International Marketing and Sales: Task 1 and Task 2

Executive Summary

PureGym is one of the successful low-cost fitness centres in the UK, which has decided to expand in the Australian market after getting huge success in the UK. The company has decided to follow the joint-venture market entry mode to enter into the Australian gym industry as the Australian industry is already saturated. PureGym also has decided to follow its existing low-cost model and is planning to launch a differentiated service delivery model in the Australian market. Digital marketing and traditional marketing, both types of tactics have been considered by management. PureGym will gain a competitive advantage due to its low-pricing method. The Australian market is a potential market because of the supportive behaviour of the majority of the Australians towards fitness services. The company is trying to expand in the city areas initially to penetrate the overall market.

Task One: Marketing Plan

This task has created a marketing plan for PureGym, which is the leading gym operator of the United Kingdom and is making its mind to enter Australia.

Introduction

PureGym is renowned as one of the leading gym operators in the UK market, which was launched in the year 2009. This chain of the gym and fitness centre is operating with almost 200 stores across the country. Some of the gyms of PureGym provide 24*7 fitness services to the customers. PureGym follows low-cost service providing a model of doing business and the gyms are equipped with free-weights, fixed-resistance, and cardio fitness equipment. All of the products are up-to-date. The number of permanent staffs working for PureGym branches is really comparing to other gyms. Moreover, the personal trainers of PureGym are self-employed. However, the degree of the competition of the UK gym industry has increased massively as the 7,200 gyms are operating across the United Kingdom. Looking into this fiercely competitive market situation, the management of PureGym has decided to expand its business in other countries. Now, the company has decided to expand its network in the potential Australian market. The marketing plan of PureGym has been developed considering the Australian market in mind.

1.1 The Value Proposition

The value proposition of customers on PureGym can be developed below through the analysis of stakeholders and value chain of PureGym. This is

Mendelow’s Stakeholder Matrix

Customer, personal trainers, permanent staffs, part-time staffs, Humphrey Cobbold, gym members, community members, and government ate the major stakeholders of PureGym.

Figure 1: Stakeholder Matrix

(Source: Bharathi and Dinesh, 2019))

The major needs of customers are to get low-cost and necessary fitness services from PureGym. Humphrey Cobbold is the CEO of PureGym, and the need of the CEO is to maximise the profitability of the gym through expansion activities. The need of the members of PureGym is to get 24 hours a day access to the gym services of PureGym. Moreover, the needs of permanent staffs, part-time staffs, and personal trainers are receiving good support, good behaviour, and good salaries from PureGym. The major need for government is to make PureGym follow regulations and sustainability policies (Benmedjdoub et al., 2018). On the other hand, the major needs of community members are to receive welfare services from PureGym.

Community members and the government will be positioned at Category A Axis as their interest is low and the power of influence is also low. Humphrey Cobbold will be positioned at the Category B Axis as the business interest is high and influential power is comparatively low. Customers and Gym Members will be positioned at Category C Axis as their influential power is high and interest level is low towards PureGym is Australian market is saturated with premium gyms, and PureGym is also new to the industry. Lastly, Employees and Trainers will be positioned at Category D Axis as their interest level of getting rewards and promotion is high (Swaid et al., 2019). On the other hand, their influential power is also high to encourage decision-makers to make sustainable strategies.

Porter’s Value Chain Model

Value Chain Model proposed by Michael Porter will be applied below in order to identify the set of activities of PureGym, which can help a particular company to create values for the organisation.

Figure 2: Value Chain of PureGym

(Source: Benton, 2019)

The value chain analysis has been done on PureGym in the following tabular manner in which both the primary as well as support activities of PureGym have been analysed.

Value Proposition of Customers

The customers will receive fundamental and basic gym services from PureGym with supreme quality as high quality will be maintained. Moreover, the services will be accessible to the members and customers for 24 hours a day. PureGym is also committed to offering fitness services at minimum and competitive price. Moreover, advanced fitness equipment is also installed in gyms (Deans et al., 2017). These are basically added value for the customers.

1.2 Important Findings, Challenges, and Opportunities

The opportunities and challenges for PureGym will be identified through the conduction of the following analysis.

SWOT Analysis

It is a vital strategic analytical tool, which might help PureGym in identifying the internal competencies, internal weaknesses, external threats, and external opportunities of the company.

Four Identified Issues

Different issues and challenges have been identified through the above situation analysis, which can hamper the business growth for PureGym in Australia during the initial phase. These are discussed below.

Absence of a Strong Base of Permanent Employees

Gym and fitness-oriented business is a service providing business in which the needs of customers should be fulfilled by the management. In this course, a base of professional, skilled, and, motivated employees can play a major role (Chau et al., 2019). However, the company has a lower strength of permanent employees to cut-down the business cost. It can create challenges for PureGym in Australia initially.

Strong Market Competition and High Saturation in Australia

The Australian gym and fitness service industry is already being dominated by several popular and established organisations, which can create difficulties for PureGym to create a competitive edge within the Australian service providing industry (Morgan and Taylor, 2017).

