Lost In Translation

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					CL_April_2006 P92-98      17/3/06      4:18 PM       Page 094




                         Marketing




  Lost In Translation
           Marketing is often viewed as being synonymous with advertising and promotion but specialists in the field will be
           quick to point out that they’re in fact not the same thing. Advertising and promotion are revenue building activities
           that on their own don’t translate into a better bottom line - they may bring patrons through the door but don’t
           typically consider all the costs associated with serving them. Meanwhile, marketing is a global activity that focuses
           on balancing all aspects of product and service delivery with an aim of developing initiatives that will turn increased
           patronage into profits. So, why do clubs get lost in the translation? Former UNSW marketing lecturer, Richard
           Carter, examines the challenges in association with PhD student Colin Farrell from Russell Corporate Advisory and
           Clubs Consulting. Photography by Gemma Quilty.
           Clubs have had little need to be                as well as the annual tax increases will      high fixed asset base of most clubs.
           marketing-focussed in the past and it’s no      limit gaming machine revenue even more.
                                                                                                         Clearly the way for clubs to overcome
           secret that gaming machines have ensured        Not only are sales flat but after-tax
                                                                                                         these hurdles is to tap into new markets
           business sustainability. It also comes as no    surpluses will decline dramatically in the
                                                                                                         and increase patronage. However, there
           surprise to hear that times have changed.       short to medium term and as a result, net
                                                                                                         are even challenges in executing this. The
           Legislation aimed at reducing problem           sales will be down while fixed costs and
                                                                                                         club market in many localities is fixed
           gambling has seen per capita expenditure        overheads will largely stay invariable; and
                                                                                                         (and even shrinking). Often the only way
           stagnate. Forthcoming changes in                while there’s some scope to reduce
                                                                                                         to grow is at the expense of other venues,
           smoking regulations and an ongoing              variable costs, there are significant
                                                                                                         and such a strategy doesn’t increase the
           reduction in gaming machine entitlements        limitations given the opening hours and
                                                                                                         market but leaves clubs scrambling to get
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                                                           it but it doesn’t work like that. Without an    c) Where do they live?
                                                           understanding of customer needs,
                                                                                                           d) What is their age profile?
                                                           advertising and promotion is a waste of
                                                           time. And it can also be an expensive           Information sifted from your current
                                                           waste of money that has the potential to        database can be compared with previous
                                                           carelessly backfire if false expectations are   years to collect further insights. For
                                                           created and the customer’s let down.            example, How many new members is
                                                                                                           your club attracting?; Has the visitor
                                                           Meanwhile, marketing is a global strategy
                                                                                                           profile changed?; How many members
                                                           aimed at fully aligning a business with its
                                                                                                           have you lost?; and, Who are our most
                                                           customers. It pays attention to all the
                                                                                                           valuable customers? Trading figures can
                                                           ingredients of an operation - the product,
                                                                                                           also be analysed to find out when
                                                           price, physical environment, service - and
                                                                                                           customers frequent your club and where
                                                           matches these components with the
                                                                                                           they’re likely to spend the most money.
                                                           customer’s perception of value.
                                                                                                           This information can be supplemented
                                                           So, it’s time to start with the customer!       with surveys that ask more specific
                                                           Marketing always begins with an                 questions about what your members like
                                                           understanding of the needs of the               and dislike about the club’s facilities and
                                                           customer. The vital first question to ask is,   services. Questions may also be asked
           a slice of an increasingly smaller pie.         “Who are our customers and what are             regarding other recreational interests and
           Clubs are also losing their share of            their needs?” This question will lead you       whether your patrons visit other venues.
           hospitality and recreational expenditure to     to three categories to consider: existing,
                                                                                                           Surveys can take several forms - a written
           other forms of entertainment and the            lapsed and potential customers.
                                                                                                           survey mailed to members, telephone
           dependence on gaming revenue has led to
                                                           Existing customers are core revenue             interviews or an intercept survey. Intercept
           a ‘blinkered’ vision over other recreational
                                                           providers. They’re easy and inexpensive to      surveys involve a staff member or third
           items now on offer.
