Understanding the Marketing Strategy of Virgin Active - Case Study Example

DIGITAL STRATEGY MARKETING REPORT FOR VIRGIN ACTIVE By Introduction Richard Branson founded Virgin Active in 1970 and through the course of time the organisation has immensely expanded as it has ventured into numerous sectors of the economy. Today Virgin Active has operations in air transport, space travel, hospitality, health willingness just to name but a few (Virgin Active –UK, 2012). The steady rise of the company can be attributed to the manner in which the organization’s structure is fashioned together with the strategy to provide premium products to its clientele thus standing out in the market (Virgin Active –UK, 2012). There are presently 167 recreation centres that cater for close to a million clients around the world. Regardless of Virgin Actives prosperity, just like other firms, they have competitors. Virgin Actives fundamental rivals are Living Well and Fitness First, who are additionally all known and set. Dominance of Virgin Active in its market niche has been enhanced by a market-centred approach that the organisation has implemented to give consumers the highest level of satisfaction. Situational Analysis The situational analysis will dwell on analysing Virgin Active from both the micro and macro environment to ascertain what has enabled it to obtain a competitive advantage over its market rivals. Relatively, the analysis will also include SWOT and PESTLE analyses all aimed at unravelling the factors that have ensured the Virgin brand to be dominant globally. Internal Analysis Based on resources Virgin Active is endowed with massive capital reserves that have enabled it to implement global expansion within a short period. Virgin chose a market strategy that involved provision of premium services that would distinguish the firm from the rest. In so doing the resources of the company were sufficient to source talented personnel who have the requisite skills to offer the services to the satisfaction of the clients. That notwithstanding, the resources enabled the company to run international marketing campaigns both on multimedia platform and through personal selling targeting a certain cradle of customers who would find its services useful (Virgin Active, 2013). Promotions through expansive broad communications advancement to correspondence based instalment of nonperson structures forms the primary procedure utilised for the improvement of different services (Blazey, 2008). The employees of the firm is yet another valuable resource that Virgin Active possess, the management team is composed of competent leaders who have been formulating policies that have seen the organisation expand its operations across the world to develop its product portfolio. The level of services offered by Virgin Active continues to stand out amongst the rest thus attracting more clientele. The Virgin Active organisation ties ups with other large foundation inside the Virgin group. The Virgin name is now marked, in this way partner Brighton Health and Racquet Club with the more extensive Virgin group, from trains to TV, from flights to wines, from mobiles to cash and from occasions to wellbeing clubs. The offering of exceptional discounts makes a feeling of prosperity for the clients (Virgin Active–UK, 2012). SWOT Analysis Strengths The significant strength of Virgin Active is its strong brand name and management skills. Virgin Active gyms are accessible to customers after e.g. acquiring Holmes place that is a strategic central place. This has enabled it increases its reputation. A significant pool of resources for expansion operations. The company invested over £225 million for refurbishment, an important for the company’ future (Gosh, S., 2015). Professionals at Virgin are internationally acclaimed thus offering the best services to clients. The company accommodates consumers of all ages and operates outlets in many other countries, thus enabling it diversify its market. Virgin Active offers seasonal offers to its members to motivate their consumption patterns and attract new clientele. Weaknesses The market is characterised by intense pressure with the price reduction being a primary strategy by Virgin Active’s competitors. However, Virgin does not reduce its price, which is detrimental and may result in the company losing its market grip to competitors. Some areas are dominated by other club providers such as Living Well and Fitness first, thus making Virgin Active less attractive. The company relies heavily on its brand name, which is a risk as management may lose focus. Opportunities There is room for expansion both globally and in terms of product portfolio. Virgin Active can deploy advanced technology in its operations to provide better services for its customers. For instance, the can invest in sections and classes for the disabled and elderly. Opening 24 hours can enable the company to attract other clientele such as bar and restaurant staffs, bus and taxi drivers lieu of the 0600-2230hrs schedule. Threats Different clubs are putting forth appealing packages at subsidised rates that are taking the attention of clients. For instance, Fitness First has created a women section, which is appealing to this clientele. This can be a threat in long-term as women will find the rival’s section more private for exercising. Threat of competition is another material element threatening the market of Virgin Active (Gosh, S., 2015). PESTLE Analysis Political factors The political and the regulatory environment is one significant factor that determines the success of business operations in any jurisdiction. It also affects how that particular country will relate to other countries when it comes to trade or any other international aspect of commerce. Government regulations also play a role in determining the manner in which certain goods and services are consumed (Virgin Active, 2012). For instance, regulations such as those relating to management, health and safety around swimming pools will always increase business risk and cost of operations. Others acts such as those disability acts and tax regulations affect the company’s operations. Social factor Social elements such as changes in demographics, a shift in preference and taste and change in consumption patterns of families, as well as the cultural aspects influence consumers, demand for a particular product. For instance, with increasing campaigns to create awareness on the dangers of obesity and related diseases in the UK, consumers are changing their consumption patterns to keep fit. The need to belong to a given social class with emergency of footballer rich people, especially among the youthful generation is a critical element posing challenges to fitness centres on how to segment the market in the UK. The overall effect will be potential customers scaring away from Virgin’s products thus negatively impacting on its business operations (Grant, 2005). Economic factors Financial factors refer to investment rates, taxes, trade rates and development in the economy. All these firmly impact the advertising procedures in Virgin Active Health Club. As per Miller et al., (2011), different creation frameworks are connected