Marketing Management For Indirect Competitors

Analysis of the situation

The location of health and wellness spas businesses is highly influenced by population, that is why such business are mainly located in the states of Queensland, New South Wales, and Victoria which accounts for 78% of total businesses in that industry.  However there still other centres. which are located in other Australian states but they have very low popularity and market penetration rate.

A survey by Euromonitor international global survey shows that many people are now subscribing to natural healing methods thus resulting in a rapid growth in this industry. This creates more opportunities for businesses in the industry to take the Australian market.

The survey also finds that locally in Australia, people are now preferring to go for these natural health sessions, rather than go for expensive holidays. With the increasing intake of wellness tourism, it can be useful in fighting major health issues such as blood pressure diseases among others.

It is projected that by 2022, the global spa market will reach approximately $154.6 while the fastest growth will be in the medical spa during 2016-2022. Massage, facial, and body treatment are among the spa services that are administered to rejuvenate the body and the brain. They help in improving the immune system, removing toxins from the body, and stress management.  

The Hot Springs attracts tourist from Australia and the entire world.  Typical markets which can be targeted include;

• People who want to enjoy Japanese culture, health, and relaxation.
• Executives who are stressed.
• People who are concerned about their wellness
• People who engage in sports.
• People who enrolled in wellness programs
• Seniors
• Those who have chronic pain
• Those with established health issues.

• Relaxation massage.
• Those suffering from chronic pain.
• Sportsmen  
• Those who desire to improve their performance.

The strategy shall involve product promotion in order to gain a high market share, improved services in order to increase customer retention, competitive pricing as a way of scaring away of competitors, and hiring professional therapists in order to increase customer satisfaction. The adoption of these strategies will enable the business to outsmart all its current and future competitors by dominating the marketing and maintaining a strong and reputable brand.

Despite having many massage centres in Sydney they do not have bath houses, therefore, making them be less competitive.

The table below shows Victoria’s direct and indirect competitors of the business.

Direct Competitors	What the customer gates	Strengths	Weaknesses
Peninsula Hot Springs.	Has underground warm water which flows into the pools. A well-being center.	20 diverse bathing involvements. Bathing choices are either public or private. Availability of both moonlight and sunset bathing. Limits restriction of kids. A variety of spa treatments are offered.	Located far from Melbourne. Noisy due to the presence of kids. No lodgings
Japanese Mountain Retreat Mineral Springs and Spa, Victoria	Relaxing therapy and isolated retreat.	Housing, secretive bathing, yum cha, spa treatments. It is near Melbourne.	High pricing Only Provides Package
Hepburn Bathhouse & Spa, Hepburn Springs, Victoria	Pool bathing, pool with salt therapy, steam rooms with fragrance and couches for the spa.	First to be established. Obtains its water from Hepburn mineral springs reserve. Fragrance steam bathroom, bodywork spa, café, and pool. Offering lodging, packages and massage spa treatment.	Situated far from Melbourne.
Indirect Competitor	What the customer gets	Strengths	Weaknesses
Lithgow town massage	Reflexology muffling and relaxation.	Less expensive Multiple reflexologies	Offers reflexology only
Reflexology in other areas	Reflexology relation	Not expensive Wide choice of massages	Limited to massage only

The strengths include a conducive atmosphere, monopoly in the locality, Blue Mountain, lodging, and both indoor and outdoor services. Provision of a variety of services which include; aromatherapy, deep tissue treatment, and facial, body lotion, and oils collection. The business will maximize on these strengths in order to gain a competitive edge.

This includes the cost of supplies and the provision of quality services, the perception by many people that bath houses are expensive thus reducing the customer base, and the high cost of hiring professional therapists.

Trends in the external environment of the firm

The business can utilize multiple available opportunities which include; word-of-mouth referrals, the possibility of expansion by introducing new services, ease of bundling services, and a wide network of employers who can bring their employees.    

The major threats to the business include; high cost of hiring and unavailability of certified professionals, customer dissatisfaction on issues such as quality of the service and the products used, lawsuits arising from customers who develop side effects as result of using particular products. Among others.

The business aims at getting 40 clients per 3 hour’s session, conducting 7 sessions per week, to have 55% usage of the bath house which will increase to 75% during winter, to provide massage services at the rate of 30 hours per week which increases to 60 hours per week in winter.

“To get a 20% increase in customer base every year.”

“To create a unique massage center that provides body therapy and facials according to client’s specifications”.

“To achieve package increment by 20% of sales”

“To have a quarterly introduction of new sections.”

Position in the market: since it is the only Japanese hot bath in that market it will definitely be the topmost.

Unique selling position: it will provide a variety of indoor and outdoor services.

The market can be segmented based on income, gender, or age, to provide the following segments.  

65 years- above

The segment will contribute the highest number of customers because people in this age group have the following characteristics; health insurance, high amount of wealth, health awareness, and a weak immune system.

 18- 64 years

People in this bracket are more conscious about their health and have embraced natural health therapies.

Below 18 years

This group may not provide the best market since parents may be reluctant in subjecting their young ones to natural therapy. This group is also characterized with less chronic pains.