Lack of Differentiation and Value-Addition

Lack of differentiated services like swimming people, saunas, and beauty therapy sessions also can affect the business growth of PureGym in Australia during the initial phase of time )Stevens et al., 2017).

Economic Issues due to Pandemic COVID-19

The outbreak of deadly coronavirus not only has affected the economic environment of developing nations, but several emerging nations like Australia is also suffering from the economic challenges due to this as Australia federal government has announced complete lock-down to stop the spreading of this virus. Hence, economic activities and social activities are stopped in Australia, like other countries across the globe. This is also considered to be a real challenge for PureGym in Australia.

1.3 Marketing Objectives

A SMART marketing objective has been created for PureGym to assist the company in creating a sustainable marketing plan for Australian markets.

SMART Objectives

SMART is the acronym of specific, measurable, attainable, realistic, and timely. These five marketing objective are developed below for PureGym.

• Specifically, the company will target the major cities of Australia for opening the gyms and fitness centres.
• Measurably, PureGym will try to focus on the creation of a member base of 50 individuals in all the gyms throughout Australia.
• Attainably, PureGym will use traditional and digital marketing and promotional plans to promote the services throughout Australia.
• Realistically, PureGym will practice both traditional and digital marketing activities to create strong brand awareness among the target Australians.
• In terms of time-frame, PureGym is eying on achieving all the above-mentioned objectives within the next 365 days of business expansion into Australia.

Corporate Objectives of Organisations

The corporate objective of PureGym is to become a successful global brand as the CEO of PureGym does not want to limit the business within the UK market. Australia is such a country in which people love athletics, football, rugby, cricket, cycling, and swimming etc. Overall, Australians are health conscious and love to stay fit (Bennie et al., 2018). Therefore, SMART objectives can easily be met through a useful marketing and business plan. Hence, these SMART objectives will allow PureGym to create a strong link with the corporate objective.

Strategic Intent of the Organisations

The strategic intent of the company depends on three aspects, such as low-cost model, quality services, and strong expansion. All of these intents of PureGym will help the management to meet the created SMART objectives as this will suit them.

1.4 Strategic Marketing

A plan for strategic marketing activities is highly important to develop as the plan for strategic marketing activities will allow PureGym to achieve the created SMART objectives adequately.

Market Segmentation

The management of PureGym has decided to apply behavioural, demographic, psychological, and geographic segmentation for the introduced gym and fitness services across Australia. Following is segmentation strategy considered by PureGym.

Targeting Strategy

The management of PureGym has adopted two important target marketing strategy, such as primary target marketing strategy and secondary target marketing strategy. The profiles of the primary as well as secondary target audiences are discussed below.

Athletes, public figures, sports individuals, and majority of the brand ambassadors are considered as the primary target audiences as these audiences require these kinds of services primarily (Funk et al., 2017). On the other hand, young adults, college students, health-conscious people, and teenagers are considered as the secondary target audiences of PureGym as these kinds of individuals generally love to join gyms and fitness centres out of motivation and influence.

Positioning Strategy

This is also considered as an important marketing activity that can help the management of PureGym to position the brand name of PureGym based on the characteristics of target audiences and market segments in the competitive Australian market.

PureGym only focuses on giving basic but high-quality gym and fitness services to the customers. Most importantly, the organisation follows a low-cost business model in which the organisation gives quality and basic gym services. However, the management of PureGym fails to offer differentiated services, such as swimming pool services and beauty therapy services (Kolb, 2018). Hence, it is important here to state that the management of PureGym is focusing on the low price and high quality positioning of the gym and fitness services.

VRIO Analysis to Identify and Justify Sources of Competitive Advantages

The major sources of competitive advantages for any company are considered to be the resources of the organisations. Similarly, the management of PureGym thinks that the major sources of competitive advantages are the allocated and utilised resources in the operation management activities. The conduction of the VRIO analysis can help here to identify the resources, their capabilities, and competitive advantages created due to the resources.

1.5 Traditional and Digital Marketing Tactics

After making decisions regarding entering in Australian market, it is important for the management of PureGym to develop both traditional and digital marketing strategies to make the marketing plan successful and meet the SMAR objectives successfully. PureGym has created a marketing campaign titled “Sweat in Our Way and Live Healthy Life in Your Way within Your Budget”. Both traditional and digital media platforms will be used to promote this campaign for PureGym.

Traditional Tactical Plans

Traditional tactical marketing plans for the promotion of the new stores of PureGym have been developed below with the help of 8Ps of marketing mix.

Digital Tactical Plans

The marketing team of PureGym will adopt the 4Cs of marketing communications strategy to develop a unique and contemporary promotional plan for PureGym.

Figure 3: 4Cs of Digital Communication Plan

Facebook, Twitter, You Tube, Instagram, SEOs, Televisions, and Smart Phone Applications will be used to promote the marketing campaign of PureGym, titled: “Sweat in Our Way and Live Healthy Life in Your Way within Your Budget”. The clarity, consistency, credibility, and competitiveness of the campaign in terms of the use of digital platforms have been highlighted below.

