Case Study: The Old Vicarage Hotel - Business Essay Example
Case Study: The Old Vicarage Hotel
This case is an interesting example regarding how a company can concentrate on market niches to increase its sales - Case Study: The Old Vicarage Hotel introduction. The current era is no longer of mass marketing as it was before but rather has shifted towards catering to niches and mass customization. The Old Vicarage Hotel is a good example of how its owners discovered a small niche in the current market and chose to capitalise on it.
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This niche was of cricket teams that travel the country and need lodgings along with access to nearby sports facilities. Old Vicarage apart form providing the lodgings decided to build its own cricket ground. Only three to four such hotels existed which owned their own cricket ground. When the owners, Buck and Harrison started business, the hotel just provided lodging services in a quiet rural location, near the sea and food for the occasional traveller. They saw that despite of cutting costs and improved business and customer service, it wasn’t resulting in any profits and that the stream of guests coming in was too low. What they needed was a sustainable supply of customers; a star attraction besides food and lodging in a serene location. They found their answer in the form of a neighbouring field they acquired for car parking.
Old Vicarage’s marketing strategy has been somewhat simple so far. This can possibly be attributed to the nature of their business. They’ve advertised only in local newspapers and specifically to touring cricket teams by mail as well. The real success and awareness of their offering however was created due t the hype that they managed to create by being a hotel which provides such services along with a resident team as well which would compete against visiting teams. They have however realised that their earning is mainly in the summer months. During winters, hardly any cricket team’s tour the area and they are mindful that in order to keep the sales going, they will have to come up with more ideas for the winter months.
They have opportunities in terms of a neighbouring field which can also be developed into a playing ground for either cricket or some other sport, a barn which can refurbished for indoor sporting facilities and using the current ground with extra offerings to attract cricketers during winters.
Their current marketing strategy so far has not been strong enough. They should have incorporated elements in it to cater for the winter months as well. For now, what they can do is offer discounts or other options in terms of a cricket tournament with a prize at the end. This will encourage teams to come and take interest and also develop the interest of residents of the village. They can also develop the current ground a bit more to provide seating facilities for audiences and encourage them to visit and cheer the cricket teams on. Old Vicarage have not yet studied the commercial aspect of their business and what all they can truly benefit from the vast potential it holds. They can use their grounds for other things such as archery competitions, sports fairs etc. They can also develop the second field they are about to acquire and possibly transform it into a football ground. This will broaden their scope and customer base as well without distancing form the niche marketing approach they have capitalised on so far. They can then develop their hotel and possibly expand restaurants to specifically cater the audience members as well. The barn can be refurbished to provide other sporting facilities which are conducted predominantly indoor. But for this, they will have to conduct a research as to what exactly their customers want. They can then target schools, colleges, universities etc. and invite their teams to use their grounds for their tournaments. All this will be advertised most properly by placing advertisements in newspapers and distribution of brochures at key localities. Colleges can be targeted via direct marketing techniques and teams can be targeted via distribution of brochures at other famous sporting venues in the area. It would not be advisable for now to target customers through TV commercials and other forms of media. They can do this once they have a big enough customer base and are sure of making enough profits and are also sure their facilities are big enough to cater the larger amount of audience that such advertising might attract. In the long run, Old Vicarage can acquire similar localities elsewhere in the country and develop its older ones into full fledged sports centres which offer memberships at a subscription fee.
A mission Statement for any company needs to be precise yet informative. It shouldn’t be a grandiose piece of work nor should it look too much like a marketing stunt. Instead, it should contain three components namely:
§ Values (Radtke 1998)
In case of Old Vicarage Hotel, the mission statement should be such as to reflect what they do, why they do it and their value set. Being in the hotel business, their main service set is clear; to provide a lace for living for travellers and tourists. Apart from this they also provide a cricketing ground to its guests who are mainly touring teams in the area. They are also planning to expand which means that their main aim is to make profits. Thus their mission statement can roughly be the equivalent of:
‘Old Vicarage is a medium sized hotel which serves the sporting and lodging needs of touring teams and tourists as well. Our mission is to make profits and provide memorable experiences to our valued customers.’
This statement will suit the needs of Old Vicarage as it is to the point and effectively reflects their purpose. The scope of this statement is not to narrow (not just limited to cricket but sports) nor is it too broad (not all entertainment facilities but limited to sporting) and maintaining this balance is critical. Too narrow a scope, causing Marketing Myopia (Levitt 1960) and too broad a scope resulting in Marketing Macropia (Baughman 1974). Since a mission statement is what leads an organization and all its actions have to be conducted keeping it in mind, it has to be properly thought of and decided upon at the beginning of a firms operations (in the business plan). Even if Old Vicarage expands now, the mission statement will hold true in that they are in the business of sporting facilities as well. As long as they stay true to the essence of this statement they will be doing what they have stated.
