expensive and the payout we would

get from that wouldn't be as desired as other groups. And if these people are coming to stay at

their getaway homes they are most likely to stay close or around those households and won't

venture out as consistently as others. The reason we won't be targeting elderly people as they

aren't as apt to travel very far from their home unless it is with their younger generation families

who would transport them usually.

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Marketing Strategy - Product

What it is that Norris Hot Springs has to offer is fairly clear. However, how

we address this will vary. Here, we lay out the product that Norris Hot Springs

offers in detail, including all aspects that a customer would desire.

When people are thinking of going to Norris Hot Springs they are looking to fulfill the

want or need for relaxation, a natural, beautiful setting, delicious food, a few beverages, local,

live music, and an opportunity to get away, maybe camp out, and have a good time. Norris

fulfills all of these wants and needs by having live music every Friday, Saturday, and Sunday,

serving local, organic, and fresh food, along with a wine, beer, and cider selection, the location is

in a beautiful setting and is just far away enough from town to make it a get away with an option

to camp there.

Norris Hot Springs is simple and has a rustic, authentic feel to it. It brands itself as being

solely a hot spring. However, they enhance that by bringing attention to its local, organic food,

the rejuvenating water, and its weekly live music. It is very different from the other two hot

springs businesses in the area. The first being Chico Hot Springs in Paradise Valley. They brand

themselves as resort and day spa. It offers hotel rooms and cabins to stay in instead of a camping

option. They also have a fully stocked bar and sit down restaurant. It offers all kinds of activities

and amenities like a day spa, dogsled treks, a horse stable, rafting, skiing and snow shoeing, and

a gift shop. It has more hours than Norris does but its pricing is similar for the use of its pool.

The other hot spring business is Bozeman Hot Springs in Four Corners. It brands itself as a spa

and fitness business. It has indoor and outdoor pools (including the addition of four more new

outdoor pools this past March), a steam room, fitness center, and day spa. An interesting fact

about the business is that it has very unusual hours. It has normal hours Sunday-Thursday but on

Fridays it is only open until sundown and then does not open again until sundown on Saturdays.

It is due to the owners’ religious affiliation as Seventh-day Adventists. This is also why it does

not serve any alcohol. From our analysis, it seems that Bozeman Hot Springs and Chico Hot

Springs have more competition between the two of them because they have more similarities.

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Norris Hot Springs is in more of its own category and is not trying to be like the other hot spring

businesses.

Norris Hot Springs is in the maturity of the product life cycle. It is an established

business. It does not have plans to significantly change anything about its business. So the

important thing for Norris is to just keep the promotion steady and consistent, reminding

potential customers of the familiarity and reliability of its long-term business.

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Marketing Strategy - Promotion

At this point in our marketing plan, we have identified several key ways to

attract new customers to Norris Hot Springs. The added income from the

newcomers will generate more revenue and a portion of this additional revenue

will be devoted to marketing. We recommend different approaches employing

multiple types of marketing to reach out to desired segmented people. Over time

the number of customers will increase and so will profits. Norris will see a great

improvement throughout the annual cycle of business by following these strategies.

Table 4: Anticipated New Customers by Marketing Method.

The primary goal we have developed for Norris Hot Springs is to have an additional 10

customers per day, on average, visit the hot springs. We believe this to be an attainable goal

because there has been limited marketing done for the business. We strongly believe that if

Norris Hot Springs were to conduct marketing communications in the Bozeman area, the hot

springs’ customer base would grow substantially. Using public revenue data, we calculate that

there are 21,666 paid visits to Norris Hot Springs every year. An additional 300 newcomers each

month will add $1,800 worth of revenue on a monthly basis. Of this $1,800, 33% could be saved

to be put toward marketing communications, totaling $600. We chose 33% to allow our

promotion plan to result in an overall increase in profits.

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In order to efficiently allocate the funds earmarked for marketing communications we

have multiple recommendations. In the first month we plan to print and distribute flyers (See

Figure 1) around Bozeman for a concert series featuring local musicians. These flyers would go

up on campus, in coffee shops, and anywhere allowed downtown. Further, pending approval,

they could be distributed in places that more of our target segments would frequent such as the

Emerson Center and the Filling Station. By using marketing communications and event

marketing in this manner, we believe that Norris would experience a significant return on

investment (ROI). The flyers should attract young adults, and middle aged people, who are

familiar with local name musicians. If Norris was to distribute 2,500 flyers at a cost of $45 and

achieve a 3% conversion rate, the effective rate for flyers that we found based on our research,

an estimated 75 customers would make the trip to the hot springs. This would bring Norris a

quarter of the way to the goal of 300 additional customers per month. From these flyers, Norris

Hot Springs would receive a 900% ROI, which shows that this is an excellent use of limited

funds.

