Business Analysis for Retreat Center

Introduction

The purpose of setting up a business is that after a while, one may breakeven, earn profits, maintain existing customers and gain new customers. For those objectives and many more to be achieved it is important for an analysis of the industry and the business as a whole to be carried out. The key purpose of carrying out an analysis is so that the problem within the industry can be identified. Once the problems have been identified it is simple for one to make recommendations to help in mitigating or changing the effects of the problem. It is important for a business to understand its target market and employ strategies that will enable them to capture that market (Lynn 2011). The strategies that they employ will be one of the defining factors that will set apart a business. Gaining a competitive advantage in modern business is very important due to the availability of substitute products that can be easily accessed by one’s customers (Wen-Cheng, Chien-Hung and Ying-Chien 2011). As such, it is important that a business has an understanding of their customers so that they know the strategies that they should apply to capture that target market.

The problem within the Retreat Center

The business that will be evaluated is a retreat in Newcastle college. The retreat is a salon in part of Newcastle college which provides beauty treatment in affordable price and all students of aesthetic practice and spa management work there as a therapist to develop their confidence and experiences (The Retreat 2019). The identified problem within the retreat center is that they have a target market, but they are not being accessed effectively. The center is ineffective in the means that they have applied to capture their target audience. While the means have been effective in giving them access to their target market, it can be improved. Therefore, the identified problem is that there is a target market, but they are not being utilized effectively.

Purpose and Objectives of the Research

Based on the retreat the aim of this study is to identify who are the target market in the retreat salon in order to advise a strategic proposal to raise the retreat’s client’s and improve their sales. The research aim is to gain a good understanding of the retreat’s current clients and their audience market. Accordingly, this research will help in determining the way to develop this category. Therefore, the main purpose of this report is to increase sales and equally to improve the levels of experience and knowledge of students. Additionally, the research will aim to gain an understanding of the current industry, the current target demographic and also a hitherto untapped target market.

Literature Review

The purpose of the literature review will be to understand how to segment markets and select target markets, to assess the importance of identifying the target market of a business, the target market of spas and the beauty industry such as The Retreat and the ways through which businesses can entice their target market.

Segmenting Markets and Selecting Target Markets

Before detailing the importance of a business identifying a target market, it is important to understand the nature of a target market and why it is important. Lynn (2011) notes that marketing can be summed up in three words and that is segmentation, targeting and positioning. The succinct summary implies that markets consist of a number of homogenous groups each one having key defining characteristics that define the group. It is this homogeneity that allows a business to craft their targeting strategies to revolve around that market. It would be unfeasible to craft a marketing strategy that would appeal to individual idiosyncrasies. As such, marketing strategies usually revolve around targeting homogenous groups and positioning the business in such a manner that it will appeal to that distinct homogenous group (Lynn 2011). To understand the target market of a business, it is important to divide and segment a market to make it easier to identify the target. While their many manners through which a market can be segmented there are common ways through which the market can be segmented. Kottler, Bowen, & Makens (2006) note that markets can be segmented on the basis of demographics, geographic, psychographic and behaviors. Demographics would revolve around variables such as age, gender, education, and income. Geographic revolves around variables such as nation, state, region, and neighborhood. Psychographic revolves around variables such as attitudes, interests, opinions, and values. Behavior revolves around variables such as media habits, purchase frequency, channel usage, and brand loyalty. A business can identify the variables and the segments that make the most sense for their business. The more specific the segment, the easier it will be to craft a marketing strategy that will be able to meet the variables within that segment. The variables should be specific enough to allow the business to craft a marketing strategy that will appeal to the segment but wide enough to ensure that it encompasses a largely homogenous group. It is important to note that a business can adjust the target segment as many times as they want. The adjustment may be due to the business changing its vision, its target market or it may be the business expanding to include other market segments. Therefore, for a business to craft a proper marketing strategy they need to segment a market and select the target market.

