Principles and Practices of Marketing: Virgin Active in Brazil Report

This report analyzes Virgin Active's marketing strategy for expanding its health club business into Brazil. It begins with an introduction to marketing principles and the SOSTAC framework, a strategic planning tool. The report then conducts a situation analysis of Brazil's macro-environment, considering political, economic, social, technological, legal, and environmental factors. It outlines specific, measurable, achievable, realistic, and time-bound (SMART) objectives for Virgin Active's expansion. The strategy section utilizes the STP model (Segmentation, Targeting, Positioning) to define Virgin Active's approach. Tactics are discussed through the marketing mix (Product, Price, Place, Promotion). The report details the actions required for implementation and concludes with a discussion of key performance indicators (KPIs) to monitor the expansion's success, including revenue per member, working capital, debt-to-equity ratio, net profit margin, and customer acquisition cost (CAC) payback period.

Principles and Practices of
Marketing
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INTRODUCTION
Marketing is the set of activities perform by an organization to promote and sell the
products or services to the customers. It is considered as the process that includes product design
and development, research, customer service and promotion. The four basic marketing principles
are Place, Price, Product and Promotion. It helps the firms to get an understanding about the
product or service that is offer to the customers. In this presentation, the company that is
undertaken is Virgin Active, it is a health club chain in various countries such as Botswana,
South Africa, Australia, Thailand etc. The company was founded by Richard Branson and
Matthew Bucknall in 1999 and its first headquarter was situated in Milton Keynes but currently
it is situated in London, United Kingdom. The company wants to expand their operations in
Brazil to increase their market presence in the global level and to increase the revenue and
profitability of the firm. SOSTAC framework helps to raise the question that helps in planning
and executing any project. This model is given by PR Smith, which is mainly used for making a
plan related to marketing and business process. It Stands for Situation, Objectives, Strategy,
Tactics, Actions and Control. It is considered as the standard strategy and planning framework
among the companies of varies sizes like small, medium or large enterprises.
TASK 1
Situation analysis :- It is the first stage of the SOSTAC process that provides a general
description of the firm. In context with Virgin Active the situation analysis based on the
following macro environment factor of Brazil that is discussed below :-
 Political factors :- It basically involves the government laws and decision that
authorities of the government makes to provide some guidelines to the companies or
firms that are out of control and not following the principles. This factor elements are
such as government policies, international trade policy, tax policy etc. In context with
Virgin Active expanding their business in Brazil, the company has to follow all the
guidelines provided by the country to run their business. So that in future the company
did not have to face any challenges and difficulties to run their operations.
 Economic factors :- These are the factors that can affect the economy and influence the
investments but are not linked to the business. It includes interest rates, employment and
unemployment rates, foreign exchange rates, and raw material costs. In context with
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setting up the business in Brazil it has to face a lot of challenges such as complicated tax
system, the decrease in consumer demand, tariff and non tariff barriers and poor
infrastructure. But the country also offers the various opportunities to the international
and domestic firms to expand their businesses in several sectors like health,
infrastructure, energy, aviation, IT, energy, tourism and education.
 Social factors :- These are the elements which may affect our habits and thoughts
process in social situations like demographics, which consists of age, gender, race,
consumer behaviours, opinions and attitudes etc. With the reference of expanding the
Virgin Active in Brazil, the company should analyse the social challenges faced by the
country like many children still did not get the proper education, proper health care
centre and housing. Discrimination on the basis of race and gender is common in Brazil
that may have affect on the surrounding of health club of virgin active.
 Technological factors :- These are the factors that is thoughtful for the improvement of
application and improvement of products which can affect the marketplace or industry. It
includes the changes in automation, technology, research and development, which helps
Virgin Active to find new ways of delivering the service or new ways distributing
products and services in Brazil. The government authorities heavily invest on the
innovation, creativity, research and development.
 Legal factors :- These are the factors that the firm should strictly follow to be free from
any troubles such as consumer rights and laws, equal opportunities, product safety and
labelling, health and safety. The company must have the knowledge about all the rules
and guidelines of the country in which the firm is going to open its business. Written
contracts of employment is very ordinary exercise of contracts of employment albeit it is
not needed under the law of Brazil. This country encourages the foreign direct investment
but it also restricts to invest in some sectors such as financial institution, investment in
the postal services, nuclear energy, private security and transport to the residents of
Brazil and International investors.
 Environmental factors :- These factors are immensely influenced from the locality of
environment and due to the rise of importance of CSR, this element has become a critical
point to consider while management a business. It includes climate, carbon footprint,
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waste disposal and sustainability. In context with Virgin Active starting their operations
in Brazil, the firms have to face many situations like air pollution, land degradation,
deforestation, illegal poaching, water pollution etc. that have a direct effect on the firm.
But the country has also taken a various environmental friendly steps over the past years
to deal with the challenges in the environment.
Objectives :- It is the second stage of SOSTAC model in which Virgin Active should focus on
the main objective of the strategy. The firm must focus more on the SMART objectives that
helps to define the goal that an organization want to achieve. The word SMART in related to
objectives is discussed below :-
 S for Specific :- The objective a firm undertakes must be clearly defined the goal and
answer the questions like What, where, when, how and why in concern with the
objective.
