Apple Tree Lane Child-Care and Nursery Centre - Assignment Example

? Apple Tree Lane Child-Care and Nursery Centre BY YOU YOUR SCHOOL INFO HERE HERE Apple Tree Lane Child-Care and Nursery Centre Background Apple Tree Lane Child-Care and Nursery Centre is a privately-owned nursery utilising local rental space in the village hall in order to maximize customer volume and provide more efficient child care services. The ownership, Lorna Jefferies, conducted small-scale preliminary marketing research in order to determine the potential market segments available for profit expectations and also to determine the variety of services expected by potential target markets. After attaining the appropriate licensing, Apple Tree was established and now the facility is capable of supporting higher volume child care. The business maintains three distinct long-term objectives which are based on reputation building, the provision of quality care for all children, and expansion of the business without loss of key provisions to service quality. The complications with establishment of an appropriate marketing strategy include identification of targeting opportunities for key markets, providing a brand reputation through positioning against competitors, and identification of what constitutes quality service dimensions and service structure. This marketing plan encompasses all methods of STP, promotion, service development, quality auditing systems, and methods of differentiating the organisation from existing child care competitors in the region. 2. Segmentation, targeting and positioning (a) Defining the market In order to develop a quality marketing effort, it is necessary to understand the dimensions of what constitutes a market. A market is a group of potential customers dispersed geographically that maintain the potential to make service purchases. To reach these individuals, it requires process planning, recognition of important elements associated with the marketing mix, and maintaining relationships to satisfy individual and organisational objectives (Boone and Kurtz 2007). Markets want to satisfy their utility needs in terms of the overall fulfilment that comes from a particular service (Boone and Kurtz). In order to gain market attention, the business must segment, which is the process of dividing a whole market into smaller, homogenous groups most willing to make purchases at Apple Tree. Once these markets have been identified, targeting occurs in which promotional materials are developed against their service demands, lifestyle, or other demographics in order to maximize profit for those most likely to utilise the service. On the heels of these activities is positioning, which is “owning a place in the minds of consumers by concentrating on a single phrase or concept that defines the company values and purpose” (Trout 2008: 18). (b) The vitality of STP to Apple Tree STP is vital to Apple Tree in terms of cost, labour and ensuring that the best fit of potential customers is selected for utilising the service. The business wants to recruit markets that share the same values and child-rearing principles of Jefferies to avoid the need for labour training or dissatisfying consumers. Failure to follow STP models for market reach can lead to high costs of promotional materials, wasted on non-key markets and also force operational and management changes on the organisation for this business. Since Apple Tree’s longevity is centred around revenue building from direct customer transactions, it is important to identify homogenous groups that share the same child care vision to avoid service failures or perceptions of service failure from markets that utilise the service who do not share Apple Tree vision. (c) Segmentation Jefferies will segment according to the most effective market criteria. The key, potential market availability for Apple Tree are mothers who already utilise child care services, but are constrained by locality (travelling too far). Localizing the service will provide added convenience to the service model. Another market is mothers who are currently unsatisfied with their current child care provider looking for more similar values to their own that can be found at Apple Tree. Segmentation therefore will focus primarily on psychographics, a lifestyle and resource-based strategy. The business will utilise the VALS 2 concept, which is segmenting by people with similar psychological characteristics and values (Kotler and Keller 2011). The business will seek out the believers, who are generally traditionalist, slow to change their buying habits and are very family-oriented (Boone and Kurtz). Principle-oriented individuals will also be part of segmentation, markets that value knowledge and appreciate educational programming (Boone and Kurtz). It is commonplace for parents to send their children to the first day care centre they discover in the search process that has convenient location, operating hours and acceptable pricing, rather than taking the time to find an option that suits their own child-rearing philosophies (Tavecchio, Stams, Verhoeven and Reiling 1998). This is advantageous to Apple Tree as location convenience is a significant factor in service delivery by localising marketing and service location. It is also commonplace for the working mother to require workplace absences in order to manage child care issues, such as when their current home-based care provider is ill and must attend to their own well-being (Gordon, Kaestner and Korenman 2008). Mothers who must act as breadwinners to establish quality lifestyle in the household face these work