Lizzie & Rose Private Members Club - Case Study Example

Executive Summary Lizzie & Rose Private Members Club’s concept is to offer a leisurely space where members can relax, celebrate special events and oreven just spend their spare time basking in the exclusive services that the club has to offer. Members to this private club are entitled to enjoy the services and facilities of Lizzie & Rose at a discounted price or even at a waived cost. Each club affiliate would be given privileges that are exclusive only to his membership. Lizzie & Rose’s main objective is to provide a second home to its members and to promote the feeling of enjoying outstanding club services within a home far away from home. This for-profit business first opened in Balmain, NSW. The mixture of services, capped with the ingenuity of the product offers and the outstanding customer services that Lizzie & Rose capitalizes on, guarantees the success of this new entrepreneurial venture. The target market is families – moms and dads who have varying needs for themselves and for their families. The leisure club offers a space for relaxation for moms and dads, working and non-working alike, while offering an environment of edu-tainment to their kids. The environment is planned to be a safe, clean, comfortable, supervised venue where kids can enjoy the fun facilities or be educated through workshop program courses. To make the service more accessible to the target market, Lizzie & Rose shall be occupying space in local mall Westfield Sydney Central Plaza. Members can access the club’s various services here. This expansion targets the acquisition of more members from a different location. a. Type of Business Lizzie & Rose is Private Member’s Club, a for-profit business with the aim to acquire club membership from targeted segment of the society in exchange for exclusive perks, services and use of club facilities. The club’s home base is Balmain, but plans to expand business in Westfield Sydney Central Plaza where the target market is mostly present. Each member will have to pay an annual fee to enjoy the membership privileges. 2. Management Lizzie & Rose will implement a shallow organization whereby the main drivers and decision makers would be the owners themselves, backed up by highly-competent and suitably experienced department heads to handle the finance, administrative and marketing aspects of the company. All deliverables pertaining to legwork shall be contracted from a third party agency to save the company of costs and labor-related concerns, which may arise from employing a trifle, too many workforces. This provides a degree of flexibility and excellent diversification and growth opportunities. The fixed costs are kept to a minimum and this provides scope to access more relevant resources from other organizations as management determines future strategy around products and services based on sound market research findings from database and general market. Most importantly the hollow organization provides opportunities to network with the local business in a strategic and contractual capacity this will provide enormous advantages in the face of competition. (Wickham, P.A., 2006). 3. Product/service and competition Lizzie & Rose will basically offer various facilities that parents would enjoy. This includes a café with free access to Wi-fi, free use of meeting rooms and access to various seminars that aim to enhance their knowledge as parent. Recreational and even relaxing activities such as spa and salon services shall also be offered exclusively to members. For the kids, Lizzie & Rose shall feature several play and learning areas and will offer children’s lessons in art, craft, cooking, dance, singing, music, language as well as a weekend movie club and birthday party services. Parenting courses include Pre Natal, Post natal, Babies, Nutrition, Wellbeing, Cookery, to name a few. Coffee, Time Out, Family Advice, Trunk Shows, Social or business meetings and catering (from the local business network) are also at the member’s service. The services are provided through a network of local business and local professionals and artist. a. OBJECTIVES 1. Short Term Lizzie & Rose aims to establish itself and acquire a total of 200 club membership during the first three months of operations at the Westfield Sydney Central Park. It would like to focus on establishing rapport with the club members by being able to offer services that are commonly suitable to the members. It aims to identify at least five regular annual programs and 10 short-term courses for both parents and children. 2. Long Term The long term objective is to be able to garner a returning customer base of 70% annually, and at the same time, acquire 500 new members with an incremental rate of 20% each year. With these numbers in mind, Lizzie & Rose targets to expand by two ways: establish locations in three other malls in New South Wales and offer franchising for expansion for the rest of Australia. b. Market Analysis 4. Overall market In reference to Lizzie & Rose’s feasibility study, the management team is optimistic with the current market situation in NSW, particularly on the existence of its target market and the economic developments surrounding the area. The size of the current market in terms of finances is consisting of 2,241 businesses within the ABS Classification of Interest Groups. More so, over the last 4 years has experienced an average