The target market will be grouped into two groups which are hot bath customers consisting of people from every age gender and age group, and massage customers who will comprise of upper and middle-income people who are above 25 years of age. The two markets are expected to be directly associated with each other. Clients with a high disposable income will form the long-term customer base and will bring more referrals although they can also bring challenges such as demanding for lower rates.

Advertising and word-of-mouth referrals will play a major role in getting clients for the business. The suitable marketing strategies that can be used include the following;

• Use of Social media marketing since it has a high usage in the target market. The business can use social media to advertise its products, services, and promotions. Example of social media platforms includes: Facebook, Twitter and Google+ among others.
• Provision of convenient booking methods that will adopt a variety of options such as phone booking, booking through agencies, online booking among others.
• Production of business newsletters regularly and distributing them to clients through email as a way of maintaining good customer relationship in order to attract them to the business again.
• Having unique activities every month as a way of exciting clients and attaching them to the business since they will be sure to find something new every month. This will also result in many referrals and high customer retention capacities.
• Adopt generous ways of welcoming customers into the business. This may involve the use of techniques such as offering free drinks at the reception, offering entertainment devices such as televisions in order to keep customers engaged as they wait to be served.
• Using seasonal themes to market the business. Seasonal themes include Valentine’s Day, Christmas and the others. This makes the clients feel that the bath house is the most suitable place for them to enjoy their festive, thus resulting in high rates of customer retention.
• Giving gift certificates to customers after they purchase the services. This plays a major role in promoting customer satisfaction, enhancing customer retention, increasing referrals, and attracting new customers.
• Adoption of multimedia marketing which is a combination of multiple Medias such as television, radio, newspapers, journals, magazines, and publications in marketing. It is the most effective method since it reaches customers from all the identified segments. 

Promotion  /advertising type	Promotional strategy	Expected business improvement	Cost ($)
Print advertising	Local newspapers, journals, magazines, annual reports, publications, and catalogs among others	Minimization of the businesses advertising cost. Suitable for use in the seasonal promotion since they have a wide coverage.	$2,000	Quarterly ($500/ 3months)
Online advertising	Local Networking	Boding with attractions which are nearby	$900	Every 2 months ($150)
Online website	Website and a business portal	Develop a website which will cover all the business menus, advertise products and services, use it for online booking, use it to get a global coverage among others/	$1200	Monthly ($100/ month)
Radio advertising	Audio advertising	Picking the most appropriate radio stations depending on the radio affiliations of the target customers.	$6,000	Every 2 Months ($1,000)
Social media	Facebook business page, you tube business channels, Twitter business accounts.	Launching of promotional campaigns. Reduction in cost, and wide coverage	$600	Every 4 months ($200)

Specific market analysis

The three main areas of income to the business are forecasted to generate income as follows; an estimate of $70 per service from the bath house, $ 100 from massage of which 35% will go to the service provider. The above-estimated incomes are done based on an estimated production level of 150 services per week which will increase by 25% in winter. The team room is a compliment of the bath house and therefore its sales are highly dependent on the number of services offered in the bath house, however, it is expected to generate a consistent 50% income.   

SALES FORECAST
Sales	YEAR 1	YEAR 2	YEAR 3
Massage Therapy	$200,000	$240,000	$288,000
Bath house entry	$500,000	$600,000	$720,000
Tea room	$70,000	$84,000	$100,800
TOTAL SALES	$770,000	$924,000	$1,108,800
COST FORECAST
Cost of Sales	Year 1	Year 2	Year 3
Linens and Cleaning	$9,000	$9,900	$10,890
Oils & Lotions	$14,577	$8,400	$9,800
Cost of tea room 50% of Sales	$35,000	$38,500	$42,350
SUBTOTAL COST OF SALES	$58,577	$56,800	$63,040
EXPENSE FORECAST
Operational cost	$308,000	$369,600	$443,520
PROFIT FORECAST	$462,000	$554,400	$665,280

Assuming that the business will be subjected to costs such as; salaries, utilities, rent and other operational costs, with payroll constituting 40% of the estimated costs, the analysis presents the need to generate monthly revenue that will go past the break even. The provided totals are less than the estimated monthly store gross by 13%.  The estimate does not also include income from other sources and it is based on a $100 massage income estimate, $70 hot bath income estimate, and $85 customer revenue average.  Working with an average assumption of 900 customers, then the break-even values are attainable.  

The quality of services and the value that the services add to the customers, highly determine if the customers will do a repeat purchase or not. Therefore the collection of client’s feedback will be a suitable strategy in determining if the business is delivering its mission since customers will always give an honest response.