Importance of Identifying the Target Market

It is important for a business to identify its target market since it comes with various advantages. Evans (2013), the key advantage of identifying the target market is that business will have found the audience to whom their products and/or services will appeal. Not every individual or every market group will find the products or services that the company is selling appealing. Trying to market to all market demographics would not only be an uphill task, but it would be nigh impossible. A business may counter that by coming up with products and services that appeal to different market segments but even then, they will not be able to appeal to a big market segment. As such, identifying the target market is important since the business will know the group they are trying to capture when they are coming up with marketing strategies. Kim and Canina (2010) note that identifying the target market is very important for any business since it determines the level of specificity of the messages that they craft. Once the target market has been identified the messages of the marketing strategy will be crafted for that specific audience. In the long run, crafting specific messages will save the business resources in terms of time, money, and personnel since the efforts of the business will be channeled towards the specific target market. Hubbard (2019) also notes that a key advantage of identifying the target market is that it will allow the business to come up with cost-effective strategies that will meet that particular demographic. For example, if the target audience is the millennial that is between the age of 18-25 years old, the company will get better returns by advertising on social media since that is the platform that their target audience utilizes the most. Identifying the target market will give the business on their demographic and that means that their resources will be concentrated towards that market rather than diluted in pursuing too many marketing avenues. Additionally, the company will have a greater return on investment since they will have used fewer resources in the long-run (Hubbard 2019). Klockner (2015) notes that identifying the target market helps the business since they can identify an under-served market. Identifying an underserved market will be of great advantage to the business since they will be able to cultivate a niche for themselves. Having a niche product, service, or target market will give businesses a competitive advantage over their competitors. Therefore, it is important for a business to identify the target market since they will be able to craft specific marketing strategies to appeal to their target demographic.

The Target Market of Spas and Beauty Parlors

Spas tend to draw in a diverse clientele from young women to older men. However, there is a degree of homogeneity in the group that tends to visit spas and beauty parlors since they have certain key defining characteristics. Durant (2019) notes that while the group that visits spas and beauty parlors are very diverse, it is very important for the spa to have a target group so that their marketing strategies can be concentrated towards that group. Guillet and Kucukusta (2016) note that the target market of spas can be divided into four categories: spa enthusiasts, high spenders, value seekers, and price-sensitive spa-goers. Of the four categories the ones that visit the spa the most are spa enthusiasts who are basically people who love going to spas (Guillet and Kucukusta 2016). If a spa business wants a target market that they are sure will resonate with their message, then they should target spa enthusiasts. The other groups who visit the spa in terms of frequency are value seekers, price-sensitive spa-goers and high spenders (Guillet and Kucukusta 2016). It is important to target all the groups, but a spa business should focus on the individuals who attend spa the most, and that is the spa enthusiasts. The spa business continues to grow in terms of sales volume and the number of people that attend spas. McNeil and Ragins (2005) note that the growth being experienced in the spa industry is led by the baby boomers who are looking for a place where they can improve their physical and mental well-being; a place where they can relax, rest and receive pampering. Spas and beauty parlors meet that need since they offer such facilities and more. McAlpin (2016) notes the spa business continues to thrive due to a rise in image-consciousness. Historically and traditionally, it is women who have been concerned with their physical appearance since they are ones who are usually judged on the basis of their looks. However, there has been a paradigm shift as many people become more aware of their image and there need to impress other people continues to grow.

McAlpin (2016) notes that the current society is very visual oriented which means that consumers tend to associate image with success. According to McAlpin (2016) women are 1.3 times to feel pressured to look good as compared to men but both of the genders believe that part of their success is contingent upon how they look. 65% of young adults believe that one’s look and the way that they present themselves is important while 60% of people over 55-years believe the same thing (McAlpin 2016). That shows that while it is young people who are more likely to employ the services of a spa, baby boomers are not far behind. McAlpin (2016) continues to note that a demographic in which there has been a great change is men. In 2011 men used skin care products 453 billion times while the figure rose up t0 557 billion occasions in 2015 (McAlpin 2016). A survey of 1,000 people was carried out, and 56% of them reported that they had gone to a spa over the last 12 months (McAlpin 2016). As the millennial generation gets access to more disposable income, it is expected that the figures will improve more positively. 46% of the male millennials stated that they are regular spa-goers which 52% of them stating that they have had a pedicure or a manicure and 59% stating that they have had a facial at a spa (McAlpin 2016). The figures show that the key demographic that should be targeted by spas are millennials aged from 25-35. However, more baby boomers and Generation X should be targeted as well as more men across all demographics since many of them are beginning to attend a spa more often.

