Viability of Launching an Energy Gymnasium - Case Study Example

Preliminary Marketing Report Executive Summary The fitness industry is playing an important role in promoting healthier and fitter populations hence reduced health costs, increased productivity by the workforce and consistent supply of labor. In Australia, which is defined as a sporting nation, the fitness industry is growing and is expected to do so even further due to the increased need by the Australian population to grow fitter and healthier. As a result, this report seeks to develop a preliminary marketing report highlighting a marketing management process that establishes the viability of launching a self sufficient energy gymnasium as a new invention in the fitness industry in Australia. Table of Contents Executive Summary 1 Introduction 3 The Fitness Industry in Australia 3 Current industry and market situation 4 Political 4 Economic 4 Social 5 Technology 5 Environmental 5 Legal 6 SWOT Analysis 6 Strengths 6 Weaknesses 6 Current market Opportunities 6 Threats 7 Viability of launching an energy gymnasium 7 Segment of the market 8 Positioning strategy 9 Product 9 Pricing Strategy 10 Promotion strategy 10 Conclusion 10 References 12 Introduction Due to rapid changes to the global market environments, increased and changing customer demands and needs and shifting political, social, technological, environmental, legal and economic factors, global organizations and industries are investing in technology and innovation as a means to counter competition and to help them remain feasible as echoed by Peter & Donnelly (2005). In Australia, the fitness industry is no different with industry players identifying new ways and methods for achieving full potential and realizing set goals and objectives. Ready et al. (2005) indicates that there are immense opportunities in the fitness industry globally that are still untapped. This report seeks to develop a preliminary marketing report that analyzes the viability of launching an energy gymnasium as a new invention in the fitness industry in Australia. The report will primarily highlight the marketing management process. The marketing management process entails assessing market opportunities, conducting industry and market analysis and selecting a suitable target market, developing effective marketing plans, employing and monitoring the marketing efforts. The Fitness Industry in Australia Australia is largely defined as a sporting nation for not only being an active participant in global sporting activities and forums, but also, due to the perceptions of most Australians that sports and especially fitness is a way of life that enhances health and wellbeing of the Australian population as discussed by Fitness Australia (2009). The fitness industry in Australia generates commodities and services that enhance fitness such as fitness equipments and facilities such as gyms and services of professional fitness trainers. According to Hanna & Subic (2008), the industry has potential to grow significantly due to the increased desire and willingness of the population to become healthier and fitter. Moreover, encouragement by the government to the population to participate in fitness as a means to reduce health expenses and develop healthier populations that ensures constant supply of labor and improved productivity by the workforce. Current industry and market situation To understand fully the external and internal environment of the fitness industry in Australia, PESTEL and SWOT analyses are carried out. PESTEL analysis examines the political, economic, social, environmental technological and legal environment of the fitness industry while SWOT analysis examines its strengths, weaknesses, opportunities and threats as highlighted by (Stevens & Loudon, 2005). Political The political climate in Australia impacts on the fitness industry positively. Apart from the low barriers to entry due to flexible state and federal regulations on establishment of fitness business, the state has in fact encouraged the growth of the industry in a bid to reduce the costs of healthcare caused by increased health risks associated with lifestyles. In addition, the government sees the fitness industry as an effective way of developing a healthier and fitter Australia (Stephenson et al., 2000). Economic The economic environment is the most influential element affecting the fitness industry as suggested by Field (2008). Despite the economic benefits, the industry generates in terms of employment opportunities, contributions through revenues to the country’s gross operating surplus and indirect social and economic gains in terms of better health outcomes and increased amount of labor and low cost of health care, the fitness industry is susceptible to economic conditions. Economic issues such as economic and financial instability in Australia translates to increased inflation and interests rates and a hike in prices on household consumer goods which minimizes consumer spending on services and products offered by the fitness industry. Poor economic performance generates into weak customer sentiments