 M for Measurable :- It must be measurable that helps the firm to quantify the
advantages.
 A for Attainable :- The goal must be within the reach of the company that could be
attain easily.
 R for Realistic :- The objective that is set within the limitation so that it can achieve.
 T for Time Bound :- It is an important part for a firm that it should set a timeline into
which it has to accomplish the goals.
Virgin Active main Objective to expand its business in Brazil is written below :-
 To increase the market share by 10% in the next 6 months.
 To grow the profitability by 8% in the upcoming 3 months.
 To rise its revenue by 20% from the previous financial year.
TASK 2
Strategy :- According to PR Smith, The strategy is the immense image of how the firm plan to
achieve its objectives that they have set. It also happens to be one of the more difficult parts of
the SOSTAC marketing plan. PR smith suggests that for finding a strategy the STP model is
very useful and the process of STP is discussed below: -
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 Segmentation: - It is the first step of STP analysis in which Virgin Active has to make a
different forms of customers groups and segmented it according to the need of the firm.
Virgin Active segmented customer groups are higher classes people due to high service
charge taken by the firm.
 Targeting: - The next stage after that segmenting the groups is to target that the
customers group and communicate about the product and service that the firm provides to
them. Its target customers group are both male and female and from children to senior,
who are looking a best health club near their home.
 Positioning: - This is the last step of STP analysis in which the company conduct various
types of marketing about its product and service to create a brand awareness in the
marketplace. Virgin active focuses on creating a good brand image in the eyes of the
people so it can attract more customers and increase its profitability.
Tactics :- It states the techniques and tools to achieve the objective of the marketing plan. To
accomplish this goal Virgin Active must conduct a marketing mix, which is given below: -
 Product: - It specifies the details of the product that the consumers are going to use it. It
has a certain life cycle that includes the introduction phase, growth phase, the maturity
phase, and the sales decline phase. It is vital for marketing team of Virgin Active to
reinvent their products to arouse more demand once it reaches the decline phase.
 Price: - It is an important component of the marketing mix that has a direct impact on the
buying power of the consumer. It is considered as the most vital factor of the whole
marketing plan which can increase or decrease the sales and profit. If Virgin Active
charges of the health clubs is more than the purchasing power of consumers then it will
decrease it sales and vice versa.
 Place:- It is one of the vital element of marketing strategy. Virgin active should position
its products or services in the place that is easily accessible by all the consumers. Virgin
Active is a premium health club so it should open its franchises in the urban areas where
the localities can easily afford to pay the charges.
 Promotion: - It involves the process of advertising about the product or service to the
consumers. It is basically creating a branding awareness by communicating with the
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people through promotions and tells them about the features of the product. It will help
the Virgin Active to build a market in Brazil by specifying their features to the target
customers.
From the above marketing mix it has been analysed that the Virgin Active uses the
standardization approach in which the firm replicates without any changes in their
operation. The firm generally uses this strategy to saves the costs through economies
of scale. It helps to provide a standard product or service in the competitive market
and reduces the risk of losing the marketplace.
TASK 3
Action: - It is the fifth step of SOSTAC model which tells about the details of tactics and how it
accomplished. This stage states about all the efforts that is made to set up the firm and to create a
brand image. This factor can be explained by answering the questions like who does it and what
is done, where it is done, when it is done and how it is done. In Context with Virgin Active
expanding its business in Brazil, the whole work to set up its market in Brazil is done by the
employees of the firm. This expansion is very important to increase the sales and profitability of
the company. This is done by conducting a research on the macro environmental factors of the
Brazil and the success rate of opening a firm in this country. The major work is done by the
marketing to create a good image in the eyes of the Brazilians about the service provided by the
organization.
Control: - It is the last stage of SOSTAC model which mainly focuses on analysis and KPIs.
KPIs stands for Key Performance Indicators which is majorly used to analyse the performance of
an organization. The KPIs used by Virgin Active to monitor the performance is written below: -
 Revenue per member: - It is the most used KPI to check the profit that came from each
consumer of the product or service.
 Working Capital: - It is the debt that you get from the bank or friends and family to help
your business in performing daily activities.
 Debt to Equity Ratio: - It helps the company to analyse the effectiveness of funds that is
collected from the shareholders.
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 Net profit margin: - It depicts the net profit of the company at the end of financial year
which gives the company an idea about its performance.
 CAC Payback Period: - It is defined as the time period for a company to earn back their
customer acquisition costs. The value of CAC payback period is depends on how high is
the CAC and how much a customer contributes in the profit.
The above KPIs helps the Virgin Active to engage the employees to work on a common goal,
it also motivates everyone by measuring their impact on the company and how their daily
activities have an impact on the organization.
CONCLUSION
From this presentation it has been analysed that SOSTAC model has a great impact on the
growth of organization and how it helps the company to establish their business in another
country. It has also been concluded from the above writing that the macro environmental factors
has a great impact on the expanding a new company into new region. Virgin Active has to face a
lot of challenges to expand its business in Brazil like to understand the rules and regulations for
setting up the business that country.
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