Table of Figures - mariahchavez.files.wordpress.com€¦ · Web viewThis market plan proposes a new business venture for the health club In-Shape Corporation. As childhood obesity

Running head: IN-SHAPE 1

Fit for Kids

Prepared by Team 3:

Anne Acrey, Mariah Chavez, Kaelie Cardoza, Mallory Lufkin, Amanda Waymire

California State University, Monterey Bay

Presented to Professor Davis

May 5, 2014

IN-SHAPE: FIT FOR KIDS 2

Table of ContentsExecutive Summary.....................................................................................................................................5

Market Analysis...........................................................................................................................................7

Situation Analysis....................................................................................................................................7

Market Summary.....................................................................................................................................7

Target Market..............................................................................................................................................8

Demographics..........................................................................................................................................8

Geographic..............................................................................................................................................8

Psychographics........................................................................................................................................9

The Market..................................................................................................................................................9

Market Needs..........................................................................................................................................9

Market Trends.......................................................................................................................................11

Market Growth......................................................................................................................................12

SWOT Analysis...........................................................................................................................................12

Strengths...............................................................................................................................................13

Weaknesses...........................................................................................................................................14

Opportunities........................................................................................................................................15

Threats...................................................................................................................................................15

Competition...............................................................................................................................................16

Product Offering........................................................................................................................................16

Keys to Success..........................................................................................................................................17

Critical Issues.............................................................................................................................................18

Marketing Strategy....................................................................................................................................18

Value Proposition..................................................................................................................................18

Mission..................................................................................................................................................18

Marketing Objectives.............................................................................................................................18

Financial Objectives...............................................................................................................................19

Target Markets..........................................................................................................................................19

Existing Members..................................................................................................................................19

New Members.......................................................................................................................................19

Positioning.............................................................................................................................................20

Strategies...............................................................................................................................................20


Marketing Mix...........................................................................................................................................20

Pricing....................................................................................................................................................20

Distribution............................................................................................................................................21

Marketing Communications..................................................................................................................21

Marketing Research...............................................................................................................................21

Financials...................................................................................................................................................22

Break-even Analysis...................................................................................................................................22

Sales Forecast............................................................................................................................................23

Expense Forecast.......................................................................................................................................24

Controls.....................................................................................................................................................25

Implementation.........................................................................................................................................25

Marketing Organization.............................................................................................................................26

Contingency Planning................................................................................................................................27

References.................................................................................................................................................29


Table of FiguresFigure 1: Affordable...................................................................................................................................10Figure 2: Knowledge..................................................................................................................................11Figure 3: SWOT Table................................................................................................................................13Figure 4: Revenue......................................................................................................................................22Figure 5: Profit & Loss................................................................................................................................22Figure 6: Break-Even..................................................................................................................................23Figure 7: Sales............................................................................................................................................24Figure 8: Selling Costs One Location..........................................................................................................25Figure 9: Selling Costs 70 Locations...........................................................................................................26Figure 10: Marketing Organization Chart..................................................................................................27


Executive Summary This market plan proposes a new business venture for the health club In-Shape

Corporation. As childhood obesity becomes a more pressing issue, In-Shape needs to expand its

services to address this issue. The purpose of this report is to showcase the launch of Fit for

Kids, a venture that will expand revenue for In-Shape, and take a stand against childhood

obesity.

In the past three decades childhood obesity has increased tremendously (Werner, 2012).

The issue has gained notable mention from Michelle Obama in her Let's Move! campaign. In-

Shape has the opportunity to help with childhood obesity. Fit for Kids is a new brand that will

be implemented by In-Shape across the United States. This program will provide child exercise

classes similar to the classes offered for adults. In-Shape has an advantage as the first

corporation implementing this revolutionary concept. In addition, In-Shape has a childcare

facility in place which creates an existing market for providing this service.

