Kiwi Experience Marketing Case Study

Edith Cowan University

Ricky Gordon
MKT1600

*Learning objective: To ensure that students understand the marketing concept, a marketing philosophy,
and the buyer decision process.

Statement: The buyer decision process varies according to the customer, the organisation, the market, and the
product. The buyer decision process has 3-time zones; the first-time zone is purchase behaviour. It is often
overlooked that after selecting a product a customer will form expectations which will be assessed and evaluated
in the second and third time zones.
Task 1: Using the Kiwi Experience product demonstrate your understanding of the first-time zone and the steps
a consumer may take when selecting [or not selecting] this product. Ensure you also discuss how expectations
influence customer satisfaction.
Statement: The total product is the totality of what an organisation delivers to the customer – what is promised,
therefore, what is expected, what is delivered, and what are the total costs to the customer.
Task 2: Given this statement, holistically, demonstrate your understanding of the total product relevant to the
example.
Statement: There are a number of product considerations that would be of importance to the marketing manager
of this business.
Task 3: Identify the most important [relevant] product considerations [6] and then discuss the implications, from
the perspective of a marketing practitioner, each selected product consideration.
Statement: There are 6 product components in the total product [goods, services, ideas, experiences, people,
and places].
Task 4: Identify the product components within the Kiwi Experience product; rank them by importance; justify
your decisions.
Task 1: Using the Kiwi Experience product demonstrate your understanding of the first-time zone and the steps a
consumer may take when selecting [or not selecting] this product. Ensure you also discuss how expectations influence
customer satisfaction.
A: The first time zone (of the 3) which influences customers and organisations is purchase behaviour. Purchase behaviour is
the process of a consumer searching, estimating and selecting a product. This process is conducted via an initial recognition
of an unmet need (biogenic/psychogenic) at the hands of the consumer. Of the 9 types of consumers as per Mitchell’s (1983)
VAL’s analysis, Kiwi Experience (KE) would be looking to facilitate the experiential group of consumers who are typically
young adults with a median age of 25, who spend on youthful products and services such as backpacking (Shih, 1986). It is
worth it to note that although the experiential group of consumers have a median age of 25, backpacking, however, is
categorised by a lifestyle and not an age bracket. Integral to marketing is the understanding that motivation stems from a
compulsion to fulfil a need, and a need can be internally driven or externally driven (social, cultural or economical) (Golf,
2014); i.e. the motivation to travel the world based on the internal need for self-realization. Using Pearce’s (2005) simplistic
leisure ladder which outlines layers of travel motivations adapted from Maslow’s hierarchy of needs, we can see that KE is
responding to the varying needs and motivations of backpackers via their product offerings and product augmentation.
Therefore KE caters to this lifestyle demographic as Pearce’s model shows by:
Stimulation needs (stronger emotions): The ‘Tamaki Maori Village Encounter’ may entrench stronger emotions as a
connection is made to the culture.
Social needs (family, friends): The shared bus hop on/hop off experience.
Self-esteem (self-development through cultural, nature or other activities): Confidence building via activities such as bungy
jumping and sky diving.
self-realization (search for happiness): Hedonic value is synonymous with the product offering due to the nature of the
market (backpacking/tourism) that KE operates in.
The consumer will then engage in a cost-benefit analysis, where there is an evaluation of the positive and negative (risks)
qualities of the product or organisation in order to proceed with the purchase, postpone the purchase or exit all together.
The decision behind the cost-benefit analysis is embedded in a consumers values (personal, human, cultural), consumption
costs (money, time, effort), situational factors/characteristics (customer, organisation, market, product) and consumption
qualities (functional, social, epistemic..). Some cost/risk and benefit factors that a consumer might consider when wishing to
engage with KE product offerings are: the financial cost of buying into the experience, the social risk of bad behaviour
backpacker counterparts and the self-esteem (epistemic) benefit of self-development through new novel experiences out of
your comfort zone. As highlighted before, all these are subjective in the sense that each consumer will vary in their response
to these costs/benefits based on their own perception; the intended market segment, the backpacker, holds certain values
such as low costs (value2), as opposed to the luxury hotel traveller. This is where KE steps in by implementing risk
management strategies such as financial guarantees and warranties (augmentation).