                                                           market toward because a relationship            party asking questions (with permission)
           So, the time has come to shake off the          already exists. Changes made to products        when customers are at your club. If you
           complacency generated by gambling               and services aimed at attracting new            choose to use the third strategy for
           revenue and enter the wider hospitality         customers shouldn’t put established             gathering information, it’s normally
           game. However, the reality is that very few     customers off. An exception may occur if        conducted through focus groups. Typically
           have sophisticated knowledge on how to          it’s discovered that existing customers are     these groups involve 10-12 club members
           align their products and services with          a dwindling group that are driving other        who are invited to an informal discussion
           market demands. Too often it’s assumed          customers away.                                 moderated by a trained facilitator. The aim
           that advertising and promotion alone will                                                       of this technique is to gather information,
                                                           The easiest way for a club to gain
           bring new patrons through the door - this                                                       not only about how people feel about the
                                                           information about existing customers is
           simply isn’t the case.                                                                          club, but why they feel that way. For
                                                           to analyse their current membership
                                                                                                           example, a general survey may indicate
           Advertising and promotion are vital             database. Typical questions asked
                                                                                                           that customers consider the level of
           strategies in a comprehensive marketing         might include:
                                                                                                           service to be average, but what does this
           plan but they’re merely the ‘icing on the
                                                           a) How many members do we have?                 mean exactly? Does it imply that staff lack
           cake.’ These activities assume people will
                                                           b) What is the average duration of              enthusiasm or are they lacking in
           come to a venue simply by hearing about
                                                              their membership?                            knowledge? Or, does it mean that there is
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           not enough staff rostered on? A focus          Often customers terminate their               to see how the demographics in the
           group discussion can colour broad              memberships for valid reasons outside of      community are changing and what
           statistics with telling details.               your control but some may have left for       implications this has for your long-term
                                                          reasons that indicate issues that may         operations and prosperity.
           Clubs should also be aware that there’s no
                                                          possibly lead to other members jumping
           greater source of rich information on                                                        The Marketing Mix
                                                          ship. Bearing in mind that word of mouth
           customers than your own employees.                                                           Surveys, focus groups, trading figures,
                                                          advertising is the cheapest and best way to
           Employee focus groups also provide                                                           membership analysis and demographic
                                                          promote your club, it’s important to
           valuable insights into existing services                                                     data assist clubs to create a clear picture
                                                          maintain good relationships with every
           and customer perceptions of value.                                                           of existing and potential customer bases.
                                                          customer, even those who have left. In
                                                                                                        But this exercise shouldn’t be seen as the
           And did you know that one technique for        fact, a survey of past members does a lot
                                                                                                        target audience for advertising and
           gathering information that isn’t               more than simply collect information - it
                                                                                                        promotion. The objective now is to
           recommended is the ‘customer feedback          can also improve the perception of your
                                                                                                        develop a profile of products and services
           form?’ It should be noted that, in general,    club. People feel honoured that their
                                                                                                        that are clearly differentiated from
           people who fill in these forms have either     views are being sought after. Any past
                                                                                                        competitors. Such a profile forms the
           had a very good or very bad experience -       grievances are aired and customers, even
                                                                                                        basis of your club’s marketing mix.
           they either want to share their joy or vent    if they are unable to return, leave knowing
           their spleen by complaining. It’s for this     that they have been heard and respected.      The term ‘marketing mix’ was originally
           very reason that the feedback is highly        It’s these customers who will maintain        coined by manufacturing companies and
           distorted. Another reason to avoid such        a good opinion of the club if and when        began with a focus on the 4 ‘P’s’: the
           feedback techniques is that a limited          they are asked.                               product, the price, the place (where the
           number of forms are completed relative                                                       product was sold), and how it would be
           to the actual number of guests who
                                                          Demographics                                  promoted. Manufacturers relied on a
                                                          The Australian Bureau of Statistics
           use your facilities. Feedback forms are                                                      balance of these elements when selling
                                                          collects a wide variety of information
           simply not representative of the club                                                        goods through wholesalers and retailers
                                                          about people living in your community,
           experience overall.                                                                          and it informed them of their marketing
                                                          including information on age ranges,
                                                                                                        choices. For example, if you consider a
           Your techniques used to gather                 gender distribution, family sizes,
                                                                                                        product such as ‘Head & Shoulders’
           information can also be conducted with         income levels, ethnicity and other
                                                                                                        shampoo and what way it should be
           lapsed customers, including past or            household facts. Some of these statistics
                                                                                                        distributed and to whom, firstly you
           current members who aren’t using the           can be accessed for free; others can be
                                                                                                        need to define the product - it’s a family
           facilities. Surprisingly, this group is both   purchased for a relatively small cost.