growth rate of 4%. The total revenue in for this industry in NSW is $530,550,000. $75,600,000 is the revenue derived from the Leichhardt LGA (Primary target market catchments). Customer-wise, there are 6,735 families living within the Leichhardt LGA that comprise our target market; couples with young children under the age of 10 with a household take home income of over $2,500 per week on average. It is estimated that the potential market share will be 4% with projected member take up of 490 members in the first year due to pent up demand. Continued growth is expected as the baby boom has hit Leichhardt, with the municipality experiencing a major increase in the birth rate, turning up the pressure on child care services in the area. The number of births has risen from 711 in 2000 to 935 in 2005, according to the 2006 Census statistics released last month and continues to grow. The figures showed that Leichhardt, had the greatest increase in fertility rates in Sydney, and the boom has been felt by Leichhardt Council as more parents seek out child care & child services in the area. (www.abs.gov.au) 5. Competitive factors Lizzie & Rose will adapt the differentiation-focus strategy, which calls for the development of a product or service that offers unique characteristics which would be valued by customers. These products and services shall be perceived by the customers to be better than or different from the products of the competition. The kind and quality of the products and services that Lizzie & Rose will offer would allow the company to charge a premium price for its membership. Lizzie & Rose believes that the higher price will more than cover the extra costs incurred in offering the unique product. Because of the products’ unique attributes, if suppliers increase their prices then Lizzie & Rose may be able to pass along the costs to its customers who cannot find substitute products easily. Lizzie & Rose have the following internal strengths: The focus side of the Lizzie & Rose strategy will see the business concentrate on a narrow segment being ‘affluent young professional families” local to the Balmain Peninsula and it is within this segment that Lizzie & Rose will attempt to achieve differentiation. Because of the narrow market focus, there will not be high volumes and this in turn means less bargaining power with our suppliers. However, Lizzie & Rose may be able to pass higher costs on to customers since close substitute products do not exist. Some risks of focus strategies include imitation and changes in the target segments. Furthermore, it may be fairly easy for a broad-market cost leader to adapt its product in order to compete directly. Finally, other focusers may be able to carve out sub-segments that they can serve even better. a. Marketing Roughly about 30% of Lizzie & Rose’s operational budget shall be allocated to Advertising and Promotional strategies alone. This includes expenses to be incurred in utilizing mainstream media particularly print advertising; other alternative media; and design and production of merchandising and promotional materials. The marketing budget will be determined basing on 3% of gross revenue per year. Lizzie & Rose’s marketing strategy will focus on four segments: Pregnant Woman, New Mums, Mums with Toddlers, Mums of School age kids age 5-8. These are people whose needs are addressed by the Private Club and would have a big influence to the family’s decision maker, which is the dad, if not the decision maker herself. These groups are highly affluent and local to the Balmain Peninsula. Lizzie & Rose will implement a strategy that treats these customers as a community. This means the company’s marketing resources will be centered more on below the line activity through a direct approach, highly targeted rather than mass approach. The launch of Lizzie & Rose will be by invitation only to VIP’s of the local business community and targeted mothers groups. There will be high focus on public relations and community building activity. All marketing communication will be integrated from the online space through to the physical channel. Branded with Lizzie & Rose logo and continue reinforcement of the core values. Cross promotional opportunities with partners will be scoped through a variety of channels. Lizzie & Rose will partner with magazines and publications with similar target market. The aim is explain the company’s offering and programs through descriptive articles to entice the target market. Special rates shall also be offered on a seasonal/ promotional basis. Events will be staged celebrating special dates such as Mother’s day, Father’s day, Easter, Thanksgiving, among others. Vendors, suppliers and other services with a common denominator will be invited to co-sponsor, share in the production costs and implement co-branded programs for the same target market. The aim is to make the membership even beneficial and to add premium to the benefits that Lizzie & Rose is offering. Monthly newsletters announcing Lizzie & Rose’s programs will be part of the member’s privileges. Updates on the course offerings and development on the various facilities shall be featured in these newsletters to constantly update the members on the perks that they would be receiving. On top of all these, Lizzie & Rose will build up its own website to be able to expand its market reach not just in NSW but to the rest of Australia and even to the rest of the