for market for consumers in lower economic levels as they are more likely to spend less on fitness and more on basic amenities such as food, shelter, clothing and education (Field, 2008). Nevertheless, good economic performance of Australian economy favors the fitness industry. Stephenson et al. (2000) suggests that majority of Australians are growing wealthier, therefore they have enough disposable income to spend discretionary on fitness, and alternatively, they see fitness as a basic need. Social The growth of the fitness industry in Australia is attributed to safeguarding Australians from lifestyle related disorders such as obesity. Presently, majority of Australians are more aware and keen on being active, healthy and fit in order to lead productive lives. This social pattern favors the industry. Australia is ranked among the most overweight nations globally due to social lifestyles and the fitness industry provides an opportunity to reverse this (Stephenson et al. 2000). Social concern on health in Australia affects persons of all ages and gender, which favors the development of the industry since fitness is not seen as a concept for a particular social grouping. Fitness Australia (2007) notes that the Australian aging population is expected to increase government spending on the long run due to massive outlays for pensions and health costs and therefore health promotion and preventive interventions and services as which are generated by the fitness industry are likely to be adopted and encouraged nationally. Technology The technological environment In Australia is characterized by ease in adoption and implementation of emerging technologies. The technological infrastructure is relatively developed and therefore, allows easy and cost effective production and delivery of quality products and services to the target market (Fitness Australia, 2007). Environmental Environmental factors have a significant impact on the fitness industry. The environmental conditions are such that more and more efforts are being geared towards energy conservation and environmental sustainability. Fitness industry relies heavily on energy resources such as water and fuel as a means to power most of the fitness equipments in terms of electricity needed for gym equipments, water for the pools and energy required for cooling (Fitness Australia, 2007). Over dependency on energy resources such as water and fuel means enhanced environmental degradation due to excess use of natural resources and increased energy costs which translates to hiked costs of engaging in fitness and using fitness equipments. Legal According to Fitness Australia (2007), current legal elements such as legislations on establishment of new fitness centers are favorable. Acquisition of business licenses is relatively formal but efficient and regulations set are appropriate and easy to comply with. SWOT Analysis Strengths Fitness programs aligns with the growing need for developing a healthier and fitter Australia as supported by Fitness Australia (2009) Increased market shares due to changing social and market trends where more and more Australians are health conscious and are obsessed with being fit Established technological infrastructure Low barriers to entry Increased turnovers in fitness facilities (Fitness Australia, 2007) Weaknesses High costs of obtaining fitness programs or joining fitness clubs due to high amount of finances to equip and operate fitness facilities such as energy costs which are passed down to fitness consumers few fitness personnel permanently employed and few have professional qualifications (Fitness Australia, 2009) Current market Opportunities There are significant market opportunities in the fitness industry with a growing need for innovative fitness ideas, products and services. Among the opportunities are Growing demand for innovative fitness programs Prospects of high return on investments due to growing need for exercises as a means to safeguard against lifestyle diseases such as obesity (Fitness Australia, 2009) Increased awareness and familiarity to the usefulness of using fitness facilities such as gyms on daily basis Production of fitness products and services that are low priced to meet the largely untapped low income group (Fitness Australia, 2007) Fitness services that attracts the attention of aging baby boomers Establishment of fitness programs that demonstrate high quality, uniqueness and innovative designs Low concentration in the fitness industry (Fitness Australia, 2009) Threats The main threats are Stiff competition from already established fitness center chains such as Fitness First and Curves chain (Fitness Australia, 2007) High costs of maintenance of fitness facilities due to high energy costs Viability of launching an energy gymnasium The invention is economically and financially viable for a number of reasons. Establishment of a self sufficient energy gymnasium where power is harnessed from the customers’ use of the exercise equipment is not only innovative and unique but it is anticipated to generate high returns. Based on the fact that it will effectively