Marketing and Strategic Analysis of Virgin Active

Marketing and Strategic Analysis of stark(a) busy1. IntroductionThe UK has had an overwhelming increase in the leisure industry market involving lyceumnasiums. This cover up go forth include a strategic review of unadulterated mobile and as well evaluate the ch on the wholeenges and opportunities faced by staring(a) expeditious. The topics, included in this study exit be description of the physical composition, comprehensive strategic analysis (detailed analysis of internal s support, environmental scan and core competencies), a SWOT analysis of crude alive(p) and challenges faced by the organisation. Further more than than, alternative strategic options and managing change will also be discussed.Strategic management is heavy for all organisations, with taboo regards to their size of it or position in the market. The definition strategic management has non been agreed, how forever, the outcome of defining strategic management is similar. Armstrong (cc2, p. 38) sug gests strategic management is, that managers ar expression ahead at what they need to achieve in the middle or relatively distant future. Also, Cons skirt (1980) suggests strategic management as the management plow and decisions that determine the long-term structure and activities of the organization (Thompson, 1993, p. 6).Both definitions focus on the importance of decisions to be rejoindern for the future, by managers, so that the organisation is sustainable. This report will analyse the effectiveness of stark(a) Actives strategies and also, strategies they can initiate.2. utter(a) Active2.1 The Business pure(a) was founded by Sir Ric heavy Branson in 1970 and is one of the most well k straightn brands in Britain. Their portfolio is diverse and ranges across from market to market such as trains, soft drinks, publishing, cosmetics, holidays, mobile phones, extreme sports, music, space tourism and the finance industry. ( extension 1) The organisation has over 200 companies world(prenominal)ly, and has approximately 50,000 employees. The total for Virgin in 2008, exceeded 10 billion (Virgin, 2009)Sir Richard Branson (1990) was anxious to build the best, state-of-the-art community on the market, providing genuine value for it customers, in archetypal class surroundings. Hence in 1999, Virgin opened their first gymnasium. Customers were attracted to the facilities and high level of customer service, and demand has grown steadily over the years. at that place is now 167 gyms and, approximately 900,000 members worldwide (Virgin Active, 2009).Despite Virgin Actives success, like all other organisations, they provoke competitors. Virgin Actives main competitors are vivification Well and Fitness First, who are also globally know and placed.3. Strategic Analysis3.1 Internal scanThe brand institute Virgin, is a very valuable asset for Virgin Actives. Richard Branson (2002) express In our customers eyes, Virgin stands for value for money, quality, inno vation, fun and a sense of competitive challenge We much move to areas where the customer has traditionally received a unretentive deal, and where the competition is complacent We also look to lay off old products and services in new ways. The brand name Virgin is extremely well known throughout the UK. A brand name is an indication of what to expect from a product a quality statement of a value-for-money signal (Hollensen, 2006). The most boffo move Virgin Active rescue made so far, is the 20 million invested, for a major refurbishment and upgrade programme.Despite these strengths, these can wrench weaknesses of the organisation.Frequently companies can establish overly convinced with their brand name, and start putting less attempts in developing the line of work. Thus, the organisation is under threat of non developing, or being able to sustain gloomy days in the future. The development in module can also decline. Although 20 million was invested by Virgin, none of it was spent on employees. And so, a opportunity for Virgin is to invest more time and finances on staff training.Leaders in the UK often lack dedicated attention from their supervisors to help develop in a planned fashion through continuous learning, both from job experience and more formal training activities (Addison, 2006, p380). It is important to have up-to-date staff development and training, as technology and the environment is constantly changing. If employees performance is weak, then the main priorities and strategies of the organisation become weak.3.2 Environmental scanExternal environment must be taken in to consideration, when developing a organisations strategies. The environmental analysis determines the organisations opportunities and threats. Thompson (1993, p. 246) said, managers should always be attentive to changes and their decisions and actions should be both re supple and proactive as appropriate (Appendix 2). Thompson is defining the significance of managers a dapting to different strategies depending on the environmental changes. The social environmental pop outs in the gymnasium market, is always changing and plays a crucial rule on deciding strategies. Virgin Active have forecasted expectancy growth, so they have a special discount for elderly deal (55 years old plus). These grey consumers are relatively rich. The over-fifties own around three-quarters of the worlds financial assets and control half of the arbitrary budget (Hollenson 2006, p. 48). Yet, in that respect is also many elderly who are financially restricted due to the increase in utility bills, and were unfortunate to have no savings. This is why Virgins outline of decreasing prices for the elderly has been effective and also, as the elderly have started becoming more fit in this day and age, it has also had a positive outcome.Additionally, the