Marketing Strategies for the New Gym Services of SportUNE - 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 9 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 16 14.0 Conclusion 17 15.0 References 18 1.0 Executive Summary This report provides a deep understanding of the strategic marketing plan for the new gym services of SportUNE. Looking at the market structure of SportUNE it is more likely for SportUNE to follow a pioneer role and look towards market expansion and increased penetration along with niche marketing of targeting the working women class for better growth and emerge as the market leader. The various stages of PLC has been explained in detail along with the most suited strategic alternative which SportUNE can look upon to ensure differentiation advantage and gain sustainable competitive edge over its existing and potential rivals. The organizational structure of the company is more likely to a functional one which can be successfully replaced by a matrix organizational structure to ensure benefits of both functional and divisional structures. Furthermore, the company marketing spending has been justified in the marketing metrics along with immense opportunities being identified by way of a SWOT analysis conducted for the same purpose. Finally the marketing audit in terms of macro-environmental, organizational and strategies audit has been conducted which ensure more growth opportunities and long term sustainable development of the new gym services offered by SportUNE. 2.0 Introduction This report looks to further discuss upon the strategic marketing implications and its importance for SportUNE which the company certainly can look as an important tool to ensure better growth and development of his gym services. Initially the report focuses on the importance of product life cycle and the stage at which the gym services of SportUNE currently experiencing along with new market entry strategy which are most viable for SportUNE to ensure a larger market reach and better revenue generation. An analysis of the existing position of SportUNE has been analyzed to ensure whether the company can follow a pioneer or a follower strategy along with different strategic alternative choices available in context to the same. A discussion has been made of the relevance of growth stage of the product life cycle along with different growth strategies like market expansion, flanker, confrontation, fortress and contraction strategies which SportUNE can look upon to ensure sustainable growth and development of its gym services. Furthermore, apart from the growth stage the other stages of product life cycle such as shake-out, maturity and decline stages has been explained in detail along with recommendation of most appropriate marketing strategies which SportUNE can look to follow so as to enable a better positioning of its firm and emerge as a market leader. The new market economy and the organizational structure along with its importance for SportUNE has been explained and finally the relevance of marketing metrics and different marketing audit has been conducted to ensure no lags in its business operations and provide a theoretical and practical understanding to all readers of the report. 3.0 Product Life Cycle Product life cycle is a complete cycle which includes a period of time over which an item is developed, brought to the marketplace and eventually removed or eliminated from the market. The product life cycle is generally characterised with four different stages where initially the product begins with the introductory stage in which the product/service is eventually introduced or brought into the market and the distinct and unique features of the product are explained to its intended targeted audience. The introductory stage holds a prime importance as it paves the path for the next stage which is popularly known as the growth stage. The growth stage is the most viable stage for any product/service as it ensures relatively higher sales volume and larger profits characterised by deeper market penetration and larger market share (Berkman & Gilson, 2001). However, with time the product is more likely to move towards the third stage which is the maturity stage as the selling opportunities are decreased and the growth reaches its zenith. This is the stage when new alternatives to the existing product become easily available in the market and the old one tends to become obsolete reaching the decline stage. Decline stage is the period when sales revenue falls significantly and the product/service is finally eliminated from the market. It is to be further note that all the four aforesaid discussed stages has its own unique characteristics and strategic marketing alternatives which a company needs to decide upon so as to ensure a better positioning of its products and ensure higher growth and returns from its business. SportUNE has been doing well in context to its various services offered to its customers and has been successful in gaining the trust and confidence of its customers. However, looking the recent gym services introduced by the company it is more likely to be in the growth stage which could be sensed from a significant rise in sales volume and sharp rise in the number of new members joining the club for its gym services. Furthermore the gym services currently contributes 18% of the total revenue for SportUNE showing signs of more future growth and expansion opportunities available for the company. 