New Era Health & Fitness Marketing Plan by John, Jennifer, and Shawna

New Era Health & Fitness

Marketing Plan by John, Jennifer, and Shawna


Our Mission

New Era Health & Fitness will be recognized as an all-encompassing health club dedicated primarily to the health,

happiness, and well being of our senior members, both physically and emotionally while maintaining an atmosphere that benefits all our customers. New Era will strive to provide

only the best, most affordable and premier quality service that health minded people in their senior years should expect to

receive. Our goal is to grow our membership in conjunction with the increase of our population’s maturity, while providing a fair and equitable return to our stockholders and employees. It is

our hope that the people who have given so much of their lives will come to view New Era as a trusted health and fitness

partner dedicated to fulfilling their retirement needs.


Strengths

-New idea/business- gives new customer appeal-Nature of business-Fits customer (aging population) need-New promotions available-New facility-New equipment/specialized programs-Competitive price-Recumbent cycles are used at senior fitness clubs which a more back friendly for older Americans–Hand weights rather than more strenuous barbells are also senior friendly


Weaknesses

-Start up Capital

-New business-awareness issues

-Product Life Cycle- entering a mature market, may lose money in beginning, competition is intense

-Market Exposure is weak


External Opportunities

-Senior population is increasing-Baby Boomers retiring

-Timing of Business-The need is great

-The environment at conventional health clubs is intimidating to seniors because programs and services are geared towards younger adults rather than seniors

-Seniors benefit from exercising to prevent heart disease, stroke, cancer, diabetes


External Opportunities cont.

-Centers provide entertainment and relationship building

-Prevention of Alzheimer’s 60% less chance

-Seniors can maintain their independence with proper fitness

-Senior fitness centers use low impact equipment and slow, controlled strength training

-Allows seniors to save millions in health costs


Market size

New Era is geared toward the baby boomer generation and older Montanans. Billings Montana and the surrounding area will be the market for our first health club. Although other Montana cities are experiencing a larger increase in population it is believed that Billings holds the most opportunity because it has population base of approximately 150,000 and is growing at a steady rate while maintaining a median household income above the other cities. Other faster growing cities like Bozeman and Missoula may be prime targets for future expansion.


People Quick Facts Billings Bozeman Butte Great Falls Helena Missoula Population 2005 95,220 30,753 32519 56155 26718 60752% change 2000-05 3.9 11.3 -4.1 -1.0 3.3 6.1 % change 1990-00 10.3 21.1 1.9 2.4 2.8 17.8Median Income $35147 $32156 $ 30516 $32436 $34416 $ 30366Persons over 18 72367 24264 24811 42172 20733 48759Persons over 65 14092 4920 7707 8116 3713 6315Females % 51.9 47.4 50.6 51.5 52.4 50.3Source U.S. Census Bureau: State and County QuickFacts

Market Determination


Billings

95,220 (Billings pop.) x 75 (% over 18) = 71415 (people over 18)

71415 x 15.43(% joining health clubs) = 11019 members

11019 x 5% (market share) = 550 New Era members

Surrounding Area50,000(area pop.) x 75 (% over 18) = 37500 (people over 18)

37,500 x 15.43 (%joining health clubs) = 5786 members

5786 x 5% (market share) = 290 New Era Members

Total Projected Membership550 + 290 = 840 New Era Members from Billings and vicinity


Threats

Qualified Employees

-There may be difficulties in hiring an adequate number of qualified trainers who can work with senior issues.

-Billings College Nursing programs will help alleviate this problem.

-Billings College Sports Medicine and Therapy Programs could also provide employees.


Competitors

Bally Total FitnessBillings Athletic ClubCurves for Women (2 Billings & Laurel)CurvesClub Rocky24 Hour FitnessPowerhouse Gym Circuit the Women In Fitness (2 Billings & Laurel)Yellowstone Racquet & HealthLa Tone Fitness Locomotion Fitness Center CHR Fitness CenterYMCAEvolution LLCPlaza FitnessNew Era Market Share 5% (1/20th)


Seeking Competitive Advantage

-Similar health club chains only offer a circuit training 30-minute workout center.

-New Era will also focus on the benefits of low impact water classes as well as weights, machines, and aerobic classes designed to be low impact and easy on joints.

-New Era will also take it a step further offering on-site health evaluations to ensure that customers are in good health.

