Strategic Marketing Plan of SpotUNE - Case Study Example

Table of Contents Particulars Page No 1.0 Executive Summary 2 2.0 Introduction 3 3.0 Product Life Cycle 4 4.0 New Market Entry 5 5.0 Growth Strategies 6 6.0 Shake-out Stage 8 7.0 Mature Stage 10 8.0 Decline Stage 11 9.0 New Economy Market 12 10.0 Organizational Structure 12 11.0 Marketing Plan 14 12.0 Marketing Metrics 16 13.0 Marketing Audit 17 14.0 Conclusion 18 15.0 References 19 1.0 Executive Summary This report looks to identify and explain the strategic marketing plan of SpotUNE and is in continuation of its earlier part. Looking at the overall report, the gym services for SportUNE highlights great opportunity signs for SportUNE business development. Currently the gym services is in its growing stage and SportUNE can look upon following a pioneer role with strategic choices such as mass market, niche, skimming or early withdrawal strategies where niche penetration seems to be the most suitable and viable option for SportUNE. Further being a pioneer it should look towards market leader and follow a combination of market expansion through new target segmentation strategy of working women along with a fortress strategy. Further more different stages of a product life cycle along with marketing implications and best suitable strategies for SportUNE have been explained in details. For example, SportUNE can look upon following a harvesting and niche strategy during its decline stage. A discussion has been made on the new market economy along with organizational structure where SportUNE is more inclined towards functional organizational structure however, it can look upon matrix structure to best suits its need and demand. A marketing metrics has been identified which ensure a growth opportunity for SportUNE owing to higher retention of its existing members and new promotional offers for new members. Finally a maketing audit has been conducted in terms of macro-environmental, organizational and strategic audit to identify the key success factors and elements critical for future growth. 2.0 Introduction This report is in continuation to the earlier part of SportUNE where the basic strategic marketing plan of the organization has been discussed. This report aim to enhance the in-depth knowledge of various marketing strategies that can be most suitably applied by SportUNE under various stages of its product life cycle along with new market entry strategies. The report initially looks to identify the stage at which the gym facilities provided by SportUNE in the product life cycle and the new market entry strategy which is most appropriate for the organization to ensure a larger coverage of its targeted audience and generate higher revenues and growth. A complete discussion has been made of new market entry strategy where SportUNE can look upon following a pioneer strategy along with a discussion on the best suited pioneer strategies like mass market, niche, skimming or early withdrawal strategies. To ensure a further better growth during its growth stage of the product life cycle a discussion has been made of the various growth strategies which SportUNE can look upon like market expansion, flanker, confrontation, fortress and contraction strategies to ensure a sustainable growth in its business and profits. Furthermore the report looks to identify the various appropriate marketing strategies in other stages of the product life cycle which includes maturity, shakeout and declining stages. A discussion has been made on the new economy market and organizational structure which SportUNE currently adopts and suitable changes which it can look upon to ensure better growth of its business. Finally a discussion is made on the marketing metrics and marketing audit to ensure a smooth flow of its business and further ensure corrective actions against any deviations in its marketing plan structure. 3.0 Product Life Cycle All products and services irrespective of its size and success similar to a human being have its own life cycle which is better known as the product life cycle. The initial stage or the cycle begins at an earlier introduction stage which usually relates to how the product or service is introduced in the market and customers or people are made aware of the distinct features and uniqueness of the particular product which to some extent decides upon the success or failure of the product. If introduced and marketed in a correct manner at the right time and to the right targeted audience the product or service is more likely to achieve substantial growth stage. The growth stage is characterised with deeper market penetration and larger market expansion with relatively higher sales and higher profit generation (Baker, 2002). However, as the product or service begins to mature the selling opportunities tend to decline and the product reaches its maturity stage where the product has high chances of becoming obsolete and replaced by new alternatives which leads to a declining stage and further the product or the service being ruled out of the market. Further it is to be noted that there are various different alternative marketing strategies which can be applied in context to each stage to ensure better longevity and higher returns. SportUNE has been doing well in its various facilities offered and has certainly become a name which is trusted by large number of its targeted audience. Looking at the gym facility one could clearly sense that the gym service currently lies in its growing stage which is evident from the fact of significant increase in its day to day membership and higher revenue generation. Furthermore the gym services contributes 18% of the total revenue for SportUNE which again indicates market growth opportunities and untapped market segments which can help the gym services of SportUNE to contribute higher revenue and better recognition in its existing and future market expansion opportunities. 