AQA A2
Business Studies
BUSS3 - Strategies
for Success
Revision Workshop
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Case Study
Target Sports pl
c
Mike Cullinan, th
e new Executive
Chairman of Targ
Head-hunted to
et Sports plc, was
lead the strugglin
feeling stressed
g
now had to expl
.
ain his proposed quoted retail group just four mon
ths earlier, he
“Strategy for Suc
It would be a toug
cess” to the Targ
h, but important
et Sports Board.
discussion.
Target Sports had
been formed back
in the early 1970’s
Todd. The busine
ss grew rapidly du
by former Everton
ring the 1980s an
across the U K in
d 1990s, opening midfielder Stan
out-of-town retail
sports shops
parks and high-str
growth strategy pr
eet shopping cent
oved very succes
re
s. The organic
sf
ul
in 1998. However
, and Target Sport
, the next decade
s
flo
at
ed
on
th
e
Stock Exchange
saw significant ch
when Stan Todd
anges to the orig
retired in 2001.
inal business mod
el,
In 1999, Target S
ports had opened
its first health club
chain of fitness cl
as part of a plan to
ubs around the U
K, competing agai
de
First. A USP of Ta
ns
t the likes of David velop a national
rget
Lloyd and Fitness
Target Sports shop Fitness was that each club was lo
ca
, making it easy fo
r fitness club mem ted in the same building as a
with some retail th
bers to combine a
erapy. By the star
t of
visit to the gym
generating annual
revenues of £138. 2009, there were 55 Target Fitnes
s clubs operating,
7 million and oper
Sports had invest
ating profit of £22
ed over £225 mill
.9 million. Target
ion in building this
considered a succ
part of the Group
ess despite intens
, and it was
e competition from
much larger fitness
Less successful ha
club operators.
d been the Group
’s
specialising in fash
decision in Januar
ion sportswear –
y 2008 to acquire
TubeShoes and C
tw
of the Group, had
ha
made the acquisiti
vCity. Carlo Bacco o retail chains
ons in an attempt
the market-leading
relli, then CEO
to compete head
retailer of fashion
-o
n
sportswear. The
the two acquisition
decision to pay ov with JD Sports –
s now seemed a
er £25 million for
disastrous one, an
had been taken ev
d Mike Cullinan w
aluating the two ch
ished more care
ains before they w
he estimated that
ere bought. In his
, if they were allow
B
ed to keep tradin
make a combined
g, TubeShoes and oard Presentation,
loss of £18 millio
ChavCity would
n in 2009.
The core retail bu
siness of Target S
ports was also in
400 stores, like-fo
difficulty. Trading
r-like sales had fa
from
llen by 15% in 20
£30 million. Bacco
0
8 and retail profits a portfolio of
relli had blamed th
by 68% to just
e failure of England
stock lead times an
d poor quality stor
to qualify for Euro
e managers. But
deeper than that.
the underlying prob 2008, longer
lems were much
2 AQA A2 BUSS3 Revision Workshop
the
to copy ts
d
ie
r
t
had
duc
ccorelli ands and pro ed
a
B
.
s
u
k
r
t its foc ass-market b become pac rts
s
lo
d
a
rts h
Spo
ing m
s had
get Spo ct by introduc Sports shop itional Target orelli
r
a
T
,
s
r
ire
trad
acc
rget
ome
its cust at of Sports D ices. Many Ta interest to the troduced by B oup’s
f
o
s
e
y
r
In the e ful trading form inal selling pr stock, of little he changes in within the G te 2008
n
t
ig
la
T
s
succes well below or , mass-marke ialist service. used confusio king stores in bs.
d
a
c
s
a
jo
e
c
e
e
t
m
p
ir
at pric avily-discoun
ded, s ff morale and lose 74 loss- eared for the
n
a
r
b
a
e
a
f
c
now
raw
full of h r who wanted rs affected st e decision to
kforce
r
o
e
e
h
to withd llowing
w
m
T
m
g
.