versus child care issues regularly. (d) Targeting the segments The business will play on the aforementioned factors of need for localised convenience and also the lifestyle issues that arise with high workplace absences. The first method of targeting is to create a value proposition that will guide the service dimensions at Apple Tree and speak of its values and mission as a care provider. Value propositions “are continuously signalled through every manifestation of the company’s brand and every interaction with the consumer” (Picoult 2008: 41). Further, individuals are looking for companies that offer guarantees in their value statements. “Companies that offer no guarantees in their value propositions will have difficulty finding market share” (Alexander 2009: 17). The goal is to target using value propositions in order to differentiate value and quality from existing child care providers in the local region, offering advertising that highlights knowledge as a key internal resource, as a means to avoid lifestyle workplace absences (through guarantee provisions) and convenience advertising. The fundamental values of education for the children, guaranteeing less workplace conflicts and focusing on family traditionalist values will target these segments effectively. (e) The positioning strategy Positioning will focus on value differentiation and convenience differentiation, as well as educational provision competency under quality positioning. Taglines with elements of value, convenience, and educational competency will be included in all marketing literature designed to make psychographic connection with identified markets. For instance, under convenience, the phrase “We’re the Closest Friend you Have” will put the service into a unique position of convenience. All elements of positioning will have similar advertising jargon. (f) Specific advice for Lorna Industry is growing in the local region and thus providing more workplace and educational opportunities for the career mother trying to raise children. Industrial growth provides more market availability as it is commonplace for households to have both parents working during the daytime. Business developments are also providing mothers with more executive-level positions that require extended periods away from work, other than the typical nine-to-five career structure. Recognising the infrastructure of workplace dynamics and career can give Lorna more opportunities to utilise appropriate advertising to gain market interest. Such developments provide opportunities to establish pricing that is in-line with extended hour day care services and also more environment by which to distribute marketing literature. (g) Exploring market opportunities The business will develop direct marketing literature that is distributed to local corporate businesses in order to gain market attention. If these businesses are localised, convenience tagline literature will be included. This also provides opportunities for Lorna to schedule appointments with local HR management at these businesses to personalize the service and also develop strategic partnerships to assist in revenue production. Futher, Lorna will hire low cost guerrilla marketing teams that will carry promotional pamphlets and merchandise (i.e. keychains, stationary, coffee mugs) that are branded with Apple Tree logo and philosophy. Guerrilla teams are low-paid, low-training required promotional teams that promote the brand and will attend events with many children as well as child-friendly restaurants and other appropriate local venues. By getting personalized in regions where children congregate, the Apple Tree brand logo can become a part of the family lifestyle through useable merchandise to constantly remind the potential target markets about Apple Tree vision and locality. 3. Pricing strategies In order to effectively compete and also offset operational costs of service provision, Apple Tree must establish a pricing structure that best suits profit and customer needs congruently. (a) Varieties of pricing strategies Lorna can select to utilise premium pricing, which is establishing quality-based pricing that is higher than competition. This is a strategy to exploit market tendency to believe that higher prices mean a better service dimension. Lorna can also select penetration pricing, a short-term lower-than-competition pricing structure designed to increase customer volume with opportunities to raise prices in the future after market share has been achieved. Price skimming is another option, setting a high price in order to offset the costs of establishing the day care facility and its initial operational costs. Competition based pricing is also an option, which is establishing a price structure congruent with the mean average of existing day care facilities in the local or national region. Lorna can also establish price discrimination, which is charging different prices to different markets based on their socio-economic backgrounds as a means to exploit higher revenue from more affluent customers. Market-oriented pricing is also an available option, which is setting a price after conducting market research on price elasticity of available markets in order to exploit the highest pricing structure they will accept. Of these pricing options, Lorna should utilise competition-based pricing, price discrimination, and quality-based pricing. Price discrimination will allow child care services to be personalized by meeting with interested markets, gaining first-hand knowledge of their needs, and then quoting a price based on intuition, observation and interviews