To determine if the effort is successful, customers could be asked to fill out a survey

when they were leaving. The survey could ask how the customers heard about Norris Hot

Springs and if it was their first time there. Once they fill out the survey, there could be a blank

portion at the end for customers to make suggestions to make the experience better for others. It

would be beneficial if the customers could place their

email address on the survey so we can keep in contact

to inform them of future events. This would allow you

to implement a form of direct marketing through email

contact with former customers. (See appendix for

survey example)

For a digital marketing campaign, we believe

that Norris Hot Springs should take advantage of

Facebook’s digital advertising platform (See Figures

3&4). In our research we found that the average cost

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per click for the travel and leisure category was $0.35, with a 0.263% click through rate. This

means that for $0.35 our ad can be seen by approximately 380 people, which we find to be a

good value. However, the average cost per impression for the travel category is $0.72, which is a

better value if your firm is just trying to increase exposure. You can have the number of people

in Gallatin County view the ad for a mere $6.82. We recommend that Norris use a CPM method

vs a CPC method as we do not believe that a CPC advertising campaign would be profitable for

Norris. By using digital marketing, we are trying to target our teenager and young adult

segments. These people are more prone to be using social media often and should likely see our

ads. If Norris were to spend $220 on Facebook advertising 305,000 people would be able to view

the ad by using the CPM method. From these 305,000 people we expect to convert 0.05%,

gaining 152 customers from the campaign. This equates to $1064 in revenue and a 384% ROI.

As a cost-free addition, Norris Hot Springs can use Instagram to share photos and event

promotions with its fans. Instagram provides an excellent opportunity to stay in touch with

customers while promoting business. Further, it allows a business to express itself visually,

inspiring its customers by showing them was it has to offer rather than simply telling them.

A third marketing communications activity we recommend is an effective public relations

campaign. Specifically, we recommend partnering with Big Brothers, Big Sisters to sponsor river

float trips where we also perform clean ups of the river. Our goal with this is to get Norris Hot

Springs more involved in its community by supporting local programs, and teaching the youth

the importance of protecting their environment. The cost of implementing this project is

relatively low, the majority of cost will come from buying inner tubes to float with. The tubes

cost between $7-9 each, but they can be reused multiple times, making them a long term

investment. If Norris purchased 30 to begin, it would cost around $240, but this cost would be

spread out over a few months, and they could purchase a few tubes when necessary throughout

the floating months along with trash bags to collect the trash in.

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Figure 7: Calendar of Events

To support our public relations efforts we recommend writing news releases and

distributing them to the media. Because the recommended partner is Big Brothers Big Sisters,

that organization likely already has means to promote partnerships and events, and will be able to

help. The most important aspect we can influence is making sure our PR campaign is received in

the public. To do so, we will try to convince the Bozeman Daily Chronicle or the MSU Exponent

to write an article about what we are doing with Big Brothers, Big Sisters. This would result in

the community seeing Norris Hot Springs in a helpful and friendly light and could provide free

publicity as well. This could promote our PR events and Norris as a whole. In addition, an article

is free newspaper space, a welcomed alternative to buying digital advertising. We expect the ROI

to be low on this method, but it will reinforce Norris as an eco-friendly hot springs. If an article

is released in the Chronicle, we would expect to receive 15 new patrons at the hot springs,

assuming that 0.05% of Bozeman Daily Chronicle’s 30,000 readers visit the hot springs. This is

$105 in revenue and a -129% ROI, but the tubes are fixed costs after this and the ROI will

improve over time.

Early in our marketing communications campaign, during that first month, we

recommend that Norris Hot Springs generate other “free” marketing communications, such as a

company blog (See Figure 5), to keep customers aware of current events as well as discounts and

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promotions available. We also recommend developing a YouTube (See Figure 6) channel that

would have videos of the hot springs showing customers at the location enjoying all that Norris

has to offer. During the second month, and going forward, we plan on doing more Facebook

communications, which are another low-cost option for reaching the target audiences. Because

this is once again another form of digital marketing we will be targeting young adults and adults

ranging from the ages of 20-44, because they be more likely to surf the internet for a variety of

reasons.

Figure 8: Wristband Samples

A final

recommendation we have

for Norris Hot Springs is to

leverage personal selling to

boost attendance and sales. We

suggest using local outdoor

recreational locations as a place to sell wristbands (See Figure 8) to the hot springs. Going to

either the Big Sky or Bridger ski resorts where a relaxing soak in a hot spring would be ideally

appealing to people finishing a long day of skiing or hiking. (Note that this would be contingent

upon permission from the resorts as well as costs associated with purchasing the right to solicit.)