Marketing in the Spa Industry

To retain old customers and gain new ones, a business must market themselves. Wirtz, Tuzovic, and Kuppelwieser (2014) note that part of the reason why businesses should market themselves is to improve brand awareness and visibility and to appeal to customers. Marketing is basically, the business trying to convince the customer that their products and services are the best as compared to their competitors. A properly crafted marketing strategy will give a company a competitive advantage over its rivals. While the spa business may not be as big as other industries, they still have to market their products and services to their target market. Michopoulou (2016) notes that marketing in the spa industry must first begin with the business being aware of who are their target customers and the tailoring their marketing plan to their target market. Ashe-Edmunds (2019) notes that on top of identifying the market, the business should set the prices in relation to the customers that they want to capture. Setting the price will not only be determined by the customers but also by the company’s competitors. Therefore, it is important to pay attention to the prices that are set by the company’s rivals. Active advertising and promotions are also another way through which spas market (Ashe-Edmunds 2019). Taking into consideration the demographics of the target market, the spa chooses the medium that will best serve their purpose and crafts messages that will appeal to them. If the target is millennials, then the spa will direct their advertising resources to social media platforms, and if their target market is older generations, they may use more traditional forms of media such as television and newspaper. Michopoulou (2016) observes that at the core of the advertising is delivering on the promise and giving clients value for their money. People will come to the spa simply because they want to relax and be pampered. If and when they get such an experience, they are more likely to refer the business through word-of-mouth. By giving the individuals an unforgettable experience, the business will have earned the loyalty of current customers while simultaneously getting more customers. Therefore, while there are different means through which a spa business can advertise, their best advertising tool is the experience that people have when they visit the place.

Methodology

Research Design

The research design selected is both a qualitative and quantitative research design. The analytical method is used in this research. By linking quantitative method (collecting information about the client’s age category from record cards which are kept in Retreat archive) and quantitative (collecting data from similar case studies).

Participants and Setting

The participants of the study will be the clients of the retreat center and the students with the school. A sample of around 50-100 people will be selected given the small number of people that access the retreat center. If that figure is not attainable, then the threshold number will be at least 30 people. The sample group will then be divided into various strata. The group will be divided into male and female, student and client, and people over 35-years-old and people below 35-years-old. It will be preferable to get individuals who are over 35-years old and a good number of men. That preference is based on the fact that the marketing recommendations will be about how to improve relations with people who are 35-years-old and above since they are the key target market and also finding out methods through which the Retreat can be made to appeal to more men. Using those two demographics and understanding their needs and wants in relation to their spa experience a marketing plan will be created.

Instrumentation

Two primary methods will be utilized when collecting data, surveys and individual interviews. Preferably, it would be better if all the participants would have time to be interviewed but given the fact that some of them are bound to be busier than other surveys will be employed. A survey will be carried out on the clients and students who will be selected to participate and based on the results of the survey some of the clients and students will be selected for personal interviews. The survey will be for collecting information and exploring the main reason why people go to the spa and the methods through which their experience can be improved in the spa. Preferably, more men and people who are over 35-years old will be the ideal candidates since they are the target market of the retreat center. After the survey clients and students who will be selected will then be contacted for interviews. Sitting down with a participant will help the researcher to see things that would not, indeed cannot, be brought out by filling questionnaires; things such as the tone of voice and unspoken cues. The beauty of it all is that it is the researcher who will have control over the interview and thus will be able to lead it to where one needs it led. The unspoken cues will lend a better perspective on the participants’ answers. Questions conceived before the interview shall be asked. However, there will be room for an unstructured interview so that the participant will feel comfortable and thus get involved wholly. Individual interviews tend to be a bit expensive and will limit the sample size, but the answers at the end of it all will be rich and robust. Some participants will not be accessed for individual sit-down interviews. For such participants, they will be accessed through Skype which is basically a teleconferencing software. The interview will thus be done online and the results transcribed by the researcher.

