Scotland’s Stobo Castle Health Spa: a case study on marketing planning

1. Marketing Tools of Analysis

MARKETING AUDIT

• Product

Stobo Castle Health Spa is a 29-year-old health spa business in Peeblesshire, Scotland. It offers products and services to people who have penchant for relaxation and pampering. The array of treatment options available includes treatment of the body, hand, and foot; alternative therapies; face and eyes; waxing; hair; and fitness among others. All treatments can be avail by both men and women aged 16 and over unless stated otherwise.

• Price

The guests and customers of Stobo Castle Health Spa are paying an average £135 per night. Products and services included in each treatment are individually priced and timed.

• Placement

The Stobo Castle Health Spa is situated along Scotland's beautiful Borders countryside with tranquil surroundings that is excellent for relaxation and pampering. As among the modern-day and antique fusion of Scottish architecture, the Castle is “perched on a hill amongst rolling grounds, shaded by trees and set around a picturesque loch”. The interiors, on the other hand, are carefully designed to create an atmosphere of comfort and relaxation.

• Promotion

Similar to other businesses, Stobo Castle Health Spa uses all possible ways and means as well as channels of communication to promote their products and services and build its brand name and reputation. On this case, Stobo Castle Health Spa promotes their products and services through traditional marketing communication (e.g. advertising) and specializes in online marketing. A new marketing campaign to sell Stobo Castle Health Spa treatments to the Scots is considered.

PORTER’S COMPETITIVE FORCES

• Competitive Rivalry

This is the most influential determinant of competitive advantage in any industry (Hitt et al 2003). Identifying the intensity of competition or rivalry in the niche market requires the need to identify the existing number of competitors, rate of industry growth, diversity, cost allocation, informational complexity, level of advertising expense, exit barriers, and so on. Sometimes, competitors compete aggressively and in different approaches and dimensions such as innovations, marketing, management, etc. In this case, the growing necessity of customers of lifestyle products and services as offered by Stobo Castle Health Spa and the profitability in the spa market increases the threat of entry of new competitors. Similarly, the presence of resort hotels and small-scale local spas in the area decreases the profitability of Stobo Castle Health Spa. Thus, competition is tough as there are major competitors like resort hotels such as Turnberry, Gleneagles, and the Sheraton and local counterparts such as Peebles Hydro and MacDonald Hotel at Cardona. Due to this, Stobo Castle Health Spa is inclined to apply new consumer and marketing approaches that make their spa products and services stand out from others.

• Threat of New Entrants

Opening any business entails a significant consideration of essential factors such as barriers to entry, economies of product differentiation, brand equity, cost or capital requirements, supply chain and human resources, external policies (i.e. government and legal), and others (Hitt et al 2003). In the health-spa industry, Stobo Castle Health Spa as well as other spa businesses are protected by a number of barriers to entry, which makes it difficult for new business entrants to rise and compete. Among these important barriers are the requirements of large capital and considerable number of employees to be employed for a functioning business operation. In order to acquire the right workforce, sufficient supplies, and open distribution channels, a starting company must have a high initial capital. These barriers to entry then prevent other firms to compete effectively. The challenge however is the carrying out of an effective strategy applied in right practices and conditions.

• Bargaining Power of Buyers

This factor refers to the power of the buyers over the company or manufacturer (Hitt et al 2003). Customers’ bargaining power is described as the market of outputs. Their ability to challenge company standards affects the organization’s as well as customer’s sensitivity to changes (i.e. pricing strategy). Identifying the factors affecting buyer’s bargaining power include buyer and firm concentration ratio, volume, level, costs, backward integration, availability of substitute products or services, price and others. The threat derived from the buyers is gained when buyer power is high. In the case of the health-spa industry where Stobo Castle Health Spa belongs, the buyer’s bargaining power is high. There are a number of factors that support this claim. For instance, buyer power is high as many substitutes are made available to the market for the consumers ranging from leading resort hotels (e.g. Turnberry, Gleneagles, and the Sheraton) as well as locals (e.g. Peebles Hydro and MacDonald Hotel at Cardona). With this source of buyer power, buyers tend to have a greater control over the manufacturers. Thus, Stobo Castle Health Spa needed to establish a resource-based competitive edge against the rest.

