In order to stay competitory in the market and increase hot tube gross revenues. Surfside Leisurescapes must turn to the followers. Failure to react to these critical issues will diminish gross revenues and weaken the quality of the employee work force. * Seasonality – 78 % of hot baths gross revenues occur from April 1st to September 30th. In order to stay profitable overall. gross revenues need to increase during the winter months. * Hydrotherapy – A possible value added service to urge the curative benefits of hot baths. Surfside will necessitate to perforate into this market to increase market portion. * No selling program – Increased competition – 12 new rivals have entered the market ; 3 being direct. A deficiency of promotional scheme and no mark demographic will ensue in a reduced market portion ( exhibit 1 ) . Situation Analysis
Surfside Leisurescapes market size is diminishing. This is caused by new entrants come ining the market as menace of new entrants is high ( exhibit 2 ) . The old grass roots marketing scheme has non been sufficient to cover with the new competition. Seasonality is a big issue. 78 % of gross revenues occur during the “on” season ( exhibit 4 ) . This issue is compounded because of the trouble to retain choice salesmen during the “off season” . An remarkably cold clime has besides negatively affected gross revenues. As a consequence. possible clients may hold bought replacements such as big jetted bath bath that aren’t susceptible to climate ( exhibit 2 ) . Hydrotherapy is a critical chance. This is a new market section that Surfside has non yet explored. 30 % of Newmarket’s population consists of retired persons over the age of 55 ( City of Toronto. 2005 ) . This represents a major chance to aim a new demographic.
Hydrotherapy can help high blood force per unit area. and arthritis. a common concern amongst this age group ( Natural Healers. 2006 ) . A farther critical issue is Surfside’s deficiency of marketing experience. Because surfside has had limited competition in the yesteryear. their selling attack has chiefly been grass roots. Surfside will hold to develop a promotional scheme targeted to their mark market demographic. Without a proper selling scheme past clients will be stolen by the new competition. Surfside’s competitory advantage is that they are good respected and established within their community. They have a extremely experient gross revenues squad that is household oriented. This is backed with a Readers Choice award. Surfside’s hot baths division had gross revenues in 2004 of $ 749. 800. They earned a net net income border of 7 % on this. Industry standard net net income border is 12 % ( BizStats. n. d. ) . Decision Standards
* Increase gross revenues of hot baths by 15 % for 2005. This is meant to actuate employees by making a historically gettable mark. * Increase cyberspace net income border to the industry norm of 12 % for 2005. Options
Option 1: Hire an extra salesman for the hot tubs division. An extra employee would be an excess $ 72. 490. This employee would hold to sell an add-on 23 units to warrant his wage. This is an addition of 25 % of unit gross revenues ( exhibit 5 ) . Much higher than our mark to increase gross revenues by 15 % . A farther hazard is that engaging an extra employee would make a competitory merchandising environment as a big portion of their wage is committee based. This strays off from Surfside’s competitory advantage of offering a household friendly environment. Option 2: Hydrotherapy preparation
To develop an employee in hydropathy would be $ 2. 000 for a hebdomad class ( Natural Healers. 2006 ) . Gross saless would increase from 10. 8 % to 20. 6 % increasing net income 12. 9 % to 14. 6 % ( exhibit 8 ) . Risks of this option include losing their primary mark market and neglecting to raise consciousness of hydropathy benefits. Customers would see this as a value added service ; increasing client trueness. Besides. this option addresses employee keeping by smoothing gross revenues throughout the twelvemonth as these clients buy hot bath for wellness grounds which are non climate dependent. Option 3: Direct Mail
Direct mail reaches more twosomes aged 35 – 55 than any other media. There would be 6 purchases straight from the ads. It will besides raise the most awareness. Surfside will be able to make 25. 087 places in and around the country ( City-Data. 2006 ) . This will construct trade name consciousness and will assist to increase gross revenues in the hereafter. Immediate effects will be an addition in NI of 19. 044 and will increase hot tub gross revenues 6. 5 % . Option 3: Merchandise mix
Pacific hot bath floor infinite is restricted to demoing merely 2 hot baths ( exhibit 9 ) . A scheme for aiming our cost sensitive market would be to lure cost sensitive users with cheap theoretical accounts. Eclipse T bath can be used as a publicity to acquire clients in the shop. With the merchandising monetary value being merely $ 5. 300. this is really competitory to the competition ( exhibit 7 ) . Europa LT should besides be on the salesroom floor because of its past public presentation ( exhibit 3 ) . To extenuate the hazard of losing gross revenues of other theoretical accounts. they should still stay available to order and be stocked. These budget hot bath can present new low terminal purchasers into purchasing a hot bath with the hopes of turning them into loyal clients. Ultimately. this will increase Surfside’s market portion and ability to sell higher terminal. higher border theoretical accounts to these clients in the hereafter. Recommendation and Action Plan
Surfside should pay $ 2. 000 to develop an employee in hydropathy. This option meets determination standards for increasing gross revenues and NI. These clients are more likely to purchase throughout the twelvemonth which helps diminish seasonality and which will increase employee keeping. Surfside can extenuate the hazards of losing their primary demographic by advertisement in media that targets both the wellness witting and adult females ages 35 – 55. The first measure is to reach a reputable school with a hydropathy developing class such as Natural Healers. Second. Surfside should direct out door hangers publicizing the wellness benefits and quality service. This signifier is more noticeable and differentiates them from other more common direct mail options. These will be sent out to the 25. 087 families 3. 5 times a twelvemonth. Once during December. May. and August. This will increase consciousness during the low and peak seasons.