address the current need for consumers in Australia to use innovative, eco-friendly, unique, value added fitness services and programs to remain healthy and fit (Fitness Australia, 2007). The energy gymnasium will overcome the fitness industry weakness of high costs of accessing fitness programs due to high-energy costs and help attract and retain the untapped market in the low economic group. In addition, the invention will address the present need for environmental conservation through use of sustainable energy supply since it generates an alternative source of energy, which means less reliance on water and fuel as the main source of energy thus, reducing environmental impact. Since energy used to run the equipments is generated by the patrons or the customers as they use the fitness equipments, there are no environmental risks such as pollution due to emission of toxic gases such as carbon generated when equipments such as generators are used to provide power to run the equipments. This means, the energy gymnasium will not only generate profits but it will do so in an eco-friendly means. Among the weaknesses of the fitness industry is the high costs of maintaining the facilities due to increased costs such as energy costs which are then passed on to customers. The energy gymnasium overcomes this challenge since, the maintenance costs are substantially reduced since energy costs are eliminated meaning more people especially in the untapped lower economic group are able to access fitness clubs and programs at affordable rates and thus, lead fit and healthy lives. The energy gymnasium also eliminates the risks of service inconsistency characterized by fitness facilities that rely on fuel energy and electricity which are affected by electricity black outs. This means enhanced customer satisfaction which cultivates customer loyalty. The energy gymnasium is bound to generate and retain much interest by customers as they are actively engaged in using their physical energy to contribute to environmental conservation. This elicits a feeling of customer engagement and participation where in pursuit of their personal health goals; they help enhance the health of the community by being eco-conscious. Segment of the market Market segmentation refers to establishing and sub-dividing a homogenous market into distinguishable units with identical demands, needs and characteristics as defined by Peter & Donnelly (2005). The energy gymnasium is intended for individual customers and for corporate customers. Individual members entail people who finance their attendance to the energy gymnasium out of their own pockets and have individually developed fitness schedules. Corporate customers are mainly employees to corporate organizations whose membership is financed by their employers and the employer schedules their attendance. The energy gymnasium is also intended for persons of all ages and gender, and encompasses individuals from higher and low economic groups in both rural and urban areas. The identified market segment not only enhances the market share and the competitive edge of the invention but also increases the uptake of fitness as a means to being healthy and safeguarding against fitness-related illnesses such as obesity. Positioning strategy Stevens & Loudon (2005) defines market positioning as how a firm wants the target market to perceive their products and services. The most effective positioning strategy is low cost and differentiation where the self sufficient energy gymnasium is positioned as a low cost, unique, innovative and eco-friendly brand that is inimitable, relevant and affordable brand that enhances the health and wellbeing of individuals and the community in general respectively. Through differentiation and low cost marketing positioning strategy, the Amazing Ideas Company will not only counter stiff competition from already established fitness center chains such as Fitness First and Curves chain among others but also capture the existing market opportunities of untapped market from the low economic group, who cannot afford to visit current fitness programs and centers due to high costs as suggested by Woolf (2008). Differentiation captures the attention of the aging baby boomers who are more environmental aware and are keen to purchase innovative, versatile, unique and quality fitness services and programs (Fitness Australia, 2007). Product The self sufficient energy gymnasium is developed and designed to counter current and future challenges prevailing in the fitness industry such as high costs due to high energy costs, stiff competition from industry players and safeguarding against environmental costs generated by over reliance on fuel as a source of energy. The invention is unique, innovative and engages the customer in making a difference in their lives and in their community which enhances the competitiveness of the fitness brand (Woolf, 2008). The product designs are also developed to suit people from all ages such as the young, adults and the elderly, which generates diversity and differentiation and meet the needs of individual and corporate