The market for this product is existing family membership holders and potential new

members. Due to the attractiveness of having a fit family, membership holders with children

will want to expand health benefits to their children. In addition, the existing members use

childcare where children participate in sedentary activities only. The concept of childcare with

exercise will be more attractive to the members. This is also attractive to the surrounding areas of

In-Shape locations. This new concept will be advertised to surrounding areas allowing parents to

enroll their children as members, even if they do not currently hold a membership. With the

decrease in active lifestyles for families due to hectic schedules, parents can ensure their children

get daily exercise when they come to work out. In addition, schools are cutting programs so

children need a place to get active and stay healthy.

Fit for Kids has numerous strengths to ensure the program is successful. In-Shape has

instructors certified in classes such as zumba, aqua, and yoga at each location. They also provide

childcare services so they have a background in child care and child needs. Most importantly, the

obesity epidemic creates a significant need in the market. There are also some weaknesses

affiliated with the program. Since each facility is limited on space, there may need to be

expansions in facilities to accommodate this program. In addition, In-Shape will need to prove

results are being met. Children also have low attention spans which may make it difficult for

instructors to effectively teach a class. There are threats of competition associated with this


product as well. Some private children’s’ gyms offer specialized kids exercise classes. In

addition, there are video games that promote children getting active. However, the opportunities

in this market are greater compared to threats and weaknesses. In-Shape will gain a positive

image as well as be associated with Michelle Obama’s Let’s Move! campaign. There is also

potential for increased membership because of the attractiveness of this concept.

This product will be offered to existing family memberships at a price increase. It will

also be available to people only enrolling children in the Fit for Kids program without an existing

membership. The increase will be $30 for both existing members and single child memberships.

At all 70 California locations, this could equal revenue of almost $8 million in the first year.

There will also be expenses associated with this product launch. Employee salaries,

advertising, and sales expenses will need to be taken into consideration. However, even with

taking these expenses into consideration, In-Shape will see a generous 32% profit margin.

In-Shape will prove to be profitable in the process of launching the new product. It will

need to monitor monthly memberships to ensure there is an increase to meet revenue forecasts.

In addition, changes in marketing costs will need to be monitored in order for costs to remain at a

minimum.

Research and development will be an ongoing service provided by members on the

marketing board. New classes and competition will need to be monitored as well as results. In

addition, advertisement will be the main promotion of this service, beginning with contracting all

In-Shape gyms and promoting the services at all locations. In addition, sales will be maintained

and watched under the supervision of the board members.

It is recommended that all In-Shape gyms promote this service to current and potential

members. The need for a healthy and fit lifestyle is necessary and wanted by parents. Under the

supervision of the marketing board, proper advertising, research, sales, and product development

will ensure this program is successful. This program will prove to be a profitable venture for In-

Shape and a positive lifestyle change for children.


Market Analysis

Situation Analysis Childhood obesity has recently gained national coverage because of Michelle Obama’s

Let’s Move! campaign. The First Lady started this campaign to end childhood obesity. The five

pillars of the Let’s Move! campaign are: making sure children have a healthy start, providing

knowledge to parents, ensuring schools have healthy food, improving the cost and availability of

healthy foods, and increasing physical activity (About let’s move, 2014). Increasing physical

activity is key to raising healthier children and ending childhood obesity. The In-Shape health

clubs are in a great position to act on this pillar of the Let’s Move! campaign. In-Shape currently

provides daycare for children while their parents exercise. This would be an excellent time for

children to get active. In-Shape could tailor their exercise programs for children to get kids

interested in fitness. This will not only get kids on their feet, but build the foundation for a

lifelong love of fitness.

Market Summary Over the past three decades the rate of childhood obesity has increased. In the age group

from 6-11, obesity rates have more than tripled and the Youth Risk Behavior Survey found that

13% are obese (Werner, 2012). The majority of these children will end up becoming obese

adults, unless parents take preventive action. No single factor has contributed to the increase of

childhood obesity, but rather a few factors have made childhood obesity more prominent. School

and child care are more sedentary, and parents lead busy work lives, which are the main two

contributing factors to childhood obesity. To combat such a considerable issue, In-Shape, a

popular health club, wants to provide exercise classes for children so both parents and children

have options. The current health club market does not facilitate exercise classes geared toward

children. With exercise classes available for children at In-Shape, an effort would be made to

decrease childhood obesity and sedentary activities.

