Marketing Mix Composition for Fernwood Fitness Centre in Australia - Case Study Example

Executive summary This report is a marketing plan recommending an appropriate marketing mix composition for Fernwood fitness centre in Australia. The report highlights the critical product, price, promotion and distribution action plans that Fernwood should implement in order to achieve set targets and objectives by the year 2015. Fernwood must develop low cost but quality products for its target market. The pricing and promotion should be suited for the average working women between the ages of 20 and 54 in Australia. Additionally, Fernwood must develop a strategy to unsure quality assurance by its franchise-holders. A budget of $560,000 has been proposed to ensure successful implementation of Fernwood’s marketing plan. Table of Contents Introduction 3 1 Product 3 2 Price 5 3 Promotion 6 4 Distribution 8 Conclusion/Recommendations 9 Proposed Fernwood’s Marketing Budget for the year 2014 10 References 11 Introduction Part B of this marketing plan aims to recommend an appropriate marketing mix for Fernwood Fitness Centre in relation to the current market situation in the Australian fitness industry. The Australian fitness industry is highly fragmented with very many players offering less differentiated products (Fitness Australia, 2012). Fernwood fitness centre will have to develop a marketing mix strategy that exploits the available opportunities and internal strengths and at the same time lowers the external threats facing the company. The marketing plan will have recommendations for the most suited pricing model for Fernwood based on the target market characteristics and the competition profile. This marketing plan will detail recommendation of Fernwood’s product features including market positioning and branding. This marketing plan will also offer analysis on the recommended promotion strategy for Fernwood products in the target market. The plan will provide recommendations on the appropriate distribution strategy for Fernwood to reach its target market. Finally the report will provide a budget estimate for Fernwood’s marketing plan. This report is structured into five major sections based on the Four Ps of marketing and a suggested marketing plan budget. 1 Product Currently, Fernwood offers personal training services, functional fit training program and food coaching. This is the core product offering, Fernwood has introduced a range of products to differentiate its positioning in the market. The non-core products include childcare services and health retreats and Zumba classes (Fernwood, 2014). According to Romaniuk & Sharp (2004), noncore products or augmented product offering helps in differentiating a product from the competitors in a market dominated by many players offering the same product experience. The Australian fitness industry is made up of 2550 fitness companies that make up the competition for Fernwood (Fitness Australia, 2012). However, Club pink, Jetts fitness and Contour Express are the direct competitors to Fernwood as their product is targeted for Fernwood’s niche market (Market Line, 2014). Fernwood should continue positioning itself as a women’s only gym to differentiate itself from the many gyms and fitness centres in Australia. Some women feel comfortable exercising in a women’s only facility (Fitness Australia, 2012). It is also worthy to note that the female gender is rated as more loyal customers as compared to their male counterparts (Joyner, 2009). As such Fernwood can be guaranteed of a stable source of income if the product offering meets the expectations of the target market. Fernwood can consider women-only motivational talk’s sessions as part of attaining whole body and soul fitness. Fernwood management can introduce health examination services to advice members of any medical concerns. The health examination department can work in conjunction with the exercise function at Fernwood to attain desired fitness and wellness level and if possible recommend appropriate medical attention to be sought by a member. Fernwood product offering will also be differentiated by the level o professionalism and interpersonal skills possessed by the trainers and staff at Fernwood centres. Qualified trainers can encourage and understand the varied needs of women clients at Fernwood centres. This is critical in ensuring the members remain safe and satisfied at Fernwood centres. Due to the ease of market entry, Fernwood will have to consider introducing Zumba classes in all its franchises in order to attract more women as it is proving popular with women according to the Australian Fitness Industry report (2012). The overall branding of Fernwood product offering will be anchored on quality all-round fitness and wellness experience at Fernwood centres. Women at different ages between 20 to 54 years should find a product package that suits their preferences. Services such as beauty treatment and therapy, fitness retreats, spa and health checks should differentiate Fernwood in the market as a women’s fitness centre. This branding will help in promoting Fernwood as a unique player amongst businesses offering similar products. An affordable product will be advantageous to Fernwood’s objective of increasing membership by 5000 new members. Fernwood will consider the cost replicating its services in all branches so as to cater for the whole market and standardise its services. Overall, Fernwood product offering will be more diversified from the core product of personal training services, functional fit training program and food coaching. This will enhance competitiveness and brand strength. 