4.0 New Market Entry A new market entry describes the initiation of all the efforts of an organization which is directed towards the selling of a new product or service to a group of targeted audience which previously has not been targeted by the organization. A new market entry can be new products or services which the world has currently not witnessed, new product lines, addition to existing product lines improvements or added benefits to existing offerings, repositioning or cost reduction. Here the SportUNE for its gym facility shall look upon improvement in its already existing gym services with new facilities and features to make it distinct and unique so as to achieve sustainable competitive advantage over its existing competitors and potential market threats (Schlegelmilch & Keegan, 2001). The major marketing challenge for SportUNE is to target the women working class and look for expansion for its targeted market audience and build upon its primary demand so as to convince the targeted audience of its gym services and further attract larger customers to adopt the same (Rea & Kerzner, 2007). An appropriate suggestion to the same could be use of R&D in its gym services to adapt to new uniqueness and features. SportUNE can look towards two different strategies which are pioneer or follower. With deeper understanding of its gym services it is more likely for SportUNE to adapt to a pioneer role as SportUNE has a new product or service market which is insulated from the entry of its competitors due to its high brand name and recognition among its targeted audience. Furthermore, SportUNE following the pioneer role shall have added advantages such as distribution advantages, economies of scale, better market segmentation and positioning etc. SportUNE in its pioneer role can further look upon one of the following strategies to ensure better returns and growth of its gym services. Mass Market Penetration: The major advantage of mass market penetration is command over a higher market share of the new and unique product or services and is more likely to be successful when barriers inhibit or delay the appearances of its rivals or when pioneer has some unique competencies. Niche Penetration: This strategy seems to be most viable for SportUNE as it can help small pioneers like SportUNE to gain the biggest advantage from limited funding and avoid direct confrontation with larger competitors. SportUNE through a Niche penetration strategy can focus their efforts more specifically on a single market segment which is the working women segment as there are almost virtually nil gym services with unique features currently targeted towards this segment than looking to capture and sustaining a leading share of the entire market. Skimming and Early Withdrawal: This strategy involves setting a high price and engaging in limited promotional tools and advertising so as to realize the per-unit products development cost quickly and maximizing profits. Here firms tend to look upon next generation technology and introductory promotional programs which might best focus on customer group who are less price sensitive and more likely to adopt the new product or service (Schmitt, 2003). Thus we see a pioneer role with a niche penetration strategy is most suitable for SportUNE for new market entry. 5.0 Growth Strategies As already has been identified and discussed in the aforesaid paragraphs that the gym services of SportUNE is currently more likely into the growth stage of its product life cycle and it is of prime importance to clearly discuss upon the various growth strategies which SportUNE can look upon and ensure better returns. Furthermore deciding upon a leader or follower is equally important to further proactively plan upon its growth marketing strategies. SportUNE inclined towards a pioneer role for its gym services can more suitably adopt itself of becoming a market leader because of its high brand value and unique offerings in its gym services which are mostly technology driven and virtually nil supplied by its existing or potential rivals (Mitchell & Coles, 2003). Furthermore having the best gym instructors recruited on basis on global talent adds to the sustainable competitive advantage of SportUNE. SportUNE while adopting to be a market leader needs to keep the basic facts in mind that the dynamics of a growth market makes maintaining an early lead in the relative market share a difficult task to win and SportUNE can maintain its current share position in the relative market only when its sales volume continues to grow at rate which matches with the overall growth rate of market enabling the firm to stay even in absolute markets. Furthermore it is important to now look upon the best suited growth strategies which SportUNE as a market leader can look to follow which includes making a choice between different strategies such as market expansion, flanker, confrontation, fortress and contraction strategies or a combination of one or more of such growth market strategies. SportUNE as a market leader among the aforesaid growth strategies should look upon the following strategies. Market Expansion: SportUNE as a growth strategy can look upon market expansion by not just extending its geographical boundaries but instead looking an expansion through new market segmentation and targeting strategy. Targeting the working women class which currently occupies a moderate share in its working environment can ensure SportUNE of higher new membership and better revenue generation with brand equity significantly rising as a result of the same. It is further a more aggressive and proactive version of a flanker strategy which certainly suits for SportUNE as a part of its growth strategy. Fortress Strategy: Along with market expansion as a growth strategy, SportUNE can look upon Fortress Strategy in combination with expansion strategy. Fortress strategy is a kind of defensive strategy where SportUNE can look to continually strengthen its current position in the market owing to its loyal and brand preferred customers in other services to become part of its gym services (Paganetto, 2003). Actions shall be directed towards better and higher customer satisfaction and loyalty along with focus on simplified repeat purchases. While shoring upon its already strong position, SportUNE can ensure better customer satisfaction of its existing customers while making an effort to increase the attractiveness of its offering to new customers. It is to be noted that the other growth strategies like flanker, confrontation and contraction are ideally less viable for SportUNE as in case of a Fortress strategy looking to develop a second brand to compete against its own brand reputation is more likely to higher its own business risk while following a confrontation or contraction strategy and reducing upon its other services offered to boost up the revenue for gym services might negatively affect its reputation and allow more of its loyal customers to switch to its rivals thereby leading to a declining stage of the product life cycle earlier than its anticipation. 