Travel and Leisure Industry - Assignment Example

CENTER PARCS TACKLES SPA SNOBBERY Assignment where are we Center Parcs one of the prominent players in the travel and leisure industry. The Center Parcs resorts have wonderful villas resorts in forests and among other activities that the resorts offer, Center Parcs offers Aqua Sana, a spa which allows the visitors to pamper themselves. 1. MACRO ENVIRONMENTAL AND COMPETITIVE AUDIT 1.1 PEST ANALYSIS This analysis is used to ensure that all aspects of the macro-economical environment are covered while assessing a business and ensures that key factors like Political environment, Economic factors, Social factors and Technological factors are taken into account. POLITICAL ENVIRONMENT Some of the political factors that are reviewed in a PEST analysis are Stability of government Likely change in regulations pertaining to the business Stance on marketing ethics for the industry in question These factors are essential to the decisions being made at the corporate headquarters of a company (Anon, 2000). FOR CENTER PARCS A stable government Government promoting leisure activities - This was primarily so because of the fact that the leisure industry is a high growth industry and contributes about 10% of the total GDP for UK (Anon, 2005). Increase in the numbers for the older generation - Groups such as the Fitness Industry Association are lobbying for a US style tax system for the use of health clubs on the premise that by encouraging the citizens of UK to be healthier the load on the National Health Service will reduce (Anon, 2005). . ECONOMIC FACTORS Some of the economic factors that are important are Long term prospects of the economy Interest rates Inflation FOR CENTER PARCS Large numbers employed in resorts - The leisure industry employs a large number of people and therefore lends itself to the economic factors that effect UK positively. Taxes for the industry - There is a positive view on the overall taxation for the industry since the current government is encouraging citizens to take time off for leisure and is propelling the health industry into momentum. Consumer confidence on a high - The consumer confidence in the economy is also on the rise and therefore expenditure on leisure is likely to increase. SOCIAL FACTORS Some of the social factors which influence a business are Attitudes to the industry in question Roles of men and women in the society What is the age and income profile of the citizens and how is it likely to change FOR CENTER PARCS Increased personal stress - Increased personal stress has become a way of life in UK and everyone is looking towards ancient therapies to relieve stress and regain vigour and health. Therefore, a need to rewind during the weekend and / or take a few days off for pure relaxation and rejuvenation is increasing. Increase in the older generation - The older population continues to increase with the 'baby boomers' reaching the age of above 55 years. The 'grey' market therefore is ready for boom. Increase in the corporate travel incentives - Corporate travel incentives has seen an increase over the year; a trend that is unlikely to change in a hurry. Increased interest in beauty and fitness - high interests in health, beauty and fitness among the UK populations have made the spa industry to be a sought after area of operation. Other factors - Reduced costs of airlines (Anon, 2005) . All this points towards a higher demand for services like health spas. TECHNOLOGY FACTORS The technological factors that one reviews are How vital is technology for the industry Does it allow for reduced variable cost of the product Does it allow for more innovative service FOR CENTER PARCS Technology of a different kind - Here a technology of a different kind is required. Understanding various treatments like 'Carita', 'Decleor', 'Elemis' and other such treatments is a must. The techniques of a Turkish bath, a Japanese Salt Room, Aromatherapy, Reflexology and many more do not come without technology. Trained professionals who are qualified need to be recruited to ensure customer delight. 1.2 COMPETITION REVIEW - THEIR STRATEGIES At the beginning of 2003, the estimated number of private health clubs in UK was 2328. Other information sources suggest that these are conservative estimates and the actual number was close to 4271. It is clear therefore, the competition for Center Parcs is large. Some of the other health resort and escapes in UK are Whatley Manor, Wiltshire, Four Seasons, Hampshire, Grove, Herts, Mandarin Oriental, London etc. Most of these are luxurious health resorts with a choice of various activities which can be indulged in while on a holiday. The target consumers of these resorts are families on a holiday camping trip. They mostly target the high income families. Some of the resorts have also positioned themselves so as to attract corporate clientele. The strength of these strategies lies in the fact that they are well established and known to work. The resort and health club industry is on the rise and any resort which targets at these 'tried and tested' consumers is likely to gain for the next few years with the industry. However, the weakness of these strategies is that the positioning is so undifferentiated that a customer could choose one resort over the other and not know the difference. Therefore, there is a low chance of loyalty and repeats, making the marketing task to grow at a higher rate than industry a gargantuan task. It would be pertinent to note that Center Parcs should not consider only these resorts as competition but should have a wider net. Center Parcs should aim at attracting the individual who chooses various expensive activities to spend his free time in. Therefore, the company should look at gaining 'share of leisure time spent' and should not be narrow sighted in trying to tackle only other luxury holiday resorts. 