While the family dynamic has changed considerably over the years, more and more

research is being conducted and shows that maternal employment affects childhood obesity

(Anderson, 2006). There has also been in an increase in dual careers and single parent working

families. Thus, one can conclude that a child's environment has been affected. Children spend

more time in front of a computer or television screen and more parents value meal convenience.

The current physical education requirement in schools has also changed. Currently 44%


of schools have cut physical education to make more time for academics (Patterson, 2013).

Moreover, "...children have seen a 25% drop in play and a 50% drop in unstructured outdoor

activities" (Anderson, 2006). In-Shape’s exercise classes can positively impact childhood

exercise, and prompt a healthy and more active lifestyle.

In-Shape understands that within families there are different ages and levels of physical

capability, which can make it hard for an entire family to be active. In-Shape proposes family

gym time -- when the parents are working out, the children can be as well. However, the classes

will be geared towards children with an aim to create a healthy lifestyle change. This family-

based extension of In-Shape will meet the needs of the modern day family. It will be successful

because it is “designed to accommodate the complex demands and needs of two parent and

single parent families” (Thompson, 2010). Fit for Kids will be affordable and offer a variety of

exercise classes that will spark children’s interest.

Target Market

Demographics In-Shape caters to a wide range of family types, from single parent to two-parent families.

This new In-Shape exercise program for children will target the current families that are

members as well as attract new members. The draw of a new child exercise program will

encourage families who are not members to join In-Shape. This targeted market would involve

middle class and low-income families. The exercise classes for children will be offered at low

cost, and accessible to families that would want to utilize this opportunity. Because current gym

members will be targeted as well as new families with children, family physical fitness will

increase overall.

Geographic In-Shape gyms are currently located in suburban areas. Shopping centers, neighborhoods,

and schools are in close proximity to In-Shape gyms. In-Shape promotes an active lifestyle and

the surrounding community will be impacted positively by this new activity. The In-Shape child

exercise classes will heighten In-Shape’s capacity and attractiveness to the surrounding market.

Because physical education has been cut in schools and parents lead busy work lives, the

exercise class will be a suitable choice for the geographical location.


Psychographics There are two types of psychographic uses for the kids In-Shape classes: the child

involvement in the classes and the family type that will utilize the classes. The research shows

that families influence childhood physical activity (Steinbeck, 2001). If parents involve their

children in exercises classes, they will develop a healthy lifestyle that will last throughout the

child's life. The statistics show that, “children of active mothers are twice as likely to be active as

children of inactive mothers, and children of active fathers are three and half times as likely to be

active as children of inactive fathers” (Steinbeck, 2001). This part of In-Shape will promote a

healthy lifestyle, not only for adults or children, but for the whole family.

The Market

Market Needs Child care and fitness for children has become a recurring topic in recent years due to childhood

obesity, and other childhood health issues. A survey conducted by Fit for Kids demonstrated that there is

a gap in the market for physical fitness for children that is convenient for adults, and easily fits into the

parents’ lifestyle. Many participants also wanted a more affordable child care option that improved their

children’s health and fitness knowledge.

The survey concluded that out of those who cared for a child, 95% used child care, and 94% of

those individuals felt that they were paying too much for the child care services (refer to Figure 1) (Acrey,

et. al. , survey, March, 2014). These statistics make it evident that child care services are currently needed

in the market. Fit for Kids would fill this gap by providing the needed day care services that are being

requested.


Figure 1: Affordable

Figure 1 (Acrey, et. al., survey, March, 2014)

Additionally, of our survey respondents who cared for a child, 96% wanted their child to get

more exercise, and 97% wanted the child to be more knowledgeable about health and fitness (refer to

Figure 2) (Acrey, et. al., survey, March, 2014) . There is a clear need in the market for not only a child

care service, but also for a service that encourages fitness for children. Fit for Kids would increase the

amount of exercise for the children, while teaching them about fitness and encouraging them to live a

healthy lifestyle.