Ethics

The research will begin by selecting participants for the study. Once consent has been attained, a survey in the form of a questionnaire will be administered to the participants. The survey questions will be sent to the participants via email. Once they complete the survey, they will send back the survey forms. The survey forms will help choose the individuals who will be selected for individual interviews. Individuals who have had more spa visits and those who have had fewer spa visits will be selected. The participants will be informed that they are participating in the study out of their own volition and that they can withdraw at any given moment or whenever they feel uncomfortable. Participants will also be informed that the information that they provide is confidential. If and when the information will be used to substantiate the study, the names of the participants will be changed. Participants will also be informed that if they do not want their information to be used in the study, they should inform the researcher at the beginning of the study. All in all, the participants will participate in the study out of their own volition, and they can withdraw at any moment that they desire. Their information of the study will also be kept confidential only to be shared by the supervisor of the researcher.

Discussion

Based on the literature review, the spa business is a lucrative one with a very diverse clientele. The diversity of the clientele does not mean that the business should neglect to advertise and finding its target demographic. Knowing the target demographic will enable the business to craft specific messages that will appeal to that group and to know which advertising avenues will be the best to reach their target clientele. The target clientele of The Retreat located on Newcastle college is individuals between the age of 35-60. The Retreat provides services such as microdermabrasion, chemical facial peels, caci, and other anti-aging procedures, so the target market is men and women who want to look young. 1 out of 10 people who visit the spa are men. The Retreat needs to find a means through which they will appeal to their 35-60 years old demographic and improve the number of men that visit the spa. The solution must understand who the target market is, how to attract them, and how to keep them loyal.

Conclusion and Recommendations

The Retreat is a spa that is within Newcastle College. The target demographic of the spa is individuals who are 35-60 years old. The Retreat wishes to get more customers and also to appeal to more men. Given the nature of their demographic advertising on social media will not be a good idea given the fact that the majority of that demographic does not spend their time on social media. Advertising on traditional forms of media such as television and newspaper will be the best route to take. The obvious pitfall of such advertising is that it is usually very expensive and there is no way to measure the returns on investment. However, such means of advertising will reach a bigger audience. Sales agents can be hired to advertise the products and services that are provided in the spa. Given the fact that the spa is located within Newcastle College, students looking for work can be employed as sales agents where they advertise the goods and services of the spa. It will be easier to gauge the return on investment when using sales agent. Since the target market is the 35-60 years-old demographic that wants to look young the services that the spa offers such as microdermabrasion, chemical facial peels, caci, and other anti-aging procedures should be used at the forefront of the advertising campaign. That will help the target group know that the products and the services that they are seeking can be accessed at The Retreat. To appeal to the men, going to the retreat should be given a masculine “feel” in the sense that the marketing campaigns should detach it from being a thing that women do. Getting men to advertise the products and participate in the spa will encourage more men to come to the spa. The above recommendations if properly applied will help the business access its target demographic in a better manner.

References

Guillet D, B. & Kucukusta, D., 2016. Spa market segmentation according to customer preference. International Journal of Contemporary Hospitality Management, vol. 28(2), pp. 418-434.

Klockner A, C., 2015. The Psychology of Pro-Environmental Communication. Palgrave Macmillan, London.

Kotler P, J., Bowen. T. & Makens C, J., 2006. Marketing for Hospitality and Tourism, 4th Ed. Upper Saddle River, NJ: Prentice Hall.

McNeil R, K. & Ragins J, E., 2005. Staying in the spa marketing game: Trends, challenges, strategies, and techniques. Journal of Vacation Marketing, vol. 11(1), pp. 31-39.

Michopoulou, E., 2016. International Spa Management. UK: Goodfellow Publishers.

Wen-Cheng, W., Chien-Hung, L. and Ying-Chien., 2011. Types of competitive advantage and analysis. International Journal of Business and Management, vol. 6(5), pp. 100-104.

Wirtz, J., Tuzovic, S. and Kuppelwieser G, V., 2014. The role of marketing in today’s enterprises. Journal of Service Management, vol. 25(2), pp. 171-194.