Once a consumer has decided to proceed, they consider the set of products which are best set to satisfy their needs based
on internal (e.g. past consumer experiences) and external (e.g. billboards) searches. The organisations objective is to
communicate by creating brand awareness – interlinking a consumer need to a brand and product and promoting product
qualities which are attributes that a consumer may seek in a product to satisfy their need. A rational consumer will then
evaluate suitable alternatives on the market that can best suit the needs they desire to be fulfilled, which is a process
explained via a selection of decision making rules. One of these rules is the brand affect rule, where based on perceived trust
and brand recognition, a consumer will opt for one product over the other. This is where KE may shine as they have a
reputable well know brand that a consumer may consider over their pricier competition: Stray.

Expectations are dynamic in that they are formed pre-purchase, during purchase, during use and after use. (Gardial et al.,
1994). A consumer turning into a customer is based on their perceived expectation that quality, value and satisfaction will
be provided. If this occurs, trust and loyal behaviour is earnt and organisational satisfaction is achieved (circle of satisfaction).
To simplify, expectation formation and product selection are synonymous in that a consumer will only select a product based
on its ability to satisfy expectations. Gnoth (1997) also highlights that motivation is a parameter component of expectation
formation; the motivation to satisfy a need comes with certain requirements and is embroiled in the expectation that when
selecting KE , it can fulfil them. At the moment of pre/post purchase KE customers may evaluate the product and price, while
after use, the results are the elements valued by the tourist (Rodrıguez et al., 2006). As KE offers a holiday experience, the
organisation thrives on referrals as a opposed to repeat business. Therefore, ensuring satisfaction is vital to the organisation
as no one shares positive commentary about a company that fails to meet expectations. Cost and flexibility for the bus service
as well as superb service via knowledgeable and fun bus drivers are some product attributes that KE uses to meet and exceed
expectations to earn customer and organisational satisfaction.
Task 2: Given this statement, holistically, demonstrate your understanding of the total product relevant to the example.
A: As satisfying consumer expectations is directly linked to organisational success or failure, it is important for a marketing
practitioner to consider elements of the total product and how they synchronise to offer a unique value proposition. This
helps to facilitate product and brand leadership which is directly related to market share and profits. The total product is
the totality of what an organisation delivers to the customer and can be summarised by the question: what is a products
DNA?. A products DNA encompasses 3 aspects which are broken down into product considerations, product layers and
product components. Part of the utility of understanding the total product is that it assists in an organisations ability to know
costs as well as the consumers ability to assess value.
1. Product considerations are inherent characteristics to consider when implementing a new product or managing an
existing product, and help an organisation as well as the consumer to understand the nature of what they are offering. By
understanding the nature of the product, a marketing practitioner can communicate a products unique value proposition.
KE is in the tourism industry and knows its target market well (backpackers), thus leverages its unique value proposition by
hinging on the product considerations that engage this consumer base. It achieves this by product augmentation, by hiring
knowledgeable bus drivers who know the landscape as well as provide safe and efficient transport (service component). This
has the added benefit of reducing costs as tour guide and driver become one, which better services the needs of the price
sensitive backpacker. Also, KE realises that their product offerings are linked to external product factors such as the
destination (New Zealand) and how consumers get to New Zealand as this is what constitutes the total ‘holiday’ experience.
Kiwi is therefore an aggregator because it has partnered with Air New Zealand and STA Travel in the past, in order to better
manage the aggregate customer experience. To further this, Kiwi also understands that some of their value proposition
comes from the social value aspect, and promotes this because customers become the co-producers of the product, in that
a backpacker has social needs which are fulfilled by other backpackers engaging with the bus service. This is evidenced by
their promotional dialogue on their website: “Travel alongside like-minded travellers while exploring the hot spots and the
hidden treasures of New Zealand”.
2. Product layers: There are 3 product layers which marketing practitioners should consider: the core product, the expected
product and the potential product. Consumers have what is known as a zone of tolerance, which is a subjective measurement
based on service perception (Zeithaml, Berry, & Parasuraman, 1993). If the experience did not match the expectations then
the service quality is perceived to be poor and there is dissatisfaction, if a consumers perception of the service met their
expectations they are satisfied and if the experience exceeded expectation, the perceived service quality is high and the
customer is elated (Johnston, 1994). As Yap and Sweeney mention (2007), company’s often heavily invest in service quality
improvements in order to meet and exceed customer perceptions, yet end up facing financial hardship. The question then
becomes to what degree is investment and improvement necessary? As some “customers are indifferent to small increases
or decreases of service quality within the zone” (Yap & Sweeney, 2007, p. 137). This Indicates that understanding the total
product is crucial as benefits and costs need to be weighted in order to maintain the profit viability of the organisation.