1.3 STAKE HOLDERS IN THE INDUSTRY - CUSTOMERS, BUYERS, SUPPLIERS AND NEW ENTRANTS Given that the industry is growing at a fast pace, it is likely to see more entrants in the scenario. However, launching a resort has high entry barriers. It required real estate, high initial investments followed by intensive marketing to ensure a good rate of return on the investments. There is high risk in this business since the offerings of all the resorts are fairly undifferentiated. Also, there is not much industry information available in UK on the health resort industry. This makes decisions even more risky for someone looking at entering. Given that there is a sporadic mushrooming of health resorts in UK, the 'customer is the king'. In this situation service and the ability to garner loyalty is supreme. It reduces the burden on marketing to continuously attract new customers. Substitutes for health resorts are abundant with the customer looking for a variety and excitement in whatever they do. Going to a resort one has visited recently is not very common. Competition pervades in the resort industry. However, given growth figures, there is room for everyone to grow and therefore, the industry sees a health environment of competition. Groups like the SPABA - Spa Business Association are proof of the fact that the Spa owners come together to sort industry issue at large to ensure a healthy growth for this leisure industry. 2. INTERNAL ANALYSIS OF CENTER PARCS Center Parcs currently has four sites around UK namely the forest resort locations in Wiltshire, Nottinghamshire, Cumbria and Suffolk, UK . These resorts have wonderful villas where one can enjoy various activities on a holiday with family and / or friends. The resorts believe in a lovely harmony between nature and modern day needs. With nature as the backdrop, the forest resorts allows the guest to be one with nature. They believe in creating a homely atmosphere where the customer can rewind with family and friends. They have special packages for those wanting to celebrate something special like a birthday or an anniversary and various themed holidays like Halloween, Christmas, etc Center Parcs allows for something for everyone acknowledging the fact that customers have varied interest in different activities. One can pamper oneself at the spa or take a swim in the indoor pool. The hot tub bath is a novelty every guest of Center Parc talks about. Various activities are planned at the locations. Among the offerings are the 3G swim from a 13 meter climbing tower, fishing, flower arrangement, water color painting, Tai Chi, Yoga and the like. The resorts have kept pace with the changing times and continuously added various activities which the guests can indulge in. They believe in 'everyday, the perfect break naturally'. They aim at giving the perfect break to the guests through the quality of service, facilities and a perfect staff. As most resorts they believe that the customer is the king and aim to delight the customer and all offerings are value engineered to give the maximum impact to the consumer. They consider their largest assets to be their staff and the people which make the holiday experience a wonderful one for their guests. For this they indulge in training, ensure recognition and succession planning, believe in working in cross functional teams, value honesty and integrity and ensure high levels of internal communication. The company sets high goals and standards for themselves and deliver what they market, monitor performance against targets. The other primary support values which Center Parcs believes in are related to ensuring that the resorts can provide the best services to their guests and also to increase footfalls and revenue. These include undertaking ensuring various innovative escape routes for their guests. These are done by ensuring that the staff that they recruit is top of the line and are also regularly trained to ensure that the skills are updated and relevant in the modern context. 3. SWOT ANALYSIS SWOT analysis is a toll which allows for auditing an organisation and its environment. It is the first stage of analysis for any company which wants to define its course of action. It helps to focus on key issues. SWOT stands for Strengths, Weaknesses, Opportunities and Threats. (Anon, 2000) STRENGTHS Location of sites amidst nature - all the sites for the resorts have been chosen to be in the middle of forests. This ensures a wide choice of activities like walks in flower meadows, following a brook / stream etc Variety of activities - the activities that one can undertake in the resorts range from cycling, swimming to sauna's and hot steam baths. This ensures that there is something that the resorts have to offer fro everyone who visist there from children to adults Trained, top of the notch staff - Center Parcs believes in training their staff regularly to ensure that they are the best in the