Figure 2: Knowledge

Figure 2 (Acrey, et. al., survey, March 2014)

Convenience is another element that the market wants, as 100% of those surveyed stated that they

worked out at a gym, and many commented on the convenience that Fit for Kids’ services would provide

them (Acrey, et. al., survey, March 2014) . The services would prevent them from having to schedule

their workouts around when the children are at school, or have to arrange other childcare alternatives.

Market TrendsIn terms of the important variables that were identified in the market summary, a rise in obesity

was the umbrella issue. Although the related variables to an increase in obesity in the market are school

and child care becoming more sedentary, and parents leading busier work lives (Werner, 2012). Each of

these variables are trends occurring in the marketplace, and all relate to the need for more services that

offer physical exercise.

The U.S. National Library of Medicine National Institute of Health reports that approximately

30% of children and adolescents eat fast food on a daily basis (2014). Fast food is widely available and a

convenient, as well as an affordable, option for most families. Since parents, or care takers of children,

are leading busier work lives, fast food is a convenient dining option which is contributing to the increase

in obesity.

School and childcare has also become more sedentary, with physical fitness not being a necessary

element in some child care services. If children cannot get exercise at school or at daycare, then it is not


likely that they will be active on a regular basis. Inactivity will increase their chances of obesity, although

Fit for Kids can decrease this chance by encouraging regular exercise.

Market GrowthThe National Association for Sport and Physical Education reports that physical education will

improve a child’s life through adulthood in a multitude of different areas that include mental as well as

physical health and wellbeing (Luce & Motil, 2014). Reports such as this one will lead to market growth

since childhood obesity is currently such a big problem. Parents will be encouraged to act proactively,

and enrolling their children in fitness classes will allow parents to take a proactive stance towards the

growing issue.

Additionally, the amount of women in the workplace has increased from 40% to 59% therefore it

is increasingly common for both parents in a household to be working (Kotler and Armstrong, 2014).

This fact will definitely increase the need for child care services since more parents will need child care

assistance. It will also further stress the importance that these child care services provide physical

exercise for the children, since the parents may be less likely to encourage fitness for their children if both

parents are working full time.

Fit for Kids will also help the market grow by the convenience that the service provides,

considering 100% of those surveyed by Fit for Kids who care for a child also work out at a gym (Acrey,

et. al., survey, March, 2014). The service would provide the parents with an easy solution to the problem

concerning what they should do with their kids while they are working out. The fact that the amount of

women in the workplace is increasing will also add to the appeal of this convenience. Many of these

women will now have to work out after their children are out of school.

SWOT AnalysisIn order to determine whether or not Fit for Kids is a viable business strategy, In-Shape

has prepared an analysis of its strengths, weaknesses, opportunities, and threats. An overview of

these items can be found in Figure 3.


Figure 3: SWOT Table

Strengths

Obesity Epidemic

Childcare background

Class options/availability

Instructors

Weaknesses

Children’s ability/ focus levels

Transitioning childcare

Providing results

Space in facility

Opportunities

Michelle Obama Campaign recognition

Improved image

First corporate fitness center to

implement

Increased membership

Threats

Obstacles in certification

Government policies/ Insurance

Video game based exercise

programs

Private children gym studios

StrengthsIn-Shape will use existing capital and social issues to successfully implement the classes.

Childhood obesity is a social issue that affects children all over the United States. In addition,

“the effects of obesity have a lasting impact on individual’s life in childhood, through

adolescence and into adulthood” (Mollen Foundation, 2011). This issue creates a strong need to

change children’s lifestyles to help end childhood obesity. The sedentary lifestyles children have

adapted to are contributing to this growing issue. It has been found that “just swapping thirty

minutes of screen time for more active play can make you healthier and feel better” (Healthy

Kids, 2014). In-Shape will use this pressing issue to showcase its ability to reverse childhood

obesity through the launch of In-Shape’s Fit for Kids program.