e
o
o
f
t
t
h
f
in
s
t
a
n
u
t
f
e
s
c
t
o
cus
o
f
a
08 f
thre
loss o
d shop
– many
ts were t the end of 20 up with
r
o
and the epartments an yee relations
p
S
t
na
rge
ome
d
plo
rs to Ta s of £48 millio roup could c the likes of
buying
e
ved em
k
o
n
r
a
p
b
im
t
, the
wing
llow
the G
had no
n worse net bank borro illion. Unless iness would fo
e
v
e
s
r
£60 m
p had
e matte
ire bus
the
To mak port. The Grou e year of over k that the ent
ad left
h
is
p
t
h
r
u
i
g
ll
s
h
e
in
ir
r
ig
r
e
h
o
th
Bacc ision. But time
tflow du , there was a tration.
lo
u
r
o
a
h
C
s
.
iv
y
a
ac
trategy I into adminis
strateg m the retail d
s
t
a
le
h
t
ib
d
p
velo
s fro
a cre
nd M F
d to de nior manager
e
orths a
t
in
lw
o
o
p
o
e
W
ral s
en ap
had be ng with seve
n
ated
a
in
ll
u
lo
e estim
H
.
ly
Mike C arly in 2009 a
e
t
edia
set
e
ins imm ments and as
a
Group ing out.
h
:
c
s
t
y
n
it
me
n
pay
avC
was run
main ele
and Ch maining lease
o
s
w
e
t
o
d
h
a
h
g re
al
ubeS
n’s plan
aking T illion, includin
’s origin rs to
d
m
d
s
o
s
T
Cullina
lo
n
se the t around £9 m
ing Sta ke up to 2 yea store
lo
s
c
u
,
o
T
in
a
os
(1)
ld ta
g of
ts ch
would c
st spor sitioning wou s and retrainin estment
li
ia
c
e
p
that this ;
repo
nge
sas
d inv
ffs
ports a s Crazy”. This of product ra . The estimate . The
S
t
write-o
e
g
r
n Ta
orts
plan
port
ation
epositio ores being “S uts, rationalis of popular sp d to back the e they were
r
o
T
)
c
st
yo
(2
ge
de
plan, sin
store la
persua
t of the
on a ran
concep involving new expert advice nks could be d to back the ition.
a
e
s
,
r
from
achieve hey could offe ing that the b to be persuad ts’ financial po
m
k a call fer
t
r
e
u
o
o
v
o
s
o
a
p
s
t
s
h
f
a
S
f
n
t
o
a
a
–
ls
st
n
ge
n of
ullin
5 millio
would a
s of Tar
Mike C ing to make a
g
in
t
e
was £9 key suppliers istent rumour
e
ll
rd m
s ca
rs
the Boa n Todd. He wa ject.
r
Group’s d with the pe
e
t
n
e
ne
Sta
e to
to re
f the
concer
was du phone. It was ld be foolish
e
h
n top o
e
r
o
o
u
f
s
o
e
e
p
il
b
w
o
b
h
utes
isure
he s
is mo
ts plc
luding t Stan Todd Le e
Just min number on h f Target Spor
c
in
(
n
r
o
ess
ivisio
er th
a familia ed the Board
itness d ame the busin ree not to ent
F
t
e
v
g
e
r
li
Ta
ag
ren
he be
buy the n. He would Sports would
o
t
s
a
w
o
t
li
mil
offer
arge
Todd’s lubs) for £100 eal was that T the sale.
feel
d
r
c
gan to
fitness ndition of the t 5 years afte
e
b
n
a
o
as
ullin
and a c arket for at le
, Mike C over.
g
in
t
e
m
e
t be
rd m
fitness
he Boa roblems migh
t
o
t
in
alked
his p
As he w h the worst of
g
as thou
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Session 2
Marketing Strategies
for Success
BUSS3 Content Blast
Q1:
a)
b)
c)
d)
e)
Which TWO of the following are external influences on marketing objectives?
Effectiveness of customer service training
Production capacity to meet demand
Competitor promotional campaigns
Changes in technology affecting product life cycle
Profitability of the business
Q2:
a)
b)
c)
d)
Which ONE of these is a disadvantage of test marketing?
Reduces the risk of a full product launch
Allows the marketing mix to be tested and changed
Competition are kept in the dark about new products
Test market may not be representative of full market
Q3:
a)
b)
c)
d)
e)
Which TWO of these statements are TRUE?