industry at any given point in time. Key attraction - Aquasana spa. These spas borrow the best of techniques from the heritage of various countries. The satisfied customers of these spa services ensure that they come back for more ensuring a fairly high repeat rate for the resort. Having a chain of resorts allow Center Parcs to procure supplies at a negotiable rate due to economies of scale. WEAKNESSES Arguably, Center Parcs does not enjoy a premium image from among all the resorts. Center Parcs also does not attracts a lot of day visitors and most of the people who come in are those who spend a long weekend at the resort. Most of the clientele of the resort are families which come to the resort for a good time with their kids OPPORTUNITIES The fast growing 'pampering' industry in UK holds a great opportunity for Center Parcs since Aqausana is one of the key attractions. The increase in the 55 years plus population is on the rise. If Center Parcs holds on to their customers, they can ensure a steady flow of guests for their resorts Luxurious services at an affordable price. Though communicating this paradox is a difficult task for any marketer, if done it can reap large benefits for the resort THREATS The burgeoning of resorts all over the UK is a threat for Center Parcs. Given that consumers seek variety and novelty in most recreation activities that they undertake, it is likely that the presence of so many options will lure even the most loyal guests of Center Parcs. Increasing real estate prices indicate that if Center Parcs does not expand fast, they may soon have trouble starting a new location and adding more locations is extremely important for the chain of resort if they have to grow. Too much dependence on one key attraction - Aquasana. Center Parcs needs to develop more exclusive options for the consumer to associate the resorts with. Unless this is done, the resorts are in danger of being known for only the spa and therefore lose out on clientele which may not be so keen on a spa. CENTER PARCS TACKLES SPA SNOBBERY Assignment 2 - Where do we want to be and how might we get there 1.1 Mission Statement Establish Center Parcs as a luxurious yet affordable 'getaway', where the best technology and heritage from across the world is used. 1.2 Marketing objective One of the tools which aid in developing the marketing strategy and objectives is the Ansoff Matrix. Based on the Ansoff Matrix there are four broad areas of growth. Product Market PRESENT NEW PRESENT Market Penetration Product Development NEW Market Ddevelopment Diversification Given the large proliferation of health resorts in UK, Center Parcs should not look at opening more resorts across the country. Initial investments are extremely high due to the ever increasing real estate prices With unprecedented growth in the spa sector in the last 10 years, the increasing share of men contributing to business, and a present penetration of about 1%, this industry holds a large potential for businesses who are seeking to grow rapidly (Anon, 2004). Currently, health resorts are perceived to be for the rich and are only aspirational in nature. This image has been the main reason that less than 1% of the UK population visits spas (Anon 2005) Center Parcs therefore needs to look at related diversification. The marketing objectives for Center Parcs would be 1. Launch the first stand alone spa to target the mass market by November '06 2. Roll out the model spa to a total of 10 such stand alone locations by August 07 3. Target break even by March 08 1.3 STP The main pillars of modern strategic marketing are STP - Segmenting, Targeting and Positioning. Earlier 'mass marketing' and 'product variety marketing' were accepted routes to market a product / service. However, in the age of competition and variety, it is essential that after segmentation of the market ha been undertaken, specific and relevant communication be made to the target audience. The trend today is that the mass markets are breaking up into hundreds of mass markets and customisation at a group level is becoming essential. The steps STP are Identify the variables that can be used to segment the health spa market and segment the market Develop and evaluate the attractiveness of the profiles of these segments Select the target segments Identify possible positioning concepts for each segment selected Finally develop and communicate the concept to the right segment using the right media vehicles For Center Parcs which would like to launch spas, there are various variables based on which we could segment the market Current user vs. Potential non user Holiday users vs during the weekday Citizens vs. tourists Pampering vs. medical treatment Older vs. younger, males vs. females Currently, the penetration of spa goers is less than 1% in UK. It has not percolated among the masses. The profile of the spa goers is older than average and the average income is also higher than that of the population. Given this knowledge, it would be pertinent for Center Parcs to target to expand the market of spa- goers. Generally spas fall into two general categories - medical and pampering. The market for those seeking medical treatment through spas is likely to be a niche market a yet and therefore, Center Parcs should not target that segment of potential users. It can be argued that the percolation of using a spa shall not happen overnight and though there should