Marketing Management in Fitness, Its Importance, and Its Main Functions - Essay Example

Preliminary Report on Bodyproud Fitness Overview of the company Bodyproud Fitness is a three-year-old health and fitness company that offers services on a membership only basis. Despite the lack of business experience of its top management, it continues to prosper in an expanding market. It has determined that it needs to systematically address its marketing program. The present marketing mix employed by the company appears to deliver the following: Product: 1. It has the usual state-of-the-art fitness facilities and exercise machines. It does not have a swimming pool, but it has a steam room and sauna, tanning rooms, massage services and Jacuzzis. 2. It offers a range of fitness activities, such as aerobics and yoga classes. 3. It provides personalized health and fitness programmes designed around individual needs, including advice about diet and lifestyle. 4. Services available from 7:00 a.m. and 9 p.m.every day of the week except on Christmas day. Place: The facility operates out of a former furniture warehouse located one mile from the town centre in Huddersfield. Price: Initial joining fee of ₤100 and an annual membership fee of ₤500. Discounts are offered for members under 18 or over 55 years of age, and for family memberships. Promotion: Mainly involves local advertising, some useful publicity in the local press, and through visits conducted by one of the founding partners among local schools, in order to talk about the importance of health and fitness for young people. Marketing management in fitness, its importance, and its main functions The growing interest in health and fitness may be viewed as an offshoot of the increasing modernization and affluence in lifestyle, particularly in the urban areas. Evidence of the importance accorded personal fitness and well-being is the growth of this industry for the tenth consecutive year; according to the 2010 FIA State of the UK Fitness Industry Report, 122 new facilities opened across the country during the 12 month period ending in 31 March 2010. Although national GDP contracted by a record 4.9% for the same year, the fitness industry remained strong at ₤3.8 billion, with 7.4 million members and growing (The Leisure Database Company, 2007). Because of the strong competition and the potential buyers into this particular service, there is a need for well-managed marketing management to bring the company to customers’ attention. Marketing is “the commercial process involved in promoting, selling, and distributing a product or service” (Princeton University, 2011). The aim of marketing is to provide information and encouragement for those who would benefit particularly from the services provided by Bodyproud Fitness, that is, those who would find the company’s geographical location, price range, and product offerings appropriate for their particular needs. According to the seminal book by Bates & Parkinson (1969), the numerous marketing functions a company may undertake can be categorized into the following (i.e., as adapted in the fitness industry). 1. Analysis and forecasting, i.e. Marketing Research - In the case of Bodyproud, marketing research would include a more precise estimation of the company’s potential demand for the various products it offers – gym, aerobics and yoga, and nutritional advice. This estimation includes a more thorough description of its target consumer profile, in terms of demographics, statistics, and future trends. It requires a determination of the affordable price range, the preferred product features, and the possible future likes and dislikes of the said market. (For price, Bodyproud may have to adjust its $100 initial and $500 monthly fee, depending on its research update.) Research also necessitates a survey of developments in the technology of fitness and health, including human kinetics, nutrition, calisthenics, and related activities such as dance and martial arts, which the health and fitness customers may find desirable. Equally important will be a market research on the company’s competitors, their techniques and trends. 2. Product development and design – With the information gathered from marketing research, the marketing function should determine the particular products to develop and what features such products should have in order to more appropriately meet customer needs and expectations, while ensuring a reasonable profit for the company. It should be kept in mind by marketing managers that the resulting product design should be able to command a competitive price for the company’s target market segment, which would sufficiently cover the costs of production and the minimal required return by the investors. For Bodyproud, this means a survey of the gyms within a reasonable distance from the gym – cursory research indicate anywhere from a two-mile (Love-to-Know Exercise, 2011) to five-mile (MoreBusiness.com, 2010) radius. It is reasonable to expect that people who would be going to the fitness center would do so before or after work hours, to a place reasonably accessible to their place of work or residence. 3. Influencing the demand design, advertising and promotion, etc. - The marketing function is critical in fashioning the manner in which the product is brought to the attention of the public, to more effectively reach the intended customer based in order to generate maximum sales. From its determination of the ideal and range of attributes in the customer profile for its product, marketing should decide which type of demand to spur, what product features to highlight, the medium to be used and the style of delivery the advertising is to assume. It should also periodically come up with promotional campaigns that would generate initial and renewed interest in the product. Depending on Bodyproud’s target segment (see succeeding sections), this may mean anybody from the youth to the adult to seniors, or even niches such as athletes, overweight persons, or persons with disabilities in need of special physical therapy. 