clients. Pricing Strategy Since the energy gymnasium brand targets both high and low income earners and addresses varied needs of the target market, the pricing strategy adopted will be a blend of market oriented pricing and dynamic pricing. In market oriented pricing, prices are set depending on analysis compiled from the target market while the latter, is a flexible pricing strategy where prices are adjusted to correspond to the willingness of the customer to pay as discussed by Peter & Donnelly (2005). This will ensure the high-end customer feels their social status and prestige is not lowered while at the same time, the low-end customer feels their needs are met at an affordable price where they are able to derive value for money. Promotion strategy Promotion strategy is meant to influence the decision of the target market by informing and appealing to it as discussed by Stevens & Loudon (2005). The most effective promotional strategies for energy gymnasium is advertising through both electronic and print media and publicity through newsletters, press releases and sponsorships of environmental projects. The two approaches help differentiate the brand and are essential in helping the Amazing Ideas Company to reach, attract and retain the attention and loyalty of a large portion of the Australian population. Electronic media will encompass use of the internet especially use of social media to capture the relatively young population. The message content in the promotion medium selected should ensure to highlight the distinct and unique feature of the fitness program, which is energy sufficiency which differentiates this brand from what exists in the market. Conclusion The fitness industry in Australia is a lucrative one and is expected to grow significantly due to the increased need for Australians to remain healthy and fit in a bid to safeguard against health risks such as obesity. The fitness industry in Australia generates commodities and services that enhance fitness such as fitness equipments and facilities such as gyms and services of professional fitness trainers. The aging population in Australia is bound to exert immense pressure on government spending in regards to health related costs and therefore, health promotion and preventive measures fostered by fitness programs is bound to gain more prominence in Australia. The self sufficient energy gymnasium invention will not only meet these rising needs for modern customers to be fit and healthy, but also, address the energy issues presently facing global industries where the fitness industry is not spared. The brand is unique, innovative, quality, economically and financially feasible and it addresses important individual and community issues of health and environment respectively. The report has developed a preliminary marketing report that analyzes the viability of launching an energy gymnasium as a new invention in the fitness industry in Australia by highlighting the marketing management process. By analyzing the industry and market situation of the fitness industry in Australia, the report has established suitable market segmentation, positioning strategy, product, and pricing and promotion strategy for the self sufficient energy gymnasium. The energy gymnasium is positioned as a low cost, unique, innovative and eco-friendly brand that is inimitable, relevant and affordable brand that enhances the health and wellbeing of individuals and the community in general respectively. References Field, A. 2008. Future insights fitness industry: Literature review. Auckland: Nielsen Company. Accessed on 10th Oct 2011 from http://www.lesmills.com/files/globalcentral/Agents/Research/Industry%20Research/Future%20Insights%20Fitness%20Industry%20Literature%20Review%20Synergia%20NOT%20YET.pdf Fitness Australia. 2007. Mobilizing the fitness industry to assist with practical implementation of falls prevention strategies. Sidney: Fitness Australia. Accessible from http://fallsnetwork.neura.edu.au/events/files/2007/ttg-stace.pdf Fitness, Australia. 2009. Let’s get physical: The economic contribution of fitness centers in Australia. Sidney: Access Economics. Accessed on 10th Oct 2011 from http://www.fitness.org.au/the_economic_contribution_of_fitness_centres_in_australia_report___july_09_2.pdf Hanna R. K., and Subic A. 2008. Towards sustainable design in the sports and leisure industry. International Journal of Sustainable Design, vol. 1, pp. 60-74 Peter, J.P., and Donnelly, J.H. 2005. A preface to marketing management. New Jersey: McGraw-Hill. Ready A. E., Naimark B J, Tate R & Borseskie S L .2005.Fitness Centre Membership is related to Healthy Behaviors. Journal of Sports Medicine and Physical Fitness, vol. 45, no. 2, pp. 199‐207.  Stephenson, J., Bauman, A., Armstrong, T., Smith, B., and Bellow, B. 2000. The costs of Illness Attributable to Physical Inactivity in Australia: A Preliminary Study. Canberra: Commonwealth Department of Health and Aged Care and the Australian Sports Commission. Stevens, R.E. & Loudon, D. 2005. Marketing planning guide. Upper River Saddle: Routledge. 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