Figure 4: 4Cs Model of Communication

1.6 Action Plan, Budgets, and Financials

The action plan for the implication of the marketing plan and the budget assigned for the marketing plans have been mentioned below through the tabular format.

Important Steps in the Implementation Process and Important Activities

Discussion about Budgets and Financials

A highlight about the budgets and financials has been provided below. Moreover, the break-even time also has been mentioned below.

This is identified that the management of PureGym requires almost 1, 93,000 US dollars to start a new business in the Australian market as per the above developed marketing plan. The company has decided to invest 1, 00,000 US dollars from the profit amount of UK business. The company also has decided to take a loan of 93,000 US dollars from the UK banks to do business in Australia. However, the company has received the loan amount and the management of PureGym is expecting that the company will break-even within the next two years.

1.7 Ethics, Sustainability, and CSR

The possible ethical issues for the management of PureGym in the Australian market have been discussed below.

Identified and Assessed Ethical Issues

Two ethical issues have been identified here. One is poor employee management model and recruitment issue as the company has mentioned that they will focus on the recruitment part-time employees to cut-down the recruitment and payroll cost. However, lack of permanent and professional employees can hamper the customer service aspect. Secondly, the company is failing to provide differentiated services to the customers like swimming pool services and beauty therapy services. The industry has become competitive and other gyms always offer these kinds of services for refreshment and relaxation of customers as value-added services. This also can affect the preference level of Australian customers.

Appropriate Recommendations

First of all, the management of PureGym needs to develop a potential HRM policy and recruitment plan to create a base of skilled and professional full time employees. The company can take the help of the local partner in Australian market. Professional services and quality services are important growth drivers for the organisations within the Australian gym industry.

Secondly, this is also important for PureGym in Australia to provide value-added services to the customers beside of the necessary gym and fitness services as it can help in ensuring competitive advantages.

1.8 Controls, Measurement, Review, Risks, and Contingencies

Consideration of the following aspects is important for PureGym as it can help in making the marketing plan successful.

Critical Success Factors

Traditional marketing tactics, digital marketing tactics, and joint-venture market entry mode will be considered as critical success factors for PureGym in Australian market.

Important Performance Indicators

Results of the detrital marketing campaign, traditional marketing campaign, and marketing campaign slogan titled: “Sweat in Our Way and Live Healthy Life in Your Way within Your Budget” will be considered as the important performance indicators.

Risks and Contingencies

Conclusion

PureGym is a successful gym in the UK market, which is following low-cost business operation model. Now, the company has decided to expand its network in the Australian countries. Apart from the use of the low-business operation cost model, the management also needs to follow a differentiation approach, digital marketing approach, and traditional marketing approach to meet the developed SMART objectives appropriately.

Task Two: UPPSALA Model

This task has critically assessed the relevance of UPPSALA Model in terms of internationalisation activities. Secondly, this task also has applied this model on the internationalisation activities of PureGym in the Australian market.

Critical Assessment of the Model

UPPSALA Model was proposed and established in the year 1977. The model was established in order to analyse and understand the internationalisation process of the companies. This is identical that the internationalisation process in this contemporary era takes place through several activities and strategies. However, the basic principle of this UPPSALA Model states that the companies have to start their internationalisation process from the domestic market by acquiring important experience on the business operation activities. This fundamental principle of UPPSALA Model also states that the organisations generally start their internationalisation activities through some exporting activities after gathering valuable business experience in the domestic market. This is also identical that the UPPSALA Model is a descriptive and behavioural model as this model was established based on the nature or characteristics of the businesses of the era during 1977.

Now, the global business characteristics have changed. Now, the companies can get involved in international business operation activities without exporting activities. In this present era, franchise, joint-venture, partnership, and merger & acquisition etc. are considered as some important modes of international businesses (Gottschall and Saltmarsh, 2017). These concepts of different international businesses operation approaches were not described under the UPPSALA Model. Therefore, it can be stated that some principles of UPPSALA Model should be transformed keeping the modern business characteristics in mind.

Application of the Model

Previously, the UPPSALA Model suggested that the knowledge and learning is the only important thing to overcome business barriers. Now, there are several important aspects to consider for the management professionals of the modern companies to do business. The global business industry has become competitive and saturated. It is identified that the Australian fitness and gym industry has become saturated with several multinational and local companies. During the early 1980s, the degree of competition was really low. Hence, the traditional principles of internationalisations as per the UPPSALA Model cannot help PureGym to ensure success and business growth in the Australian market. Overall, the company has to think beyond learning, education, and exporting as global business environment has become dynamic.

The applied version of UPPSALA Model has been transformed by some modern scholars in the year 2009. As per the new and revised version, the company has to maintain a good relationship with the stakeholders in the foreign market to ensure a successful internationalisation. In this case, the management of PureGym has to create a joint-venture with the local company as the industry is competitive and customers have different options. Therefore, PureGym should focus on commitment towards the relationship with the important stakeholders and the joint-venture method will help the management to ensure good relationship with the stakeholders in the Australian market. In addition, the companies also need to capitalise on the opportunities through the consideration of existing resources to maintain a competitive position in international market.

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