                                                                                                        dandruff shampoo; then, define the price;
           easy and inexpensive to bring back - they
                                                          So, just why is this information useful to    point of sale (place); and, the promotion,
           already have an awareness of your service,
                                                          registered clubs? Most importantly, it        accordingly. This particular product meets
           a history of use and some psychological
                                                          allows you to compare the wider               the needs of the household market, is sold
           commitment but it’s up to you to find out
                                                          community profile against your                at an affordable price through
           why they haven’t returned. Have they
                                                          membership base. Are there areas of           supermarkets, and promoted to families.
           moved? Have their financial circumstances
                                                          opportunity? Can new members be
           changed? Have they simply forgotten                                                          Defining a product, its price, the place
                                                          brought in if goods and services are
           about your club? Are they using another                                                      where it’s sold and the appropriate
                                                          created to meet their needs? Clubs can
           recreational venue?                                                                          promotion are an important part of any
                                                          also compare current census information
                                                                                                        marketing strategy. However, a club is
                                                          (2001) against the previous census (1996)
                                                                                                        doing a lot more than simply selling a
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           product - it also sells a service, and          control the quality of service unless it’s     discrete and detailed categories. For
           marketing a service is a much more              highly standardised. Service is a              instance, information on gaming machines
           complex task. Product marketing is              consumable that relies on an interaction       should include the number of machines,
           relatively straightforward because the          between people. It’s consumed as it’s          how they are laid out, the denominations
           customer can judge the quality by sight,        produced. Service can easily drop during       and the games on offer. Information on
           touch, smell and taste. Evaluating a            busy periods - the very time when guests       other products and services should be
           service is far less discernable and yet in      should be impressed. Nevertheless, there       equally detailed - How many food and
           the hospitality industry service is a vital     are tools that can assist in defining and      beverage facilities are there in the venue?
           component of success. Customers do not          improving service delivery. More recently,     What type of food and service do they
           come to a hospitality venue simply              and with the growth in service industries,     offer? This detail provides a clearer
           because it has particular products; they        three new Ps have been added to the            understanding of current operations
           are looking for an experience - a more          original marketing mix.                        against which customer expectations can
           difficult deliverable to get right.                                                            be compared. Knowing your customers’
                                                           The first is ‘physical environment,’ which
                                                                                                          very specific needs and recognising where
           To some extent the importance of service        refers to more than just the place where
                                                                                                          your business is hitting the mark and
           and creating an experience may have been        the product is sold. It includes the fit-out
                                                                                                          missing it is the foundation for a good
           lost in the club industry due to the over-      of that environment, its furnishings,
                                                                                                          marketing plan - it identifies opportunities
           reliance on gaming revenue. The                 lighting, physical space, signage, and so
                                                                                                          for creating perceived value and this is
           reluctance to focus on service as an            the list goes on. Next up is ‘processes,’
                                                                                                          what attracts patronage.
           important component of an experience            which covers the way in which a product
           and to use proficiency in that area as a        is delivered. For example, when a              There is a great difference between
           marketing tool is probably also related to      customer visits a restaurant or bistro are     perceived value and price, and you
           the challenges in getting the service right.    they offered self-service or table service?    shouldn’t equate the two. Too often many
                                                           When change is required for a gaming           believe a lower price equates higher value
           Service Marketing
                                                           machine how is it provided - do                and use this as a measure against the
           As mentioned before, it’s easy to judge the
                                                           customers come to the front desk or does       competition. However, the issue for the
           quality of a product because a customer
                                                           a cashier personally attend to them            consumer is not the product’s price but
           can see, touch, smell and taste the item.
                                                           directly? And finally, arguably the most       the perceived value of the service. In
           However, service is intangible and highly
                                                           important factor is ‘people.’ Who are the      service industries perceptions of value are
           personalised. What one person may
                                                           people serving your customers? What are        influenced by a marketing mix that
           define as good service, another may
                                                           their knowledge levels? How are they           includes all of the elements - product,
           deem as bad.