be an attempt to lower costs and bring these services to the mass market, the same can be achieved slowly. Therefore, the profile recommended for Center Parcs to target would be Males / Females, in the age group of 30 to 45 years belonging to higher middle / high income households (between 25000 to 40000 income) Before going forward and defining the need that the Center Parcs spas will meet we need to ensure that the target that we have defined is Measurable, Substantial, Accessible, Differentiable and Actionable. (Kotler1994) The psychographics description of the target consumer would be a person who is seeking to pamper themselves and escape momentarily from the dredges of a normal day. These potential consumers are either busy professionals who would like to mix business with pleasure or non working women with relatively high disposable incomes. Given this psychographic profiling we arrive at 2 segments of potential consumers Segment 1 - Males / females who are looking towards relaxation but would like to utilise this time for business networking as well and Segment 2- Females who may be non working but have high disposable incomes and are socialites. The positioning for Center Parcs spas therefore would need to communicate an understanding of the need for unwinding in today's world of personal stress. It would need to communicate that Center Parcs has the knowledge of practices followed by ancient civilisations and the modern day technology to provide the best atmosphere for unwinding. Center Parcs should also continue to use their brand name of spas (currently being used for spas in the resorts) Aquasana for the stand alone spas as well. This has benefits for the new stand alone spas as well as the resort. Customers who have sampled Aquasana at the resorts and are satisfied with the services offered are likely to try the stand alone spas while in the city. The resorts, where one of the key attractions is the spa, will also benefit from the hype around the launch of this network of spas. The rub-off effect is a mutually beneficial one. The positioning statement thus would be: "In today's world of increasing stress and tension which takes its toll on ones body and mind, one needs some time out of the daily rigmarole to relax. Center Parcs brings to you Aquasana, a chain of spas which you can look towards to relieve you of all your stress. Accessible and 'just round the corner' these spas use the knowledge of various ancient civilisations and merge them with the best modern day technology to allow you a time where you can not only unwind but also network with other people ensuring proper utilisation of time. With a 'Do It Yourself' approach Aquasana spas ensure that you can control the time and money that you spend on this service. So go ahead and visit one of our Spa's in the city. All you need is a few hours off and a desire to be pampered." The SMART (Specific, Measurable, Achievable, Realistic and Time bound) objectives for Aquasana spas would be Ensure 20% triers from among those who have sampled services at Center Parcs Aquasana Parcs Achieve about 40% ratio of males of the total customers of Aquasana by the first year of operation Ensure a 20% repeat rate Implement a referral scheme and ensure that 2% of the new customers added are obtained from referrals 2. MARKETING MIX There are 4 P's to traditional marketing - Product, Place, Price and Promotion (Kotler, 1994). Product - The most basic element of the marketing mix is the product. It stands for the offering which the firm has to make that might satisfy a need /want. . It includes objects, services, persons, palces, organisations and ideas. At Aquasana the services should include A mix of short therapies / treatments and full treatments - given that the stand alone Aquasana spas would be targeting their consumers in the middle of the week, it is essential that the customers have a choice in which they do not have to spend too much time. However, for the indulgent female audience it is essential that the elaborate treatments also form a part of the offerings. To keep investment at a minimum, Aquasana should give more importance to services like sauna, massages, aromatherapy facials and hydrotherapy since these are the most often used. Also since the objective of the launch is to increase the penetration of spa goers, the new triers are likely to try the basic facilities first A rest room for relaxation and some eateries - since Aquasana is positioning the spas as a place to interact with people and network, there needs to be a space where conversation can take place at leisure. These will add to the revenue of the location and also ensure that the offering is in line with the promise. A 'Do It Yourself' approach for the services offered - This will ensure that the customers who come in from the high street and who are in the middle of a rush day have the flexibility to decide the amount of time that they can spend in the spa. This will also ensure low man power requirement and help in keeping costs down. High end facilities to be added later based on profits accruing from the specific locations - the initial investments per location should be basic facilities like those listed above. However, the high end services should be added later after the locations have defined their catchment areas and proven that the spas are profitable. The branding as discussed earlier should be Aquasana