Name: Roll No: Subject:

Shrisha Kumar Acharya 048 Managerial Communication

Written Analysis of Communication on Growing a Premium Brand

Facts of the case

y Transition is a chain of ultra premium health clubs located in major cities throughout the world Gordon Johnston is the owner and president of Transition health club. Scott Conner is Director of Sales and Marketing and Frank Casale is Director of operations and Facilities. Target customers of transition health club are mainly senior executives, frequent business travellers and high net worth individuals. An annual Membership fee of transition health club is 2300 dollars per year plus 600 dollars initiation fee. The average member age of Transition health club was 41 ten years ago as compared to present level of 46.

Identification of Objective
y y y y To maintain current level of profit margin. To sustain current level of growth To increase present level of membership. To maintain premium brand image of Transition.

Problem statement
y Decline in sales due to reduction in number of membership adversely impacting the profit margin and thereby increasing the operating expense of the company.

Solution [Plan A]:

Key to succeed in any business is Innovation .Constantly adapting to ever changing nature of business is a must for survival that s when innovation comes into picture. There are 2 major factors that we need to consider in order to increase sales and reduce operating expense (i). (ii). Is to increase number of membership Price of the membership fees.

Since Transition Health club is into elite client market. Hence the market for brand such as Transition is very limited to the extent of availability of such High Net worth individuals which is bound to put pressure on the operating expense in order to maintain such high standard facilities. Company should look at tapping other lucrative market mainly into developing countries like Brazil, China, India, and Russia. As this would increase overall client base for transition health club worldwide. And at the same time introducing customized schemes for all the elite clients where in they can choose from wide variety of services and pay for only those selected services. This way one can identify which service or which facility is utilized utmost and which ones are underutilized. Above scheme can help in proper allocation of resources. Such schemes can be quite popular in the developing economies. This in turn can help in reducing overall operating expense. The main drawback in exploring emerging market and introducing customized schemes is that it may dilute the brand image of Transition Health club as elite organization. Taste and preferences of High end clients may not be the same in the emerging market as this market would already have been exploited by the domestic companies providing same services as transition but at a cheaper cost. However considering above drawbacks, Transition still can explore the emerging market knowing they are an elite brand having a requisite expertise in providing High end world class services.

Plan B:
Even after exploring the emerging markets and introducing customized schemes, the profit margins are still weak and the operating cost is still on the rise then it is best to form a subsidiary company which will cater to the requirements of the non-elite clients. In this way, transition can cater to both class of clients .i.e. elite and non elite. Both the companies can have customised services and the membership fees would be depended on the services selected by the clients. In this way transition can create goodwill in the market as the non-elite clients would get a taste of Transition s high end services.

Main advantage in forming a subsidiary company is that Transition as an elite brand won t get diluted and at the same time subsidiary company can explore the non-elite client base. Main drawback in forming a subsidiary company is that it would be expensive and very tedious task. Transition though technically enjoys no competition in the elite health club segment may face stiff competition in the non-elite segment.

Conclusion
Both the above solutions are feasible depending upon the market scenario but only recommended when there is a steady fall in the sales growth and profit margin over a period of time.