4. Service distribution after sales, service, etc. - In the fitness industry, the product is delivered within the confines of the gym or facility. However, marketing can support the after sales experience by making periodic reminders by calls or e-mails to remind persons of their scheduled exercise programs or their dietary regimes. After service support may also include invitations to seminars or electronic newsletter on topics of interest for health and fitness. It is important to maintain personalized service consistent with the company’s principal strategy. The scope and relevance of a STEP analysis The fitness industry has proven itself resilient even during economic downturns; all the same, it is important to conduct periodic analysis of the business environment in order to adopt the appropriate strategies. The following is a STEP analysis for the fitness industry: Source: Learn Marketing, accessed at http://www.learnmarketing.net/pestanalysis.htm Factor Direction Importance Political Government policies that promote wellness may provide support and subsidies for the health and fitness industry There is state interest in a healthier population to increase productivity and lower costs of public health programs Positive Positive Major Major Economic Fitness industry is strong even during economic downturns so demand will continue to be sustained Cost of equipment and professional services may rise, tending to reduce the company’s profit margins Positive Negative Major Major Social There is enhanced social status in looking good and fit, creating incentive among your professionals to go to gym People may function better at work, with fewer sick leaves, encouraging companies to subscribe to health programs Positive Positive Minor Major Technological There are periodic improvements in state of the art machinery and equipment, although basics remain the same Research constantly yields new data in nutrition and health, which requires customers’ updating; may generate opportunities for new company goods and services Pos/Neg Positive Minor Major The importance of understanding Buyer Behaviour Health and fitness is a service industry, requiring the motivation and cooperation of its customers’ conduct and behaviour. To illustrate this point, in a study of the fitness industry differentiated against purely spa users, Morton (2007) identified the various types of customers that patronize the health and fitness facilities, and determined critical characteristics of their buyer behaviour. The summarized results are as follows: • Almost 70% of health and fitness club members lived within 15 minutes of the facilities. Surveys elsewhere have shown that in more urban areas this ratio is even higher – often with 90% of members living within 10 to 15 minutes. Almost all members lived within 30 minutes and it is highly likely that those living further away travelled to the area to work. • In comparison with fitness customers, only 60% of day spa users lived within 30 minutes and over 20% travelled for more than an hour to use the facilities. This indicates that the proximity of the location of fitness clubs is more important to the customers. • Almost 70% of health and fitness club members came from the top socio-economic, or from the 25% most wealthy families in the area, whilst just over half of spa users came from the same group. Health and fitness club members thus comprise of a narrower market, although they can tolerate greater price fluctuations. There is, of course, a need for Bodyproud to conduct its own customer profiling; however, assuming for the sake of this exercise that the foregoing findings hold true for its market, Bodyproud may expect to count on the following observations made by the Morton study: 1. Members of hotel based health and fitness clubs are drawn from a narrower demographic market than day spa visitors, probably due to spa users enjoying special treats and day access has wider market appeal than the monthly membership subscriptions employed by health clubs. 2. Fitness club members are more accessible by direct marketing activity, such as door drops, direct mail, postcards, and leaflet distribution. etc., therefore area penetration levels are higher. By comparison, spa marketing depends more on radio, press, and local magazines for publicity; however, it is also possible to successfully launch well targeted, very local direct marketing activity. 3. In order to increase the yield and effectiveness of their marketing efforts, spas need to add value per visit to their customer analysis. On the other hand, health and fitness centres should monitor member value by taking into account the length of stay per visit and the types of members. Spa users will tend to be more heterogeneous in user values, and fitness members more homogeneous. 4. The profile of health facility users is more likely wider than is generally surmised. The company should therefore not limit its marketing activity based on perceptions, but on solid research data.. Don’t limit your spa marketing activity based on your own perceptions – they may be wrong. 