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Writer's Profile
James Cann

Specialised Subjects

Business, Communications, Cultural Studies, E-Commerce, Econometrics, Economics, International Relations, International Studies, Marketing, Operations Management, Project Management, Risk Management, Statistics

I graduated with an MSc in Economics from a UK University in 2012. I also hold a Master’s degree in Economics. I have many years of experience in teaching as a lecturer and assistant professor. My work experience has included developing the syllabus and overall course structure while administering students’ progress. I successfully achieved all the targets that were assigned to me when I filled the position of assistant professor. Because of my hard work and commitment, I have recently received a service recognition and performance award. I am looking forward to achieving greater success in the near future by taking key steps to promote my knowledge and enhance my skills.

The marketing strategies of Virgin Active Health Clubs

EXECUTIVE SUMMARY

The aim of the report is to examine the way in which Virgin Active Health Clubs use various marketing techniques in order to raise their brand awareness and brand equity in a dynamic and newly-evolving market such as in the UK. It is very important that a firm in an emerging market understands the market dynamics in order to inform its prospective marketing and branding decisions. Marketing concepts are generated from ideas that evolve from involving business with fun, as suggested by billionaire, Richard Branson, Virgin Group CEO.

Patrons of Virgin Active experience a friendly environment that is fun to be in and which defines the club’s global position as the top facility for developing health and psychological synergy. This research will use various analytical-theoretical frameworks to examine the branding practices of the Virgin Active Health Clubs. I will use macro-analysis frameworks such as PESTEL and SWOT and competitive analysis frameworks such as Porter’s Five Forces and SMART marketing objectives to build up my analytical model for the comparative analysis.

By means of questionnaires, open interviews and cordial interaction with both staff and available customers, I was able to identify the following five aspects of the Virgin Active Health Clubs that define the significance of this report:

  • The marketing trends within the Virgin Active Health Club industry
  • The current marketing strategy and the creation of value
  • The advantages and disadvantages of the current marketing strategy according to a SWOT analysis
  • The market segmentation/demographics, targeting and positioning (STP)
  • The recommendations from the SMART analysis

Introduction

Virgin Active Health Clubs operate mainly in the United Kingdom (UK), Australia, Italy, Portugal, Spain and South Africa (Virgin Active–UK, 2012).  There are a total of 192 fitness clubs distributed among many countries. Virgin Active Health Clubs fall under the Virgin Group whose CEO is Sir Richard Branson. The Group was founded in 1999 and has actively participated in the market, experiencing a tremendous revenue growth average of 18% (Virgin Active–UK, 2012). It has over 900,000 affiliated members within its different clubs which are located in different locations worldwide (Virgin Active–UK, 2012).

The mission for the Virgin Active Health Club group is to provide solutions for fitness through the use of expert trainers, professional teams and dieticians, so as to train and monitor the balanced life of their clients (Virgin Active–UK, 2012). These activities are practiced in commercial premises with a combination of professionalism and luxury. The premises have a wonderful ambience, advanced equipment and excellent exteriors that provide home comforts (Virgin Active–UK, 2012). The range of facilities provided and the classes and health/beauty activities carried out by Virgin Active Health Clubs include:

  • Reduction programme with weights – Cool kit
  • Swimming lessons
  • Gymnasiums – gym floor                                       –
  • Spring radiance express massages
  • Cardio (aerobics, cycling, martial arts, dance)
  • Spa treatments
  • Racquets (tennis, badminton, and squash)
  • Spring radiance express facials
  • Free weights
  • Gym floor; ladies only
  • Mind and body (Yoga, beaming, post-natal)
  • Club extras (computer lounge, Wi-Fi)

 Methodology

Qualitative analysis was used; documents and interviews were used to test the assumption that a successful service marketing strategy would lead to a strong Virgin Active Health Club brand name. The Virgin Active Health Clubs used were within the UK: the Riverside Health and Racquet Club Chiswick and Brighton Health and Racquet Club (Virgin Active–UK, 2012).