2 Price A competitive market-focused pricing model will be the most appropriate strategy for Fernwood to attract and retain members. The fitness market in Australia is currently very fragmented making it very difficult to rely on price discrimination based on premium product offering. Instead, Fernwood will have to concentrate of reducing operational cost and relatively inexpensive offering. The low cost of operations will ensure Fernwood’s products are priced at par with the rest of the market. This will be a strategic move that is sensitive to the growing power of the buyers due to presence of many suppliers. However, cheap prices might give the indication of poor quality as argued by Ferell & Hartline (2010). It is important, therefore, for Fernwood to have a price floor for its products to retain the brand association with quality services. Most of the revenue generated in the Australian fitness industry is directly attributed to membership fees. Members are introduced to lock-in contracts that ensure they pay for services even when they are not experiencing them. This model is becoming unpopular with fitness and wellness clients in Australia. According to Market Line report (2014), Jetts fitness has managed a phenomenal growth in the Australian market mainly because of low cost packages without lock-in contracts. Fernwood will have to consider offering services to clients without expensive lock-in contracts. One-off payments of services and short-term contractual agreements will prove popular with members who desire having control over their expenditures in recreational and fitness activities (Market Line, 2014). Fernwood may attract new members to long-term contracts by offering discounted rates to clients who subscribe to longer membership packages. This will give clients a sense of control over their experience and expenditure at Fernwood. 3 Promotion Promotion should focus on communicating the products value to consumers (Jerome & Drewniany, 2010). According to Percy (2012), selling focuses on increasing revenue for the seller. Marketing on the other hand should focus on meeting the needs of the buyer. Promotion should, therefore, be dedicated to ensuring the target market understands clearly the value that can be derived from a product offering (Pickton & Broderick, 2005). The promotion strategy will particularly be anchored on positioning Fernwood as a women-only fitness centre. This should be evident in the choice of more feminine colours and graphics. Pink and bright purple have been proved to be more attractive to females in psychological marketing (Rotfeld, 2006). These colours can be used in Fernwood websites, interior design at Fernwood centres and advertising material. Promotion efforts should communicate Fernwood’s new pricing model which offers more freedom to members to select and pay for the packages they feel is more suitable to them in terms of cost and desired benefits. The promotion should be designed to counter the direct threat of competitors such as Jetts fitness which is benefiting from consumers’ dislike of lock-in contracts being offered by many players in the market. The promotion should, therefore, communicate the fact that Fernwood offers quality experience at an affordable price and offers freedom of choice to clients. Finally, the promotion efforts should effectively communicate the diversified products range and augmentation offered by Fernwood. Fernwood has additional products such as Zumba and health retreats which can diversify its revenue base and absorb market shocks in the traditional gym and aerobics market. Such efforts will increase the uptake of Fernwood’s health retreats by at least 25% by the end of 2015. Fernwood’s focus on women as the target market may be rewarded by increased membership if beauty treatment and childcares services are promoted effectively to the target market. To actualise the aims of the promotion efforts, impersonal promotion strategies such as social media adverts and contests will be used to enhance brand awareness. TV commercials and billboards are also effective communication channels that can be used by Fernwood to promote the brand. Internet marketing through YouTube videos and Google ads may not be so effective due to presence of a lot of scam and consumer dislike for such intrusion online (Ryan & Jones, 2012). The target market may treat Fernwood messages on the internet as scam. 4 Distribution Fernwood offers personal training services, functional fit training program and food coaching. Fernwood has employed the franchise model since 1994 to help it expand operations all over Australia. Fernwood has a nationwide presence in Australia with most of the Fernwood centres being franchised outfits (Fernwood, 2014). Franchising as a business model helps an organization to expand exponentially as franchise holders contribute the initial capital and take care of local problems