Services Marketing of HHFC Report

Executive Summary

The purpose of this report is to assess the current service provision of Holborn Health & Fitness Club (HHFC) to develop service-marketing plan for this company. In order to do so, this report will concentrate on the key information of the industry, brief description of the service concept of the company, and analyze current service marketing mix and so on.

In addition, this report will focus on the key issues and identify problems of HHFC to recommend some strategies to improve its current performance and increase profits in the future.

However, the major problems of this company are lack of customer base, number of competitors, content of website, rules and regulations, shortage of promotional initiatives, higher charges for several services excluding membership charges, high remuneration of the employees, complexity of operating services, decline in living standards and economic growth, and so on.

Therefore, this paper will suggest different strategies for development, such as, arranging integrated marketing communications (IMC) campaign, restructuring pricing strategies, joint venture with other companies and changing staff selection procedure.

Company Background

Holborn Health & Fitness Club (HHFC) is the largest independent fitness club in London and it offers numerous services including personalised exercise programme along with a range of exercise classes, Spa combining ancient beauty traditions, regular aerobics programme, swimming pool facilities, teaching pool, meeting, and luxury London hotel accommodation and so on (HHFC, 2010).

In addition, it provides five star hotel accommodations, which includes modern facilities, such as, outstanding dining facilities, flexible conference hall, comprehensive range of health and beauty treatments, bar, café, and high-speed internet access (HHFC, 2010).

However, Grange Health Clubs operates number of partners such as HHFC, St. Paul’s Health and Fitness Club, City Health and Fitness Club, Grange Health Clubs, Golden Lane Leisure Centre, and Tower Bridge Health and Fitness Club etc (GHC, 2011).

According to the statistics of Market Research (2007), the healthcare and fitness market of the United Kingdom was worth an estimated £3.450 bn in 2006 and expected 4% to 5% growth by 2007 and government invested more to encourage higher participation in sports and fitness activities considering London Olympics 2012. At the same time, LMIL (2009, p.15) stated that fitness and healthcare industry has bright prospect in the future due to increasing populations age and obesity rates along with developing health consciousness among the people.

Current position Analysis

Theories

• Consumer Behaviour:

Kotler & Armstrong (2009) provided Stimulus-response model to analyse consumer behaviour and Solomon, Bamossy & Askegaard (2001) stated that there are six different elements of external factors those influence consumer’s behaviour, such as –

Figure 1: Consumer Behaviour Model

Source: Self generated from Solomon, Bamossy & Askegaard (2001)

• Human Resource Management:

Lovelock & Wirtz (2007) stated that companies should recruit right person for right pace, motivate the employees and develop performance; however, following figure shows HRM model for the company.

Figure 2: Human Resource Management

Source: Lovelock & Wirtz (2007)

However, the management of HHFC has not enough experienced and failed to maintain proper HR plan; therefore, it experienced significant losses last year.

• Managing Customer Relationship:

Lovelock & Wirtz (2007) stated that CRM is a deliberated corporate strategy and administrative viewpoint that seeks to develop long-term relationship with customers to boost sales; additionally, it enhances the affiliation with diverse markets and final consumers; so, HHFC should integrate the following framework for CRM strategy:

Figure 3: Integrated-Framework

Source: Lovelock & Wirtz (2007)

Four Categories of Services and Marketing Mix

Lovelock, Wirtz & Chew (2009) stated that the nature of services is different and recipient of the services are different; therefore, they provided four categories of services, such as –

• People processing
• Possession processing
• Mental stimulus processing
• Information processing

However, the following figure gives more information about four categories of services along with examples –

Figure 4: Four categories of services

Source: Lovelock & Wirtz (2004, p.11)

According to the above figure, Holborn Health & Fitness Club provides people processing services; however, it provides hotel, fitness, healthcare, and other services. Furthermore, Macchi & Lah (2010) pointed out that service based company should invest considering marketing mix categories, for instance –

Figure 5: marketing mix categories

Source: Macchi & Lah (2010)

• Website content of HHFC is not informative to support selling services;
• Existing customers of HHFC are satisfied its services and most of time they provide positive feedback regarding quality of services; however, it has not sufficient customers to recover this company from continues losses;
• It has not taken any milestone programme to develop market awareness;
• HHFC has Facebook account, but it has not arranged any internet based campaign to create market demand or develop brand

Positioning Strategy:

HHFC is one of the well-known brands in London though it needs to create a significant brand value not only in terms of fair price, but also in terms of other intangible benefits; however, following figure shows that HHFC provides moderate services with high price (instead of member costs other offerings).

Figure 6: Positioning strategy

Source: Self generated from Lovelock & Wirtz (2004, p.12)

Key Issues/ Problem identification and Conclusion

Key Issues/ Problem identification

• The promotional strategies of this company is outdated and the content of the website is not informative to reach target market; therefore, the customers get mostly no information about this company from he existing website of this company and it helps the competitors to gain competitive advantages;
• In addition, HHFC uses static website instead of dynamic website and it has no online payment option, which decreases its sales;
• In the monopolistic health and fitness industry, it is too important for the companies to obtain additional customers along with retaining them by using several marketing techniques, but HHFC is not using latest customer relationship management tools;
• The local governments have played traditional role of the foremost investors for sports and recreational, so, this company needs to compete with both public and private competitors;
• This company asks nominal joining fees, but the service range is not adequate considering offerings of the competitors, for example, it has outstanding accommodation facilities, but it has lack of sports services and personal training equipments comparing with competitors. As a result, it fails to attract huge number of customers though it offers a holistic approach to health, fitness, and well-being within a modern and deluxe atmosphere;
• Customer retention and new customer attraction mainly depend on four distinct categories of the marketing mix, but this company has not special focus on the issue;
• This company needs number of efficient employees to control major fields and it requires paying huge remuneration.

