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Presentation text for the Space & Light Studios case study
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Plan of action for the owners of SLS:Like mentioned before, one of the major issues for SLS is the difficulty to attract customers.
Therefore they have to invest more in advertising. There are many different methods to try to
increase the number of people attending yoga classes in the future. We think that the best step to
take is using a combination of several advertising methods. After implementing these methods for a
certain period, an analysis can be performed to see which of these techniques brings in the highest
number of customers and which method is not worth its time and/or money. After the analysis,
adjustments can be made to focus on the best methods and reduce or let go of the methods that are
failing to attract new customers.
Word-of-mouth marketing is one of the best advertisements a company can have. This is an
organic source of advertisement that helps to build the SLS brand. To increase the return of
customers and recommendation of SLS classes to other people it is essential that the
atmosphere in these classes is enjoyable. This can be ensured and improved by having well
educated and trained instructors that give the yoga classes. Providing resources like flyers or
articles gives the customers simple means of sharing information about SLS. This enlarges the
reputation and establishes the brand name in the market. (investing in staff and a good
selection process is very important to get that organic advertisement) (reorganising human
resources)
Digital marketing is another method with great opportunities for SLS. There are many
different ways this can be approached. SLS is already using their own Facebook page but can
increase their reach by additionally creating their own blog and using other social media
applications. An actual video advertisement campaign can be produced and posted to all
their socials. For further investments in digital marketing, SLS can look into collaborations
with local people who have a decent following and use their influence to attract more people
to SLS.
Customers could also be attracted by increasing the awareness for yoga and make clear what
all the benefits are that can be achieved from practising in the yoga classes. By doing this
they can use their strategy for differentiation where they provide ……… yoga which is not
provided elsewhere.
Offering deals like previously done on groupon can be repeated and/or extended to different
platforms. Another interesting deal that can be used in this market is giving discounts for
referrals. In this way customers get a reduction of their price if they bring or refer a friend.
This is a real win-win situation.
Another problem that has been encountered Is that only a small part (in May 2013 only 30%) of the
capacity is used. By more effectively and efficiently using these resources also more customers could
be gained. In May 2013, the breakeven point was 195 classes, by offering more classes and thus using
more capacity a profit would be earned. Another step to take is increasing the amount of times slots
and thus the number of classes taught. This gives the customers more possibilities and can certainly
attract more people who otherwise couldn’t attend classes. By providing classes during time slots
where no other yoga companies provide classes brings in an edge over these competitors. Beside the
increase in flexibility also the operating capacity rises in this way.
In the analysis it can be seen that the fixed costs are high, it accounts for nearly 60% of the total
expenses. Lowering these costs increases the margin and thus would be very good for the profit of
SLS. The growing customer base who specifically come to the location for SLS brings in additional
benefits for Verita as well. Once these customers are at the location, there is a higher possibility that
they also make use of the services provided by Verita. This can make renegotiations (with Verita)
, about the price for the rent and use of the salt cave easier and could possibly result in a lowering of
the fixed costs for SLS.
Another possibility to get a larger profit is by charging a higher price for each category of classes. The
results of the sensitivity analysis show that increasing the price by 10% would have a good impact on
the profit. Looking at the prices in the market they are relatively cheap compared to others and it
seems that there is still room for a rise in the price without losing the advantage of being cheaper. Of
course an analysis has to be made after implementing this increase in price to make sure that they
can keep their customers while making the classes more pricey.
Besides the fixed cost another option Is to lower the fee given to teachers to decrease the variable
cost. This is somewhat contradicting with the fact that SLS has to make sure the instructors are highly
educated and trained and thus usually are a bit more costly but provide a better experience and
learning atmosphere for the customers.
The option for renting another studio which is cheaper has both advantages and disadvantages. By
renting somewhere else, the change in location can lose some regular clients this can be due to the
fact that the studios at verita have a unique atmosphere and a beneficial collaboration with Verita.
Also people who found this location convenient can drop out if they have to go to another location.
Therefore it seems a better option to try and negotiate with Verita to get a lower rent price.
The addition of a stream of income coming from retail would be a good idea. They already sold a
healthy food bar (“kindbar”) and were in negotiation with yoga apparel companies. Expanding to a
real retailers section can provide a nice extra income as long as there is a good product selection and
not too much space is lost.
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