Product Management of Fernwood - Case Study Example

Fernwood Fernwood is an all female chain of health centres which is looking to expand internationally. Even though their profits are high and there are international opportunities, the home market still needs attention before expansion into the global market can be considered seriously. Towards this purpose, a SWOT analysis of the company is given in this paper along with an overview of their current marketing strategy. Suggestions are then made regarding the 7 P’s of marketing where it is found that provision of customer service and the modifications of processes might be more useful for the company as compared to changes in other P’s. Overall, the company seems to be in good shape but there is still room for improvement in the marketing mix. Introduction Health and fitness has certainly matured as an industry and looking after one’s health in today’s world has come at par with looking after one’s appearance. However, the development of this industry did not come about overnight and names such as Fernwood have been a part of the health industry in Australia for decades. This placement and history has given Fernwood an edge in terms of marketing but a lot can still be done to improve Fernwood’s position in the market. Towards this purpose, this marketing report makes a SWOT analysis of the situation along with an audit of the market to see how Fernwood can become more competitive. SWOT Analysis To better understand the factors which can lead to the success of Fernwood as a company, we can utilize a SWOT analysis to see the strengths, relative weaknesses, opportunities and threats which the company faces (Johnson, G., Scholes, K. and Whittington, R. 2005). It seems that the strategy mixture which Fernwood has used is a success but as the company also ignored some of the procedures used at a few franchises, it could also be in a bit of trouble due to work of mouth of the buyers. Strengths The most important strength of the company is in the quality of its product and the nature of the service it provides as being an all female gym chain. The company extends this advantage by not only having female members for the organisation but also a female staff since it has been exempted from legal requirements that would have forced it to take on male employees (Fernwood.com, 2007). The prices charged by the company for the services it provides are reasonable and this gives their brand an advantage over the market. Additionally, Fernwood has a long established name with a long standing history of quality and service when it comes to serving their clients. Since they have been around since the 70s (Fernwood.com, 2007), the company should have an established history with suppliers who could be pushed into improving their quality control and efficiency since they have a major interest in dealing with Fernwood. When it comes to offering services to their clients, the staff at various franchises can be given additional training and service quality standards by the company’s home office. Such training is certainly a valuable asset and can be considered a strategic strength for the company that required trained professional for service as well as assistance in providing health related information (Smith & Hayton, 1999). The management of the company itself is a strong point for the company but that strength is tempered by the control that is taken up by franchises. However, as recommended by Welch (2005), top executives paid a lot of attention to the little details concerning the company which remains important for the overall functioning of the business. While some franchises may be able to provide better value than most others may not be that particular therefore greater control over the franchising network can be established by the group. Many individuals in the market know that Fernwood is a chain therefore they can always complain to the head office which means that control should be relatively easy to establish. Most importantly, the external environment where more and more people are become health conscious is an important strength for the company since people may prefer to invest in lasting health benefits rather than fashion fads that change every month if not every week. Weaknesses Essentially, the primary weakness of the company is the management style and the operations of some franchises that may not be following the correct guidelines or not giving proper advice to customers. Centralised management, despite all of its drawbacks may become necessary for such franchises or even a monitoring team may be required to prevent such situations from developing into real disasters. Other competitors including mixed gyms can capitalise on the situation if they are able to steal members away from Fernwood. Although the company does provide some training for franchise operators, they still remain largely independent on how their franchise is operated by them which could be a real weakness in the long run. In fact, a lot of the weakness faced by Fernwood can be caused by the passive attitude of independent franchise managers who seem to be more focused on getting money out of the business quickly rather than establishing relationships with their clients. This may help the franchise owner in the short run but will certainly damage the reputation of the company in the long term. Local managers seem to disagree with the rulings given by the home office which