6.0 Shake-out Stage Shake-out is the stage in which new industry emerges as during this stage the competitors start to realize business opportunities in the emerging industry. The total value of the industry also rises at a rapid pace as a result of the same. This is the stage when firms in the similar industry looks to establish a concrete design thus eliminating many smaller firms which do not follow this pattern of the product life cycle. Barriers to entry become very high during this stage as large scale consolidation is a common element which is prominent during the shake-out stage. Investments tend to get higher to ensure better competitive positioning of the firm along with efforts being directed towards larger market share. SportUNE during its shake-out stage can look upon the following strategies to ensure better growth and development of its business and ensure long term planning and success of its business. Competitive Advantage: Achieving sustainable competitive advantage is certainly beneficial for any firm in any industry. SportUNE can look upon competitive advantage by offering customers greater value either though lower prices or through differentiation advantage. SportUNE should look to focus more on differentiation strategy than considering cost advantage as majority of its targeted customers are higher income group customers and cost reduction may deviate it from its successful market segmentation. Adding new and unique innovation in its gym services can certainly help SportUNE to achieve differentiation advantage. Transition: Transition involves preparing for future and this strategy looks to improve co-ordination and communication among different departments of a business so as to ensure smooth flow of business for future benefits. It further involves transferring or making a transition of its existing product and service lines to new lines so as to ensure better growth in future. SportUNE can look for transition strategy during the shakeout stage however, adding new services in the gym may again have a negative influence to its primary services and management need to consider the same with utmost care. Market Share: SportUNE can look upon strengthening market share as another viable strategy during the shake-out as it holds a dominant market position and pool of loyal customers it is more unlikely for SportUNE to lose majority of its market share during the shake-out stage in comparison to its competitors. To further strengthen its market share it can look upon alternatives such as acquisition, merger, strategic alliance etc so as to develop a larger market base and rule out its potential rivals and small competitors. 7.0 Mature Stage This stage of a product life cycle is when the sales have reached to their peak point and now tends to decline. Investments during this period usually tend to range from moderate to low. The strong growth in sales usually diminishes and competition becomes most fierce. There is a plethora of similar products or services and the first basic product usually becomes less wanted due to higher competition from new and similar unique products or services. Pricing strategy plays a crucial role during this stage of product life cycle and companies usually lower their prices as a reason of intense competition (Bodenhorst, Brevis & Cant, 2009). Price wars are salient features of this stage and companies in order to extend their maturity phase or eliminate the risk of rising decline stage usually look for promotional tools such as discounts, coupons, offers etc. emphasis is focused on product differentiation in terms of its quality, use, price and reliability. SportUNE during its maturity stage can look upon the following strategic marketing choices so as to extend its maturity stage or endeavour to bring its gym services back to growth stage. Market Expansion: SportUNE during the mature stage can look for geographical market expansion instead of focusing on expanding its customer base through higher segmentation of working women class which already has been carried out during its introductory and growth stage (Kotler, Armstrong & Wong, 2008). Having created a large pool of loyal customers it can look upon advantages of brand equity by opening new SportUNE clubs through a market demand analysis in other geographical locations on a worldwide basis. Further to meet the financial obligations process such as mergers, strategic alliance can be looked upon for a steady and better market expansion strategy. Increased Penetration: SportUNE has been looking to target the upper middle and upper income level consumers of the customer pyramid. However, during the mature stage where sales become constant or start declining increased market penetration through competitive pricing or special promotional offers for new users can certainly boost up its revenue and ensure a better and increased market penetration (Levinson, 2007). 