Power Point presentation: Please use the attachement

Developing the Implementation Plan

Jolene Woodruff, Alain Hutchison, Mike Matthews, Gorbeh Kupee

Grand Canyon University, ENT-435

July 30, 2017

One out of every five Americans are heading to the gym, or at least paying for a membership. The one thing a large percentage of these facilities have in common, large or small, tough or trendy, is the sauna. Current product on the market uses low tech, low cost solutions to control the sauna temperature. The growing need for reduced carbon emissions and the gym operator’s desire to reduce operation costs, making the business more stream lined, leads to the development of the Intelligent Sauna Controller offering substantial cost savings to the sauna provider, as well enhancing the sauna experience for the customer.

The cost of providing this benefit to club members is an expensive one. Typically, a gym runs 16 – 24 hours 7 days per week and only utilizes the sauna at peak times, wasting enormous amounts of energy when not used. Through tests it was found a sauna could be run at much lower temperature called the “Standby Temp” and when the user requires the sauna the temperature can be increased to full temperature within 5 minutes. There for, providing cost saving benefits to the customer without upsetting or spoiling the consumer’s sauna experience.

Depending upon the size of the sauna and the heat generator it is expected to save the facility around $750.00 – $1500.00 per month, this translates to an impressive bottom line savings of $9000.00 - $18000.00 per year per facility. If Fitness First was to embrace this development this would mean they could save an estimated $2,500,000.00 on the estimation of 250 facilities every year.

In 2016, there were 36,540 gyms in the U.S. The high-end facilities are spotless and trendy, appealing to the ego with exquisite marketing, showing beautiful people doing beautiful things. The other extreme would be the crunch gym, who pride themselves on catering to the less than perfect specimens, making people feel that they can be comfortable, starting over, in their environment, again and again. Then, there are the high-end hotels and companies that offer a gym for their employees. The sauna is for unwinding, sweating out impurities, significant improvements in thyroid function, balance, reaction time and even IQ! The heart also gets a gentle workout while the heat of the sauna dilates the capillaries and improves blood flow, so it will be a viable industry for a long for-seeable future.

There are many different strategies available to use for pricing a product. Reviewing the information online and resource there are 4 main pricing strategies with variants. Using the approach as laid out by Leigh Richards (Richards, 2016)

• Premium Pricing

  • The price is set much higher than other product in that market, due to commercial and benefits provided by the product. This method maximize revenue during the early stages of the product life cycle.

• Penetration Pricing

  • This pricing strategy uses a competitive price to gain entry in to the market or break through key customers to gain brand awareness.

• Economy Pricing

  • Companies take a very basic, low-cost approach to marketing--nothing fancy, just the bare minimum to keep prices low and attract a specific segment of the market that is very price sensitive.

• Price Skimming

  • Business that have significant competitive advantage and the price skimming strategy is designed to give maximum revenue before competition develop ME 2 products

• Psychological Pricing

  • Used by marketers to trick consumers’ minds to make the product appear better value. E.g. placing a low-cost item next to a high price, high quality. Giving the illusion that the lower cost price is cheaper, but of the same quality and brand.

Gregory C. Hamel describes the fundamental issues when setting a price in the market for your product are:

• Cost

  • This is the basics you must sell your product for more than your cost of product and operational cost. In other research, this is described as the break even.

• Competing Products

  • Review the market to find competitors with similar products. Their price can provide a guideline to where you price should lay.

• Consumer demand

  • Market research and surveyors will have provided valuable data on the market and the possible market share that could be achieved. With new and improved features and benefits a primum can be added to create more profit.

• Product Positioning

  • The price influences the consumer. A low price implicates and an expectation for low price quality is compromised and a high price leads to a high-quality product. Therefore, the price reflexes the image of the goods and brand.

From the research, the appropriate pricing strategy should be a premium pricing strategy, the product provided large cost saving benefits for the operator of the sauna and new enhanced features for the end user in a safety working environment. Then with the life cycle of the product the price can change as the market changes to the new product. To set the price other factors must be applied as noted from our research.The cost of manufacture and price for the unit is approximately based on small volumes. 100 – 200 units per year.

$100.00 cost of delivered good

$30.00 pay back initial investment

$50.00 operational cost

This gives a break-even point of around $200.00 per unit.

The current competition’s product does not provide the features and benefits of our product. It is difficult to compare prices, as there are cheap timers made by cheap components and will fail under normal use, as well as giving the consumer the ability to control their own experience. Our product uses premium products to deal with the tougher environment you find in an everyday public place.

Consumer demand is not known and the market research will provide valuable data. The product is expected to show high interest due to the cost saving provided to the provider and eventually the end user will be provided with much better sauna experience such as temperature control, saunas that have been on all day and the wood temperature burns your skin because it is too hot. These user benefits will lead to better sauna experience and deliver the health benefits of a saunas to more people.