creates conflict and weakens the company in terms of customer satisfaction and repeat buyers. Additionally, while the company seeks to expand outwards from Australia, there are real threats inside Australia in terms of competition that is doing well without having the unique proposition of being an all female health centre. In this position, Fernwood needs to protect the home market before venturing into exporting their business model to other countries. Expansion into foreign market is attractive but the home market is often more important as recommended by Flint (2003) who says that: “Theres no place like home. No matter how exciting China is, no matter how exciting it is to acquire foreign companies, the heart of the business is always at home. He who doesnt protect his home market first is a loser (Flint, 2003, Pg. 114)”. Opportunities In the early nineties, the company had a significant opportunity to revamp and capitalise on its image and name which it did not and lost a chance to break into new markets which were coming up for the rest of the health industry. Developing markets with regard to mixed clubs and other opportunities such as online sales, cross promotions, loyalty cards and other means of retaining customers and repeat sales do not appear to be utilised affectively which meant that the company will have to acquire new customers or simply continue to appeal to them on the basis of their position in the market as a single sex gym. International expansion and improvements in sales for growing markets certainly are possible opportunities for the company the emerging markets of the Pacific Rim as well as locations in South East Asian countries could help to add up to the profits. As we know today, these markets have become very important and those who entered them early have a clear advantage over those who did not (Welch, 2005). However, such entry has to be carefully planned and should only be considered after the company has securely established itself as the top Australian brand first. Threats The biggest threat which the company faces is competition coming from mixed and single sex gyms in the shape of organisations such as Body Shape, Verve, Curves, In Shape, Zest and Fitness First could all be seen as threats. Of course some of these may not be in the same league as Fernwood but the quality of service and reasonable prices may place them differently in the market so that they can give Fernwood some competition. Most importantly, technology and environmental changes in the industry can be a significant threat for the company since home exercise equipment or even video game machines such as the Nintendo Wii could push some of the members away from going to clubs and staying within the confines of their homes to perform their exercise routines. This threat may not be prominent now but a few years ago no one even considered that more people would be downloading their music rather than listening to it on CD. Therefore, the company has to take these threats seriously and plan accordingly. Fernwood can not afford to be left behind in a time that is moving forward and since the company knows the customer and can see how the demands of the customer have changed. However, they need to change themselves as well to stay in touch with the customer base. Current Marketing Strategy The current marketing strategy of the company seems to be focused on establishing a positive image for Fernwood and this is likely to be helpful for the organisation in the long run. Fernwood focuses on the message of providing a healthy, safe and pressure free environment for women who would like to exercise and remain fit therefore the images they use represent everyday Australian women rather than super fit models that represent an idealised image of the perfect physique. Their campaign is supported by their magazine which covers a lot of areas from makeup to eating healthy which certainly ties in with their business proposition of being a female’s only brand. However, as reported by Choice.com (2007) the marketing techniques used to cajole people into signing up for memberships at some of the franchises are very pressuring. This means that there is a conflict between the image that they are giving to their clients and the actual presentation and sales which takes place at franchises. The marketing strategy at franchises may not be under the direct control of the company but it must be noted that such tactics fly in the face of the vision of Fernwood and things which go against the vision of the company can be exceedingly dangerous (Welch, 2005). While the company markets itself as an organization with integrity, commitment and respect for women, it should ensure that the marketing tactics used at local franchises are also in line with the same vision and ideals. With regard to media presentation of the company, the idea of maturity and serenity coupled with health benefits certainly remain paramount in the advertisements. The message is upbeat but it is tempered with the idea of providing support and a comfortable atmosphere for professional women who wish to work out and remain healthy. In these terms, their marketing campaign is quite useful for their purposes. Recommendations Since the present market for Fernwood shows a growth trend (Doran and Lekakis, 2007), it would be a good time for a company to get the right mix of the seven P’s. The competition for gyms has traditionally been strong since