The marketing strategy too will now stem from this mission statement and revolve around creating awareness of Old Vicarage and its various offerings in terms of facilities and as well as locality.
If we conduct a SWOT analysis of Old Vicarage, we can have a better picture of where they are and what direction they should take form here onwards.
Unique offer in terms of service and location
Support of local residents
Buck’s cricketing expertise
Motivated workforce and unique services
Under developed strategy and marketing plan
Quality of teams sportsmanship; may not be able to interest more serious teams
Quality of current sporting facilities; need more modernization
Lack of maintenance staff for facilities
Expansion to nearby fields and barns
Offering other services in terms of sports facilities
Capitalising on current success and hype
Developing interest outside immediate locality
Other opportunities such as competing in higher level of games
Indoor games if barn is acquired
Biggest threat being new entrants wishing to emulate their success and unique offerings
Threat of obsolescence once the hype fades out; lack of marketing
Lack of financial backing might slow the progress down
No formal business plan or marketing communications plan
Thus it is clear that Old Vicarage will have to plan a business strategy and a marketing strategy as soon as possible in order to continue their business properly. They should be mindful of new entrants and try to add more service offerings so as to command a loyal following. Key points here are:
Strength: Strong Unique selling point. The services offered by Old Vicarage are unique in the sense that only a few other hotels are present which own their own cricketing ground. This means that Old vicarage is providing its customers with a ground, lodging services and a local team to compete against as well.
Weakness: Under developed strategy and marketing plan; no formal plan to follow which is a major drawback and is certain to create problems in the future. This is a major weakness. Old Vicarage has been operating in its current capacity for an year now and they do not have a formal plan. Right now, two things need to be concentrated upon. What to do from now on and the expansion strategies that Old Vicarage needs to employee in order to grow. Planning in both these aspects is important to be successful for Old Vicarage right now.
Opportunity: Capitalising on current success and hype and Indoor games if barn is acquired seems to be the most exciting opportunities for Old Vicarage. Old Vicarages current offerings are by far successful enough to help them envisage a future growth opportunity in terms of expanded sports facilities. Although they are making a profit, this revenue stream is seasonal and they will have to thik about how to make it year round instead.
Threats: currently faced by Old Vicarage would be the four already listed. This is so because each threat is unique and can be potentially very dangerous to Old Vicarage if left unattended. Not much can be done about threat of new entrants, but Old Vicarage can erect barriers to entry in the form of superior services and good bargains. Secondly the importance of a marketing and business plan has already been mentioned. Unless Old Vicarage has a plan and means to measure its performance according to it, they have a very high chance of failure. Old Vicarage should also be keen on capitalising on the current hype that they have managed to create. Unless they do so, it will fade out and this will become a threat instead. Hypes fade out too soon and one cannot rely on them for a long time. Hence Old Vicarage will have to expand on this and avail this opportunity before they end up lacking in this are and become unable to cater to the hype and come up to their customers expectations. A new entrant too might capitalise on this hype and take Old Vicarages market share away.
Old Vicarage should now not only expand their operations but devise effective ways to communicate them and create awareness to consumers. It would be advisable to develop an effective marketing plan and follow the Marketing and Planning Control Cycle.
Mission: a mission of a firm states their current business and provides a direction where it should be headed. The mission statement is the key in devising a business plan and strategy for any firm in question. Old Vicarages current mission can be seen as to effectively develop its current facilities in line with consumer demands (which will be found after research) and communicate them through a formal marketing communications plan.
Objectives: should be to expand their current offerings and create awareness of them thus encouraging sales.
Strategies: Many strategies exist and Old Vicarage will have to choose a course of action very carefully. Whatever they do, they should be mindful of the fact that their current customers are not affected by it. For example, if they expand into too many offering like a football ground and indoor games, their current cricket teams might not like it. Many teams that come to Old Vicarage usually comprise of people who are looking for some peace and quiet and they may not like it if Old Vicarage becomes just another sports centre. Same can be said of guests residing at the hotel. Thus they will have to develop strategies which will strike a balance between their current and future customers which they hope to attract. They can do this by first of all not going completely commercial. They should use media which is not too noticeable (like Television) but does the job in reaching their target customers (primarily Print media in terms of newspapers, magazine, brochures etc. and radio too to a certain extent). Their prime strategy in terms of marketing however will be to follow the niche approach i.e. their strategies will centre on them serving a niche market. According to the Ansoff Matrix:
Old Vicarage is currently at the market penetration stage. It should move over and strive for the product development and then market development stages. It should for now consider adding more services in its current offerings. By doing so, they can penetrate into other markets as well (cricketers being the current market). This will result in a two pronged strategy which will help in both product and market development simultaneously.