4.0 New Market Entry A new market entry is discussed in terms of efforts made by any organization which are directed towards the selling of a new product/service to a new group or targeted audience which previously has not been tapped by the firm. It is not necessarily that a new market entry is always for a new product/service it can be in terms of new product lines, addition to the existing product, repositioning of the products, cost reduction technique or new benefits to existing offerings. SportUNE in context to new market entry shall not focus on a new service but it’s already introduced gym services through new facilities and offering being added to the existing consumers along with new targeted audience with more refined demographic segmentation to include the working women in its targeted audience and ensure differentiation advantage in its services offered (Denscombe, 2000). To further achieve success in the new market economy SportUNE can certainly rely on technological advancements and use of more R&D for deeper market penetration and higher sales revenue generation. SportUNE in its endeavour to taste success at a faster pace can either look upon a pioneer or a follower strategy. A deeper look into the current marketing environment of the gym services enables SportUNE to be more likely to adopt a pioneer strategy as the services offered by SportUNE is more likely to be insulated from the competitors and the company enjoys a large pool of loyal customers with good brand name and recognition among its targeted audience. Furthermore, adopting a pioneer role shall ensure SportUNE of added benefits like better positioning, differentiation advantage, economies to scale, first-mover advantage etc. Let us now have a look at the strategic choices available for SportUNE which it can look upon as a pioneer role for its gym services. Mass Market Penetration: SportUNE can look upon mass market penetration as it shall enable the firm to command a larger market share. However, a mass penetration strategy is more likely to taste success when barriers inhibit or delay the appearances of the competitors and the firm is characterised with differentiation advantage due to new and unique characteristics of its services or products offered. Niche Penetration: Niche Penetration strategy looks to target a niche segment of the target audience and this seems to be the most viable option for SportUNE as it shall avoid the firm from direct confrontation of larger competitors. Furthermore, Niche strategy shall help SportUNE to concentrate more on the working women class which it looks to target within its demographic segmentation than focusing on the entire market. Skimming and Early Withdrawal Strategies: This strategy is more of a defensive approach where firms tend to set a high price and engage in limited promotional marketing tools so as to quickly realize upon its per-unit product developmental cost and then look to maximize profits. However, such a strategy is not much viable for SportUNE as it looks to ensure a long term business growth than looking to book short term profits. Thus, we see that a pioneer role along with a niche marketing strategy is the most suitable strategy for SportUNE for new market entry. 5.0 Growth Strategies The growth stage is the most productive stage enjoyed by a product/service in its life cycle as the same is characterised with higher sales, profitability and larger market share. The gym service of SportUNE is currently experiencing a growth stage and it is important for the management to decide upon the role of a market leader or a follower. Since, as already been discussed in the aforesaid paragraphs where SportUNE is more inclined to adopt a pioneer role, it can as a combination to the same look to emerge as a market leader than a follower. A market leader is someone who brings new and unique product/service to the market and ensures to capture the largest share of market through its differentiation and unique products. SportUNE owing to its high reputation and brand equity which it has developed over period along with the use of technology can look to provide unique services differentiating itself from its competitors. Furthermore, it looks to recruit the best gym instructor on a global basis which adds to its uniqueness (Alvarez & Casielles, 2005). Becoming a market leader shall further ensure SportUNE to target new categories of customers in a more refined manner such as the working women class which it currently looks as the best segmentation enabling it to draw more members to its gym services. Looking to adopt itself in a pioneer role and market leader, SportUNE needs to decide upon the various strategic alternatives associated with the same and make a choice upon various market leader growth strategies like market expansion, flanker, confrontation, fortress and contraction strategies. SportUNE can certainly look to adopt the following growth strategies to ensure maximal growth of its business and extension of its growth strategy. Market Expansion: Market expansion in strict sense does not just implies expansion of the geographical reach of a business but expansion of the product lines, cost reduction, new market target and segmentation etc. SportUNE as a growth strategy can look upon market expansion through new features being added to its existing product line of gym services and new segmentation and targeting market of the working women class in its gym services provided. With this strategy it is more likely for SportUNE to capture larger market share and outperform its existing and potential rivals to emerge as a market leader. Confrontation Strategy: SportUNE to ensure more growth and better profits with larger pool of loyal customer can look upon confrontation strategy during its growth stage by meeting or rather beating the attractive features of its near rivals through the use of distinct features being added to its gym services, product improvements, promotional efforts