2a. The core product is the “idea, the key message, is the essential service or benefit designed to satisfy the identified needs
of target customer segments.” (Komppula, 2001, p. 3). KE’s core product is the service it offers for consumers to get from
one place to another. Customers, however, expect more than just getting from A to B, and simply offering the core product
would leave customers dissatisfied or neutral.
2b. The expected product is what a customer expects to receive as a result of an exchange and is a price correlation dynamic,
meaning that expectations grow and shrink as prices grow and shrink. The expected product is often a consumer heuristic
based on the industry standard. Simply put, Kiwi meets expectations by reaching destinations on time, with a good service
at a competitive price, leaving the consumer satisfied or neutral.
2c. The augmented product is the product layer where an organisation aims to exceed customer expectations and
satisfaction by going above and beyond. It is a product/market differentiator and organisations augment their products with
qualities that exceed their target market’s needs. For instance, KE is effective when it comes to realising the relationship
aspect of exchanges, which is important as the relationship between a customer and an organisation has a large effect on
the total value perceived. As Revald and Grönroos (1996) emphasise, “In a close relationship the customer probably shifts
the focus from evaluating separate offerings to evaluating the relationship as a whole. The core of the business, i.e. what the
company is producing, is of course fundamental, but it may not be the ultimate reason for purchasing” (p. 19). This is
evidenced by the requirement for their staff to meet and know their consumer base: “There was a bbq at a backpackers'
hostel in Auckland recently, and KE had their accountants and other staff, who don't directly come into contact with
customers, turn up and meet the backpackers, so that they could understand who KE customers are, and where they come
from” (Kiwi Experience 'Case Study', 2007). Also, drivers are hired based on their young age, ability to have fun, be
adventurous and who have an out-going personality (Inti International University College, 2007). Both of which constitutes
good customer/organisation relations and augments the core product.
2d. The Potential Product is the future product based on market research or customer feedback. This equates to a new and
improved product mix, and fills existing gaps in the market.
3. Product Components: to be elaborated on in question 4.
Task 3: Identify the most important [relevant] product considerations [6] and then discuss the implications, from the
perspective of a marketing practitioner, each selected product consideration.
Central to the role of marketing practitioners, is considering the end user of the product as this determines the focus of the
product. By doing this, practitioners can take into account certain product considerations, which are inherent characteristics
to consider when implementing a new product or managing an existing product (Fanning, 2018). KE is a consumer servicer
because it sells products which satisfies the needs and wants of consumers (B2C), therefore, there are 6 product
considerations in particular which should be emphasised.
1. Product Mix & Product Line: A product mix refers to the entirety of the product lines a company offers (Suttle, 2018). A
product line is a range of related products which targets certain consumers (Fanning, 2018). As Rundle-Thiele et al highlights,
“different tourism stakeholders within a single destination attract different tourists” (2009, p. 169). Considering this and the
evolving demographics of the travel/backpacker consumer, it is important for the marketing manager of KE to take into
account the evolving needs and wants of its consumers. For example, 50% of New Zealand’s tourists are over the age of 40
(Markward, 2008), therefore, only appealing to the common youth backpacker stereotype (experiential consumer)
disengages a percentage of the market. Product differentiation would be crucial to capture some of this market which can
be done by marketing a product line that considers the needs of this type of consumer. Because KE’s business model is
“developed around the high-volume, low-margin business where the minimization of costs is paramount” (Kiwi Experience
'Case Study', 2007), they can differentiate on low cost product augmentations such as greater hands on experiences.