• Bargaining Power of Suppliers

The power of the supplier is also an important aspect of competitive forces of a company (Hitt et al, 2003). This is the market of inputs, which include suppliers of raw materials, components, and services. Identifying the bargaining power of suppliers necessitates supplier and firm switching costs, degree of differentiation of inputs, presence if substitute inputs, concentration ratio, integration, buying and selling costs, and the likes. Similar to buyer’s bargaining power, if the supplier concentration is high, the supplier’s bargaining power cannot be considered as a threat. In Stobo Castle Health Spa, primary suppliers are used for its production and increase of product or service line. Stobo Castle Health Spa is able to offer products that are of high standards through these suppliers. Although there are a considerable number of suppliers, Stobo Castle Health Spa must have an established high quality supply chain so as not to affect its process of production and operations. Considering that there are other similar businesses and the threat of competition is high, suppliers will not be greatly affected if they drop a particular customer. Diversity of offers from supplier is a must. This means that suppliers are able to give supplies to an even greater number of companies or manufacturers. Thus, the bargaining power of the suppliers in the health-spa industry is then counterbalanced by the high threat and availability of substitutes.

• Threat of Substitute Products

Substitute products increase the susceptibility of customers to avail similar products and services or switch to alternatives particularly on cases of price increase (Hitt et al 2003). Identifying the threat of substitute products involve the knowledge of buyer’s behavior towards substitution, relative price performance of closely related substitutes, buyer switching costs, level of product differentiation, and so on. Due to the presence of many health-spa competitors, the high rate of substitutes for products and services is then considered a threat for Stobo Castle. There are many spas that operate in Scotland niche market including the leading resort hotels (e.g. Turnberry, Gleneagles, and the Sheraton) as well as locals (e.g. Peebles Hydro and MacDonald Hotel at Cardona). The presence of these competitors necessitates the making of brand preference and loyalty as a matter of concern. To deal with the threat of substitution, Stobo Castle has to add certain features that could address the threat on substitutes like pricing strategy to cater not only the big spenders but also all potential customers.

SWOT

• Strengths

Stobo castle Health Spa is a 29-year-old health spa. With this tenure of operation, it already built a reputable and trusted name in the specific niche market. This is tantamount to their perfection of the practices of marketing and management. It is an example of a company that has been able to implement a strategy that suits the needs of its clientele and provides quality services to continually make the business become a tough competitor among its existing rivals. Their ability to significantly grow and deal with changes in the health-spa market is also remarkable. The management of Stobo Castle Health Spa is able to predict changes that are affecting the business performance and operations. They continuously develop all aspects of production. In terms of innovations, the management is equipped with the needed machines and equipments used in providing treatments to customers. Their progressively stable financial performance is commendable as clear planning is done and achieving goals is a priority. Lastly, they hold a competitive practice in attracting and maintaining skilled human resources that serve as main players in the continuous development in the business and investment growth.

• Weaknesses

The identified weaknesses of Stobo Castle Health Spa include the image of exclusivity and inability to trim costs. Since they cater to high spenders, other potential customers presumed that the health-spa is exclusive to such. They project a brand identity as a “health-spa for high income people” thus, resulting to inability to cater to vast variety of possible clients. Further, the inability to trim cost is also a weakness as evidently seen on the constant developing and upgrading of accommodations and facilities and other related business makeover or expansion plan. This is also dependent on the need to provide outstanding products and services since most customers are living in an upscale lifestyle.

• Opportunities

With the marketing and overall management system of Stobo Castle Health Spa and the strengths that it has, they have bigger opportunities to stay as leading health-spa brand in Scotland, dominate the niche market, and catch up with the competition in the Scottish health-spa industry particularly in terms of providing more quality and less price products and services to its clients. Another opportunity that can be attached to Stobo Castle Health Spa is its possibility to gain more customers if they would be able to determine the latest trends for products and services to continuously meet the demands of their target market. Their plans for making the spa environment alongside with the short-break destination are promising. With the incessant and attracting and maintaining skilled staffs, Stobo Castle Health Spa is expected to have tangible and resource-based sources of competitive advantage, which are the people as workers themselves. Lastly, the continuous initiatives of the management in diversification of its revenue resources also open new opportunities to make the business become stronger to outgrow all its rival companies.

• Threats

Competition in its worst condition is most influential threat in any business. The increasing number of competitors that offers closely related products and services as substitute, innovations, price wars, and other managerial and business risks affect the overall business environment. Furthermore, the nature of consumers as well as their behaviors and level of satisfaction with regards to the product and service procurement is also a risk. Lastly, the challenge of continuous improvement is never taken out of place.