there are just a few chains in the market and it is difficult to produce quality unless the control over the franchises is maintained at a high level. While all factors of the marketing mix are important for Fernwood, the three most important ones are the physical layout, provision of customer service and processes. As of the other P’s, product seems to be the one which is closest to its ideal position since the classes as well as the nature of the business should help in getting the most customers without reaching out too much to the targeted segment. However, it would be to the company’s advantage if their product was tied to other services for getting repeat businesses and up selling. Additionally, the features and benefits of their core-product can be enhanced if Fernwood focuses on giving healthy food to go with the current market trend of a demand in health related food. Since the industry is dominated by a few large players, the company should also seek out prime locations which are near offices and other areas where professional women may congregate. They must be able to create a path for potential buyers that are not hindered by the location being out of the way. In this scenario, it might be easier for them to focus on franchises serving the outer regions of commercial areas or residential areas and then expand to central locations to get more clients. Additionally, due to the oligopolistic nature of the market, the company might have to differentiate its product on price as well. They may not be able to charge a real premium over a mixed gym and might even have to give discounts to those women who do not use services such as day-care for young children. This will help in them getting more customers while it would also ease the burden on those franchises which are running expensive day-care operations as well. At the same time, the company can also enter into the related business of providing day-care services for those franchises where the day care population is comparatively low (Fernie, et. al, 2003). Coming to Promotions, advertisements in trade shows, phone books, mailing brochures and other direct contact services may not be appropriate options since the target market is wide enough to be given a broader approach to marketing. However, the company still needs to focus on programmes which are likely to be more popular with women rather than men since their brand is focused on women. Food and cooking related programs could also be useful since there is a lot of awareness about the benefits of having healthy food. Additionally, the buyers who are well aware of the benefits of joining a gym might latch on to the differentiation and the unique business proposition if it is clarified to them with a no pressure visit to the facilities. Finally, the company should promote repeat business by offering discounts for additional services (Harris & McDonald, 2004). For visits to franchises, the physical layout of the gym becomes very important and Fernwood seems to have a lot of that covered with their methods of laying out how their gyms operate. Airy, open and well lit areas for exercise and other gym services need to be planned with focus groups as well as research studies that can help the company understand how the layout of their franchise can affect buying decisions and the decision to stay with the club. The visual media presented by the company on their website certainly supports this idea (Fernwood.com, 2007) but more can be done to ensure that the company responds to the desires of the clients. Provision of customer service and the processes at the gyms however, leave a lot to be desired since there is evidence that some franchises may not be following the guidelines given by the company (Choice.com, 2007). Customers are likely to be loyal to those companies which provide good service and since Fernwood’s reputation might be hurt with pushy sales and high pressure tactics, the company should take a very strict notice of such activities. Once the company has aligned its marketing strategy with the correct mix of the seven P’s, it can certainly hope to gain more value and more profits out of the local market which has been so profitable in the recent past. After they have established themselves firmly as the top brand in Australia they can certainly seek out new opportunities internationally but going global before protecting the local might be a real mistake which the company needs to avoid. Works Cited Budhwar, P. 2004, Managing Human Resources, Routledge. Choice.com. 2007, ‘Joining up’, [Online] Available at: http://www.choice.com.au/viewArticle.aspx?id=104348&catId=100563&tid=100008&p=2&title=Gyms Doran, M and Lekakis, G. 2007, ‘Gym industry gets pumped up’, [Online] Available at: http://www.news.com.au/business/story/0,10166,22066375-462,00.html?from=public_rss Fernie, J. et. al. 2003, Principles of Retailing. Oxford. Fernwood.com. 2007, ‘Fernwood Women’s Health Club’, [Online] Available at: http://www.fernwoodfitness.com.au/Default.aspx Flint, J. 2003, ‘Rules of the Game’, Forbes, vol. 172, no. 9, pp. 114-115. Harris, P. & McDonald, F. 2004, Business and Marketing. Sage Publications. Johnson, G., Scholes, K. and Whittington, R. 2005, Exploring Corporate Strategy, FT-Prentice Hall. Smith, A. and Hayton, G. 1999, ‘What drives enterprise training?, International Journal of Human Resource Management, vol. 10, no. 2, pp. 251-272. Welch, J. 2005. Winning. Harper-Collins. Read More