Marketing activity	Date of review	Monitoring methods	Review outcomes
Social media pages	Monthly	Number of Facebook followers	Assessing how many customers have followed or liked the business social media pages.
Online website	Monthly	Number of new visitors.	Website traffic and the proportion of customers who book via it.
Print advertising	Quarterly	Keeping records and response obtained from clients.	Number of customers who agree that they learned about the business advertisement from print media
Radio advertising	Quarterly	Collecting feedback from clients and keeping records	The rate of radio penetration

Marketing activity	Timeline	Success indicator	Person responsible
Social media pages	Monthly	A high number of followers in the social media platforms.	Owner
Online website	Monthly	Increase in bookings via the website	Owner
Print advertising	Quarterly	Increase in customers acknowledgment of print advertisements	Owner
Radio advertising	Quarterly	Increase in the number of customers courtesy of radio advertisements.	Owner

Reference list

Sam Ashe-Edmunds, Spa Marketing Strategy viewed 2 November 2017, https://smallbusiness.chron.com/spa-marketing-strategy-60538.html

Day Spa Business Plan Sample viewed 2 November 2017, https://www.bplans.com/day_spa_business_plan/strategy_and_implementation_summary_fc.php 

Health and Wellness Spas in Australia Market Research viewed 2 November 2017, https://www.ibisworld.com.au/industry-trends/specialised-market-research-reports/life-sciences/health-wellness-spas.html 

Fiona Baker, The growing trend of wellness vacations viewed 2 November 2017, https://www.bodyandsoul.com.au/health/health-news/the-growing-trend-of-wellness-vacations/news-story/babb22579e03a24f750d18072da1a42b 

Lisa Mooney, Day Spa SWOT Analysis viewed 3 November 2017, https://smallbusiness.chron.com/day-spa-swot-analysis-40787.html

Erica Tambien, Day Spa SWOT Analysis, September 26 viewed 3 November 2017, https://bizfluent.com/about-6623509-day-spa-swot-analysis.html

Spa Market Size, Share, Spa Industry Trends and Analysis, August 2016 viewed 3 November 2017, https://www.alliedmarketresearch.com/spa-market

Beth McGroarty, Statistics & Facts — Global Wellness Institute viewed 3 November 2017, https://www.globalwellnessinstitute.org/press-room/statistics-and-facts/

David Whytcross, IBISWorld Industry Report X0015 Alternative Health Therapies in Australia, May 2014 viewed 7 November 2017, https://collegeofweightmanagement.com.au/wp-content/uploads/2015/02/X0015-Alternative-Health-Therapies-in-Australia-industry-report.pdf

Alternative Health Therapies in Australia Market Research viewed 7 November 2017, https://www.ibisworld.com.au/industry-trends/market-research-reports/thematic-reports/alternative-health-therapies.html

Jacqueline Head, Alternative therapies viewed 7 November 2017, https://www.abc.net.au/health/consumerguides/stories/2002/08/22/1836994.htm

Typical Massage Client Target Markets viewed 8 November 2017, https://www.futurelmt.com/typical-massage-client-target-markets/

Physical Therapy Massage Business Plan Sample viewed 8 November 2017, https://www.bplans.com/physical_therapy_massage_business_plan/market_analysis_summary_fc.php

Keith Eric Grant, PhD, NCTMB, Reflections on Market Share updated Massage Today December, 200 7, Vol. 07, Issue 12 viewed 9 November 2017, https://www.massagetoday.com/mpacms/mt/article.php?id=13720

Massage Therapy Trends, May 27, 2015 viewed 9 November 2017, https://fitness.edu.au/the-fitness-zone/article/massage-therapy-trends/

Massage Therapists in Demand viewed 9 November 2017, https://www.firm-n-fold.com.au/explore/newsletter-articles/massage-therapists-demand

Growth of the Australian wellness industry, Mar 26, 2017 viewed 9 November 2017, https://www.massageenvyfranchise.com.au/australian-wellness-industry/

Maria Mascaraque, Key Health and Wellness Trends for 2017, February 13th, 2017 viewed 10 November 2017, https://blog.euromonitor.com/2017/02/key-health-wellness-trends-2017.html

Top 5 Onsen Bath Houses in Australia viewed 10 November 2017, https://asianinspirations.com.au/experience/top-5-onsen-bath-houses-in-australia/

Ben Groundwater, Japanese Onsen in Australia: Why we need to stop copying overseas experiences, Jan 19, 2017 viewed 10 November 2017, https://www.traveller.com.au/unique-australian-experiences-why-we-need-to-stop-copying-overseas-experiences-gtqxyk

Linda Moon, Best Hot Springs and Bath Houses in Australia, May 15th 2013 viewed 10 November 2017, https://www.weekendnotes.com/hot-springs-and-bath-houses-in-australia/

Cara Waters, Charles Davidson’s $25 million hot water business: Peninsula Hot Springs, March 20, 2017 viewed 12 November 2017, https://www.smh.com.au/small-business/entrepreneur/charles-davidsons-25-million-hot-water-business-peninsula-hot-springs-20170207-gu73e8.html 

Spa and wellness tourism action plan 2005-2010 viewed 12 November 2017, https://www.tourism.vic.gov.au/images/stories/Documents/StrategiesandPlans/victorias-spa-and-wellness-plan-2005-2010.pdf 

Salon & Spa Marketing & Promotion Plan & Ideas viewed 14 November 2017, https://designbetty.com/salon-promotion-spa-marketing.php 

19 Spa Marketing Ideas for 2017. Great start to the New Year, viewed 14 November 2017, https://dayspaassociation.com/19-spa-marketing-ideas/