and lowering prices. Fortress Strategy: This strategy can be applied in combination with market expansion by SportUNE to ensure no lags during its growth phase of the product life cycle. Fortress Strategy is a defensive strategy where SportUNE can take advantage of its already established brand name and large pool of loyal customers which is currently being enjoyed by the company (Chrisan, 2001). Actions here shall be directed towards maximal customer satisfaction through the use of uniqueness and differentiation advantage in its gym services offered which shall ensure higher retention of its existing customers while making efforts to increase the attractiveness of new customers and expanding its market share. Thus we see, SportUNE can look upon the aforesaid growth strategies or a dual combination of the same to ensure maximal benefits however, it is to noted that other growth strategies such as flanker and contraction strategies are less viable for the company as developing a new brand may take time and can lead to its own development of a new competitor fighting against other services offered by SportUNE or a contraction strategy which might lower its targeted audience base enabling lower returns and profits during the growth stage. 6.0 Shake-out Stage Shake-out stage of the product life is a less desirable phase by any business offering its products or services. This is the stage when a new industry emerges as more competitors start to capitalize on new business opportunities in the emerging industry. This is the stage when firms tend to establish a concrete design for itself thus looking to eliminate many small competitors out of the business. Barriers to entry become very high as large consolidation is a common general occurrence of the market during this stage. Investments tend to get higher so as be enable a better competitive position and capture a larger market share. SportUNE during its shake-out stage of the gym services can look upon the following shake-out strategies to ensure better positioning of its firms and generate higher revenue. Competitive Advantage: Competitive advantage always adds to better positioning of any firm in any industry. SportUNE during its shake-out stage can look upon gaining competitive advantage either through cost-reduction or differentiation advantage. Differentiation advantage here seems more viable an option as the gym services are intended towards a targeted audience who are basically from the upper income and upper-middle income group of the customer pyramid and are less price sensitive. Furthermore with technological advancements and uniqueness in its gym services differentiation can be achieved at more ease. Transition: Transition strategy involves a future oriented growth opportunity by ensuring improving upon its co-ordination and communication among different departments and further making a transition of its existing products or services lines to new distinct lines for ensuring long term sustainable growth of the business (Awni, 2008). This strategy seems to be less viable for SportUNE as new line of services may hamper its existing gym services and lead to customer sways. Market Share: SportUNE during its shake-out stage can again look towards an attacking strategy of gaining more share though its efforts being directed towards mergers, acquisitions etc and strengthening upon its customer base and expanding its market share. 7.0 Mature Stage Mature stage of a product life cycle is achieved when the sales of the product/services have reached its peak and there is more likely a chance of declining sales and lowering profits in future period to come. Investments here are usually low to moderate and continuous efforts are directed to revive the growth stage of the product/service. During this period there is a plethora of similar products/services available and the first basic products tend to lose its creditability and finally getting obsolete in its declining stage. Focus is perceived on reviving the product through differentiation in terms of quality, use, price and reliability of the products and price wars and extensive use of promotional tools are general characteristics deployed by most firms during this stage of the product life cycle. SportUNE during its maturity stage can certainly look towards the following strategies to ensure revival of its growth stage and ensure better longevity of its gym services provided. Market Expansion: Market expansion could certainly be a strategic choice for SportUNE during its growth phase however, the same shall have a different dimension during its maturity stage as during this stage SportUNE should look upon geographical expansion of its services than concentrating on other means of expansion strategies like adding new product lines, new market segmentation and targeting etc. SportUNE should look to focus more on entering into a strategic alliance or merger and acquisitions strategy of market expansion. Extended Use: SportUNE can look upon extended use of its gym services to attract more new customers through promotional means of price cuts, discounts etc. however, such a strategic choice inculcates higher risk for SportUNE as its primary segmentation of high class income group may be hampered leading to less retention than attracting new customers (Sheth, Mittal & Newman, 2009). Increased Penetration: SportUNE can look to follow increased penetration along with market expansion as a dual effective strategy during its mature stage. Increased penetration for SportUNE can be achieved through competitive pricing and increased promotional tool though privileged and loyalty programs for existing members and promotional offers to attract new customers (Solomon & Rabolt, 2004). 