with the client. Price discrimination will allow Lorna to exploit higher-resource buyers and also offset operational costs. By scanning the external market for pricing competition activities, Lorna can also develop a congruent pricing model that is competitive for the value-seeking buyer willing to conduct considerable searching in their selection process. Quality-based pricing can be targeted at executives or those who require extended service hours for elongated work periods as a means to gain higher revenues. Since this will require extending the hours of operations, there should be premiums attached for food services, education, and labour offsetting. The drawbacks to the selected pricing options are: Competition pricing may fluctuate over time and without analysing the external market regularly, competitive edge can be lost. These analyses can be costly financially. Price discrimination can also impact potential word-of-mouth if customers who utilise the service discover that they have been quoted different prices which can impact brand reputation. Quality based pricing could lead to customers selecting a lower-cost service provider as part of their value-consciousness. Despite these drawbacks, they represent the most effective method of recapturing operational costs and also personalizing service and developing an effective cost-recognising service structure and hours of operation. Pricing in this fashion also allows for routine adjustments when they are needed based on market conditions or rising costs in the supply chain for child care services. By having several pricing strategies, Lorna can maximize her profit and ensure all capital investments are offset by appropriate revenue production efforts. 4. Competitive advantage (a) What is competitive advantage? Competitive advantage is maintaining a single or several attributes related to service or product that is differentiated from competition and can be exploited to gain market share. By establishing service innovations or providing unique tools for child care, the business has competitive advantage. This can be accomplished through human capital support development or simply through service variety. Competitive advantage is important for Apple Tree as a means of differentiation and also as a dimension of quality. Apple Tree wants to have services that are unique as a means to create incentives for target customers to select this facility over all others in the local region. Lorna can develop competitive advantage by diversifying her meal provisions for the children, providing educational assistance through learning tools, or simply by taking a lean approach to the supply chain for her child care needs. Any method that is unique from competition gives her either a cost or reputation edge. (b) Developing competitive edge with Porter’s generic strategies “When consumers plan to acquire a service that requires a high degree of commitment, they consider the price of different options and brands as a key factor in making a choice” (Campo and Yague 2007: 269). Elongated searches, when they occur, poses a risk to revenue building at Apple Tree since this is a high commitment service. Thus, Lorna must focus on concentrated differentiation strategies in the form of unique services. Since one main target customer group is the principle-oriented consumer, Lorna can differentiate by hiring support staff that are licensed in youth educational provision as a tool to satisfy the knowledge-appreciating buyer. By adding a more quality schooling system to the day care process, it will make the service unique and also justify pricing under both price discrimination and higher quality-based pricing structures. Focus will also satisfy the family-oriented buyer identified through segmenting by focusing on differentiation strategies. For example, research identifies that young children have a vulnerability for food-borne illnesses since they constantly put their hands to their mouths and often do not understand proper hygiene factors (Enke, Briley, Curtis, Greninger and Staskel 2007). Focusing on not only variety in the food options, but to the commitment for child safety by identifying their protocols to protect the safety of children, it can further gain attention from the family-oriented buyer segment already identified for targeting. Lorna can also utilise a cost advantage under Porter’s Generic Strategies by developing less expensive advertising systems. For example, there are organisations online, such as care.com, that provides referral systems to child care facilities where listings are free and the organisation pays only for information and referrals (care.com 2011). Reducing costs associated with promotional materials whilst still expanding brand presence is one option of cost leadership for competitive advantage. 