2. Marketing Research Plan

2.a i Research Problem

How can Stobo Castle Health Spa maintain its competitive advantage particularly in extending its preferred clientele without sacrificing its profitable objectives? How can they attract day visitors and compete with new hotel spas?

ii Research Brief

A management team is formed and intends to conduct a 3-month duration marketing research study employing specific descriptive-quantitative techniques and involving various participants (i.e. middle or average income earners). Survey and customer feedback system using various communication channels is a potential source of marketing information. First-hand data are essential factors to consider in marketing planning and strategy execution.

iii In-house (Rationale)

The research is to be done in-house through customer feedback system using various communication channels because it is time and cost efficient. Since first-hand information are gathered from communication channels, the analysis and application of data obtained is urgent and trouble-free.

2.b Research Objectives

i B2B – To come up with an effective marketing communications strategy using other businesses and to expand the range of clients and productivity.

ii B2C – To develop an effective marketing communications strategy directed to increase of customers and company profitability.

2.c Research Methodology

i Secondary

Descriptive approach is used as secondary methodology. It is primarily concerned with describing the nature or conditions of the current situation in detail (Creswell 1994). This includes analysis of data obtained from customer feedback system, expert’s opinions, internal (i.e. sales figures, balance sheets, inventory records, price lists, etc.) and external sources (i.e. documents generated outside the company including in the domestic market, other publications like reference books, data bases, and periodicals).

ii Primary

Case study method is used. Punch (1998) states that case studies involve looking one or more cases, which are “studied n detail, using whatever (research) method seems appropriate” (pp. 150). It is collected specifically for the investigation at hand by known and controlled methods. This will include data from customers in the marketplace obtained in the customer feedback system.

iii B2B

Online forums and feedback system using host website will be used. The method pushed far beyond the process of simple information-gathering and streamlining of orders (Timmers 1999).

iv B2C

The evaluation of website is an appropriate methodology. Since customer feedback system is website-based, online services can be critically evaluated depending not only on the willingness of its users to pay for online services, but also on their ability to do uphold the site’s function, user friendliness, ad support to the company’s business strategy (Eckersley et al 2003). Also, online services can be evaluated within its web design and presentation of the products or services. Its easy access, comprehensive and understandable concepts are also being evaluated in online businesses.

2.d Analysis of Data

Data analysis will be done through qualitative interpretation using content analysis approach. Content analysis of all the information obtained in all sources involved is manifested in the systematic conversion of text to numerical variable. It is done step by step. Every piece of information was carefully read, grouped, and condensed to formulate answers to the research questions or problems. Once the data were collected and collated, the final task was the interpretation of the results. It is important to maintain objectivity and a great deal of caution particularly in the process of analysis and drawing conclusions and knowledge for marketing planning and strategy execution.

3. Outline Sales and Marketing Plan for Stobo Castle Health Spa (12-month duration)

3.a Mission

To increase the existing number of customers using the products and services of Stobo Castle Health Spa and balance the return of investments

3.b Objectives

• To build an internal marketing plan for Stobo Castle Health Spa that is designed to improve the company’s productivity and performance.
• To improve marketing communications strategies as response to the stiff and rapid competition in the health-spa industry.
• To intensify the existing marketing strategy particularly of pricing.
• To establish a new array of clientele with competitive marketing and management strategy.
• To continuously create new innovations in its products that will serve the demands of the consumers.

3.c Strategies

The operation of an effective marketing communications strategy is perceived to be contributory to company’s satisfactory performance. The general concept of marketing communication pertains to any messages and related media used to communicate a product, service, brand, organization or company. Marketing communications activities contribute to the organization's reputation and image (Daymon & Holloway 2002).

Further, pricing strategy is considered. Being the most powerful tool in marketing, price is identified following the company’s established goals and objectives. These goals range from enhancing the market share of the products, improving the demands in the target markets, to extending the sales at an even rate for one whole day, week, month, or year. Pricing strategy is serves (1) to increase unit sales so that resources of the firm; (2) to restrict sales, or limit the quantities demanded per unit time; (3) to make the market less attractive to actual or potential competitors; and (4) to attract buyers so that they will buy other items once the transaction has begun (David 2003).