Most primary data came from questionnaires gathered from customers within specific areas of the Brighton Health and Racquet Club and the Riverside Health and Racquet Club, Chiswick. The managerial staff and trainers provided sufficient information concerning the prevailing market trends. Secondary data was obtained from reference books, online websites, articles, newspaper reports and magazines that provided information about Virgin Active Health Clubs (Virgin Active–UK, 2012).

Situational Analysis

To assess the strategies that the Virgin Active groups used to overcome threats and seize opportunities, the following were used: PESTEL analysis (Political, Economic, Social, Technology, Environmental & Legal factors), SWOT (Strengths, Weakness, Opportunities and Threats) analysis, and Porter’s Five Forces. These analyses influence change and through change individuals become happier as they live healthier lives. These analyses assist Virgin Active Health Clubs to understand effective marketing strategies and their customers’ bargaining power.

PESTEL  Analysis

Choice ad preferences are common action among customers and it gives a variety of options from which to choose. According to PESTEL (2012), the overall general idea of PESTEL Analysis implies that the household preference level involved Marketing choices greatly influences the preference of the Customer and the purchasing power; this makes it easy for the customer to make decisions based on the marketing patterns (Rogers, 1999).

Political factors

Political outcomes influence the ownership level of investments and international trade relations between countries, i.e. the UK and South Africa. Good political structures allow for the efficient allocation of resources by households and firms without much government intervention. Such structures do assist in dealing with market failure from an economic perspective (PESTEL, 2012). Politics can have an impact on the health of on people’s ability to join various clubs such as the Brighton Health and Racquet Club and the Riverside Health and Racquet Club, Chiswick (Virgin Active–UK, 2012).

Social factors

Social factors relate to aspects such as changes in family dynamics, lifestyles, demographics and cultural changes (PESTEL, 2012). According to Armstrong and Kotler (2003), the social strategies are based on the family systems and the status of an individual in a particular locality. Members of the Riverside Health and Racquet Club, Chiswick would only desire to do some exercises depending on the cultural practices and the taste preferences of that particular population (Virgin Active–UK, 2012). Demography influences the marketing strategy of the Brighton Health and Racquet Club; it is affected by the population distribution and takes into account gender type, the prevalent age group and the occupation of individuals (Virgin Active –UK, 2012).

Economic factors

Economic factors refer to interest rates, taxes, exchange rates and growth in the economy. All these strongly influence the marketing strategies in Virgin Active Health Club services (Virgin Active–UK, 2012). According to Milberg (2004), various production systems are linked to international trade and the collapse of one may result in the poor performance of other economic factors. Macroeconomics stimulates the type of product and pricing-mix strategy that could be set for Virgin Active (Scanning the Marketing Environment, 2011). Brighton Health and Racquet Club’s industry managers can avoid this threat through capitalising on opportunities of international expansion and the use of Virgin Active services that are readily available (Virgin Active–UK, 2012).

Technological factors

The Virgin Active Health Clubs group utilises TV and radio media when marketing its chocolate products (Virgin Active–UK, 2012). Thus, the Riverside Health and Racquet Club, Chiswick’s services are threatened by innovative competition. The fact that it is part of a mass-marketed corporation that is mature has influenced the marketing of its brands (Kotler and Armstrong, 2004). Virgin Active Health Club marketers have to find ways to keep the Virgin Active services competitive in the industry that is producing other modern, innovative services like online training lessons and cheaper gyms.

Environmental factors

According to Virgin Active–UK, (2012), the Brighton Health and Racquet Club’s marketing environment bases its customers’ distribution strategies on micro- and macro-environmental forces. The Virgin Active marketers keep up to date on good environmental practices through introducing recycling of training machines, use of environmentally friendly machines and through employing greener living schemes.

Legal factors

The introduction of age and disability discrimination legislation in UK has changed the legislation in health clubs. In the Brighton Health and Racquets Club, to correct the market outcome, new systems and procedures have had to be developed to cater for all the population (Virgin Active–UK, 2012).

Porter’s Five Forces

The elements involved in marketing are mainly the marketing dynamics and the type of advertising mechanism employed; this impacts on the potential that a customer has in terms of the market specifications and aspects of population distribution in terms of whether he/she can easily be reached in a given locality.