smoking ban in Britain, showed signs of a healthier Britain. Also, due to many campaigns and advertisements issuing obesity a nd illnesses, the majority of the public have become self aware of health issues. Due to Hollywood/Bollywood and the general media, people are also becoming self conscious about their appearance. The stereotypical students have also changed theyre appearance, from the well known drinking, junk food eating, smoking danger zones to a more healthy-living lifestyle, recent surveys show. About one in four students is now teetotal, says theme Union of Student Services and among the rest of the student population there is a growing appetite for exercise facilities and healthy eating (Coughlan, 2006). Technology is ever changing, hence why Virgin Active spent 20 million to update their systems and keep up-to-date with modern technology. Taking these aspects into consideration is vital whiles preparedness strategies. According to the environment, changes in strategies should also be taken into consideration.3.3 Purpose, objectives and strategyWhen developing an organisations endeavor, i t should take into consideration why do they exist, whom will they serve and how its value will be increased. It is vital to consider the organisations future challenges and opportunities.According to Lynch (2006,p. 340), there is three sections that help build the purpose of the organisation and should be examined at an other(a) stage.The purpose of a organisation shaped by vision, leadership and ethicsVirgin Actives vision is to promote wellness by bringing positive change in youre life (Virgin Active, 2008). This vision shows that it is going beyond its current climate, which is achieving sufficient revenue.Leadership in an organisation is crucial as the directors choices and the social responsibilities policies influence the purpose they define. Virgin Active is run by an independent board and is mostly shareholder owned. The Executive Director, Mathew Bucknall, has combined industry experience and who also developed Virgin Active by overtaking Holmes Place, an established, pop ular gymnasium in the UK (Murray, 2006). This shows that the craft is run by specialists who have great expertise in their field. Meaning, taking these elements in to account the objectives of the organisation is to expand their gyms by promoting health and wellness.Virgin Actives mission statement (Appendix 3) , shows that their goal is to be known around the world as a fun unique gym, available to everyone, who is offered, regardless of age or body size. Also, their goal is to expand their business in Europe within in the adjoining three years (Virgin Active, 2008) .Also, without a capable strategy, Virgin would not have been able to become globally known (e.g. South Afica). Strategies used by Virgin Active in order to expand and also become available to all ages whereBy offering different memberships to customers with various needs, E.g. offering 2 month old babies to 15 year olds a class called Club-V.Virgin Active recently invested 20 million throughout their clubs to up-dat e workout machines and for refurbishment.They also took over Holmes Place, gaining all their current locations throughout Britain, tremendously helping their goals for expansion.3.4 Core competenciesA core competency makes the company different from others. Hamel and Prahalad (1990) said, core competency has three issues it provides customer benefit, it is hard for competitors to imitate and it can be leveraged widely to many products and markets. Virgin Actives core competency would be their brand name. As mentioned before, their brand name is what makes them stand out from other gymnasiums and is generally what customers would pay extra for. Virgin Actives competitors can not take away the well known reputation that the name Virgin holds, for example, respected and trustworthy. However, the smaller gyms such as LA Fitness also have a selling unique selling point (core competency). LA Fitness are very well known for their as their personal trainers are highly qualified and highly skilled in getting the results the customer pauperizations. This shows that all organisations have their unique selling point, which should be sustained by effective strategies.4 SWOT Analysis4.1 StrengthsVirgin Actives most crucial strength is there prospering brand name and also their strong management skills. Every venture Virgin has taken part in, it prioritises its consumers needs and wants.Virgin is an organisation that is market-driven. Market-driven organisations focus on the consumers concern throughout the company. All departments recognize the importance of the customer to the success of the business (Jobber 2004, pp. 8-8).Virgin has an exceptional reputation throughout Britain. A brand name is an indication of what to expect from a product a quality statement of a value-for-money signal (Hollensen Svend, 2006).The managing director, Mathew Bucknall invested the 20 million for refurbishment and upgrades. This was a powerful strategy for Virgins present and future.Virgi n Active accommodate all ages by providing different memberships with special classes for the elderly to special classes for children Club V (Special child care fitness for children and entertainment) Allowing parents work out freely. Other gymnasiums do not offer this, including Fitness First.Due to the acquisition of Holmes Place, Virgin Active has gained central locations for its gyms, increasing the reputation and availableness to the consumers.4.2 WeaknessesVirgin Active do not reduce their price and also sale volumes are limited as the gymnasiums can become overcrowded.Virgin Active depend on the brand name, too much.Fitness First and Living Well are two large competitorsThe club has increased their fee, for a prevalent member, from 45 in 