Norris would be selling services by going to the consumers. Selling from locations such as these

helps Norris reach active people, as well as the wealthier adults that we have chosen to target.

Wristbands could be sold with the stipulation that they be used within a certain number of days.

Should a customer not use their wristbands within this period, Norris still would have profited.

Further, because these wristbands would be sold at a discounted price, the aforementioned

customers would be less likely to feel slighted. Tickets can be purchased at Staples for a cost of

$11.49 for 200. Transportation is estimated at $45 to Big Sky and Bridger ski resorts and

materials for the table are estimated at $25. Both Bridger and Big Sky receive a large amount of

skiers everyday so we believe that obtaining 100 customers from these venues in well within the

realm of possibility. As they are sold at a discount of $6 we expect Norris could receive $600 in

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revenue from selling at tables. This is a 636% ROI and would be great for Norris to implement in

the early months.

If Norris were to implement the aforementioned marketing strategies, an estimated 342

patrons would visit the hot springs who might not have otherwise. Norris would achieve an

average 421.5% ROI which is a great return and would reinforce one of the hot springs’ core

values in the community as being an eco-friendly hot springs.

Graph 4: Revenue and Costs by Marketing Method

(See appendix for additional promotional items)

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Marketing Strategy - Price

Just as a business chooses promotional strategies based on its target market

segment, it also designs specific pricing strategies for this market. Here, we'll lay

out our strategies for each of Norris Hot Springs' product components: services and

dining.

Pricing for our products will vary depending on the targeted segments for Norris Hot

Springs. The pricing developed will be very competitively priced yet hoping to be slightly

cheaper than competitors to offset the cost of driving to Norris Hot Springs.

One thing that Norris Hot Springs has a competitive advantage on is its food pricing.

Growing an organic menu in its backyard is a great idea. Cutting out the middleman and

shipping for food can be very cost effective. People with families will for sure be looking for

healthy food for their kids but food that isn't going to break the bank in costs.

Other cost effective things Norris Hot Springs will have to offer will be the promotional

discount wristbands and tickets that they will be handing out when at Bridger Bowl or the Big

Sky Resort. This will be to gain more attraction from our young adult age group.

Norris Hot Springs should also add a discount package for families that are bringing four

or more people to enjoy their hot spring. This pricing will greatly have an effect on whether or

not families would choose Norris Hot Springs. This will help keep customers coming back time

after time again.

The prices for Norris Hot Springs aren't very elastic. If prices are raised to an amount

that’s higher than the competitors then people more than likely will not want to drive to Norris.

The added cost of fuel to get there has an impact. Also Norris Hot Springs doesn’t have as many

pools as other facilities so people would be hesitant to pay extra costs when they can't visually

see where the extra money is going.

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Marketing Strategy - Place

Though the place of a business such as this may seem obvious, as it is fixed,

place is still an important factor in each marketing plan. The way that place is

marketed can be manipulated to best fit the targeted market segment.

The place of Norris is unique in the fact that it is in a fixed location. Norris could expand

locations and open a satellite location closer to Bozeman. However, after our research on

geothermal data, the only logical spot for them to expand to is occupied by Norris' competitor,

Bozeman Hot Springs. A hot springs is limited to certain areas of high geothermal activity, and

using public geological data our team was unable to find a location closer to Bozeman that would

be suitable. Our team was able to find another suitable spot in Ennis, but we do not recommend

that Norris open a satellite hot springs there as we do not believe the population of Ennis is

enough to sustain long term operation.

We do advise that they open up a booth for selling the wristbands as we mentioned in our

recommended marketing mix. This is a very cost effective, and mobile way to promote Norris

Hot Springs and is, in essence, creating another temporary Norris establishment. Another action

that Norris should consider is starting a bus service running to and from Norris to Bozeman. This

will facilitate travelling to Norris in a safer manner from Bozeman, as well as promote Norris'

stance on being an eco-friendly facility. We believe that Norris should operate the bus to and

from Bozeman as it is the highest concentrated city within our recommended target range of 74

miles.

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Appendix

Figure 1: Flyer Example

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Figure 2: Instagram Post Example

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Figure 3: Facebook Ad Example

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Figure 4: Facebook Ad Overview

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Figure 5: Blog Post Example

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Figure 6: YouTube Video Example

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Works Cited

Heinzmann, H. (2016, April 22). History. Retrieved from Norris Hot Springs.com:

https://norrishotsprings.com/Soak/History

"Sales Leads | Company Info | Industry Analysis | Hoovers." Sales Leads | Company Info | Industry Analysis | Hoovers. N.P., n.d. Web. 27 Apr. 2016.