Hurricane Island Outward Bound School

Hurricane Island Outward Bound School – Case Study Analysis

“To serve, to strive, and not to yield.’’ – Outward Bound motto

Mission – ‘’Providing safe, challenging, educational experiences in a wilderness setting, carefully structured to improve self-esteem, self-reliance, concern for others, and care for the environment.’’

Introduction to Outward Bound movement and Hurricane Island Outward Bound School

Outward Bound schools pioneered a rigorous form of ‘’experiential” education that exposed students to wilderness settings to develop

Self-confidence: self-reliance, self-esteem

Team work: concern for others

Responsible mindset: care for the environment

Peter Willauer’s, founded the Hurricane Island OB School in 1965, work in education and sailing led him to envision an outdoor classroom on the ocean. The objective of the school was to serve the youth and the underprivileged.

Performance: Since inception HIOB school has not been able to break even on operating basis, with a huge reliance on contribution to finance the deficit.

[pic 1]  Source: Exhibit 1

Areas of improvement for Hurricane Island and Philip Chin to focus upon should be:

• Balance course mix to optimize capacity filling in each course and building off-season business
• Mission driven outreach: Growing special programs and fulfilling objective needs
• Sustainability: Marketing strategy and resolving staffing issues with a forward approach

[pic 2] [pic 3]

Source: Case study sub-topic: Marketing Options

Philip Chin’s next steps to achieve the desired goals should encompass a combination of the above alternatives laced with subtle marketing tactics

Focus on PDP: Achieve balancing course mix and drive profitability to finance the deficit

                     [pic 4]

The school can sustain itself and work towards its mission only if it manages to drive operating profits

• Target audience of PDP & special programs are either corporate sponsored or business people, to whom cost will not be a deterrent, and hence the school can charge a premium on its pricing thereby increasing its revenue
• The school can reduce PDP and Special Programs during peak season and increase in off season which will optimize course applications and off-season business.
• As the PDP programs are held during the off-season September to May, demand will be uniformly distributed throughout the year ensuring continuous employment to the instructors around the year, solving the staffing problems.
• The customer base can be increased by developing relationships with corporates and at the same time by using the existing alumni network to gain referrals. This would help to promote the course.

Strategy to optimize and market Public courses: 

• These courses will be heavily concentrated during summers (Peak Period) when the youth seek alternatives to summer camps or schools.
• Students who already have an experience with current offerings can be provided with newly designed courses at discounted rates to boost demand in the off-season
• Referral programs with incentives through current students/alumni can be an efficient tactic to capitalize on demand and strengthen the student base.

Chin can utilize the budget at hand for the following to sustain the Marketing strategy in 1987:

• Hire PDP co-ordinator: $30,000 + $1000(materials)
• Hire Alumni co-ordinator: $15,000
• Hire two sub-recruiters: $9000
• Total expenses: $55,000    
• Allocated budget: $54,000

• Additional funds required: $1000

Chin can start with one sub-recruiter instead of the estimated number (two) while he is able to extract surplus funds to accommodate another sub-recruiter.

FROM NET

Hurricane Island is the leader of the Outward Bound system, has 3,700 students (70,000 SPD) and sells a variety of courses (over 50 at any of 13 sites in Maine, Florida, New York, New Hampshire and Maryland), being specialized in sea area, for two main segments: 
- specific groups (Vietnam veterans, handicapped youth, juvenile delinquents, substance abusers) often through government agencies (special programs); 
- public courses ¡V targeting all other students except specific groups, divided into four segments by location and activity ¡V Maine Sea, Florida Sea, Winter Land, Summer Land. 
Customers, as defined by 1986 marketing plan, are: 
- high school and college students; 
- juniors (age 14 and 15); 
- municipal and agency contacts (for special programs); 
- unprivileged and minority groups; 
- young professionals; 
- corporations; 
- PDP ¡V groups of managers. 

Hurricane Island Outward Bound goals for 1987 were: continued growth and financial stability. To realize this, Mr. Chin is determined to deliver three marketing objectives: 
„« 2,700 students; 
„« 47, 800 Student Program Days (SPD); 
„« $3.4 million in revenues. 

Mr. Chin has developed four marketing proposals for 1987. The purpose of this analysis is to: 
„« Evaluate the strength and weaknesses of each proposal; 
„« Recommend what plan should be adopted, rejected, or modified and adopted; 
„« Determine the best marketing mix with respect to the marketing budget. 

First solution (expand ¡§Alumni in Marketing¡¨ network) implies hiring of a manager dedicated to the network ($15,000 starting spring 1987). The benefits generated through AIM would mostly be intangible. There are risks for too few or too many volunteers (alumni), resulting in wasted effort to reach them or complex network administration. Strengths are: easy access to potential clients via 25,000 alumni network and PR, help for logistics and testimonials during presentations. Weaknesses include volunteer over-utilization ending in donation reduction or under-utilization ending in losing 
enthusiasm for network and school. It is a risky solution as long as donations could disappear and no tangible benefits are forecasted. I would not recommend this solution. 

Proposal 3 (expand direct sales recruitment) envisages additional ¡§sub-recruiters¡¨ working under short-term contracts (additional cost of $9,000 for sub-recruiters=weakness). Full-time recruiters Reade and Miller were already in sales force starting 1986, more presentations were requested (50 for the first three months in 1987). It could be effective if right staff will work (positive). However, there were controversial results because sub-recruiters would work under the supervision of recruiters who were unaccustomed with ¡§asking for the order¡¨ concept (minus). I would not recommend this solution. 