                                                           trained? How many are rostered at a time?      price, place, promotion, physical
           Service is also a highly perishable             What is their understanding of                 environment, processes and people
           commodity that cannot be placed into            customer service? How enthusiastic are         must all be aligned.
           inventory. Consider a restaurant filled with    they as a result?
                                                                                                          If you reconsider the previous example of
           wait staff but not with customers - the
                                                           Clubs should undertake a thorough              marketing ‘Head & Shoulders’ shampoo,
           ability to serve those missing customers
                                                           examination of all seven ‘P’s’ when            the product (a family shampoo), the price
           can’t be returned. The opportunity is
                                                           assessing their strengths and weaknesses       (affordable), the place of sale (accessible to
           missed, revenue is foregone, and yet
                                                           against their competition. It’s not enough     families), and the promotion all meet to
           the cost of providing the service is
                                                           to say that the products on offer are          deliver a concept of value. On the other
           still incurred.
                                                           gaming machines and food & beverage.           hand, a young single woman might
           It’s also very difficult to monitor and         Products must be broken down into              perceive value in purchasing a much
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           higher priced product in a hair salon. In        improving service delivery processes         confidence. However, these activities
           this case, she would be influenced by her        should also be considered a core             should be the very last thing you do and
           physical environment, the level of               component. A marketing plan establishes      not the first. Clubs considering boosting
           personal attention afforded by her hair          unmet needs and then articulates how an      patronage through a promotional
           dresser, and the process through which           organisation plans to fulfil them. The key   campaign must begin with identifying
           she bought the product - the fact that she       to success is to know what customers         customer needs and then tailoring their
           was sold the shampoo while she was still         you want to attract and ensuring your        goods and services to meet those needs.
           sitting in a chair. The young single             product and service delivery is aligned      This will ensure new and existing patrons
           woman’s concept of value is also affected        with their expectations.                     are satisfied. The most enduring
           by her disposable income, her age, and                                                        advertising takes the form of satisfied
                                                            Once the marketing mix is correct, an
           what she deems important in her life.                                                         customers who promote your club
                                                            operator can then invest money in
                                                                                                         through word of mouth.
           Clubs must also align their products and         promotion and advertising with greater
           services with their customers’ needs. If it’s
           discovered that the community is after a
           family experience where they can bring
                                                                    Services Directory
           their children, there isn’t any purpose in
           having a luxurious fit out. Casual dining
           might be the order of the day in a friendly
           bistro with easy-to-clean tables and chairs.
           Parents will be less stressed in such an
                                                                                                                CLUB
           environment and see the experience as a                                                            AUDITORS
           good one. Their perceptions of value will
           relate to the ease of service, the affordable
           price of the food, and the availability of                                                    HARLEY RUSSELL
           children’s menu items. Ultimately, it’s a                                                         & DAY
           consistent marketing mix.
                                                                                                          CHARTERED ACCOUNTANTS
           Where to Spend the                                                                            We are a small firm specialising in auditing small to
                                                                                                         medium-sized clubs.
           Marketing Dollar                                                                              Our boutique firm has the following advantages:
           As already mentioned, it isn’t unusual for                                                    • Audit - Attendance at least quarterly
                                                                                                         • Personalised service
           business operators to think solely of
                                                                                                         • Cost competitive
           advertising and promotion when they                                                           • Preparing necessary returns
           allocate the marketing dollar. But                                                            • Assistance with accounting work

           promotion and advertising is about                                                            • Preparation of year end Financial
                                                                                                          Statements & Annual Report toMembers
           pushing your product into the market,
           whereas marketing is about identifying                                                               It is not difficult
           unmet needs and creating products and                                                              to change Auditors.
           services that draw the customer in. As a                                                               Contact: Garry Day
           result, true marketing spends money on                                                                 Ph: (02) 9744 6922
           aligning goods and services with customer                                                              Fax: (02) 9744 6747
           needs. The smart operator might consider                                                                  PO Box 284
           staff training to be a component of the                                                               ASHFIELD, NSW, 2131
           marketing budget. Reviewing and

				
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Description: Lost In Translation