3.d Tactics

After identifying such relevant aspects in making a marketing communications approach, it is now safe to begin the planning stage. The marketing communications proposal will deal with the messages and related applied media to be used in communicating essential information about the product for the market to know (Crane 1965, p. 2). Advertising is still the most appropriate technique. Advertising is bringing the company’s products and services to the mindset of the target market (McNamara 1999; Goddard 2002) using different mediums like TV, radio, internet, print media and online technologies.

In pricing strategy, the key here is to estimate how much the company can sacrifice just to level the price of the competitors. New product features are also seen to be added in order to reconcile with the existing product prices. Sacrifices can be made on advertisements so that the retail and wholesale price of the brand can be lowered. The following are the plan in pricing for Stobo Castle Health Spa:

Ø Cut cost in specific areas.

Ø Create product features that are more attractive and useful for consumers yet it remains affordable.

Ø Offer special prices for specific purchase (the approach will also be applied to retail).

Ø Level the price of the brand with top competitors.

Ø Estimate ROI.

3.e Implementation

Marketing Plan for six months – one year

Plan for 1^st – 3^rd months

The first three months will focus on the market and consumer research by commissioned marketing personnel and team. Strategic marketing planning and meeting particularly on communications are consistent among the marketing team. Financial considerations are carefully studied in relation to the budgetary needs of the proposed plan.

Plan for the 4^th – 6^th months

The fourth to sixth months, Stobo Castle Health Spa will initiate the creation and materialization of the marketing communication plan for the products. The project will focus on increase of sales, presentation of other product features, and expansion of popularity on other key places. Commissioning an advertising agency is suggested. Also, the IT committee must work in relation to internet advertising.

Plan for the 7^th – 9^th months

In the seventh to ninth months, the different marketing communications will be individually launched. The suggested process is that the advertisements should be released one at a time so as to deliberately reinforce the message of each one of them. Assessment will be made on whether such mechanisms are effective. Adjustments in distributions and promotions will also be. It is expected that Stobo Castle Health Spa is already well-established in Scotland and gain favorable results in terms of revenue.

Plan for 10^th – 12^th months

Stobo Castle Health Spa will continue monitoring the effects of the marketing communications plan. It is also imperative that the finance committee will provide a breakdown of expenses for the project. If the program is seen to be effective, another marketing communications must be considered.

3.f Budget and/or Gantt chart to show expenditure/timing

Advertising Costs	Logistics	Miscellaneous
50%	35%	5%

*All percentages are directly quoted from the total budget approved by the upper management and related into the terms and plan of implementation.

3.g Control measures

The above proposal is implemented under the supervision of the Marketing Manager. All underlying mechanisms are only implemented if approved and evaluated. Control measures rely on the impending threats to the overall applicability and effectiveness of the plan. Among the most important control measure is the maintenance of established evaluation team who are able to anticipate progression or deterioration of performance. Aside from that, constant communication in all areas of management serves a vital role.

References

Primary

Stobo Castle Health Spa 2007, “Stobo Castle Health Spa,” Stobo Castle Health Spa Corporate Website. Retrieved December 12, 2007 from http://www.stobocastle.co.uk/home

Secondary

Crane, E 1965, Marketing Communications: A Behavioral Approach to Men, Messages, and Media, New York, NY: John Wiley & Sons.

Creswell, JW 1994, Research design: Qualitative and quantitative approaches, Thousand Oaks, CA: Sage.

David, FR 2003, Strategic Management, Upper Saddle River, NJ: Pearson Education.

Daymon, C & Holloway, I 2002, Qualitative Research Methods in Public Relations and Marketing Communications, London: Routledge.

Eckersley, PM, Harris, L & Jackson, P 2003, E-business fundamentals: managing organisations in the electronic ages, New York: Routledge.

Goddard, A 2002, The Language of Advertising: Written Texts, London: Routledge.

Hitt, MA, Ireland, RD, & Hoskisson, RE 2003, Strategic Management: Competitiveness and Globalization, 5^th ed. Singapore: South-Western.

McNamara, C 1999, “Basic definitions: Advertising, marketing, Promotion, Public Relations and Publicity, and Sales,” Free Management Library. Retrieved December 12, 2007 from http://www.managementhelp.org/ad_prmot/defntion.htm

Punch, KF 1998, Introduction to Social Research: Quantitative and Qualitative Approaches, London: Sage.

Timmers, P 1999, Electronic Commerce: Protocols, Strategies and Models for Business-to-Business Trading, New York, NY: John Wiley & Sons.