8.0 Decline Stage This is the last stage of a product life cycle and is the period when there is a rapid decline in sales either because of new products or services available in the market or due to changing consumer patterns. It is time when firms tends to minimize their investments and new investments are generally avoided with minimize promotion and limited distribution channels. Eventually the market for the product or service start to shrink and this shrinkage could be mainly due to saturated markets. SportUNE during its declining stage of gym services can look upon the following best suited strategic choices available. Harvesting: Harvesting strategy is a planned discontinuation of a product or a service at the end of its product life cycle while trying to extract maximum profits from its sales. SportUNE shall look to eliminate all its marketing expenditure during this phase and sell its gym services on basis of its goodwill and reputation until the sales revenue fall below a cut point. A harvesting strategy thus can be applied by SportUNE to reduce cost and extract as much profit as it can from its gym services. Niche: This involves selling a product or service to small often lucrative segments of a market and is opposite to mass marketing. SportUNE can look to identify new Niche market during its declining stage such as women looking for gym services to look more attractive or working men who could shape their bodies by less workouts through the use of technological equipments. 9.0 New Economy Market Markets tend to change with changing needs of consumers taste and preferences and so is the case with gym, fitness and healthcare centres. With the advancement of technology SportUNE needs to ensure the use of latest technological equipments for its gym services probably digital products to keep in face with the changing demands of the market and ensure better customer service and customer satisfaction. Furthermore with internet creating a virtual market in today’s economy it is of prime importance for SportUNE to develop a user-friendly interface where all details of gym services are available so as to ensure a better segmentation and target of its audience. Customer service should be considered of utmost importance and efforts should be directed to ensure not just quality services provided but ensuring customer friendly timings for gym services along with an atmosphere which most suits the customers so as to ensure better relaxation of its services (Larreche, 2008). Promotion again plays a vital role in new economy market to attract more customers. With lower switching cost in case of gym services, SportUNE needs to ensure that there are some added benefits for early bird members and ensure a market penetration promotional strategy according to different stages of its product life cycle for higher revenue generation and sustainable competitive advantage in its business. 10.0 Organizational Structure Organizational structure is an important element as it draws the line of authority, responsibility and accountability of every individual associated with the organization. Organizational structures tend to vary according to business requirements and it is of prime importance to develop the best structure as it helps is smooth flow of day-to-day business activities. Let us have a look at the organizational structure of SportUNE as depicted in the diagram below. The organizational structure of SportUNE is more inclined towards functional organizational structure where role of each departments or functions are clearly defined and respective managers are appointed to head over their respective functions. However, having a functional organizational structure has a major drawback of coordination and communication between different departments which is not in the case of divisional organizational structure. SportUNE as a result of the same can look towards a matrix organizational structure which has the benefits of both functional and divisional organizational structure. Matrix organizational structure is typically followed in large corporations and is a hybrid of divisional and functional structures (Albaum & Duerr, 2008). Matrix organizational structure can create power struggles as most of the areas have a dual management in place, a functional manager and a product or a divisional manager working at the same level and looking after some of the same managerial territory. 11.0 Marketing Plans This section of the report looks to provide the readers with an understanding of the marketing plan through a SWOT analysis for the new idea selection of SportUNE along with a cost benefit analysis and contingency plans. SWOT Strengths SportUNE already has a pool of large loyal customers and it is more likely for existing members to try out the new gym services along with lucrative attraction for new members. The business has set clear future directions and realistic goals. Strong support from the government especially the health and fitness department which is more likely to provide subsidy for new technological driven health instruments (Albaum, Strandskov & Duerr, 2001) The area of SportUNE fits and suits the target market profile. The gym services are established in a market where competition is on the lower end. Weaknesses Easy entrants of small and new rivals have increased competition in the fitness market. Segmentation and target audience has been the upper income and upper middle income group of customers thus lowering its own customer base of middle and lower income group of the customer pyramid (Albaum, Strandskov & Duerr, 2001). Lack of co-ordination between different services provided by SportUNE in terms of timings may lead to emergence of its own services as a competitor to new gym services (Albaum, Strandskov & Duerr, 2001). Opportunities Health and fitness industry has been growing at an alarming rate which provides early mover advantage to SportUNE. Availability of finance and government support for installation of best technological gym equipments can ensure differentiation advantage to SportUNE. Increasing trend among working class especially working women to become part of gym so as to ensure a healthy life (Albaum, Strandskov & Duerr, 2001). Threats Rising competition with new market challenges in terms of promotion and quality services. Slowing economy where gym services may not be a lucrative offer to ensure a better disposable income (Albaum, Strandskov & Duerr, 2001) Thus, we see the SWOT analysis conducted above highlights immense opportunities for SportUNE for its gym