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Our business is categorised in the entertainment sector. We operate a small pub in Thailand. Over the past year, Thailand has been hit by a variety of political issues. This has caused a certain instability to the country and has thus brought tourism down drastically.

The most recent incident of the airport closure has caused many companies to lose billions of Thai baht. Tourism was almost a standstill as it was almost impossible for anyone to fly in to Thailand during the one week period.

Our business is highly dependent on tourism. We are situated on the third largest island in Thailand and it is the beauty of this place that attracts tourists from all over, especially from Europe. Unfortunately, coupled with the policitcal issues, we have today the economic issues. The British pound has taken a hard hit and now the available money to spend is a lot less than before.

Tourists and local expats are more conscious of their expenses right now. While they still would like to have a good time, they would not be so generous to spend without thinking.

At the same time we face increasing costs in running our business. Petroleum was at an all time in July 2008 and everything went sky high in prices. Unfortunately when petrol prices drop, our suppliers did not drop their costs. Facing a dilemma of rising costs and decreasing customers, we needed to be very aggressive in repositioning ourselves against our competitors.

We are located in the busiest street in the area for nightlife. That is a bonus but unfortunately, it is also the most competitive area with the highest rental cost. There are about 20 pubs located in this area which we are in. It is therefore extremely challenging to find a way to draw the customers into our bar.

We took a hard look at the customer profiles and the current economic situation and decided on a two factor change to bring in customers to our pub. First, we extended our happy hour pricing to almost the whole night. This means the customers can continue to drink till the wee morning hours at an excellent price. This change helped the customers to keep their own costs down and in many ways encouraged them to drink even more. The second thing we did was increase our volume of alcohol in each drink, making them stronger.

Understanding the profile of our customers is very important to us. Almost of the customers who comes to this island for a party wants strong alcohol content in their drink. Although many are no longer backpackers, they continue to look for good value.

The two prong action we took has helped us immensely. While our profit margin per drink has reduced, the volume has increased as customers are happy with the quantity and pricing they get. Instead of bar hopping, they stay in our place the whole night long and this makes us more successful.

Learn more about this author, Judy Khoo.
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