CKM Marketing Research 1

Team 2:

Melissa Coleman

Brandi Kennedy

Pragya Kharel

Jenny McCutcheon

MKTG 332-F1WW: Marketing Research

Assignment 6-1: Final Research Project

Professor Dr. Patrick Demerath

August 9, 2008
 CKM Marketing Research 2

Table of Contents
Executive
Summary..............................................................................................................................3

Central
Background
Information .............................................................................................................. 3

The
Research
Objectives............................................................................................................................... 3

Statement
of
Methodology ........................................................................................................................... 3

Summary
of
Findings ..................................................................................................................................... 3

Introduction............................................................................................................................................5

Research
Methodology........................................................................................................................6

Research
Analysis.................................................................................................................................7

Research
Limitations........................................................................................................................ 10

Conclusions
and
Recommendations............................................................................................ 11

Appendix............................................................................................................................................... 11

Survey
Used:................................................................................................................................................... 12

Final
Tabulation
of
Survey
Results: ....................................................................................................... 13

References............................................................................................................................................ 14


Table of Figures

FIGURE
1
–
Affect
of
Fuel
Prices
on
Summer
Travel ...................................................................................................4

FIGURE
2
–
How
Fuel
Prices
Have
Affected
Summer
Travel ....................................................................................4

FIGURE
3
–
Summer
Travel
in
2007
Compared
to
2008 ...........................................................................................9

FIGURE
4
–
Survey
Used .................................................................................................................................................... 12

FIGURE
5
–
Final
Calculated
Results
of
Completed
Surveys.................................................................................. 13

 CKM Marketing Research 3

Executive Summary

Central Background Information

Summer is here and gas prices have gone through the roof. CKM Marketing Research

conducted a market analysis to determine if families are being forced to sacrifice leisure

vacations in light of rising fuel costs. We believe people are still choosing to travel, but are

exploring different alternatives, such as staying closer to home, visiting amusement parks, etc.

By understanding the degree to which high fuel costs have impacted vacation spending,

businesses can gain insight on the future of the travel industry, thus allowing them to begin

taking steps to reach potentially lost customers.

The Research Objectives

Through primary research we will determine whether:

a. If people are continuing to travel this summer with the high cost of fuel;

b. If people are continuing to travel, are they traveling to their usual travel

destinations; or

c. If they are continuing to travel, are they traveling closer to home.

Through secondary research we will determine if people are choosing to stay closer to

home, what/where are they going.

Statement of Methodology

Surveys were distributed randomly using a clustered sample of forty individuals, using

age as the main criteria. Information gathered in the survey included general travel, traveling in

2007 versus traveling in 2008, and demographics.

Summary of Findings

The following information concludes the findings of this information:

 CKM Marketing Research 4

• Respondents indicated that family travel plans have negatively been affected by the recent rise
in fuel costs. Due to this, families are still choosing to travel, but are choosing to stay closer to
home.

FIGURE 1 – Affect of Fuel Prices on Summer Travel

FIGURE 2 – How Fuel Prices Have Affected Summer Travel

• In 2007, a majority of the respondents took 1-3 leisure vacations, traveled to a different state,
traveled with a significant other, and used a car as their form of transportation.

• In 2008, a majority of the respondents took 1-3 leisure vacations, traveled close to home, and
traveled with a significant other.

• Out of the 40 individuals surveyed, 21 people indicated that they sought out other alternative
vacation plans, such as amusement parks, etc.
 CKM Marketing Research 5

• An overwhelming 58% of the respondents indicated they will still continue to travel even if
gas rises to $5/gallon.

• 33% of the respondents also utilize cost-cutting websites such as Priceline or Hotwire to save
on travel expenses.

• The demographic section of the survey indicated that 43% of the respondents were in the age
bracket of 25-30 years old; while 28% were 31-40; 20% were 41-50; and 10% were 50+.

• Open-ended questions presented additional information that indicated how many people lived
in the household and how many of those individuals consisted of children under the age of 18.
18 of the 40 respondents had at least two people living in the household. 18 of the 40
respondents also indicated that they didn’t have any children in the household under the age
of 18; 13 out of 40 indicated having at least one child, under the age of 18 in the household.

• Respondents were also asked total household income. There were six available choices, one
which included “prefer not to answer.” The results indicated that 10 respondents chose not to
reveal their household income; of the 24 respondents that did respond, 80% of them made
between $26,000 and $100,000/per year. 2 respondents had a household income ≤ $25,000
and 4 respondents had a household income ≥ $101,000.