--New Era will separate itself from other clubs by offering a better value to its customers through service and imaginative programs.


Price Competition Median Values

Member Types Enrollment Monthly Dues

Regular 150.00 55.00Corporate 97.50 48.00Family (3) 66.33 34.00Couple 100.00 44.50Junior 99.00 39.00Senior 100.00 44.62 Average Enrollment Fee 102.14 44.19 (Average Dues) $102/12months = $8.50 + $44.19 = Average Monthly Fee $52.69

$52.69 X 12 months x 840 members = $531,115 Annual Gross Revenue at current projected membership


Product Life CycleMembers joining the new senior type fitness club will arrive at a slow rate at introduction until awareness materializes. Promotion costs will need to be high at this time to promote awareness. Since the industry is already in a mature market stage competition is intense. The exponential increase in the number of people reaching senior status and the increased awareness of the benefits of fitness on health issues related to seniors as well the desire to attend a unique club that caters to seniors should cause a substantial market growth after a few months. This growth should increase substantially over the next 10-25 years due mainly to the aging of the population. Market saturation and an eventual decline in the number of aged clients will materialize. Eventually membership will decline to a level that can be maintained by the relative age of the population and combined competitions. I do not see the product life cycle as declining completely because we will always have an aging population with needs for health benefits associated with fitness.


Montana Population 18 and over

Montana: Population Distribution by Age, States (2004-2005), U.S. 2005

Adults 18-65 558,790 61% Adults 65+ 129,500 14% 75%

558,790+129,500 = 688290 Population 18-75+ 61+14 = 75 % of Population 18-75+ years of age

Sources: Urban Institute and Kaiser Commission


Percentage of People Who Join Health Clubs – 15.43


Montana: Change in Total Population and Population 65 and Older, 2000 to 2030

State

Change in total

population Number

Change in total

population Percent

Change in Age 65 and older Number

Change in Age 65 and older Percent

Montana 142,703 15.8% 148,609 122.9%

Population Projection

Source: U.S. Census Bureau, April 21, 2005


41.3 -17.3 = 24/18 (years) = 1.33% growth/year in U.S.


Future Projected Membership

840 x 15.8% = 973 members by 2030 due to population growth 1.33% membership growth X 30 years = 39.9 % growth X 973 = 1361 Members by 2030

Total projected growth = 1361 members by 2030 or 62% growth in 30 years = 2.07 % a year

Projected annual membership growth 2.07%


Growth of Membership due to aging population

145220 Billings area population x 14% = 20330(65+) x 122.9% = 25000 new 65+ years of age

If only 10% joined Health Clubs it would be 2500 new members or 125(Additional Market Share)

Total projected market share could be 2155 members by 2030 or 7.68 % increase


Source: American Business Information, Inc


Growth of Competition (Health Clubs)

29069 clubs in 2005 minus 11,804 clubs in 1987=17265

17265/18years = 168% in 30 years or 5.6 % / year or about 1 new Health Club in Billings every year based on national average.

Growth in membership due to ageing population should remain at 2.5% to 3% even arrival of new competition.


Target Audience

Dimensions

AgeAlthough all ages benefit from the use of health clubs New Era will establish a marketing mix that will attract customers 18 years of age and older with emphasis on the 40+ age range.

AbilityNew Era will work to meet the needs of all ability ranges from those with disabilities (low impact needs) to those who want most extreme and rigorous conditioning programs.

Education-Occupation-Social classPersons of all education levels, social class, and occupations need to be encouraged to use this health club so that we are able to obtain a substantial market in a sparsely populated region.


Dimensions Cont’d.

RegionNew Era will work to attract mainly local residents and those in the immediate outlying areas but hopes to attract tourists, visitors, and groups that come to town on occasion by offering group, corporate, and drop in rates that are competitive.

IncomeIt is important that programs are designed to meet all income levels and those people on strict budgets so that more people have access to heath and fitness programs.


Dimensions Cont’d

Customer type

-Both social and privacy oriented customers

- Both genders and all ethnic groups (esp. Native Americans)

-Combined target approach so as to maintain substantial market numbers as need for health and fitness is homogenous

-Adequate equipment and trained professionals to meet a variety of needs

-Emphasis on attracting corporations, business groups, local clubs (ex. Red Hat Society, Pheasants Forever), government agencies and tribal affiliations


Dimensions Cont’d.