The use of focus groups in market research can be traced to the World War II period when it was used to evaluate the effectiveness of propaganda and the morale of US soldiers in the battlefield (Merton & Kendall, 1946). The process involves the collection of product data through group interaction on a specific topic that has been determined by the researcher. It involves the use of a carefully selected number of people to discuss a product by their commonality of experience. The four main characteristics of a focus group are active people involvement, commonality of experience, collection of in-depth qualitative data and finally, discussion that’s aimed at understanding the perception of consumers about a certain product or service

Selection of focus groups

The focus group in this scenario involved consumers selected from a pool of carefully selected commercial sauna owners. The sampling technique to be used for the selection of the focus group members is “convenience” or “purposive sampling,” and it involved the selection of members of the community that the researcher deemed to be the source of the best information about Sauna Control systems. In this case, individuals owning or operating saunas in businesses. The best place to get such information is from a specialist quorum such as from visitors who frequent Trade Fairs for Saunas and Pools such as the Aquanale 2017 International Trade fair for Sauna, Pool, and Ambience (Aquanale, 2017).

Opening questions:

1. Do you own or have ever used a sauna? Does it have a manual or automatic control? What do you like about the automatic control? What don’t you like about the control? Are you more than 18 years old?

These questions are aimed at addressing the issues of inclusion exclusion criteria. The respondents who will be considered are the ones above 18 years of age and those who have used or use saunas.

2. Do you prefer manual or automatic Sauna control? Please suggest reasons for your choices

This will further filter the user into categories of those who are interested or use intelligent Sauna control systems.

3. Have you ever been to a sauna that provides the customer with control of the time as well as the temperature?

The next part will be the most important inclusion criteria in the focus group since it will address issues specific to the product to be marketed.

4. Would it matter to you if you could choose a temperature more or less than the preset temperature.

5. Do you see cost savings if a controller were mounted outside the door of your sauna that brought the temp down while it was not in use and up to the clients desired temperature upon entering?

6. Does our intelligent Sauna Control system appear cost effective to you?

7. Do you see added customer benefits?

The information gathered from the questions will be used by the marketing communication department to frame the most salient and important information to be relayed to the consumers. According to Buda and Zhang (2000) and Weisstein et al. (2013) product message framing including information such as features and pricing have a great impact on consumer perception of the need, quality and affordability of a given product. The information gathered can then be used to frame a highly presentable and attractive marketing communication message that resonates with the consumers.

The most important strategy of communicating the gathered marketing information would be via an integrated marketing communication (IMC) strategy (Kitchen & Burgmann (2015). This strategy involves the use of multiple media including print, electronics marketing, promotions, direct selling, advertising, personal events, and trade shows. This is a key pricing factor and market surveys will provide a realistic price

The Product must be priced as premium product so that is sits at the top end. The Intelligent Sauna controller will pay for its self with in the first 3 – 6 months of use and more important burn less energy and help the planet. From the financials, a target price of $500 market research and the customer focus groups will fine tune this price to match the customer’s expectations.

This concludes the entire market analyses for the implementation of the Intelligent Sauna Controller, developed by The Green Team from Green Heat Technology, leaving with the hope that this product is on the market and available for consumers for better control over consumption costs, a more enjoyable sauna experience for guests, and a greener carbon footprint for everyone involved.

References

Aquadale (2017). The aquanale 2017 is picking up speed. Available online at

http://www.aquanale.com/aquanale/index-2.php

(BusCooper R.G., Edgett, S.J. (2008), Maximizing productivity in product innovation, in:

Research Technology Management, March 1, 2008iness and financial analysis).

Buda, R., & Zhang, Y. (2000). Consumer product evaluation: the interactive effect of message

framing, presentation order, and source credibility. Journal of Product & Brand

Management, 9(4), 229-242.

Husig, S; Kohn, S; Poskela, J (2005). The Role of Process Formalization in the early Phases of

the Innovation Process. 12th Int. Prod. Development Conf. Copenhagen).

Kitchen, P., & Burgmann, I. (2015). "Integrated marketing communications: Making it work at a

strategic level". Journal of Business Strategy. 36: 34–39. 

Merton, R. K., & Kendall, P. L. (1946). The focused interview. American journal of

Sociology, 51(6), 541-557.

Richards, Leigh (2016) These are the strategies: Retrieved from:

http://smallbusiness.chron.com/different-types-pricing-strategy-4688.html

Whitaker, Dr. Julian (2017) Health Benefits of a Sauna, Retrieved from;

https://www.drwhitaker.com/health-benefits-of-a-sauna