Introduction

The recent rise in fuel prices has significantly raised the prices for all consumer goods.

The price increase can be seen in high grocery bills, increased restaurant bills, increase in

household items, and nearly every thing that an average American uses on a daily basis. Such a

price jump in all sectors of a consumer’s daily life shrinks their budget for family activities, such

as a summer vacation.

Our initial hypothesis was to determine whether the increase in fuel prices has affected

travel in a major way. One cannot watch any programs on TV, listen to radio or read the

newspaper without the affects of gas prices discussed in a major way. It has been the hot topic

for the presidential campaigning, as well and we have felt the effect in our daily lives as well. It

seems that the average middle-class American family especially is cutting back on leisure travel,

staying closer to home when they do go on vacation, and using alternative transportation and
 CKM Marketing Research 6

cost-cutting methods. Others are forgoing travel altogether and spending more time at home

because they simply cannot afford the cost of transportation.

With this research we wanted find out if there is a decrease in people taking leisure

vacations due to rising fuel prices, and if so, to what extent. We also wanted to see what the

differences were from last year to this year in the trend of summer vacations. For the research,

we surveyed 40 individual adults over the age of 25, to see if their plans to travel have been

changed since last year due to the rising fuel prices.

Research Methodology

Our primary research methodology was in the form of a questionnaire. The questionnaire

was designed in an easy format to navigate through easily and to be user-friendly by asking

direct and simple questions. The short, 15-question survey consisted of mostly close-ended

questions, designed to get the most important facts and figures from our respondents. Our

respondents were pre-qualified by their age and asked a series of questions based on four

categories. They were initially asked general travel questions, and then asked the more important

questions about their travel in 2007 and 2008, and the survey was concluded with demographic

questions.

We collected our data using email as the primary medium to contact respondents and to

get the survey results from them. This allowed us to email our surveys to as many qualified

contacts, as we wanted in one shot, saving us a lot of valuable time to focus on the research

itself.

Our secondary research involved searching the Internet for research and other studies

done in the same area. We searched for reputable sources whose information would not be bias

and those that would provide us more insight on our own findings. We used the news paper
 CKM Marketing Research 7

articles from The Washington Post and USA Today that were very similar to our research to

support our findings.

Research Analysis

Tough economic times have hit all of us, and that is especially evident in the soaring

prices of all basic consumables including the ever-increasing cost of fuel. CKM Marketing

Research conducted a market analysis to determine if families are being forced to sacrifice

leisure vacations in light of rising fuel costs. Our primary research objective was to determine

whether people are traveling more, less, or the same as in previous summers, and if their change

in travel habits was due to the rise in gas prices.

Taking a cluster sample of 40 adults over the age of 25, we administered a questionnaire

to determine how our sample’s traveling plans have changed from 2007 to 2008, whom they are

traveling with, how far they are traveling, and whether they have sought out alternative methods

to save on summer travel expenses. The following information concludes our results:

• 62.5% of respondents indicated that their travel plans have been negatively been affected by
the recent rise in fuel costs, thus proving our initial hypothesis correct.

• Only 25% of the respondents said that they would give up summer travel altogether this year.
An overwhelming 58% of the respondents indicated they will still continue to travel even if
gas rises to $5 a gallon.

• An overwhelming 55% of respondents stated that they would be traveling closer to home this
summer- a full 33% increase over those who chose to stay close to home in 2007.

• In 2007, 62.5% of respondents indicated that their most popular vacation destination was out
of state. In 2008, the number of respondents planning to travel out of state dropped
dramatically to 37.5%.

• In both 2007 and 2008, the vast majority of respondents indicated that they would take 1-3
leisure vacations within the year. However, the number who reported this dropped 6.7% from
2007 to 2008, while the number of respondents who planned to take no vacation at all rose
5% from 2007 to 2008.
 CKM Marketing Research 8

• Out of the individuals surveyed, 52.5% indicated that they would seek shorter alternative
leisure destinations in 2008, such as local amusement parks and recreation, in place of
extended out-of-state travel.

• 33% of the respondents reported utilizing cost-cutting websites such as Priceline or Hotwire
to save on travel expenses.

• In both 2007 and 2008, the majority of respondents said that they traveled most often with
their significant other. This year, however, there was an increase in those traveling with
family as opposed to with friends.

• Not surprisingly, 65% of respondents travel most often by car, with the second most popular
travel method being by airplane at 30%, and with bus and train lagging behind at 2.5% each.

• The demographic section of the survey indicated that 42% of the respondents were in the age
bracket of 25-30 years old. 28% were 31-40, 20% were 41-50, and 10% were 50+.