2005 to 61 in 2007. This is due to the refurbishment, however, no member was given a news letter. Members were given a small letterMembers are not informed in the reverse method about changes, as fees increased from 45 to 61 from 2005 to 2 007 (due to refurbishment) and members were given a small letter, not a sincere letter or a newsletter.4.3 OpportunitiesAlthough Virgin Active give discounts to the elderly, can take more advantage of the increasing grey population by having special classes, helping the elderly and making things easy for them.Virgin Actives current opening times are 600 am to 1030 pm, Monday to Friday, except as many people find it hard to go to the gym in these times e.g. taxi drivers, bus drivers, restaurant workers, bar staff etc, the gym should have a couple of late night openings available for consumers that cant attend before 1030pm.4.4 ThreatsThe gymnasium may have to invest in new services, as with a rising life expectancy, the elderly that are members me not stay satisfied with the current service. A decrease in an active population is also a threat.Fitness first, one of Virgin Actives competitors has given women a specialised section for weight training, this could become a threat in the long term as women may enjoy the privacy. small percentage would pluck up the courage to enter the male dominated free-weights area (Kiernainder, 2006).5 Strategic ChallengesOne weakness from the SWAT analysis affecting the way Virgin Active operates is its two main competitors, Fitness First and Living Well. These competitors can have a direct impact on Virgin Active, in many ways, such as both competitors have branches world wide. A issue that is confronting Virgin Active, is that of Fitness First. Fitness First has recognised that 54% of customers going to the gym are women, thus giving them more priority. The organisation have immovable to give a free-weights section, dedicated just to woman. small percentage would pluck up the courage to enter the male dominated free-weights area (Kiernainder, 2006). Also, they have health clubs run by women, for women (Fitness First, 2008). This has proved to be a success, and Virgin Active should consider to implement afew changes, to make s ure they are reaching their goal, of a business that evolves around the consumer. It is important that a organisation is doing the best it can, so that customers truly believe they have made a good choice by joining. Living Well is also a globally known gymnasium, but, they do not offer anything special except from one day free passes which Virgin Active and Fitness First do not offer. Fitness First offer a free day pass, but afterwards, the customer must pay for their memberships. Virgin Active does not offer neither. The membership for Fitness First and Living well are relatively cheaper than Virgin Active. Virgin Active do not invest in training staff, hence customers could leave, due to bad customer service.See Appendix 46. Strategic options and choiceVirgin is a global brand. Meaning, Virgin Actives strategy should be based upon expanding the business and developing the numbers of members. This form of strategy option is defined as the expansion option. The model (See Appendix 5) identifies the essential characteristics of this strategy option. Strategies must remain sustainable, for Virgin to continue with its expansion. As mentioned before, their goal is to open more clubs in Europe, they are already globally operated and have also recently acquired Holmes Place. Yet, there is more strategies that Virgin can consider without major costs included. As the grey population is rising, the organisation can take advantage of this and provide special classes, made for the elder. This would make it less complicated, easier, and user friendly for the elderly. In addition, Virgin Active could start opening later hours a couple of days a week, as this would differentiate them from there competitors and increase customers as the very few gyms that are open till late, are sanely busy. This would be a good strategy option for customers who currently cant make it to the gym, due to work. Another, relatively low cost strategy, would be to cater for woman. As Fitness Fi rst have already started a exclusive section for woman only, this would be a good choice to make Virgin Active diverse and would give them a unique selling point over most competitors. These are fairly low cost strategies that would bring more customers, gist expanding the company.7. Management of implications and uncertaintyEvery business should implement their strategies, in other words put them into practise The prime aim in implementing strategy is to deliver the mission and objectives of the organisation (Lynch, 2006, p. 610). Taking uncertainty into account is important when undertaking strategies. Driskill and Goldstein (1986) defines uncertainty as the perceived lack of information, knowledge, beliefs and feelings necessary for accomplishing organizational tasks (Palenchar and Robert, 2007, p. 126). The uncertainty table (Appendix 6) defines the two types of uncertainty as fuzziness and equivocalness. Fuzziness is present when definitive, sharp, clear or crisp distinctions are not made ( Emblemsvag and Endre, 2002, p. 844). Ambiguity is present when there is a inconsistency in deciding among different alternatives or a couple or more alternatives have been left unspecified. Virgin Active has ambiguity uncertainty, because there is uncertain issues the might deal with, such as customers may want to start exercising alfrescos rather than indoors or the more elderly may want to join the gym. Another threat could be, people becoming more green or because of nowadays easy lifestyle people may become lazy or obese, having a knock on affect on memberships.Managers maybe making the correct decisions, but