Bargaining power of customers

Brighton Health and Racquet Club, whose customers have high bargaining power, are offered services that are slightly different from services offered by other clubs (Virgin Active–UK, 2012).  Brighton Health and Racquet Club discriminates between gold customers and the less valuable customers (lead customers) (Doug 2008). The bargaining power within the health club market is extremely high due to the low switching options and due to the presence of many online training options.

Pressure from substitute services

The substitute threat to Virgin Active is not high because other training institutes are small and offer little competition. The Brighton Health and Racquet Club has a medium substitute over the Riverside Health and Racquet Club, Chiswick (Virgin Active–UK, 2012). According to Barrows (2009), critical vulnerabilities of a competitive brand results in the better performance of the substitute brand.

Bargaining power of supplies

The Virgin Active Health Clubs group has a centralised system for purchasing supplies. The supplies bargaining power is low; supplier bargaining power is inclined to be more effective for smaller clubs rather than the larger health clubs. The Virgin Active Health Club group’s centralised department tends to have enough services to allow for core control and specialisation in particular supplies and to target customers (Karjainen, 2009).

Threat of new entrants

The threat of new entrants into the health club market is low due to the health clubs’ huge capital investments. Brighton Health and Racquet Club’s supply consolidation helps to avoid the market imperfections and threats from various new entrants (Virgin Active–UK, 2012). Virgin Active follows the direction of development though exploiting competencies in the supply and demand market to avoid the threats from new entrants. CSFs (change in critical success factors) are greatly encouraged in the health market to ensure that emphasis is put on discouraging new entrants.

Competition and rivalry among firms

Health club competition is high due to low switching costs. Through their wide knowledge of competitive advantage, Virgin Active managers have set up a strategy that will achieve a continuous competitive advantage (Porter et al. 1980). Brighton Health and Racquet Club’s managers know how to develop effective competitive strategies and avoid short-term strategies that may be overtaken by the other firms (Virgin Active–UK, 2012).  The low switching cost among various health firms has led to increased competition.

SWOT Analysis

In my research I was able to identify the strengths, weaknesses, opportunities and threats (SWOT Analysis) that prevail in the Virgin Active Health Clubs.

Strengths

  • Virgin Active is focussed on the fitness of customers; I observed that 60 % of revenue comes from gym floor activities. (Virgin Active–UK, 2012).
  • It has excellent schemes that are affordable and sustainable. This encourages customers.
  • I realised that branches have different pricing strategies according to geo-demographics; this contributes to healthy relationships within the branches.
  • Customer care services at the Brighton Health and Racquet Club and Riverside Health and Racquet Club, Chiswick are excellent; 96% of their members are satisfied (Virgin Active–UK, 2012).
  • Virgin Active has both internationally and nationally certified trainers.
  • Virgin Active has special annual offers for members (Virgin Active–UK, 2012).

Weaknesses

  • There is strong competition on price between the various health clubs within an area and tough competition from other services providers.
  • The central part of United Kingdom has various other facilities that cater for fitness and the Virgin Active services are untapped, thus losing most of the revenue to other participants (Virgin Active–UK, 2012).
  • It is difficult to define and identify the market structure for Riverside Health and Racquet Club Chiswick (Virgin Active–UK, 2012).

Opportunities

  • The current market can offer the latest technology at low cost with the introduction of new health equipment and affordable facilities.
  • Brighton Health and Racquet Club, being a late entrant into the market, has modern features and the dual advantage of the latest infrastructure (Virgin Active–UK, 2012).
  • The UK market has a huge market for Virgin Active gym and spa services; the market is rapidly expanding and there is the opportunity to get a large share of the market segment.
  • There are opportunities for exposure and expansion,  both nationally and internationally.

Threats

  • I noticed that there are developing health services in the UK market; other clubs are offering attractive packages and the various announcements of these and the reductions that they offer attract members’ attention.
  • There is the possibility of high customer turnover where various members sign up and leave the Brighton Health and Racquet Club and other Virgin Clubs with bad debts (Virgin Active–UK, 2012).