to global exchange, and the breakdown of one may bring about the poor execution of other financial elements given the group operates in various countries including, Italy, South Africa, etc. Thus, the company’s revenues and profits face the risk of the fluctuating exchange rates of currencies. Technological factors Virgin Active has deployed advanced technology in all its operation right from marketing activities to the manner in which it equips its fitness centres. Tech savvy and high-end equipment are finding their way into gymnasiums. This is posing unending challenges to Virgin Active and other players in the industry (Virgin Active–UK, 2012). For instance, consumers have gone digital and want personalised online training classes requiring companies to invest in these areas. Environmental factors The Virgin Active advertisers stay up with the latest technologies on better environmental practices through recycling machines, utilisation of ecologically inviting machines and through utilising greener living plans. Environmental sustainability has become a contentious issue not only in the UK but globally. For this reason, companies are now investing in technology efficient equipment and facilities as well as hiring waste disposal carriers to dispose of waste. This is adding to the overall cost of operations. Legal factors Laws that regulated the age limit of clients that would visit the wellness centre have been lifted mainly in the UK thus liberalising the business to operate freely. Nonetheless, new legislations that are aimed at providing an enabling environment for companies to thrive have been enacted boosting further the sector’s growth. Porter’s Five Forces Threats of new entrants The threat of new entrants in this industry is low because of the large capital investments required. Players such as Virgin Active have established themselves over time and thus enjoy economies of scale because of their massive sizes and competencies such as financial resources (Virgin Active, 2012). Threat of substitutes The threat of substitutes in the industry is moderately low. The players are offering differentiated packages from those of competitors with the aim of creating competitive advantages in the market. For instance, Virgin Active has introduced an app, which links the customers to the company’s services such as training enabling it to offer customised services to the consumers (Gosh, S., 2015). Bargaining power of customers The wellbeing club business is portrayed by a high customer haggling power because of the accessibility of cheap substitutes and online discussions that offer prepared training packages to consumers (Virgin Active, 2012). Virgin Active implements customer segmentation techniques through a distinction between gold customers and the lead clients to differentiate its markets. Competition and rivalry among firms Brighton Health and Racquet Clubs pioneers know how to make centred frameworks and dodge temporary techniques that may be surpassed by substitute firms. The level of competition in the health fitness sector is significantly high due to low pricing by some market players. Through their limitless data of the game changer, Virgin Active heads have set up a method that will fulfil an interminable distinct advantage. The low trading cost among distinctive wellbeing wellness organisations has engendered rivalry among them (Lamb, 2004). Bargaining power of suppliers The Virgin Active Health Clubs concentrated division has enough administrations to guarantee particular control of supplies while focusing on potential customers (Brown, 2000). The Virgin Active Health Clubs have a bound together structure for getting supplies thus suppressing the bargaining power of suppliers. SMART Objectives Quality of service Risk is an overwhelming component of the procedure of choice as individuals attempt to figure a speculation on purchasing and assessment forms for the product. Assessment of services is an essential component utilised as a part of client maintenance and customer item decision inclination (Virgin Active, 2013). Standard price Virgin Active ought to set standard prices that can be managed by its consumers. Pricing is an essential component of commodities, and the estimating procedures change in different organisations (Virgin Active, 2013). For this reason, Virgin Active can choose to have a standardised price for all its outlets lieu of price discrimination. Strategic Recommendations Diversification of products and markets In an industry that is characterised by intense competition, differentiation of products is most critical strategy to distinguish its products from those of the competition. Conversely, Virgin Active can focus on emerging markets such as those of India and penetrate into such countries (Virgin Active, 2013). Branding Parts of corporate branding will aid Virgin Active Health Clubs clients to end up being acquainted with the services and to comprehend the items in the market (Virgin Active–UK, 2012). Therefore, the group should focus on developing its existing brand by focusing on customer satisfaction and market segments to increase its market base Integrated communications marketing The fitness and wellness industry is characterised by strong rivalry, which often leads to prices wars. For this reason, for Virgin Active to be able to retain its market share without much reduction in its prices, the company should use integrated marketing strategies to market its products to consumers. The company can engage in aggressive online social advertising and through its app based personalised communication to engage consumers always and use the platform to advertising other new products (Pickton & Broderick, 2005). Bibliography Blazey, M. L., 2008. Insights to performance excellence 2008: .an inside look at the 2004 Baldridge Award criteria. Milwaukee, Wis, ASQ Quality Press. Brown, L. O., 2000. Market research and analysis. [S.l.], Wildside Press. Gosh, S., 2015. Virgin Active to offer smart wristbands in digital gym push. Available at: http://www.marketingmagazine.co.uk/article/1329070/virgin-active-offer-smart-wristbands-digital-gym-push [Accessed 8 march 2015]. Grant, R. M., 2005. Contemporary strategy analysis. Oxford [u.a.], Blackwell Pub. Lamb, C. W., 2004. Marketing. Cape Town, S.A., Oxford University Press. Miller, Frederic P., Vandome, Agnes F., & MCbrewster, John., 2011. Pest Analysis. Gardners Books PESTEL, 2012. PESTEL analysis of the macro-environment. Available at: http://www.oup.com/uk/orc/bin/9780199296378/01student/additional/page_12.html [Accessed 8, March 2015]. Pickton, D., & Broderick, A., 2005. Integrated marketing communications. Stevens, R. E., Sherwood, P. K., & Dunn, P., 1993. Market analysis: assessing your business opportunities. New York, Haworth Press. Virgin Active –UK, 2012. Brighton Health and Racquets Club. Available at: http://www.Virginactive.co.uk/en/clubs/brighton-health-and-racquets-club [Accessed 8, March 2015]. Virgin Active., 2012. Virgin Active live happily ever active: book a visit today, see virginactive.co.uk/active. [London], Virgin Active. Virgin Active., 2013. Whatever gets you going: Virgin Active Health Club, Clapham. [London], Virgin Active. Read More