Conclusion

As the content of the website is not excellent to attract customer, HHFG fails to attract new customers, tourists, the people who would like to enjoy leisure, health conscious people, children and other target audience, which adversely affects on the return on investment of the company.

At the same time, the management of Holborn Health & Fitness Club has not taken any IMC campaign to develop brand awareness while competitors arranged such programs; therefore, the business condition of HHFC is not satisfactory as it has been experienced losses from 2006.

At the same time, it has faced numerous problems related with operating services, for instance, the company has to expend large amount for maintenance of equipments along with other costs and it has well set-up to provide services for numerous customers, but only few customers take its services.

Recommendation

Objectives of the Recommendation Plan

One of the key problems of this company is the lack of sufficient customers, which results in a hindrance in the process of revenue generation for this company; as an ensuing effect, the company is unable to develop to a substantial level. In order to attract more customers and make them loyal towards the company, it is certainly necessary to arrange integrated marketing communications campaigns and undertake a number of branding strategies to make this gymnasium popular among people.

Successful implementations of the proposed campaigns would not only help to better aware people about its usefulness, but also assist the formulation of a distinctive brand that would cause imaginary differentiation of the services and provide competitive advantage over the huge number of competitors.

The company should make huge investments in the R&D department to help the IT integration and ensure that the website of the company is enhanced in terms of the contents and addition of online membership and payment option, which would complement the marketing campaigns.

It should try to restructure the pricing strategies as part of a marketing campaign to offer lower prices and discount offers. Although, according to HHFC (2010), the company is currently undertaking some discount offers, these need to be more attractive on regular basis and customer-oriented.

The corporate expenditures can be lowered by lowering the wage rate of employees and by joint venture with other companies (which have economic efficiency and greater capacity utilization). It should focus on developing HR strategies to improve staff selection procedure, complexity of operating services, etc. to get rid of existing problems of HR management.

In order to resolve the problems associated with lack of sufficient customers, revenue generation, huge number of competitors, poor website contents, and ineffective pricing strategies, it should come up with Service Marketing Plan that deals with campaigning through television advertisement, print media, radio campaigns, and online marketing campaigns through Google+, Foursquare, Twitter, Facebook, Myspace, Hi5. The Service Marketing Plan is outlined below:

• Marketing through television advertisement – this draws people of all ages, including middle-aged men and women spending their leisure, or working people watching TV; this campaign would also be effective for generation aging from twenty to thirty- five as well as the teenagers; moreover, through this campaign the company can reach many people instantly
• Print media – it could be a great campaigning media for attracting numerous customers if the company is able to advertise properly with descriptions of physical benefits of joining the gyms and attractive photographs; moreover, the company can also come up with press kits, brochures, and posters
• Radio – this marketing will address those busy people who, for instance, listen radio in roads; furthermore, radio-advertising would develop potential-outcomes for the campaign with sense of flexibility and this can also have a good capture over public
• Internet advertisement – it will need online marketing, including website content development, search engine optimization, advertisement through social networking sites, writing blogs, and e-mails; moreover, by advertising through Twitter, Myspace, Google+, Foursquare, Facebook, or Hi5, the company could get a improved place where additional public awareness can come up

The key objectives that can be attained because of implementation of this Service Marketing Plan include the following:

• The key objective of this plan is to increase customers base by 40% within the next two years
• To increase its annual sales revenue from the provided services by 50% within next three years
• In addition, the plan has aimed to build and enhance brand awareness in order to gain competitive advantage over the huge number of competitors
• It has objectives to ensure better compliance with the existing rules and regulations of the country, hire more skilled human resources to fight shortage of employees, restructure the charges for several services, and lower down 25% costs by cutting the high remuneration of the employees within the next year

Implementation

According to HHFC (2010), this fitness centre is highly luxurious with many unique features; however, for being successful in terms of profit making, it needs to eliminate present problems and implement the objectives:

Table 1: Implementation

Source: Self generated

Reference List

GHC (2011) Grange Health and Fitness Clubs. [Online] Web.

HHFC (2010) About Holborn Health & Fitness Club. [Online] Web.

HHFC (2010) Special Offers and Packages. [Online] Web.

Kotler, P. & Armstrong, G. (2009) Principles of Marketing. 13^th ed. New Delhi: Prentice-Hall.

LMIL (2009) The Future of Fitness. [pdf]

Lovelock, C. & Wirtz, J. (2004) Services Marketing: People, Technology, Strategy. [pdf]

Lovelock, C. & Wirtz, J. (2007) Services Marketing: People, Technology, Strategy: Chapter 11. [pdf]

Lovelock, C. & Wirtz, J. (2007) Services Marketing: People, Technology, Strategy: Chapter 12. [pdf]

Lovelock C., Wirtz J. & Chew, P. (2009) Essentials of Services Marketing. 1^st ed. New Jersey: Pearson Prentice Hall.

Macchi, K. & Lah, T. E. (2010) Service Line White Papers. [Online] Web.

Market Research (2007) Heath & Fitness Market Focus on Clubs and Equipment UK 2007. [Online] Web.

Solomon, M. R. Bamossy, G. & Askegaard, S. (2001) Consumer Behaviour. 2^nd ed. London: Prentice Hall.