Current Marketing Strategies of Virgin Active Health Clubs

Relationship Marketing

The Virgin Active brand focusses on customer retention and the satisfaction of customer needs (Virgin Active –UK, 2012).  Marketing campaigns have been conducted within the last few years with the implementation of direct communication and responses. Through this marketing strategy, the Brighton Health and Racquet Club concentrates on a particular audience in the promotion of its health services (Virgin Active–UK, 2012). This has enabled the Club to build a long-lasting relationship that is productive and which has rendered Virgin Active to be the most versatile and resilient of the group’s businesses.

Corporate Marketing

The Virgin Active corporation ties ups with other large institution within the Virgin group. The Virgin name is already branded, thus associating Brighton Health and Racquet Club with the wider Virgin group, from trains to TV, from flights to wines, from mobiles to money and from holidays to health clubs. The offering of special discounts creates a sense of well-being for the customers (Virgin Active–UK, 2012).

Good advertising promotion tool

Advertising involves large mass media promotion to communication-based payment of nonperson forms. Advertising is the main strategy used for the promotion of various services and services. Virgin Active has integrated its marketing communication through the use of television and radio to reach the larger population. This offers communication options for various marketers and allows them to associate their promotion tool directly or indirectly with their brand.

Direct marketing

This involves sending direct message to customers; this is mainly through commercial communication, i.e. by use of direct mail, telemarketing (use of phones) and e-mails. The Brighton Health and Racquet Club’s direct marketing involves the use of media such as TV, radios, newspapers, billboards, digital campaigns and internet banners (Virgin Active–UK, 2012).

Couponing

Through use of coupons in magazines and newspapers, Virgin Active’s managers are able to specify different schemes available within a given period, thus increasing sales that month.

Differential Advantages

Stable Direct Foreign Investments (FDI)

The Virgin brand is associated with Direct Foreign Investment (FDI), which involves the transfer of large sums of money between countries, usually from developed countries to less developed countries (Virgin Active–UK, 2012). Funds could be invested in Greenfield investment, which involves building a new business concern like a factory in a foreign country. Funds could also be used in mergers and acquisitions in exchange for royalties in product production. Virgin services/product diversification is promoted through investments, as the UK is able to venture into new businesses that assist in economic development (Virgin Active–UK, 2012)

A good brand name

The Virgin brand encourages instant recognition in an instantaneous society. Hence, the critical issue for the Virgin brand name is that it is portrayed in such a way that customers can respond to it quickly (Levine, 2003). In addition, the Virgin Active Health brand is that it is one of the most fundamental pieces of information customers use to simplify choices and reduce purchase risk. The Brighton Health and Racquet Club introduces firmness into its business, helps guard against competitive imitation and allows customers to shop with confidence in an increasingly complex world (Virgin Active–UK, 2012).

Recommendations

Recommended Objectives and Goals (SMART)

Price regulation

Virgin Active should set standard prices that can be afforded by many. According to Daly (2002), pricing is an important element in commodities and the pricing strategies vary in various companies. Customer attraction is the basis for every pricing notation and on the customers’ choice of quality and quantity.

Provision of ample quality services

Evaluation of services is a key element used in customer retention and customer product choice preferences. Risk is a predominant element in the strategy of choice as members try to formulate an hypothesis on purchasing and evaluation processes for the item (Ozer et al., 2005).

Separation of Virgin Active from its competitors

A strong brand delivers its message clearly, confirms its credibility, connects emotionally with its target market and motivates prospective customers. Brighton Health and Racquet Club and the Riverside Health and Racquet Club, Chiswick believe that the growth of their business should be based upon a strategy of diversification into related business areas (Virgin Active–UK, 2012). This has led to over 40 individual services now being offered to meet customers’ real needs.

Incorporation of voice-over customer (VOC) techniques

The criteria for enumeration in VOC techniques refer to the performance evaluation of Virgin Active services available in the current market (Virgin Active–UK, 2012). This includes the identification of the problems associated with consumption; the incremental growth of customer purchasing power; identifying the scope of the market; and pointing out the instabilities that are associated with Brighton Health and Racquet Club and Riverside Health and Racquet Club Chiswick’s potential market.

