Gyms and Fitness Centres in Australia - Case Study Example

Gyms and Fitness Centres in Australia Student number: Last name: Assessment number: Tutorial day and time: Table of Contents Table of Contents 2 Executive Summary 3 Situation analysis 4 Macro-level (PESTL) 4 Porter’s five forces product life cycle 5 Competitor analysis: SWOT Analysis 5 Customer analysis 7 Recommendations and justification of strategy 8 References 10 Executive Summary Australia is rated as one of the most overweight country globally. Even with Australia’s ever stretching waistlines, income for the contributors of fitness activities is anticipated to grow annually by 1.4% within the next five years. This industry comprise of businesses majorly involved in operating fitness centres, gymnasia and health clubs. These businesses offer a range of exercise and fitness services. Rising levels of obesity has resulted to the establishment of initiatives that have significantly developed the achievement of fitness related programs paving way for many opportunities for the industry. The industry will advance towards maturity stage the next coming five years, with the returns forecast to idle as the industry consolidation transpires. Revenue is anticipated to decrease at an annualized 1.0% to total $1.25billion in 2017-2018. Clienteles in older age groups will be the core drivers of expansion awareness of the significance of physical activity on the quality of life and health in later years. The industry will persist to give out programs, delivery methods and products to their clients. Even though some of the new programs will die away, others are expected to work in a flourishing way as Australians’ willingness to spend on their health enhances. Situation analysis Macro-level (PESTL) Governments have been greatly endorsing issues associated with fitness and health. Obesity has turned out to be the second leading medical expense for the government. In reaction, the government has been able to promote the living and healthy eating, stress the obesity of the effects and improving more energetic lifestyles (Kingston, 2009). This reaction has assisted in promoting not just local gyms memberships, but also has promoted the uptake of group fitness and personal training. Moreover, the society has increased trend towards outsourcing the services from the household, gardening and cleaning the services from personal-care. The high rise of the obesity levels have been driven by the longer term changes in the society’s behaviour (Shulman, 2013). The healthcare problems may be attributed to progressively more sedentary lifestyles, working hours without exercise and eating unhealthy food stuffs. The products of the fitness are no longer intended for trained athletes and highly fit, but also provide for every healthy level and fitness. Various markets are growing very fast specially designed for older age and females groups. The extension of the fitness of women chain reflects this curve. While the total revenue is below the leaders of the market, curves have extra establishments in any added fitness provider globally and in the country. The high demand for those centres of fitness and personal trainers who are serviced personalized that are tough in terms group and service fitness instruction. A lot of centres for fitness moved to their customer service, more options in the group fitness are offered and hiring extra personal trainers in-house. The responded also upgrade their facilities to ensure that they provide a satisfying environment, which is very important to the body fitness. The activities such as the martial arts, Pilates and yoga are growing steadily by the number of people participating in such activities. Yoga activity has become very common in the classes and schools in most part of the country. The recognition of the mixed Muay Thai and marital art also bring about many people participating in the fitness for fight training. Porter’s five forces product life cycle Statistics indicates the industry’s contribution to GDP to be dilapidated on an annualized basis within the next 5 years. In the course of this period, industry gross product is anticipated to decrease 0.8% on an annualized basis. Conversely, establishment growth has been steady as the industry tries to find to move into new markets (McDougall, 2009). This information implies that the industry is in the mature stage of its economic life cycle. On the other hand, there are still features encouraging growth. For example, the industry has been kept afloat by public interest in fitness and exercise. The swift growth of fitness and gymnasiums centres specializing in regimes such as Pilates and yoga is the most pronounced suggestion of expansion within the industry. Rising health awareness has witnessed the market grow as the fitness bug has stretched further from devotees to the mainstream. Increasing awareness of the significance of health to employee productivity has also witnessed employers welcome the industry’s services, with several workplaces presenting to subsidize their workers’ fitness expenditure. Amplified demands for personalized service favours personal trainers and fitness centres that are sturdy in terms of group and service fitness instruction (Australia Bureau of Statistics, 2008). Many also respond by improving facilities to offer pleasant environment, which tends to be more significant to the conventional market than to fitness devotees. Correspondingly, fitness centres understands the importance of giving consistency in terms of services and facilities. Competitor analysis: SWOT Analysis Competitor 1: Fitness First Australia Pty Ltd Strengths Holds a sizeable share in the industry with more than 100 gyms. The business has been sustained by sturdy demand for fitness activities an increasing number of branding, clubs and positive management. Offer numerous services to consumers and thus it is one-stop shop Weakness The business holds a limited market share of 15.8% which has become its basis for its difficulties since 2010-2011. As it’s the turnout expanded