region as well. This is to be able to achieve the long-term goal of being able to open franchise stores and expand the business in other areas. The website will be interactive and informative, and there will be options to apply for membership online. Newsletter emails will also be part of the information dissemination campaigns as this type of communications tends to be personal -- the type of service that Lizzie & Rose intend to provide its members. b. Financial Plans 6. Financial Statements 7. PROFIT & LOSS ANALYSIS – FIRST 12 MONTHS 8. Financial resources The owners of Lizzie & Rose will be investing a start up capital of $ 5,010,000.00 and additional $ 50,000 from stock shares from investors. Lizzie & Rose will continue to offer stock dividends to potential investors and to VIP members who would eventually benefit from the sales through profit sharing. a. Organization and Management b. Key personnel resources The persons who will be on top of the management of Lizzie & Rose are the owners themselves – Elizabeth Steel and Roselyn Wright. They will serve as the directors and main decision makers of the company. This original concept brings together the skills of a fantastic team of contacts, close friends and great brand networks that Elizabeth and Roselyn had made within their own circle including: artists, chefs, actors, ballerinas and tutors. The opportunity to participate in this venture who vision is to inspire and excite has been a good platform to attracting partners. These people will not be directly-hired and therefore, would serve on a contractual and commission basis. The company will implement a hollow form of management whereby the objective is not so much on doing things itself but to bring other organizations together. In effect, it creates value by building a network or making an existing one more efficient. The core organization does little itself except to coordinate the production and marketing of the products/services. (Wickham, P.A., 2006). c. Human resource management strategy Lizzie & Rose’s employment plan is as seen in below table: The rest of the manpower requirements shall be contracted through sourcing freelance/ part time personnel. This way, costs would be lower to the management as opposed to employing the level of skill sets required and bringing all services in-house. Payment of the standard benefits and other incentives shall be limited to those direct-hired only. These manpower shall be treated as contractors and will provide service basing on what has been agreed upon. a. Critical Risks and Contingencies Lizzie & Rose’s main challenge is to be able to establish a membership base for the first six month of operations. Now that is has expanded through a space in a local mall, rental and other significant operational costs must be covered for by the number of memberships and total other services and goods sold. The P&L analysis covers for the first 12 months of operations in Westfield. As such, the cash flow is expected to be always positive. Significant profits may not be felt during the first year, but the most important of all is for the income to be able to, at least, continue the operations until such time that the membership base has already been established. b. Summary and Conclusions Lizzie & Rose’s success depends hugely on two critical factors: the volume of membership that this exclusive club would be having and number two, the programs and facilities that would sustain the targeted number of happy and satisfied customers. The company’s entry in the market as part of the Westfield community is an aggressive strategy towards creating the desired number of membership. Location is a key factor in this business and the owners are determined to position Lizzie & Rose amid its target market. The company aims to overcome these challenges through careful planning and execution of its marketing plan. Another is by choosing carefully the products and services that it would continuously offer to its members. Its strategy to offer services that are advantageous over the competitor would guarantee Lizzie & Rose’ positioning as a high-end private exclusive club in NSW. The success of this venture lies on how well the company knows their clientele. Reference List Australia Demographics, Retrieved November 1, 2008 from http://www.about-australia.com/facts/demographics/ Australian Social Trends Report. Retrieved November 3, 2008 from www.abs.gov.au. Business Structure: Sole Trader, Limited Liability Company, Partnership or LLP. Retrieved November 1, 2008 from http://www.bytestart.co.uk/content/19/19_1/business-structures.shtml Economy of Sydney, Retrieved November 1, 2008 from http://en.wikipedia.org/wiki/Economy_of_Sydney Leichhardt LGA. Retrieved November 2, 2008. http://www.crc.nsw.gov.au/__data/assets/pdf_file/0016/1429/leichhardtlga4pp.pdf People, Culture & Lifestyle. Retrieved November 4, 2008 from http://www.dfat.gov.au/facts/people_culture.html Short Survey of Published Materials on UK Trends: 2001 – 2011. Retrieved October 31, 2008. http://www.cabinetoffice.gov.uk/~/media/assets/www.cabinetoffice.gov.uk/strategy/key%20pdf.ashx Sydney’s economic geography: Trends and Drivers. Retrieved November 5, 2008 from http://www.metrostrategy.nsw.gov.au/dev/digitalAssets/435_1087439419590_924eea%20_summary_JUNE2004.pdf Wickham, PA, (2006), Strategic entrepreneurship (4th edn). Harlow Win on the Web. 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