Extrapolation uses trends in historical data to predict the future
A moving average makes a trend line more volatile
Correlation cannot be used for sales forecasting
The regression line plots the relationship between two variables
Strong negative correlation indicates a strong causal link
Q4: Identify from the list below TWO likely features of a business adopting
a marketing strategy of cost leadership
a) Significant brand or product differentiation
b) High level of productivity & capacity utilisation
c) Targeting a small number of market niches
d) Lean production methods
e) Focused on online distribution only
Making Sense of Market Data
Read the following excerpt from Stan Todd’s speech to the Manchester Entrepreneur of the Year
at the Hilton Deansgate; 17 October 2009.
“I’ve been in the sports and fitness business for almost 40 years. The thing I’ve learned
is that you don’t spend too long looking at market statistics. The way you find out what’s
going on is to visit your shops, talk to customers, and spend time in the gym and cafe at
the fitness clubs.
I’m really excited about the opportunities in the fitness sector. We’ve got a great portfolio
of clubs with better managers and staff than the competition. And the changes in society
are in our favour too. We know that sports shops sales depend on how well the England Football team
does. And in fitness, it’s a dead cert that rising obesity is going to lead to long-term growth in spending
on keeping fit. There’s a direct link too between spending on promotion and increasing club memberships.
We’ll be doing a lot of marketing!!
Data Extract: Marketing Information on the UK Fitness Industry
Consumer expenditure on sports and fitness participation 2004 – 2008 (£m)
Source: Keynote 2009
2004
2005
2006
2007
2008
% change 04-08
Entrance fees
Subscriptions
Other fees and charges
Total entrance fees
1,850
1,600
3,450
1,900
1,550
3,450
2,000
1,650
3,650
1,900
1,650
3,550
1,800
1,600
3,400
-2.7
0.0
-1.4
The State of the UK Fitness Industry 2009
UK population belonging to a private club or public sector fitness facility.
Average period of health club membership
Average monthly membership fee
Number of new clubs opened in 2009
Number of new memberships in new facilities
Like-for-like increase in memberships
Competitor profiles
Sales in 2008 (£m)
Sales in 2006 (£m)
Operating profit in 2008 (£m)
6 AQA A2 BUSS3 Revision Workshop
12.1%
18 months
£42.91
64
66,444
1%
Virgin Active
Bannatynes
David Lloyd
67.4
65.2
(1.7)
77.0
54.4
14.1
207.8
187.9
39.6
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Examiner Note: A key skill at A2 and an integral part of Unit 3 is to weigh
up, select and use appropriate data to build arguments and make decisions.
Question: Analyse the usefulness of marketing information to support Stan Todd’s
decision to acquire the Total Sports Fitness Division.
Quick Question: The marketing director is keen to forecast potential membership sales.
Outline two methods that he could use to forecast sales.
Method 1
Step 1: Identify two pieces of evidence from the marketing data which (1) support and
(2) argue against Stan Todd buying the Target Sports Fitness Clubs.
Marketing evidence IN FAVOUR of the
acquisition
Marketing evidence AGAINST the acquisition
1
1
Method 2
Selecting Marketing Strategies
Following the purchase of the Fitness Division, New Managing Director Jemima Riley outlines
STL’s corporate and marketing objectives:
2
2
Corporate Objectives for STL
Marketing Objectives
To provide products and services of the highest
quality and deliver more value to our customers.
Increase membership numbers at existing clubs
by 25% within two years.
To achieve sufficient profit to finance STL’s
future growth.
To add 25 new clubs in the UK and overseas.
To explore new markets, continue to grow and
build the Stan Todd Leisure brand.
To achieve membership retention of at least
90% across the club portfolio.
Step 2: Question the usefulness of the data provided and identify how it might be improved
What will the usefulness of the data depend on?
Evaluation
Make a
judgement on
the usefulness
of the data.
What additional information may be required to make
a more informed decision?
8 AQA A2 BUSS3 Revision Workshop
Question: Identify one internal and one external influence that could influence
STL’s marketing objectives.
Internal Influence
External Influence
Gain more
marks for
evaluation by
questioning
the data and
identifying what
further data may
be required or
more useful.
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