Tactics and Implementation: tactics devised to implement a strategy should be planned carefully. Old Vicarage should fist of all see the sort of market they are in and plan their tactics accordingly. They should use a somewhat relaxed approach as guerrilla concepts and branding warfare strategies are not applicable here. This is mainly due to the fact they don’t have enough competition in this category. They should however be prepared and try to garner as much customer loyalty as possible. They should thus currently follow methods that can be implemented and have already been mentioned. (See above: Marketing Analysis, Strategies). Pricing will be strictly controlled and customers will be offered more discounted prices for the services. This will not only increase the customer base but also create the necessary hype to ensure a constant stream of customers. Moreover, once Old Vicarage has developed newer product offerings, they can ensure a constant stream of customers throughout the year. Current pricing will thus be First floor pricing. Ground floor will not be advised due to the nature of the product and being the only hotel serving its customers this way, a premium can be commanded. Once the new products are launched, Old Vicarage can price them at the second floor so as to reflect their brand persona in their pricing strategy as well they will also be in a position to command a higher premium and thus should do so but only at a later stage.
Control: a plan has to have proper control mechanisms to ensure that they are being followed. This consists of accepting feedback which is then used to modify the current implementation strategy of the plan to remain in line with it. Thus the two main components of a good control mechanism are feedback and control procedures. The feedback for Old Vicarages current activities can be collected from both internal and external sources. Internally, old Vicarage will have to decide where it plans to go form here onwards and the opinions of the key stake holders of the hotel namely the owners and employees. External feedback will be obtained through customers and the market via surveys and analysis of the competition as well. Control will also be exercised through monitoring of revenue and using other financial tools. Relationship between sales and advertising will also help determining what works for the customer and that will be capitalised upon.
Audit: audits are primarily conducted to check the ‘health’ of a firms processes. Audits vary from financial audits to information technology audits. A marketing and strategy audit is conducted to check how a firm is doing in terms of expansion and strategy and gives an insight as to where a firm should go on from the present position. Audits, in case of Old Vicarage, will be conducted but in the future to assess whether the marketing plan was effective in achieving the objectives or not.
Discuss the key Marketing Strategies needed to achieve the above:
Segmentation: market segmentation is the process in marketing of dividing a market into distinct subsets (segments) that behave in the same way or have similar needs. Because each segment is fairly homogeneous in their needs and attitudes, they are likely to respond similarly to a given marketing strategy. That is, they are likely to have similar feelings and ideas about a marketing mix comprised of a given product or service, sold at a given price, distributed in a certain way, and promoted in a certain way. Old Vicarage’s market is segmented based on consumer needs and target market. Target market being touring teams in terms of cricket. Future target markets can range from school students to sports enthusiasts. Segmentation will thus be based on demographics peculiar to the target market such as age, income group etc.
Product: the product currently is lodging facilities and a cricket ground. Future products may include other sports facilities. This means that effective advertising and possibly events will have to be conducted at launch.
Price: will remain the same and reduced as well upon entry of competition. Discounts and attractive packages will be offered to those who come for repeat purchase. This can be periodically advertised in print media and direct marketing methods. Old Vicarage can however take a different approach as well if they develop their brand name well enough to command a premium form older customers.
Distribution – Channel: although not as strongly evident here, distribution will be done form the current facility and form other facilities if Old Vicarage plans to expand. They will have to set and maintain standards at all points of distribution and market this through advertisements as well that no matter what the location, the experience remains the same.
Distribution – Logistics and Supply Chain: the supply chain will consist of not only the facilities but the employees of the hotel as well as these people come into direct contact with the customer. Additional services like souvenir shops, restaurants, room for audience etc. can also be added and increase the value of the service.
Promotion: of a product or service is communicating its benefits to the customer and constant reminding of the same as well. This can be accomplished through print media, direct selling, brochures, events, tournaments, sports fairs etc. Television and other more powerful media to be sued only when enough market has been capitalised and other facilities have been opened. School visits too can be conducted to create increased awareness among customers. Old Vicarage is unique in the sense that it will have to devise its promotion strategies carefully in order to target its customers properly. Mass advertising will not do but a total absence for long periods should be avoided as well.
Old Vicarage is in an exciting position right now. They have ample opportunities and are catering to a market which can be volatile in its needs and requirement. They have so far been successful in creating hype in an otherwise difficult to handle market segment and they should take steps to capitalise on this as soon as possible. What needs to be done is a proper analysis of their current position in financial and marketing terms and a quick decision as to where they should be headed in the next five years or so. This will indeed help them become a unique service provider of these cricketing facilities and cement their position as the market leader and innovator as well.
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