2. Product value proposition: A product needs to provide a benefit to the customer, for which they are willing to pay a
maximum price for, which is the value the customer ascribes to the product (Golub et al., 2000). The strength of the value
proposition is “the surplus value that the customer will enjoy once that product is paid for (value to customer minus price)
(Golub et al., 2000, p. n.d.). A product encompasses everything that a company offers in an exchange. A unique value
proposition is hinged on the product component factors: services, ideas, experiences, people , goods and place that an
organisations provides. Some questions that a marketing practitioner should consider are: How is the product positioned?
What ideas are being communicated from the product and the brand? How unique is the product? The role of a marketer
can be likened to that of a theatre director, in that a director communicates artistic vision, a marketer needs to communicate
product value. KE’s product value proposition encompasses everything that they offer from the reliable and fun bus drivers,
activity packages and recommendations and social experiences. KE regularly communicates their value propositions through
social media and their website.

3. Product positioning: Product positioning is the process of forming and upholding a distinctive market position for an
organisation and its various product offerings (Lovelock, 1991). A marketing practitioner needs to link a product to a category
in order to communicate to a consumer how a product satisfies a need, as product positioning is a perceptual attribute that
a consumer will use to make a choice (Rao & Kaul, 1995). A marketing manager, therefore, should match the product needs
(position) to the intended market segmentation (Alford, 1998). This could be achieved by marketing key product attributes
such as the beautiful New Zealand waterfalls or the destinations themselves for example.

4. Product desirability: Product desirability is the range between how sought and unsought a product is (Fanning, 2018).
Unsought (avoid) and sought (approach) products are related to the amount of satisfaction that is met when engagement is
sought. As opposed to avoidance motivation as exemplified by the consumption of insurance, KE consumers are typically
approach motivated. Elliott and Feltman (2012) classify this as ‘positively valanced stimuli’ which refers the direction of
behaviour indicating a propensity to move toward rather than away (negative). A marketing manager should consider what
approach elements a consumer considers when seeking to engage with a product such as pleasure (hedonic value) or
happiness for the KE case.

5. Utilitarian/hedonic value: A product may either have a utilitarian value; the value a consumer or organisation places on
a product being practical and functional, or a hedonic value; the value a consumer or organisation places on a product to
service needs for pleasure (Voss, Spangenberg, & Grohmann, 2003). KE may service both, as the consumer places an inherent
value requirement based on their needs; are they using the KE busses to simply get around? Or have they purchased the ‘Get
Kiwi Experienced’ activity pack to seek excitement and enjoyment? A marketing manager should consider what value a
product offers in order to appease the right market segment.