8.0 Decline Stage This is probably the last stage of a product life cycle which is characterised by declining sales and profits either due to new better alternatives available in the market making the products obsolete or changing in consumer buying pattern. Investments tend to be low and firms look to withdraw their investments. Eventually the market gets shrink and the product is eliminated from the market. SportUNE during its decline stage can look upon the following best suited strategies. Harvesting: This strategy can be applied by SportUNE where it can look for a planned discontinuation of its gym services while targeting to maximize profits. SportUNE shall look to minimize upon its marketing expenditures and sell off its business with context to its goodwill and reputation when its sales reach a cut-point (Rath, Bay, Petrizzi & Gill, 2008). Niche: SportUNE in its declining stage can look to maximize gains by targeting the most lucrative segment of its targeted market than targeting the mass market. SportUNE adopting a niche market has a fair chance of targeting the related segments and once again revive its gym services in the growth stage. 9.0 New Economy Market Consumers tend to change their behavioural pattern and their taste and preferences at a fast rate in today’s economy. SportUNE in order to ensure long term sustainability of its gym services need to constantly address to the changing needs of its members through the use of technological advancements particularly by use of new digital gym equipments which ensure a more healthy body with less efforts and time spent. Furthermore with the use of internet creating a virtual market place, SportUNE need to ensure a user-friendly internet interface which is easy to use and provides maximum updated information to both its existing and potential new members (Manning & Reece, 2001). SportUNE operating in a service market needs to ensure the most superior consumer service to all its members. There should be flexibility in gym timing and a pleasant service escape to ensure higher retention of its existing members and attractiveness to new members. Promotion again is a critical element of the new market economy which in no sense can be ignored by SportUNE. SportUNE should look for various promotional tools to ensure better targeting of its customers along with privileged and royalty programs for existing members and new promotional methods like early bird discounts, season discounts etc to attract a larger pool of new loyal customers to its customer base. 10.0 Organizational Structure Organizational structure is the structure which is adopted by an organization so as to ensure smooth flow of its day-to-day business as it draws the line of authority, responsibility and accountability of the employees and members associated within an organization. Organizational structure further ends to vary in terms of functional, divisional and matrix form based on the working pattern of an organization. Let us have a look at the organizational structure currently being used by SportUNE. Looking at the above organizational structure of SportUNE which is more directed towards a functional structure where roles and responsibilities of each member are being divided as per their unique requirement in the organization. The functional organizational structure seems to be less viable for its operations as it can look upon a matrix organizational structure to ensure better coordination and communication of important information throughout the organization. Furthermore, operating of a matrix organizational structure shall enable it with the benefits of divisional and functional organizational structure which is not the case of currently functional structure where SportUNE faces lags in communication and coordination between its various departments (Chew, Cheng & Petrovic-Lazarevic, 2006). However it is to noted that operating on a matrix organizational structure SportUNE need to ensure correct division of territory for each of its functional head as it can create to organizational disputes when divisional managers working at the same level may have a common territory under their power. 11.0 Marketing Plan Marketing plan is an important element to proactively design upon the future opportunities and ensure better growth and development of the business. Let us have a look at the SWOT analysis and a cost benefit analysis along with a contingent plan for SportUNE for its overall business and particularly of its gym services. SWOT Analysis Strengths SportUNE has ensured clear and realistic goals for its gym services which are more likely to be achieved with minimum efforts. SportUNE already has a large pool of loyal customers who are more likely to be attracted with new gym services along with creative promotional techniques to attract new members. The gym is located in a market where competition is less fierce. Strong support from health and fitness ministry due to use of more technological equipments to ensure better wellbeing of its members. Weaknesses Barrier to entry into the gym services are less and even a small financial resource used to set up a gym may emerge as a tough competitor for SportUNE. Lack of clear communication and coordination between different departments of SportUNE. More specific on targeting the upper and middle upper income group of the customer pyramid thereby ignoring the lower middle income who constitute a large majority of the working population Opportunities Significant growth of health and fitness industry with more signs of business opportunities due to rising demand. Availability of resources and financial backup can help SportUNE create differentiation services to gain competitive edge over