• Under demographics, 75% of households interviewed included 2-3 people. The number of
respondents living with children under the age of 18 was split fairly evenly with 55% of
respondents living with children, and 45% living without.

• Respondents were also asked to report their total household income. 10 out of 40 respondents
preferred not to reveal this information. Of the 30 that did respond, 80% of them earned
between $26,000 and $100,000 per year. 7% respondents had a household income under
$25,000 and 13% respondents had a household income over $101,000.

Figure 3 below demonstrates the changes fuel rising prices have brought to the number of

summer vacations respondents have taken in 2007 versus those that they plan to take in 2008.

As the chart Illustrates, the percentage of respondents that do not plan to travel in 2008 rose

slightly from 2007, and those that plan to travel one to three times this year declined from 2007.

The percentage of those planning to travel four or more times this summer may be due to the

trend for individuals to take shorter vacations closer to home.

 CKM Marketing Research 9

FIGURE 3 – Summer Travel in 2007 Compared to 2008

Secondary research supports our findings. During the Fourth of July weekend this year,

the average gas prices were at a record high of $4.09 a gallon, up from $2.97 just one year ago.

Despite the 27% increase in cost, only 1.3% of travelers opted to stay home for the holiday

weekend. While the drop in travel rates are slight compared to the vast increase in cost, 2008

proves to be the first year in over a decade where decreases in travel have occurred (Hennigan,

2008).

A recent Gallup Poll indicated that as many as one-third of Americans are rethinking

summer vacation plans, and many states have begun promoting local destinations as an

alternative to longer road trips. The state of Iowa has even gone so far as to advertise one-tank

road trips to show residents the leisure destinations available within one tank of gas from their

hometown, thus further promoting in-state travel. Florida offers a similar concept through their

website titled “Tours on a Tank Full” which allows residents to enter their location and find
 CKM Marketing Research 10

vacation destinations available just one full tank away. Even the nation’s capital of Washington

DC has followed suit (Howard, 2008).

From this analysis, we have concluded that high fuel costs have impacted leisure travel,

although not quite to the extent that we had originally anticipated. Despite the recent rise in fuel

costs, very few individuals are willing to forego travel altogether, but are instead seeking out

destinations closer to home. As it seems, the travel and tourism business need not worry as of

yet, as many individuals will still have summer vacations on their agenda in the foreseeable

future.

Research Limitations

Like all marketing research, ours was not without limitations. Responses to our

questionnaire showed a negative attitude towards gas prices combined with a decrease in long-

distance travel. Additionally, secondary research proved that there was a substantial increase in

fuel costs from July 2007 to July 2008, and supported our claims that many individuals are

sticking closer to home for leisure vacations. While we feel confident that the increase in fuel

costs directly contributed to the decrease in travel, and both primary and secondary data support

this conclusion, the fact remains that this is merely an assumption our part.

Due to the limited resources available to complete our research, we were unable to rule

out outside variables that may have contributed to the decrease in long-distance travel, such as

the overall poor state of the economy, job losses, or the possibility that the families surveyed

simply may not travel every year. Additionally, time restrictions forced us to use a convenience

sample of individuals who were close at hand. Since the only requirement for survey

participation was that the respondent must be over the age of 25, there is the possibility that the

40 respondents who participated were not representative of the entire population.

 CKM Marketing Research 11

Conclusions and Recommendations

It was concluded that high fuel costs have negatively impacted leisure travel plans for

families, but not to the extent anticipated. Families are still choosing to travel, however they are

being forced to stay closer to home, which reduces their options of destinations. Based on this

information, businesses in the travel industry would be wise to focus marketing efforts on local

tourist attractions to which families could travel without driving far. Capitalizing on the

“vacation close to home” theme should bring businesses the travel industry continued success,

despite the souring gas prices.

Appendix
 CKM Marketing Research 12

Survey Used:

FIGURE 4 – Survey Used

 CKM Marketing Research 13

Final Tabulation of Survey Results:

FIGURE 5 – Final Calculated Results of Completed Surveys

 CKM Marketing Research 14

References

Hennigan, W.J. (2008). Gas prices not a deterrent to holiday getaways. The Washington Times,

July 2, Business A08. Retrieved August 1, 2008 from Lexis-Nexis Academic database.

Howard, T. (2008). States want residents to stick around; Tourisim officials reach out as gas

costs, airfares rise. USA Today, June 2, Money 4B. Retrieved August 1, 2008 from Lexis-

Nexis Academic database.