the past five years the demand has moved towards low priced alternatives, which gives clients more autonomy by evading lock-in contracts. Opportunities Low priced values offered by the business In 2012-2013 the company will make an effort to trade 27 of its establishments which is anticipated to result to a harsh year. Threats Stiff competition from the other companies for instance ardent leisure group Current strategies It is a one stop shop incorporating most requirements of fitness Conducive and practical marketing strategy Future strategies The company should compete on opening hours and on price with other companies Competitor 2: Anytime Australia Pty ltd (9.8%) Strength It the second largest fitness company. Weakness The company does not operate within its budget’s niche. Opportunities Aim for maximization of franchises Consumers have understood importance of fitness Threats Competitions Current strategies Low cost gym facilities that is accessible at all hours. Cheap conventional franchisees Future strategies The company should perform more aggressive marketing to attract clients. The company should provide quality services Customer analysis The customers visiting the fitness age between 25-34 years, and 45-54 years, and this usually the targeted market. With the industry heading to maturity, most of the market segments are well enclosed in terms of customer demographics and geography implying participants in the industry are contending strongly above existing clients as the entrance of new clients to the industry occurs in a sluggish manner (Rippetoe, 2011). To this point, operators are looking to differentiate themselves by the value of service and facilities. This involves giving extensive range of services achievable at large one stop shop style fitness centres in well-situated locations such as those run by major chains like Goodlife and Fitness First. Price is becoming a predominantly competitive space as account fitness centre grants Anytime and Jetts fitness grow in popularity (Jacobs, 2000). For others it main concern is targeting a specific niche in terms of types of facilities offered and customers. For instance the curve chains that aim at offering facilities for female customers, services and equipment tailored especially to the feminine market. Recommendations and justification of strategy Fitness and gyms clubs must have suitable cost management and pricing strategy to endure in a highly aggressive market. Cost is an important aspect that determines whether cost purchases services or products. Gyms usually offer service and the cost of the service should factor into consideration opportunity cost and value for money (Maclntosh and Doherty, 2007). Therefore, the management of fitness certain should assess their target market, income, quality of service in determining costs of the services. Ensuring that equipment and facilities are well sustained will improve the participatory experience and assist prevent injuries (Huang, 2006). This means the equipments that are used in the fitness centre should be effectively maintained and also the equipments should complement each other in ensuring customers obtains maximum benefits. Some people may require physical fitness while others may be associated to medical reasons. Hence, the management should ensure the equipments and facilities operate effectively to retain and attract new customers. Fitness and gyms centres with high diversity in service will come across easier to attract customers (Bodet, Meurgey and Lacassagne, 2009). The fitness centres should offer a range of services and should factor into consideration the environmental requirements, physical nature of the customers and monetary nature of the consumers. Establishments can achieve credibility through an association with an appropriate sporting association or organization (Henneberg, Mouzas and Naude, 2009). Association with relevant associations and organisations is important since these organisations will refer their consumers to the fitness centre. For example, hospitals especially those dealing with physical therapy can associate with a fitness centre. The hospital will introduce consumers to the fitness centre and this will contribute in increasing the customers translating in increasing market share. Locating personal training sessions and fitness centres close to goal markets is significant in attracting consumers who are constrained by time (Woolf, 2008). When fitness centres are located far away from the customers, the customers may be fewer because of time required to cover the distance. Therefore, the fitness centre should be located in regions such has highly populated and specific region requirements e.g. near sport centres. In such regions, it is easier for the fitness centre to attract more customers. In the fitness industry, organizations that grant add-on services can achieve an advantage more than their competitors. Add-on services come in different forms for example childcare for those people coming with children. Other add-on service may include offering nutritional services. Having the right nutritional advice helps a fitness customer to improve faster compared those who do not have access to nutritional advice. Therefore, add-on services are beneficial to both the customer and the fitness centre. The customers would be satisfied by the service and they will market the fitness centre through word of mouth while the fitness centre would increase the number of customers. References Australia Bureau of Statistics. 2008. Year book of Australia. Australia. Bodet, G., Meurgey, B., and Lacassagne, M. 2009. Brand social representations: strategic perspectives for a fitness club. 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Starting strengths: basic barbell training. London: McMillan Publishers. Shulman, C. 2013. Gyms and fitness centres in Australia. IBISWorld Industry Report R9111 Woolf, J. 2008. Competitive Advantage in the Health and Fitness Industry: Developing Service Bundles. Sport Management Review, vol. 11, no. 1, pp. 51-75 Read More