its rivals. Increasing trend among new segments like working women to avail gym services so as to maintain their health and body. Threats Economic slowdown with low disposable income of consumers who are more likely to spend on gym services. Rising competition with new market economy makes the business complex and difficult to be operated. Thus we see, SportUNE has its own strengths and weaknesses which can be capitalized through effective strategic planning to ensure better growing opportunities and elimination of formidable threats. On basis of a cost-benefit analysis, it is more likely for SportUNE to generate its initial gym service investment at a faster rate owing to its large pool of loyal customers and high goodwill and reputation. Furthermore, the prime objective is not just profit maximization but to ensure healthy wellbeing of its members. Government subsidies along for technical devices further relax the cost structure with more probability of generating higher returns and meeting up its cost. SportUNE certainly has a good back-up plan to enter into a strategic alliance with larger players in case of its business failure along with new promotional tools to revive it business during contingent situation. 12.0 Marketing Metrics Marketing metrics involve explaining the marketing objectives achieved to its shareholders and other top management in a quantifiable term so as to justify upon its marketing spending. SportUNE has been successful in establishing a brand name of its own which is trusted by its consumers and has been doing well to generate higher profits for its stakeholders. A survey conducted indicates over 90% of its customers being strongly satisfied with its superior services with a customer retention rate of over 83% and new customer attraction of over 70%. Furthermore, its majority of income is generated from indoor and outdoor games while gym services contributing about 18% of its total revenue generation which is higher than its anticipated ROI of 16%. Net marketing contribution has increased from $2.8 billion in 2013 to $ 3.71 billion in 2014 with profitability being increased by 1.22 times in 2014 when compared with 2013 (Cateora, Mary & Graham, 2009). Furthermore on an expansion side its customer base has increased significantly by over 2000 members with more promising signs of further increase in future. 13.0 Marketing Audit Marketing Audit helps in the review of existing marketing services and appraisal of the same along with finding any deviations which the firm may be witnessing in its current marketing environment. Let us have a look at the marketing audit being conducted on SportUNE in terms macro-environment, organizational and strategies deployed. Macro-environmental Audit: Rising demand of health and fitness centre with over 140000 joining on a yearly basis provide large business opportunities for SportUNE. Furthermore with rise in the disposable income of consumers the figure is more likely to increase (Czinkota & Ronkainen, 2004). SportUNE being equipped by latest technological equipments is more likely to attract more new members for its gym services. Marketing Organization Audit: SportUNE has a solid base of instructors recruited on basis of best global talents along with a gym development officer, administrative officer and an allotment and sponsorship officer to ensure better flow of its services. Strategy Audit: SportUNE looks to follow a pioneer strategy and emerge as a market leader. Furthermore, it follows a competitive pricing and differentiation strategy to ensure maximal competitive edge. Its strategies are developed on basis of market demand and forecast which could be easily amended on basis of changing needs. 14.0 Conclusion This report look to provide a complete analysis of the most strategic alternatives choices for SportUNE in all stages of its PLC along with strategies being developed on current marketing environment which can be eyed upon by SportUNE. Furthermore the report provides both theoretical and practical understanding of the entire topic under study. 15.0 References Awni, R. (2008). Strategic position indicating. Translated by SeyedAmir Poya seyfzadeh, Management Selected Monthly, 78, 70. Alvarez, B. & Casielles, R. (2005). Consumer evaluations of sales promotion: the effect on brand choice, European Journal of Marketing, 39 (1/2), 54-70. Berkman, H. & Gilson, C. (2001). Consumer Behavior Concepts and Strategies, Kent, Boston Brassington, J. and Pettitt, M. (2001). Principles of Marketing, 2nd Edition, Prentice Hall Chrisan, P. (2001). Marketing: A Behavioral Analysis, McGraw – Hill. New York Czinkota, M.R. & Ronkainen, I. A. (2004). International Marketing, 7th edn. South-WesternPublishing:Australia. Cateora, P.R. & Mary, C. G. & Graham, J.L. (2009). International Marketing, 14th edn. Irwin: McGraw-Hill. Chew, M.M.M., Cheng, J.S.L. & S. Petrovic-Lazarevic, (2006). Managers’ Role in Implementing Organizational Change, Journal of Global Business and Technology, 2 (1), 13-34 Denscombe, T. (2000), ‘Differences in Large and Small Firm Responses to Environmental Context: Strategic Implications from a Comparative Analysis of Business Formations’, Strategic Management Journal, 19 (8), 47-53 Manning, G., & Reece, B. (2001). Selling today: Building quality partnerships (8th ed.). Upper Saddle River, NJ: Prentice-Hall, Inc. Rath, P., Bay, S., Petrizzi, R., & Gill, P. (2008). The why of the buy: Consumer behavior and fashion marketing. New York: Fairchild Books, Inc. Sheth, J., Mittal, B., & Newman, B. (2009). Customer behavior: Consumer behavior and beyond. Mason, OH: Thomson South-Western. Solomon, M., & Rabolt, N. (2004). Consumer behavior in fashion. Upper Saddle River, NJ: Prentice Hall. Read More