Proposed solution 4 is only under tests. Once full-time telemarketers are not available due to lack of sufficient program knowledge and good selling skills, Chin thought to an extended test (500-1000 prospective students who had applied but not yet enrolled). They don¡¦t have a careful response-tracking system, don¡¦t even know how much this would cost (big minuses). Costs for payroll and phone would escalate rapidly (again big minus). Having high costs and no monitoring system to assess performance, this solution is economically uncertain. 

The best solution Mr. Chin should advise is to increase marketing efforts for the professional development programs (PDP) because: 

Major problem with this marketing plan is the idea that chasing corporate America is a violation of the mission statement. This is not true. The mission statement, which reads: ¡§The Mission of Hurricane Island Outward bound is providing safe, challenging, educational experiences in a wilderness setting, carefully structured to improve self-esteem, self- reliance, concern for others and care for the environment.¡¨ 

This mission statement reveals nothing about limiting these benefits to only the underprivileged. While that population might benefit more so than the middle-upper class, it is truly irrelevant. Those at Hurricane assume that it is directed for the underprivileged. With the inception of Hurricane, founder and school president Peter Willauer envisioned ¡§an outdoor classroom¡¨- not an outdoor classroom for the poor. This is critical. In addition, according to Exhibit 4, we see that Special Programs, (i.e. the group of vets, substance abusers, troubled youth and other groups) seem to those programs which specifically cater to the under privilege but yet, in 1985 these programs only account for at maximum 22.6% of the student population (760 out of 3367). 

Yet, despite this reality, if we are to assume that the schools wants to cater to the underprivileged or those who cannot afford tuition, expanding the PDP is the only way to do so because: 

1. Its success rate cannot be ignored. 158 professional attended in 1985- and those 158 are those that received no financial aid. That accounts for 6% of the public course student population. This is significant because it¡¦s the first -year that the program is in place. In addition that¡¦s 6% of the public course student population, which is not necessarily 6% of tuition revenues. It is more likely top be more than 6% of tuition revenues since these PDP received no financial aid. 

2. In accordance with this, marketing corporate America is advantageous for Hurricane is three ways that most other populations are not: 
„« First, Hurricane has a problem occupying the winter (off-season) season. Corporations, unlike student populations, or younger, not-working populations do not have a ¡§season¡¨. Work is full-time. It does not revolve around summer or winter; 
„« it is clear that corporations are likely to pay full price for classes and do not need financial assistance as can be used as tax deductions; 
„« If Hurricane achieves success with a corporation, that corporation will be a returning customer for much longer and will provide much more income than one family or group etc. 
„« The revenue generated by targeting corporations could in turn be used to expand financial aid and thus, cementing Hurricane¡¦s commitment to the poor. 

In order to maximize this generated revenue, implementation would be as follows: 
„« Because we are sure that corporations are able to pay more (incentive of tax deductions), Mr. Chin has to advise the Board of trustees that class prices must be increased immediately, especially for the summer period. If we have to sacrifice one summer and devote a large number of available classes to PDP then, the revenues generated for that one month, would allow expansion for the following summer that could be devoted toward the underprivileged. Right now, on pg 10 it states that Hurricane charges $75 per student program day, but Hurricane earns no profit on this as Chin states that direct costs are $45 and fixed costs are $30. 

„« Problem with price differentiation, according to exhibit 6 during the period of 6.14-8.29 student capacities are almost maximized. Yet during the other dates the enrollment is low- between 67% and going as low as 17%. A price difference of 15% is not incentive enough to enroll during the off-season. Since it is clear demand during on-season is there, we must increase price much more than 15 %- perhaps 30%. This would provide increased revenue. A 30% increase is dramatic enough to offer incentives for those interested to enroll during the winter but is not dramatic enough to deter those for the summer (the price for the on-season would now be $1653.50 vs. 1,425.00- this is only a difference of $167.50¡Xwhich if you are willing to pay 1425, 167.50 dollar increase is not a deterrent) and would also obviously generate financial growth during high-demand season. 

„« Of the 54,000 allowed discretionary spending for 1987 marketing programs, the $30,000 cost which Chin estimates for a recruiter is a well-spent cost, especially if he himself estimates a $200,000 added revenue resulting from it. And especially since he admits that money must be allocated to staffing regardless of marketing strategy chosen. 

„« Offer discount referral packages. For example, when a corporation becomes a returning customer, offer 5% off during summer season and perhaps 10% off during winter season dependent on the amount of individuals they bring in. This still brings in a substantial profit. 

„« Instruct the staff, using minimal resources that implementing corporate America as a target group is in no violation of the commitment towards the underprivileged. It is an opportunity to further achieve it by providing not only a good service to managers or employees, etc, but doing would provide funding for those that cannot pay for it. It is a small sacrifice to make. Staff must remember that they sell a product. If the school employees realize the product they sell, the ¡§outdoor classroom that allows for personal development and environmental concern¡¨ is for everyone- across economic class lines, and that providing this service to a needy population such as Corporate America is necessary!!, and that in-turn that providing that needed service to them would also allow for the school to further develop programs for the underprivileged, then the lack of motivation on the part of the school employees foreseen by Chin will be eradicated. And if the staff truly begins to understand this then the ¡§word-of mouth¡¨ component that Chin saw as an asset of the ¡§expand Alumni in Marketing Approach¡¨ would become one of the PDP approach.