5. Service marketing and service delivery (a) Apple Tree differs from product industry as it is the tangible, human capital resources that drive the majority of quality related to price and service delivery. Recruiting an educational professional is one example. (b) Service gap analysis Service marketing tools available to Lorna include utilisation of focus groups of working mothers in order to identify service quality perceptions in day care as well as questionnaire development. Ravichandran, Tamil, Kumar and Prabhakaran (2010) and Wang and Shieh (2006) utilised these service marketing tools to measure multiple dimensions of service quality and gain valuable market research in the service industry. Ravichandran, et al (2010) utilised the SERVQUAL model to measure consumer perceptions of reliability, responsiveness, empathy, tangibles, assurance and many more criteria to locate service gaps. Service gaps occur when the service does not fully understand what customers expect from the service (Turner, Bienstock and Reed, 2010). This is why focus groups can measure all five dimensions of service quality with real-time consumer sentiment and also as a method to personalize the services with one-on-one interventions with leadership. Service gaps also occur when services delivered do not specifically meet customer expectations and when service specifications and standards are not corresponding to customer values (Turner, et al.). Using questionnaires and focus groups can bring not only information on how to structure the service delivery process, but gain market research data on consumer preferences for future targeted advertising and positioning if market conditions demand a change in position. Reliability is measured by the competency of the facility to achieve effective and safe child care. Responsiveness is the ability of the firm and its leaders to meet customer demands as they arise and provide full quality service delivery. Empathy is maintaining a psychological emotional intelligence as it relates to the consumers to try to mould the service around their perceptions, intuitions, and overall human personality needs. Tangibles are the actual elements of service, such as food and academic teaching tools, utilised in service delivery. Assurance is the guarantee of competency and quality, such as those identified in the value proposition offering guarantees for extended service and knowing the customer can rely on these factors. These aspects, and many more, of service delivery can be measured with questionnaire data and the focus group and then correlated around existing service delivery structure to determine how best to organise service philosophy and delivery. A follow-up questionnaire or survey after six months can determine whether values have changed, such as using a multi-tick or 1-10 survey structure to see where gaps still exist or where the business has managed to create a new customer satisfaction. Auditing of internal structure and competency of staff and leadership, along with cost recognition, are important dimensions of ensuring all elements of service quality have been established and are constantly adjusted to meet buyer needs. The SERVQUAL model allows for flexibility for addition of many different service-based criteria that can determine whether the leadership is meeting the short- and long-term demands of customers related to their psychographic profiles or tangible demands for competency. Using qualitative and quantitative research tools such as the focus group and the surveys/questionnaires provide the quality auditing required to make Apple Tree successful in terms of competitive rivalry and also internal controls establishment. The goal is to make Apple Tree a personalized relationship with many different target customers and using these auditing tools show the firm’s commitment to providing excellence in service. It serves, also, as a service differentiation strategy through involvement of customers in every dimension of service delivery, allowing them to essentially act as governors of the leadership and service delivery models. This is an empowerment strategy for both target markets that also creates a quality brand that justifies the quality pricing structure. References Alexander, J. (2009) It’s still all about guarantees, National Underwriter 113(19), 17. Boone, L. and Kurtz, D. (2007) Contemporary Marketing, 12th ed. Thomson South-Western. Care.com. (2011) [internet] Join the daycare referral program by care.com [accessed November 10, 2011 at www.care.com/day-care-marketing-lead-referral-program-p1139.html] Campo, S. and Yagu, M.J. (2007) Effects of price promotions on the perceived price, International Journal of Service Industry Management 18(3), 269. Enke, A., Briley, M., Curtis, S., Greninger, S. and Staskel, D. (2007) Quality management procedures influence the food safety practices at childcare centers, Early Childhood Education Journal 31(1). Gordon, R., Kaestner, R. and Korenman, S. (2008) Child care and work absences: trade-offs by type of care, Journal of Marriage and Family, 70(1), 239-254. Kotler, P. and Keller, K.L. (2011) Marketing Management, 13th ed. Prentice Hall. Picoult, J. (2008) Flight to quality might be bumpy ride for buyers, National Underwriter 113(15), 41. Ravichandran, K., Mani, B., Kumar, S. and Prabhakaran, S. (2010) Influence of service quality on customer satisfaction application of the SERQUAL model, International Journal of Business and Management 5(4),117-124. Tavechhio, L., Stams, G., Verhoeven, M. and Reiling, E. (1998) Attunement between parents and professional caregivers: a comparison of childrearing attitudes in different child-care settings, Journal of Marriage and Family 60(3), 771-781. Trout, J. (2008) [internet] The New Positioning: The Latest on the World’s #1 Business Strategy, Genii Group [accessed November 9, 2011 at http://www.genii-group.com/pdf/book_review_the_new_positioning.pdf Turner, K., Bienstock, C. and Reed, R.O. (2010) An application of the conceptual model of service quality to independent auditing services, Journal of Applied Business Research 26(4), 1-7. Wang, I. and Shieh, C. (2006) [internet] The relationship between service quality and customer satisfaction: the example of CJCU Library, Chang Jung Christian University. [accessed November 11, 2011 at http://www.tarupublications.com/journals/jios/full-test/JIOS-27-1-2006/jios134.pdf] Read More