Question

PHASE 2 FITNESS CENTER

Allen Goldschmidt loves exercise and fitness. At age 42 he survived a cardiac scare in which doctors first believed a heart attack had taken place. Even though subsequent tests determined such was not the case, Allen was told that being overweight and in poor physical condition might at some point lead to an actual episode. In response, he moved from a sedentary lifestyle to an activity-based approach to keeping trim and healthy.

After several months of developing his own program with the help of a fitness trainer, an opportunity arose. Allen was able to purchase a fitness center from an individual who was moving out of town and wanted to sell as much of the business intact as possible.

Allen and his trainer created a system that they named Phase 2. Their idea was that Phase 1 was an under-represented aspect of staying healthy: diet and lifestyle. They designed a program that encouraged members and visitors to eat right (low sugar, low salt, low calorie) but also to sleep in regular cycles and take steps to avoid the effects of stress, which can lead to other bad habits, such as alcohol abuse.

Phase 2 would be the fitness aspect. The center would provide both individual training and group activities including Zumba and other exercise program. Customers could create individually tailored programs for special events, such as marathon training or getting into a smaller sized dress or suit for a class reunion. Group activities would stress socialization and having fun as parts of getting fit.

The building Allen purchased contained a walking track, a swimming pool, and a wide variety of exercise equipment including free weights, weight training machines, treadmills, and more specific devices such as Stairmasters. A dining area was added to serve snacks and light meals but also to provide a location for cooking classes to be taught by experts in quality nutrition.

Allen was aware of the competition in his area. A Gold’s Gym operated in the same city, as did a Curves, which focused on attracting women to a 30-minutes workout program. He believed his combination of Phase 1 and Phase 2 would make it possible to stand out from the competition. He hired a local advertising and promotions company to help him find the right mix of people to become regular clients.

Questions:

1) Discuss the potential consumer market segments that Phase 2 Fitness Center could serve. Which segment or segments would you recommend? Why?

2) What positioning approach would be most valuable to the Phase 2 Fitness Center? Explain your answer.

3) Propose suitable marketing communication objectives for the opening of the Phase 2 Fitness Center. Then explain how those objectives might change over time.

4) Based on the case, how should Phase 2 Fitness Center prepare the marketing communication budget. Explain why you think the chosen way is suitable for the company.

Answer 1

1. Customer segmentation is the most crucial aspect to be considered while opening a business. In the given case, the target customers should be between age groups 18-50 who want to move away from a sedentary lifestyle to fit one. If we analyze the industry we can find the following customer segments:
   • People wanting to lose weight
   • People wanting to gain weight
   • People wanting to maintain fitness and get the rigged body
   • Professional Athletes
   • People with Health/medical requirement
   • Sports enthusiasts

Each of the categories can be observed in the age group of 18-50. There will always be a section of people who fall into either wanting to lose weight, gain weight or maintain weight. Phase 2 can specifically focus on those members who can be trained to use the time and opportunity to move away from the previous phase of life. Another segment that is observed is athletes who want to ensure they are in peak performance mode all the time. Their fitness regime will be very specific and tailored as per the need. Another group is the individuals who want to focus on sports such a running, tennis, swimming, etc. There will also be another category of individuals who are medically advised to undergo exercises. Each of these segments projects an accurate segmentation in the market. These segments can be further divided into different categories based on the packages they opt for.

2. Positioning the fitness center is a challenge that Phase 2 is facing. Since there are already multiple fitness centers operating in the area, the business should be positioned in such a way that customers can connect with the new fitness center. Gold`s gym is usually considered a costly option and serious bodybuilders go to this center while curves, is focussing more on women for a quick 30-minute workout. Phase 2 should position itself as a fitness center for the entire family. The facilities provided in Phase 2 give a different experience to each member of the household. The facilities for Zumba, swimming, running, etc. meets different needs that a single-family might have. They also have provisions for learning cooking in a healthier manner. Based on these parameters, the best positioning for Phase 2 is to present themselves as a fitness center for the entire family.
3. The main marketing communication objectives for Phase 2 will be customer acquisition and promotion of the new business. While marketing communication typically deals with getting higher market share, branding and customer relationship, this fitness center Phase 2 are just starting up and it is vital to reach out to maximum potential customers as possible. Marketing communications and promotions should be done in such a manner that individuals can recognize the health benefits of joining the new fitness center and approach Phase 2. The promotions and campaign should be designed in a way to showcase the different facilities available, the different packages and the benefits of choosing them over other competitors. In addition to this, they can tie up with local businesses to run corporate wellness initiatives where staff would get a discounted offer. They should also promote the business overall possible modes of communication including print, digital and radio. The primary objective of all these campaigns should be about sharing the new business in the region and attracting new customers. Over a period of time, as the business gets established, the marketing message will move from gaining customers to retaining customers, promoting the brand, market development, and customer relationships. This is vital to ensure the retained customers can be kept for a longer-term.
4. The marketing budget ensures that the direct and indirect costs of communications programs are estimated and provisions are made for the same. A budget for budgeting would include costs of copywriting, design, printing, and distribution. Marketing communication budget should be focussed on public displays and ads. This will help in promoting the fitness center to a large group. A large portion of the branding budget should be allotted to ATL and BTL marketing that customers can easily view and recognize. The initial objective of marketing should be about spreading awareness and creating a recall about the business. Phase 2 should do a detailed market study to identify the extent of customers to reach out in each phase of the campaign and get estimates to understand the approximate costs involved in the process. Each budget should carefully be planned and each activity should be accounted for. If any activity is not showing success then, the budget should be reallocated to different areas. A budget should be allocated to marketing materials such as giveaway items, promotional bags, gym accessories, etc. Apart from this, the major portion of the budget will go towards external promotional activities.