Location

New Era will be located for ease of access and awareness close to the interstate highway in Billings. We will provide adequate parking, lighting, and security to meet our customer’s needs.


Decisions

Reasons for Not Joining:

-Too Crowded

-Don’t know how to use equipment

-People think they are the only ones not in shape

-Rude behavior by other members

-Afraid to ask questions


Decisions Cont’d.

Reasons to Join:

Psychological

-See a need for health and fitness

-Preparation for alternatives like hunting, sports, walking and exploring

Purchase Situation

-Health club is in close proximity to home or work.

-Awareness created through advertising in Local Media, Signage, and Promotions


Decisions Cont’d.

-New Era is perceived to avoid high pressure sales and gives a fair representation of facilities, staff and equipment

-Need for fitness to accommodate ageing process

Social Influence -Reference Group, Peers and similar age groups are enjoying New Era


Product

Brand Positioning

New Era Health and Fitness must differentiate itself from the other clubs in the area when it comes to meeting the needs of the maturing or graying community.

Methods:

-Offer lower impact workouts

-Equipment needs for older clients

-Trainers that are qualified in older clients needs

-Private or less conspicuous workouts


Product (Cont)

Economy of Scale

-New Era needs enough clients to be profitable, conventional as well as ageing clients should be targeted

Life Cycle Management

-New Era needs to stay current with equipment technology, medical discovery and modern training methods to compete in mature or declining market

-Maintain quality service, be innovative

-Conduct surveys to judge customer satisfaction


Perceptual mapHigh Cost

Senior Members Low Satisfaction

Senior Members High Satisfaction

Low Cost

New Era

YMCA

Bally Total Fitness

Curves

Yellowstone Racquet & Health

24 Hour Fitness

Billings Athletic Club

Powerhouse Gym

CHR Fitness Center


Price

Profit Oriented

-Target Return

-Break even with investment capital in the first two years

-Maximize Profits

-By managing New Era ourselves we will save payroll costs, cater to our customers needs in order to retain them thus maximizing profits


Price (Cont.)

Price Flexibility

-Flexible Price Policy

-Because New Era caters to those 40 years old and older we will offer discount memberships to those in that age group.

-Discounts to couples

-Discounts to groups and organizations

-Discounts to entice patronage in slower season

-Sale prices to get attention or attract new clients


-Flexible Price Levels over Product Life Cycle

Penetration Pricing Policy

-New Era is the first of its kind in Billings, so there may be copy cat companies that emerge

-The elite market that would pay an initial higher price in Billings is low

Reference Pricing

Health club dues are less expensive than doctor’s bills


Price (cont.)

Discounts and Allowances

Set the prices as follows:

18-39 $45/month $540/year Initiation Fee $100

40+ $35/month $420/year Initiation Fee $75

40+ couple $55/month $660/year Initiation Fee $100

5% discount when paid in full for the year

Competitions Average Monthly Fee $52.69


Place

-Direct to start

-No middleman or franchise

-Suited the customers needs

-New Era is self-managed for better quality control

-New Era=Direct sales of memberships=final customer

Location

Clubs will be strategically placed for ease of access, near population centers or in high traffic areas with client’s convenience in mind


Place (Cont.)

Customer Service

-Our management team will do the best it can to ensure that each and every customer is receiving the highest level of customer service.

-During the first few months of business we will do periodic customer service surveys to see what we can do to improve the customers work out experience

-Remain aware that too much service can price the product out of the consumers reach or above the competition


Promotion

-Offer right product at right place at the right time

-Increasing population of an ageing generation needs to meet their of health and fitness needs in the growing Billings area at an affordable price.

Advertising

-Local media-newspaper, radio, television

-use brochures to contact senior centers, sports outlets

-provide coupons or discounts in retirement magazines and newspapers that are distributed locally

-use Yellowpages and daily paper for consistent advertising


Promotion (Cont.)

-Persuade and remind by having a grand opening to attract attention, give tours, and trial memberships

-Attract attention with advertising showing healthy, graying individuals enjoying life

Complementary Products

-Offer free apparel (sweatshirts, t-shirts, etc.) with New Era advertising on it with memberships

-Discounts to present members who sign up new members

-Realize that during market maturity clients must be continually reminded that New Era is a better health and fitness club


Promotion (Cont)

Means end chain

Great workout climate

-New Era is professionally managed, has qualified trainers and client’s privacy is prioritized

-value pricing & client satisfaction

Physical well being

-Health benefits

-Savings in medical costs

-Improved lifestyle


Promotion (Cont)

Means End Chain (cont.)