5. It is important to define Bodyproud’s target user profile at the earliest possible stage in the development process (suggested by Morton, 2007). Market Segmentation and Targeting Market segmentation involves “satisfying the needs of existing and potential customers in a clearly defined market” (Christopher, Payne, & Ballantyne, 2005, p. 65). The successful segmentation of the market begins with a clear definition of the market the company wishes to target, and devising an appropriate market strategy and plan for it. The following diagram depicts the market segmentation process: Source: Lazarus Research Group, 2006 After a firm has segmented its market, it may employ several strategies that may be selected to carry out the determination of the target market. Among these are the following (Claudiu, Ionel & Tudor, 2008): (1) Non-differentiated strategy – This strategy has the goal of targeting all segments, without distinguishing among the particular segments in the potential market; (2) Differentiated strategy – Using this type of strategy, the firm reduces its focuses to two or more segments, and addresses each with a different strategic approach; and (3) Concentrated strategy – This involves targetting a single market segment, towards which the marketing efforts of the company is focused and directed. The owners of Bodyproud may determine the appropriate market they would wish to target, based on a market-product grid such as the following suggested format: Market-Product Grid, Bodyproud Fitness Co. Market Segment Products Machines Aerobics/ Yoga Steam/ Sauna Massage/ Jacuzzi Diet/Lifestyle Consultation Reg Adult 1 1 1 1 1 Youth 1 1 1 1 1 Overweight 2 2 2 2 2 Seniors 1 1 1 2 (therapeutic) 2 (geriatric) Athletes 2 2 2 2 2 Weights: 1 – General need for the product, 2 – Particular need for the product The role of Marketing Research and Information Marketing research has been briefly discussed as a marketing function earlier in this study. The pertinent results of such research are discussed here as they pertain to Bodyproud: Huddersfield census figures for 2001 (Gibson, 2011) Population : 121,620 Under-16s : 20.6% Sixty-five or older : 16.1% Employed : 56 % Unemployed : 4.1% Student : 10 % Retired : 13.6% Other (including carers and disabled) : 16.3% Owned own homes : 65.5% Private rented : 15.1% The following is a summary of key data as culled from the UK Health and Fitness Industry and derived from the Leisure Database Company (2007): • Market Value is estimated at £3.8 billion, a 1% increase on the previous 12 months • 12 per cent of the UK population are now registered as members of a health and fitness club. • Total industry membership base has grown by 0.4% over the 12 month period to 7.4 million. • 122 new public and private fitness facilities opened in the 12 month period ending 31st March 2010 • There are now 5,885 fitness facilities in the UK • The region with the most new fitness facility openings was the North West • The region with the fewest new fitness facility openings was the North East • Single site operators accounted for 38% of all new private sector openings. The foregoing data are presented in this general outline to show the possibility of the use of information as a basis for marketing plans and decisions. For instance, 36.7% or a full one-third of the Huddersfield population, consisting of those below 16 and above 65 years of age, may be targeted with Bodyproud’s discount plan. A good two out of three Huddersfield residents own their own homes; coupled with the information from the Morton (2007) study that 70% of fitness members come from the higher economic segment, Huddersfield presents a fertile ground on which to develop higher-priced, higher-valued health programs. The high ratio of youth and employed may be better reached through new media advertising (Tock, 2008). Furthermore, since Huddersfield is located close to the town centre, it may access the potential market in the North East where there are fewer fitness facilities. Conclusion The foregoing is but a general outline of the possibilities that may be opened up by a full-blown marketing management system in Bodyproud Fitness. Such a system would more effectively generate sales, reduce costs and improve profit margins, if backed with the proper research, segmentation and targeting, strategic positioning, product design and support for the firm’s customers. The profit potential of the health and fitness industry, as well as the social benefits it provides, is irrefutable; the efforts exerted in the creation of a systematic and studied market management approach, however, is important in order to take advantage of this expanding market in the face of growing competition. Wordcount = 2,500 excluding title References Bates, J A & Parkinson, J R 1969 Business Economics. A. M. Kelley, New York. Christopher, M; Payne, A; & Ballantyne, D 2005 Relationship Marketing: Creating Shareholder Value. Butterworth-Heinemann, Jordan Hill, Oxford Claudiu, C Ş; Ionel, D; & Tudor, I F 2008 “Segmentation, targeting and positioning of the suppliers. Basis element in strategic planning on business to business market in Romania.” Annals of the University of Oradea, Economic Science Series, Vol. 17 Issue 4, p790-795 Gibson, B 2011 “Census figures for 2001”, The Huddersfield Daily Examiner. 7 Jan 2011. Accessed 17 February 2011 from http://www.examiner.co.uk/news/local-west-yorkshire-news/2011/01/07/census-figures-for-2009-86081-27944187/ Grashof, J F; Zallocco, R L; Malhotra, N K; & Schwartz, J M 1992 “Health Care Marketing Abstracts.” Journal of Health Care Marketing, Dec92, Vol. 12 Issue 4, p80-84 Lazarus Research Group 2006 Elements of a Successful Business Market Segmentation. Accessed 5 February 2011 from http://lazresearch.com/downloads/market_segmentation.pdf Love to Know Exercise 2011 Social Benefits of Exercise. Accessed 18 February 2011 from http://exercise.lovetoknow.com/Social_Benefits_of_Exercise MoreBusiness.com 2010 Personal Fitness Business Plan. Accessed 18 February 2011 from http://www.morebusiness.com/personal-fitness-business-plan Morton, C 2007 “Comparing Health and Fitness Club & Spa Markets”, Chris Morton Associates. 10 December 2007. Accessed 18 February 2011 from http://chrismortonassociates.com/comparing-health-and-fitness-club-spa-markets/50/ Princeton University 2011 “Marketing”, WordNet: A lexical database for English. Accessed 18 February 2011 from http://wordnet.princeton.edu/ The Leisure Database Company 2007 Growth in Health & Fitness Industry Bucks National Trend. Accessed 18 February 2011 from http://www.theleisuredatabase.com/news/news-archive/growth-in-health-fitness-industry-bucks-national-trend Tock, E 2008 “New Media Is Growing Player in Marketing.” Fitness Business Pro, Apr 2008, Vol. 24 Issue 4, p40 Read More