Evolution of the Vacation Product

1. Evolution of theVacationProduct June, 2012 Mexico City, Mexico

2. “Adaptation to the pressures of survival” Evolution:

3. In understanding the adaptation of our product, we need to look at those “survival pressures” that shape it and how they impact new product development

4. This implies that you cannot understand the transformation of that product without strategically evaluating: • Context within which that changing product has inter-dependency • This specifically means macro level pressure from both economic circumstances and market dynamics • The business model by which the vacation product must be marketed and sold to the Consumer within that context • The value proposition

5. Macro level pressures and market dynamics: • Economic realignment • Shrinking money supply means credit suffocation • Product relevance – consumer expectations - short term thinking - generational shifts in consumer patterns • Online market dominance – Social media, Google, Groupon etc.

6. … and their product impact: • Cost effective product. Evident intrinsic value • Short term memberships based on continuity model • Vertical integration, intense loyalty programs, a market share product that can up-sell • Dramatic market segmentation means a tightly targeted product design. Know who you are selling to and design for them. Segmented product, less generalization.

7. The business model within the macro context: • Credit driven • Cash flow driven • 50% revenue left on the table • 40 - 50% cost of selling

8. … and their product impact: • Fusion of profit centers • Intense back and front office IT • Product designed for metrics • Multiple profit centers, dovetailed products • The sales process more controlled and systemic • Structured commissions per down payment • Control the point of purchase. Empower the buyer, disempower the seller

9. TheValueProposition • Adapted to a passive buying culture • Cost and value driven – shift in emphasis from desire driven • Easy, simple, clean usage model

10. … and it’s product impact: • Hotel/Vacation club/leisure-lifestyle club • Financial logic built in to the product. • Continuity model and pay as you go. • On line usage • No affectation of inventory - a discount model • Processable at low down payment • Tightly defined price points • Incentivize larger deals - equilibrium between down payment, terms, and interest rates.