Psychological Factors

-Less Stress

-Happier lives

-Better relationships

Value

-Makes life more meaningful


Research Sources

American Business Information, Inchttp://cms.ihrsa.org/IHRSA/viewPage.cfm?pageId=804

American Council on Exercisehttp://sportsmedicine.about.com/od/tipsandtricks/a/crowdedgyms.htm

America Online, Copyright 2006http://yellowpages.aol.com/fitness-and-weight-loss/health-clubs-and-gyms/mt/billings/

Consumer Protection Division, Revised November 10, 2004http://www.atg.wa.gov/consumer/health.shtml

Diabetic Lifestyle, copyright 1997-2000http://www.diabetic-lifestyle.com/articles/feb04_burni_1.htm

IHRSA / American Sports Data Health Club Trend Report 2005http://cms.ihrsa.org/IHRSA/viewPage.cfm?pageId=626

IHRSA/American Sports Data Health Club Trend Report 1987-2005http://209.117.96.104/trendreport/10_2003.pdf


Research Sources Cont’d.Local.Com Corporation, 2006http://www.local.com/results.aspx?keyword=category%3ahealth+clubs&location=Billings%2c+MT&cid=211&utm_source=yahoo&utm_medium=pi&utm_term=health+clubs&GID=Fitness_and_Beauty

Milbank Memorial Fund, National Association of State Budget Officers, and The Reforming States Group. 2002-2003 State Health Care Expenditure Report, Table 14, Milbank Memorial Fund, Copyright 2005. http://www.milbank.org/reports/05NASBO/nasbotable14.pdf

National Health Expenditure Data, Health Expenditures by State, Centers for Medicare and Medicaid Services, Office of the Actuary, National Health Statistics Group, released June 2, 2006; available at http://www.cms.hhs.gov/NationalHealthExpendData/05_NationalHealthAccountsStateHealthAccounts.asp#TopOfPage.

Population Division, U.S. Census Bureau, December 22, 2005http://ceic.commerce.state.mt.us/Demog/estimate/pop/State/allstates_est_2005.htm


Resources Cont’d.

The Henry J. Kaiser Family Foundationhttp://www.statehealthfacts.org/cgi-bin/healthfacts.cgi?action=profile&area=Montana&category=Health+Costs+%26+Budgets&subcategory=Health+Care+Expenditures&topic=Avg%2e+Annual+%25+Growth%2c+FY1980%2d2004

U.S. Census Bureau: State and County QuickFacts. Data derived from Population Estimates, 2000 Census of Population and Housing, 1990 Census of Population and Housing, Small Area Income and Poverty Estimates, County Business Patterns, 1997 Economic Census, Minority- and Women-Owned Business, Building Permits, Consolidated Federal Funds Report, 1997 Census of Governments Last Revised: Thursday, 08-Jun-2006 09:33:17 EDT http://quickfacts.census.gov/cgi-bin/qfd/demolink?30

U.S. Census Bureau, Population Division, Interim State Population Projections, http://www.census.gov/population/www/projections/projectionsagesex.html


Resources Cont’d.

The Henry J. Kaiser Family Foundationhttp://www.statehealthfacts.org/cgi-bin/healthfacts.cgi?action=profile&area=Montana&category=Health+Costs+%26+Budgets&subcategory=Health+Care+Expenditures&topic=Avg%2e+Annual+%25+Growth%2c+FY1980%2d2004

U.S. Census Bureau: State and County QuickFacts. Data derived from Population Estimates, 2000 Census of Population and Housing, 1990 Census of Population and Housing, Small Area Income and Poverty Estimates, County Business Patterns, 1997 Economic Census, Minority- and Women-Owned Business, Building Permits, Consolidated Federal Funds Report, 1997 Census of Governments Last Revised: Thursday, 08-Jun-2006 09:33:17 EDT http://quickfacts.census.gov/cgi-bin/qfd/demolink?30

U.S. Census Bureau, Population Division, Interim State Population Projections, http://www.census.gov/population/www/projections/projectionsagesex.html

Documents

New Era Health & Fitness Marketing Plan by John, Jennifer, and Shawna