staff who litigate these strategies might not be doing it in the correct way. This could lead to deficiency. Managers must be ready and aware for changes that could take place, and should try utmost to apply correct strategies depending on the current issue taking place. An example of this could be, that there is no certainty that people will feel the same, as they could go towards being green. There are already fifty Green middle schools operating in the UK (Valle, 2007). Green Gyms are allowing people to exercise in the outdoors, without destroying the environment. Green Gyms are targeting people who want to make new friends, loose weight, and improve the environment. Research shows that, because the activities they undertake are not repetitive and aimless like other types of physical training, Green Gym participants tend to become more active in their daily life (ibid). To tackle this uncertainty, Virgin Active could have some outdoor classes, instead of indoor. The outdoor classes could be yoga or jogs in a remote park. And if it becomes popular, Virgin Active could advance more outdoor activities.The process of implementing a strategic change and doing it in such a way that it lasts, is evidence of the close relationship between an organisations personnel and any external specialists concerned. (Sadler.1993)Virgin Actives main pu rpose was to expand their club by promoting wellness.Virgin Active have implemented their objective, which is open to everyone, without age or build being a problem. The strategies the club achieved were The Club-V for infants, discounted memberships for the elder, the acquisition of Holmes Place and outgo 20 million for improvement to the gymnasiums.The Virgin brand name, is definitely a asset to Virgin Active. Although the brand name is a strength, it can also become a weakness as some businesss become to proud of the brand name and forget to put effort into the organisation. There is also none indications of staff development. Invested my management, was 20 million but none of the finances were spent on staff.Uncertainty can also impact on the strategies being planned. Thats why scenario grooming were suggested so Virgin has an idea of issues which may occur in the future or impact current strategies. This is very useful as it produces problems and solutions.For any business to be successful, it is vital that they are ready for change and that correct planning has taken place to ensure the success of which ever strategies are chosen.8. AppendicesAppendix 11968First issue of student magazine1970Start of Virgin Mail Order operation1971First Virgin record shop opens in Oxford Street, capital of the United Kingdom1972First Virgin Recording Studio opens at The Manor near Oxford1973Launch of Virgin Record Label. Virgin Music Publishing is established1977Virgin Records signs the Sex Pistols1984Virgin Atlantic Airways and Virgin Cargo are born1985Virgin Holidays is formed1987Virgin Records America is founded.1988Virgin Megastores opens new stores. Virgin Hotels launches.1990Virgin Megastores arrives in Japan1991Virgin Publishing (Virgin Books) is formed1992Virgin Records is sold to Thorn EMI1993Virgin Radio hits the airwaves with Virgin 1215AM1994Launch of Virgin Vodka and Virgin the skinny1995Virgin Direct Personal Financial Services opens for business.1996V2 M usic is created. Virgin.Net launches. Virgin Trains is launched.1997Virgin Radio is acquired by Chris Evans. Virgin Cosmetics launches1999Virgin supple launches Virgins first telecomms venture.2000V.shop, Virgin cars, Virgin Wines and Virgin Travelstore all launch2001Virgin Money brand is created. Virgin Experience launches2002Virgin Money introduces the Virgin Credit card. Virgin Mobile in the USA.2003V.Shops merges completely with Virgin Megastores2004Virgin announces the launch of Virgin Galactic developing space tourism for everybody2005Virgin Mobile launches in Canada2006Two new businesses in South Africa Mobile and Moneyhttp//www.virgin.com/aboutvirgin/allaboutvirgin/thewholestory/default.aspAppendix 2Definition of reactive and proactive outcomesReactive outcomes. The environmental analysis will highlight important strategic changes over which the organisation has no control but to which, if they happen, it will need to be able to react.Proactive outcomes. The environmental analysis will make positive opportunities or negative threats. Then, the organisation will have to develop a proactive strategy to deal with the situation.(Ref Lynch, 2006, p. 79)Appendix 3Virgin Active mission statementTo challenge the norm, shake up the fitness industry, and restore average gym offerings with the revolutionary concept of a life centre. Our huge extensive facilities deliver innovative solutions for health and wellness, while providing excellent value for money. Accessible to everyone young, old, big, small, Virgin Active is a place where individuals can uncover their personal electromotive force and have fun in the process (Virgin Active, 2008)Appendix 41Members who left due to bad customer service.2Members who left due to other reasons.Appendix 5Expansion method matrixCompanyInside OutsideInternal developmentExportingOverseas officeOverseas executeMultinational operationGlobal operationMergerAcquisitionJoint VentureAlliancesFranchisesMergerAcquisitionJoint v entureAlliancesFranchiseTurnkeyLicensing internalCountryInternati-onal(Ref Lynch, 2006, p. 467)Appendix 6Management of implications and uncertaintyUncertaintyFuzzinessThe lack of definite or sharp distinctionsVaguenessCloudinessHazinessUnclearnessIndistinctivenessAmbiguityOne-to-many relationships dissonanceDisagreement in choosing among several alternativesDissonanceIncongruityHazinessConflictNo specificityTwo or more alternatives are left unspecified figureGenialityDiversityImprecision(Ref Klir and Yuan, 1995)