effectively (Mellahi, Demirbag, & Danis, 2010). It will be strategically and economically feasible to continue relying on a franchised model to reach the target market. Franchisers can effectively customize marketing and promotion to suit the specific nature of the target market in their areas. Due to their local knowledge, franchise holders might also be at better positions to acquire strategic locations in high-income metropolitan areas. The franchising distribution model offers rapid expansion and less managerial bureaucracy, however, it may reduce the competitiveness of a business particularly when the quality of a product is compromised (Mellahi et al, 2010). Fernwood will have to increase supervision and review of its franchised contracts to ensure a standardised quality of service by the franchise holders. This will ensure Fernwood’s brand remains strong in a market characterised by stiff competition for a share of a highly sensitive fitness market. Franchisers can also be used to coordinate promotion efforts such as participation in fitness industry events. Such coordinated communication may not be as effective without a clearly laid down franchising plan. For the case of new products, Fernwood may focus on a few well performing franchisees with exceptional management. Such new products include health retreats and spa services. Conclusion/Recommendations From the analysis presented in this paper, it is justifiable to conclude that Fernwood is better placed to take advantage of the growing market for fitness and wellness products in Australia. Fernwood has a strong brand reputation that it can rely on to deliver a quality augmented product to the market. As noted by Joyner (2009), pioneers have the benefit of leading innovation and differentiation before competitors crowds out the market. Fernwood is a pioneer in the women-only gym and fitness services, a factor that puts the company at a better position to introduce product innovations and recoup initial profits. Fernwood will also have to offer affordable prices to a highly sensitive market that has a wide variety of competitors to choose from. The market is also becoming increasingly hostile to lock-in contracts meaning Fernwood will have to reconsider its membership drive program. It is very important for Fernwood develop an integrated communication strategy which will be adapted to the promotion program. Promotion should position Fernwood products as quality, affordable and designed to improve women’s fitness and health. Finally it is vital that Fernwood retains the franchise operating model to ensure continuous expansion and growth to counter growing competition. Proposed Fernwood’s Marketing Budget for the year 2014 Item Description Projected Cost Prime time TV advertisements These will be targeted for the general target market $150,000 Print advertisements Local Newspapers, Fitness Magazines $100,000 Social media campaigns Cost to be incurred in hiring services of digital marketing agencies $30,000 Promotion materials T-shirts, caps and banners. $ 40,000 Billboards advertisements $50,000 Discounts and offers $50,000 Brochures and flyers $10,000 Events marketing Fitness expos and brand awareness campaigns $60,000 Staff training $20,000 Website Search Engine Optimization & upgrading $50,000 Total Cost $560,000 References Club Pink. 2014. Welcome to Club Pink® - the boutique women's health club. Retrieved October http://www.clubpink.com.au/, 2014, from Club Pink.[Accessed October 23, 2014] Contours Express Fitness. 2014. Contours Women's Only Fitness gyms and studios. Retrieved October 8, 2014, from Contours: http://contours.net.au/go/forwomen [Accessed October 23, 2014] Ferell, O., & Hartline, D. 2010. Marketing Strategy. Cengage Learning. Fernwood. 2014. About Us - Fernwood Women’s Gyms Australia. Retrieved October 8, 2014, from http://www.fernwoodfitness.com.au/about-us/ [Accessed October 23, 2014] Fitness Australia. 2012. The Australian Fitness Industry Report. Canberra: Fitness Australia. Jerome, J., & Drewniany, B. 2010. Creative Strategy in Advertising. Wadsworth. Jetts Fitness. 2014. Jetts Fitness Australia | Jetts 24 Hour Fitness Gyms, Fitness Clubs. Retrieved October 8, 2014, from http://www.jetts.com.au/ [Accessed October 23, 2014] Joyner, M. 2009. Integrating Marketing: How small businesses become big businesses and big businesses become empires. John Wiley and Sons. Market Line. 2014. Gyms, Health & Fitness Clubs in Australia. Canberra: Market Line. Mellahi, K., Demirbag, M., & Danis, W. 2010. Marketing strategies of MNCs from emerging markets: internationalisation and market entry mode. International Marketing Review , 27 (3). Percy, L. 2012. Strategic Integrated Marketing Communications. Routledge. Pickton, D., & Broderick, A. 2005. Integrated marketing communications. Financial Times Prentice . Romaniuk, J., & Sharp, b. 2004. Conceptualizing and measuring brand salience. Marketing theory 4(4) , pp.327-342. Rotfeld, H. J. 2006. Understanding advertising clutter and the real solution to declining audience attention to mass media commercial messages. ournal of Consumer Marketing , 23 (4), pp.180-181. Ryan, D., & Jones, C. 2012. Understanding Digital Marketing: Marketing Strategies for Engaging the Digital Generation. Kogan Page Publishers. Read More