to ensure a positive rub off effect of Center Parcs and garner initial trials for Aquasana. Price - It is the amount of money charged for a product or service. For Aquasana, Price to be lower than what is charged at the resort spas for every service - this is primarily because the objective is market penetration to induce more and more people to try out spa services. Price not to be too low to indicate 'cheap' services - Spa services are currently being used by the older age group and also by the higher income class. Though market penetration is the objective, any new launch cannot undermine the importance of these current users. There is also the positive rub off that one is seeking from Aquasana for the Center Parcs resorts. Price off promotions - The strategy which Aquasana should adopt to ensure higher number of triers while keeping its image is to offer discount packages, some free services on joining, and the like. This kind of a price strategy will ensure that while there are incentives to try the services for the first time, they are not perceived as those of lower quality. Place - For Aquasana, location of the spas is a key decision. This decision would probably be the key deciding factor on the profitability of the spa. The decision for a location should be chosen on the basis of rigorous market research which will indicate the catchment areas for each spa. Some key points to be kept in mind while deciding should be Location in or close to a busy marketplace or high street - this is primarily because each spa would need a certain number of footfalls daily. Also since the positioning is to take a break from the daily monotony, a spa needs to be at a convenient location so that a customer can step in impulsively Promotion - Promotion refers to the various activities that communicate the product / services and merits to the target consumer and persuades them to buy. Communicate the launch through PR - the first launch should be announced through high PR where the company should also announce the forthcoming Aquasana spas in UK. The communication for the services should be through The Center Parcs resorts - this will ensure that those who have sampled the excellence at the Aquasana parks in the resorts, will become aware that they can enjoy the same facilities and expertise at more convenient locations Corporate packages - Special corporate packages should be sold for corporate clients through the HR of the company where the same could be included as a perk for the individual Loyalty schemes - schemes to reward loyal customers should be introduces so that the repeat rate for the spas increases. Referral schemes - Special points should be added for those who refer a friend to the spa. This could include certain services free for the member who refers a new triers for a day. In the context of service marketing, there are additional P' of marketing (Booms and Bitner, 1981). These are People, Process and Physical Evidence People - These are all the people which a firm comes in contact with. They could be suppliers, customers and employees. Employees - For Aquasana it is important that the employees of the organisation have been trained thoroughly. Aquasana could import some professionals from their resort spas initially to give'on-job' training to the new recruits for the stand alone spas. Suppliers - The spa needs to ensure that all the products used in the spa are authentic and the best quality. It is essential that the company uses its numbers to negotiate based on the large volumes Process - Procedures, mechanisms and the flow of activities is key for any service provider. Procedures and process should be borrowed from the resort spas to avoid re inventing the wheel Physical evidence - This refers to the environment in which the service is delivered. Given the scale of the business that is planned the spas should be practical and modern while giving a sense of harmony and luxury. This effect needs to be created keeping the costs in mind. References Anon. 2000. PEST Analysis. [Online] Available at http://www.marketingteacher.com/Lessons/lesson_PEST.htm (14 March 2006). Anon. 2005. Sports and Leisure : As it is. [Online] Available at http://www.prospects.ac.uk/cms/ShowPage/Home_page/Explore_job_sectors/Sport_and_Leisure/As_it_is/p!ebeeed (14 March 2006). Anon. 2005. Spa Holidays - UK - January 2005. [Online] Available at http://reports.mintel.com/sinatra/reports/search_results/show&&type=RCItem&page=0&noaccess_page=0/display/id=114689 (14 March 2006). Osbourne, Bruce Dr. 2005. The Spas OCCASIONAL PAPERS. Surrey. Spas Research Fellowship. [Online] Available at http://www.thespasdirectory.com/discover_the_spa_research_fell.aspi=10 (14 March 2006). Anon. 2000. SWOT Analysis. [Online] Available at http://www.marketingteacher.com/Lessons/lesson_SWOT.htm (14 March 2006). Anon. 2004. Britains Spa Industry Under the Spotlight. [Online] Available at http://www.visitbritain.com/corporate/presscentre/presscentrebritain/pressreleasesoverseasmrkt/jul-sep2004/britainsspaindustry.aspx (14 March 2006). Booms, B. H. and Mary-Joe Bitner. 1981. "Marketing Strategies and Organisation Structures for Service Firms", in Marketing of Services, Chicago: J. H. Donnelly and W. R. George, Eds. Kotler, P. 1994. "Marketing management, analysis, planning, implementation & control", 8th edition, New Delhi : Eastern Economy Edition, Prentice Hall of India. Read More