Recommended Marketing Strategies

Corporate branding

Customer awareness is essential for boosting buying confidence and fostering a long-life trust among customers. Aspects of corporate branding will assist Virgin Active Health Clubs’ customers to become familiar with the services and to better understand the product that is in the market (Virgin Active–UK, 2012)

Incorporation of integrated marketing communications

Integrated marketing communication involves the integration and coordination of dynamic communication tools of marketing; i.e. sales promotion, advertising to influence the customers’ opinions of Brighton Health and Racquet Club and Riverside Health and Racquet Club, Chiswick (Virgin Active–UK, 2012).

Segmentation, Targeting and Positioning (STP)

Customer segmentation guides the brand managers of Brighton Health and Racquet Club and Riverside Health and Racquets Club, Chiswick in grouping individual customer needs and the creation of an element of brand memory structures. They do this through offering uniqueness, and the glamorous Virgin Active Spring radiance express facial brand for women (brand salience) (Virgin Active –UK, 2012).  

The Virgin Active Health Clubs’ target market involves the selection of groups of people to provide services to enhance the overall company profits. The geo-demographic segments for Virgin Active Health Clubs involve age, population or income; these assist in establishing targets (Virgin Active –UK, 2012).

According to Virgin Active–UK (2012), the knowledge of concepts of positioning assist the Brighton Health and Racquet Club’s managers in establishing who their customers are [valuable customers]. It exploits brand recognition measures as customers will be able to recognise the brand and associate its quality with the brand strategies.

ANSOFF’S Matrix, BCG Matrix

The matrix developed by Ansoff (1988) assists in generalising and evaluating the strategic development directions. This is through a four-quarter analysis method for the Brighton Health and Racquet Club and the Riverside Health and Racquet Club, Chiswick (Virgin Active–UK, 2012).

Ansoff’s Matrix- The Essence of Virgin Active Health Clubs’ Future Options

Current product

 

New product

The risk is low

The risk is medium

Existing market

Low risk

This is market penetration;  businesses are encouraged to act

Virgin Active Club penetrates the market

Virgin Active can withdraw or consolidate its activities

Medium risk

We have product development where the prevailing services are replaced by better services.

Improvement of services Extensions for the product are carried on

The risk is medium

The risk is high

New

market

Medium risk

There is market development

Virgin Active Club expands to make new segments available

High risk

Diversification takes place here

This may include either vertical or horizontal diversification that is related

Source: Adapted from H. Ansoff (1988)

Market penetration

 To ensure survival in the market, Virgin Active Health Clubs should advertise comprehensively to: encourage people to choose their product; introduce loyalty schemes; launch prices; offer promotions for special purposes; maintain activities for sale; and to increase their quota by buying a company for competitors (Virgin Active–UK, 2012). They should penetrate various geographic areas/countries such as Switzerland and Canada.

Product development

Virgin Active Health Clubs should produce different and sophisticated training facilities and develop related materials that are cheap. Also, their marketing time should be reduced to ensure that customers are able to know them and improve the quality of its products and services (Ansoff, 1988). CSFs in Virgin Active Health Clubs (change in critical success factors) are greatly encouraged to ensure service success (Virgin Active–UK, 2012).

Market development

International business should be encouraged when targeting new markets. This ensures that the generation of profits for subsidising competitive attacks are fully utilised in various segments of the market that have the same region of competition. They should target different locations; location-specific implies that FDI could be based on the location specific concentration of technology advantage. Brighton Health and Racquet Club and Riverside Health and Racquet Club, Chiswick can follow a development direction though exploiting competence in the Australian, Canadian and Swiss markets (Virgin Active–UK, 2012).

 Diversification

Regarding diversification, Brighton Health and Racquet Club and Riverside Health and Racquet Club, Chiswick should use the strategy to ensure they secure their business in case of loss. FDI is considered to be risky in this section, as one does business in other cultures compared to  the local culture (Virgin Active–UK, 2012). According to Ansoff’s Matrix, Smith (1988) maintains that the advantage of diversification is that the business may be able to secure itsself from losses derived due to adverse circumstances.