6) Product uniqueness: Product uniqueness is the objective and subjective degree to which a product differs from another;
a product may be perceived by the consumer to be unique or the inherent qualities of the product may be different, or both.
Product uniqueness is synonymous with an organisations unique selling point and is what a consumer may use to determine
their product selection based on the unique value the product may offer (Fanning, 2018). This is important when considering
the role of competitors such as Stray who operate in the New Zealand market who aim to target similar market segments as
KE. The marketing manager should be considering how they can differentiate themselves from the competition in order to
attract and better satisfy their target market.
Task 4: Identify the product components within the Kiwi Experience product; rank them by importance; justify your
decisions.
A: A product is the sum of its product components. There are 6 components that constitute an organisations product
offerings. These are: place, services, experience, people, ideas and goods. Although the components may function
holistically, there is a hierarchy that exists because one component is always most dominant, products differ and consumers
product select based on different requirements and motivations (components represent different terminal/instrumental
value). A marketing practitioners job is to communicate a unique value proposition by highlighting dominant product
components in order to capture its widest consumer base. The KE product component importance hierarchy is as follows:
1. Service: Service is undoubtedly the dominant component out of the 6. The drivers of the hop on-hop off busses are said
to be what makes or breaks a trip. Drivers are selected based on their youthful and adventurous nature as well as their
extensive driving experience as their “enthusiasm, knowledge and personality will have a huge impact on customer's
perception of the overall quality of the trip, and of KE as a whole” (Kiwi Experience 'Case Study', 2007). Driver wages are also
very high (Inti International University College, 2007) because KE knows that they are the key component that makes their
organisation thrive, as well as the facilitators of company/customer face to face interaction. In many ways the drivers become
the figurehead of the company.
KE’s co-founder and managing director Neil Geddes has been quoted saying that “we ensure we give the customer what they
want better than anyone else does. Our service is not designed around what is good for the drivers, it is designed around
what is good for the customer. We are close to our market, we are proud to be close to our market" (Kiwi Experience 'Case
Study', 2007)
2. Experience: The phenomenon of backpacking is composed of "opportunities for adventure, sightseeing and general
education by the way of hands-on experience” (Ross, 1993). Therefore, the experience is the next determinant component
in the hierarchy and goes hand in hand with the service a consumer receives and seeks. The experience builds on the service
because the driver is the key facilitator of the experience as mentioned above. Backpackers seek adventure, pleasure and
fun which is linked to meeting new people, experiencing a new culture and seeing new things. All of these are connected to
KE’s main revenue generator – the hop on/off busses as well as the side activity packages that are on offer such as the ‘South
Island Gotta Do's’ which offers bungy jumping and kayaking.
3. Ideas: When a consumer buys a product they are not just buying the good, they are buying into what the brand may
represent. The Ideas that are attached to a product “help consumers to comprehend the unique product value proposition
of the product and in the long-term the brand” (Fanning, 2018, p. 117). Therefore, ideas are the third determinant
component. Since KE was the first of their kind in the NZ market, they had to communicate the idea behind the unique
product concept of a ‘coach transport network that was neither an express point-to-pint service nor an inflexible coach tour;
but one that had the advantages of both’ (Kiwi Experience 'Case Study', 2007). The reputation of KE is well known and they
have done well to position themselves as a market leader by communicating the idea that they are the go to hop on/hop off
service. This is measured on being price competitive and offering the best service as well as being the originators.

4. People: Loker-Murphy and Pearce (1995) consider a backpacker to have “a preference of budget accommodation, an
emphasis on meeting other people, an independently organized and flexible travel schedule, longer rather than brief
holidays, and an emphasis on informal and participatory holiday activities.” (p. 820). People as a determinant component is
crucial for Kiwi Experience, as their product is targeted towards backpackers who are motivated by social value. Sharing the
experience with new, interesting and like-minded people is part of the allure of the product for consumers and for this reason
people are also co-producers of the product.
5. Place: New Zealand is the broader place context at hand. while New Zealand may be the push/pull factor for many visiting
tourists, it isn’t necessarily the push/pull factor in why tourists use KE in particular. However, where place comes into play is
what destinations KE offers on its bus routes and its adventure package offerings. This might constitute why one consumer
may use KE over a competitor like Stray. For example, KE boasts 37 different destinations while Stray only offers 30. This
gives backpackers ample opportunity to see the attractions of NZ. That being said, an external form of competition for Kiwi
Experience comes from other countries not just internal bus companies. As tourists seek to holiday in other countries with a
limited time horizon, the marketers at Kiwi realise they need to associate New Zealand with the bus tours by advertising the
place just as much as the products themselves.

6. Goods: Some quality indicators of goods that KE offers are reliability and assurance of services, which differs from
manufacturing goods quality indicators such as useful life, durability and good design (Sodeyfi, 2016). As such, goods are
considered to be durable and non-durable. KE’s product offerings are entrenched in experiences and services rather than an
exchange of a physical product; the quality of the service provided is more conducive to customer satisfaction than the
transfer of any physical product that may take place. Therefore, Goods are the last determinant product component.
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