services with considerable threats which can be minimized though proactive planning and strategic marketing plans. On a cost-benefit analysis it is important to consider that the prime objective of SportUNE is not just profit maximization but to ensure healthy life of its well beings. Furthermore looking at the cost structure, it is more likely for SportUNE to recover the initial investment at a faster pace owing to its loyal customers and high brand reputation (Schmitt, 2003). Government subsidies for technological equipments for gym services further relaxes the cost structure with better and higher demand for gym services certainly ensuring of better business returns. However, on the negative side a contingency plan for SportUNE is in hand which ensures new promotional tools and methods in case the gym services fails to make a desired effect. Furthermore, larger gym services available by its most potential rivals are eager to join hands with SportUNE which provides a backup for recovery of all cost in case of failure of its new business idea. 12.0 Marketing Metrics Most companies fail to realize the importance of marketing metrics as the same focuses on the results achieved which could be explained to the top management and other stakeholders in a quantifiable term to as to justify the marketing spending. SportUNE has been doing well in its other services offered which certainly provides a positive impact for its new gym services. In a general recent survey conducted it was found over 90% of its members are highly satisfied with high quality services provided by SportUNE. Furthermore, customer retention rate which has been quantified as customers retained/ Total customers at the start of the year *100% is found to be 83% which certainly demonstrates its success and large pool of loyal customers. Majority of its revenue is generated from outdoor and indoor gaming facilities while gym services look to contribute 18% of its total revenue generation which is higher than its anticipated ROI of 16%. The profitability has increased by 1.22 times in 2014 when compared with 2013. Net marketing contribution has been found to increase from $2.8 billion in 2013 to $3.7 billion in 2014 which again demonstrates large demand of its new gym services. Furthermore there has been significant rise in over 2000 members to an overall increase of all services provided. 13.0 Marketing Audit Marketing audit has certain similarities to financial audit as it helps in review or appraisal of existing marketing activities. Marketing audit is a critical, systematic and impartial review and appraisal of the total marketing operations. Let us have a look at the different marketing audit being conducted of SportUNE. The Macro-environment Audit There is increasing demand of health and fitness centre where a rise of about 140000 people is seen on a yearly basis to join more fitness and gym centre in the area of SportUNE. There is an increasing recognition of the need to lead a healthy life with growing interest in awareness of environmental issues in any business segment. Changes of income of the members of SportUNE may have a negative influence on its sales revenue as different low cost alternatives are available for gym services. In terms of technological advancements SportUNE has equipped itself with modern equipments which can ensure differentiation advantage to the firm. Marketing Organization Audit There is a gym development officer, a gym technical officer and a sponsorship and allotment office to look after the responsibility of marketing of gym services. The structure is also equipped with Promotions and Advertising officers and a corporate press officer. Strategy Audit SportUNE major objective is not of profit maximization but ensure wellbeing of all its members. It follows a competitive strategy with different contingency plans for each of its stage of product life cycle. Strategies are developed on basis of market needs and changes and suitable amendments are made as per requirements. 14.0 Conclusion This report looks to focus on the strategic marketing plan and its implications of SportUNE. Different stages along with suitable strategic choices has been well explained which can be looked upon by SportUNE to ensure better and higher growth with sustainable development of its gym services. Furthermore, the report also identifies the suitable marketing opportunities and threats for SportUNE along with new market economy and implication of marketing metrics and marketing audit so as to ensure both practical and theoretical understanding of the entire topic under study. 15.0 References Albaum, G. & Duerr, E. (2008). International Marketing and Export Management, 6th edition, Prentice Hall International, p. 6 Albaum, G., Strandskov, J. & Duerr, E. (2001). Internationals Marketing und Exportmanagement, 1st edition, Pearson Studium, p. 225 Bodenhorst, H., Brevis, T. & Cant, M. (2009). Business Management, A Contemporary Approach, Atf Press, no edition, pp. 400-401 Baker, M. (2002). Marketing Book, 5th edition, Butterworth Heinemann, p. 91 Kotler, P., Armstrong, G. & Wong, V. (2008) Principles of Marketing. 5th edition, Financial Times Prentice Hall, p. 552 Larreche, J.C. (2008). The momentum effect: How to ignite exceptional growth. Upper Saddle River, NJ: Wharton School Publishing. Levinson, J.C. (2007). Guerrilla marketing: Easy and inexpensive strategies for making big profits from your small business. New York, NY: Houghton Mifflin. Mitchell, D., & Coles, C. (2003). The ultimate competitive advantage. San Francisco, CA: Berrett-Koehler. Paganetto, L. (2003). The Knowledge Economy, Information Technologies and Growth, 1st edition, Ashgate Publishing, pp. 429-430 Rea, P. & Kerzner, H. (2007). Strategic Planning, A Practical Guide, A Practical Guide for Managers, no edition, John Wiley and Sons, p. 311 Schlegelmilch, B. & Keegan, W. (2001). Global Marketing Management, A European Perspective, no edition, Prentice Hall International, p. 260 Schmitt, B.H. (2003). Customer experience management: A revolutionary approach to connecting with your customers. Hoboken, NJ: Wiley. Read More