Marketing programmes -7 Ps

Service Strategy

The service features ensure that customers who are planning to indulge in the services offered by the Brighton Health and Racquet Club and the Riverside Health and Racquet Club but are  uncertain about what position to take, are given help (Virgin Active –UK, 2012).  According to previous stipulations, Daly(2002) states that uniqueness of a service is at the forefront of pricing strategy and offers the customer independence in selection.

Promotion Strategies

This relates to the development of relationships with the customer, which is positivity motivated by being the favourable brand at all times. Television and DVD programmes can be used to gain publicity and to neutralise the negative comments from competitors or unwilling buyers. An effective promotion strategy is as important as the media strategy; this relies on a communication pattern that facilitates a campaign of promoting brand quality.

Pricing strategies

According to Daly (2002), pricing is an important element in commodities and  pricing strategies vary among various companies. Price measures the overall purchasing power subdued to a customer in relation to a given commodity. The Brighton Health and Racquet Club’s pricing strategies may include penetration, skimming, economy and premium pricing (Virgin Active–UK, 2012).

Quality strategies

According to Ozer (2005), the quality gives the energy that is subdued to an item boosting its performance in the market; he maintains that service quality is not measurable; as its equivalence in not practical immersed to know of its limits and the strength used in the price. Brighton Health and Racquet Club and Riverside Health and Racquet Club, Chiswick will increase their sales in the next coming years due to their reputation of offering quality and good service. This will be through offering better technology and equipment for training and also comfortable facilities (Virgin Active –UK, 2012).  This will increase its customer rankings.

Distribution strategies

Brighton Health and Racquet Club and Riverside Health and Racquet Club, Chiswick should utilise their distribution channel as it plays a major role in determining the company’s profits (Virgin Active–UK, 2012). Virgin Active Health Clubs operate under an ‘exclusive distribution’ strategy, which involves single outlets to target markets. Customers are relieved, when moving to different areas to be able to access the Virgin Active Health Club services (Virgin Active–UK, 2012). A certain geographical area is chosen for accessing the services. The distance is reduced and convenience established and exclusive evaluation is exercised to ensure a high degree of loyalty.

Public relations and publicity strategies

Readers find news stories and feature articles are more authentic and credible than advertisements. Also, specific items can act as testimonials. This communication tool is very important in branding and communicating information to children; caps and T-shirts on the ‘I love Virgin Active machines’ (Virgin Active –UK, 2012).  According to Lee, Haley and Avery (2010), an emotionally-oriented strategy is more likely to be accepted by women more than men.  Virgin Active Health Clubs marketers advocate a strategy of giving different messages to appeal to the different genders. Females like the spa and facial treatments more than males; thus a transformational message strategy should be adopted. The general message to be communicated to the target market is: Live Happily Ever Active.

Personal selling strategies

Personal selling as a communicative channel involves a live, immediate, and interactive relationship between people. Personal selling leads to relationships. In the Brighton Health and Racquet Club and the Riverside Health and Racquet Club, Chiswick health sector, the listener to a sales message feels obligated to respond to the salesman with at least a polite ‘thank you’. Children feel more welcome and that they have been noticed through personal communication with them, thus promoting good communication.

Conclusion

In conclusion, Virgin Active Health Clubs’ good marketing strategies serve as a convenient and strategic way for suppliers to imprint their product or service reputation. This is because they have goals of creating loyalty, trust, familiarity, a premium image and value for customers: branding makes it easier to attract and retain customers. Moreover, customers prefer to buy services or seek services from companies they feel they know and can trust, and known brands give them that assurance. When people are aware of the firm’s brand, they are aware of the positive characteristics they represent. Long before customers get ready to make a purchase, they feel that they know the Virgin Active Health Clubs and what unique value they can count on. To be strong and to be the most versatile and resilient business in the UK and worldwide, firms should develop brand loyalty. Marketing is a key ingredient for profit maximisation, fuelled by sufficient service communication. Integrated marketing communications (IMC) assist in promoting the brand to the public and ensuring customer loyalty. A good marketing plan and effective promotional decisions will always ensure an industry has an edge among the competitive market.

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