Exhibit 1: Swot analysis
| Opportunities: * Health witting clients seeking hot baths for curative benefits| Menaces: * Big Box shops viing as a cost leader * Direct rivals viing on quality * Gross saless Subject to endure * Direct rivals offer easy to transport/assemble products| Strengths: * Readers pick award ; good respected within the community * Niche – Highly experienced/ high quality household oriented service| * Tailoring Surfside high quality service to urge a hot bath to clients seeking curative benefits is a sound market incursion scheme to increase gross revenues and overall market share| | Failings: * 78 % gross revenues occur during “on” season * Difficulty retaining gifted salesmen during the “off” season * No past marketing experience| | * A deficiency of a selling program wasn’t a concern before rivals started to hold an consequence on gross revenues. A selling program will hold to be tailored to Surfside’s mark demographic. * Seasonality affects employee keeping and finally gross revenues.
Exhibit 2: Porters 5 forces
Supplier bargaining power
High: Suppliers have big bargaining power. 2002 market clang has put many providers out of concern. Presently there are merely 8 providers for the hot bath market in Canada. As a consequence. hot baths purchased for resellers are comparatively inelastic. Surfside should non stay dependent on one provider to increase their bargaining place. They should besides avoid viing on monetary value as they have higher costs than major retail merchants. Buyer dickering power
Low: There are many resellers of hot baths in the market. Many little and independently owned who purchase little measures. As a consequence. this limits the dialogue power of hot baths. Big box shops besides buy hot baths ; they will hold more negotiating power as they sell more units. This is a significant hazard for surfside. To increase borders. Surfside should vie on loyal clients and quality and avoid viing on cost. Competition within the industry
Medium: As direct rivals focus more on quality. monetary value is less of a concern. Additionally. low fixed costs and no extra capacity bounds competition within the industry. That being said. an increasing figure of rivals come ining the market will go on to contend for market portion. Surfside should vie in a niche market: client and trade name trueness Threat of replacements
High: There are many possible replacements for hot baths. Primary replacements include big baths. Besides. residential in land and out of land pools are replacements. Large jet baths are peculiarly refering because of Toronto’s cold clime. Although. meant chiefly for one. Hot tubs chief benefit is a societal experience. This puts hydropathy at hazard. Expanding the market definition to include generic and budget competition increases the menace of replacements further. Some illustrations include personal sweat rooms. fittingness equipment. and place terraces. Ad to raise consciousness of hot baths will extenuate this menace. Threat of new entrants
High: There are small barriers to entry. Relatively low investing and low cognition demands make come ining and go outing the industry easier. As a consequence. competition may increase. Small concerns such as surfside will hold to vie on quality sales representative and client trueness.
Exhibit 10: Range of advertisement media
Market demographics extrapolated from Toronto ( City of Toronto. 2000 ) . Hot tub purchasing rate is. 18 % ( based on figure of hot baths bought in Canada during 2005/population ( Pool and Spa selling. 2007 ) . Exhibit 3: Model Profitableness
Exhibit 4: Proportional unit gross revenues during the twelvemonth
Exhibit 5: Addition Gross saless Employee Breakeven
Premise: CM is mean for 2004
Exhibits 6: Income Statement
Premise: SG & A ; A. insurance is industry criterion ( ( BizStats. n. d. ) Exhibit 7: Rival Analysis
There are 3 direct rivals to Surfside:
Beachcomber has a significantly higher selling monetary value compared to the other competition. Monetary values range from $ 5. 000 to $ 15. 000. They target clients who are witting of quality and offer high quality client service and support. Backyard pool offers two lines of hot baths. Soft bath is low-cost. lightweight. and easy to put up. Coleman specializes in physician-designed-zone therapy ; a menace to the hydropathy market. These hot baths are mid-priced at $ 6. 000 to $ 10. 200. Sundance is a maker and retail merchant who sell direct to client. They sell high terminal hot bath which have received esteemed enfranchisement. Monetary values range from $ 8. 000 to $ 16. 000. Sundance mark market is choice witting persons. Beside the three direct rivals Surfside besides competes with large box shops that operate with low borders but big sums of gross revenues. They target the monetary value sensitive market. Exhibit 8: Hydropathy Analysis
Premise: Market informations is extrapolated from Toronto’s demographic. Hot tub Buyers response rate is. 18 % . This is the entire sum of hot baths per individual in Canada ( Pool and Spa selling. 2007 ) .
BizStats ( n. d. ) . Free Constructing materials-Garden equipment and supplies Sector Sole Proprietor Financial Reports by BizStats. Free Business Statistics. Financial Ratios and Industry Statisticss by BizStats. Retrieved January 22. 2013. from hypertext transfer protocol: //www. bizstats. com/sole-proprietorship-business-financials/retail-7. 0000/building-materials-garden-equipment-and-supplies-7. 0400/show Canadian communicating foundation ( 2012. November ) . Canadian Communications Foundation | Fondation des Communications Canadiennes. Canadian communicating foundation. Retrieved January 22. 2013. from hypertext transfer protocol: //www. broadcasting-history. ca/index3. hypertext markup language? url=http % 3A//www. broadcasting-history. ca/listings_and_histories/radio/histories. php % 3Fid % 3D399 % 26historyID % 3D181 City of Toronto ( 2005 ) . 2011 Census: Marital Status. Families. Households. Toronto. ca | Official web site for the City of Toronto. Retrieved January 23. 2013. from hypertext transfer protocol: //www. Toronto. ca/demographics/pdf/censusbackgrounder_hhds_2011. pdf City-Data ( 2006 ) . Newmarket. Ontario – Population. Age features. Dwellings. Houses. Language. Education. Work. Industry. Net incomes. Income. Immigration. Citizenship. Labor. Stats about all US metropoliss – existent estate. resettlement info. offense. house monetary values. cost of life. races. place value