In addition, In-Shape has existing capital that makes this program fairly easy to

implement. Currently In-Shape has childcare facilities available for members. This means

employees have existing backgrounds and connections with the children already utilizing those

services. The background in childcare will ensure proper supervision of children while they are

participating in classes. In-Shape also has dedicated class spaces and schedules. This will allow


In-Shape to facilitate classes that correspond with parent’s gym and class time. Additionally, In-

Shape has existing human capital in class instructors. In-Shape will utilize the instructors’

knowledge and familiarity with classes such as zumba, yoga and aqua, which will ensure the

program is tailored to children’s ability levels. These strengths will work together to ensure

children’s exercise classes will be successful not only for the participants, but the organization as

well.

WeaknessesIn-Shape will face some challenges while implementing this new program. Although

participating in exercise classes is high energy and exciting, instructors may struggle to keep

children focused on the exercise routine. The average attention span of preschool aged children

is around fifteen minutes, which will pose an issue in keeping the children involved (Loop, n.d.).

Instructors are used to working with adults who understand the need for attention and hard work

required to successfully complete a class. This will require special focus and patience from the

trainers outside of their usual job requirements.

In addition, In-Shape will need to ensure the exercise classes are providing results.

Parents will expect these classes to fulfill daily exercise requirements to prevent obesity. This

may be difficult to measure since children will not understand the ultimate goal of finishing a

class as an adult would.

There may be frustration from conflicting space issues as well. There are only certain

areas in the gyms that can be used for group exercise. In-Shape may be ill-equipped to provide

adult and child classes at the same time. This could potentially create a need for space and the

remodeling of facilities to accommodate the growing class schedule.

Lastly, In-Shape will need to transition a daycare setting to an exercise setting. Regular

childcare will still be provided to children too young to participate in classes. Currently, there

are two age groups: little kids, which are six months to five years, and big kids, which are six to

twelve years old (In-Shape, 2014). The environment will shift because the section of “big kids”

will shift towards exercise classes, while the “little kids” group will still need childcare. This

will require staff to multitask and facilitate care for the younger group, as well as oversee the

older children who are participating in the exercise classes. In-Shape will face challenges that

need to be addressed and adjusted in order to make this launch successful.


OpportunitiesWith the launch of this program, In-Shape will gain new opportunities. The background

behind children’s exercise classes come from cutting obesity. This will allow In-Shape to join

campaigns such as Michelle Obama’s Let’s Move! initiative. This will give In-Shape added

publicity and interest for future members.

This will also enhance In-Shape’s current image. A company's image is key to its success

because it is how consumers view the product. In conjunction with offering classes for children,

In-Shape will be seen as a positive business for children as well as adults. A positive image will

also attract members and impress current members.

The opportunity of attracting new members will be significant for In-Shape’s future

success. The above factors will showcase a unique selling point that other corporate gyms do not

offer, making it a more appealing choice. In-Shape will be able to take advantage of these

opportunities to increase membership and the consumer’s view of In-Shape.

ThreatsIn-Shape faces threats that could potentially harm the success of the new program. The

gym may face obstacles in the certification of the instructors. There could be limited dates and

classes available for the instructors to become certified in classes tailored to children’s needs.

Although there are numerous certifications for adult based classes, children based classes could

pose a problem with certification.

In addition, In-Shape will have to follow government regulations for children’s exercise

classes. This could potentially create the need of higher priced insurance and higher regulation.

Currently, regulations limit children sixteen and under from using exercise equipment, clubhouse

facilities, and locker rooms without adult supervision (Davis- Starling, n.d.).

There are also two types of competition that In-Shape will need to endure. There are

video games and systems, such as the Wii, that offer exercise based games that could be more

appealing to children. Video game suppliers state, “it would be great if instead of beating kids

about screen time, we turn screen time into a positive” (Seasman, 2014). This type of exercise is

marketed to children because it is part of their usual gaming routine. It is said that “kids who

play active video games lose more weight than children only following a weight management

program” (Seasman, 2014). There are also private child gyms that are available in certain areas,


with the sole focus of child exercise. In-Shape will need to address these potential threats in

order to succeed.

CompetitionIn-Shape would have a competitive advantage because no other gym offers exercise

classes for children. Fit for Kids is an option for parents who have kids that need to be watched.

With this offer, In-Shape would compete with all the day care facilities in the area. This feature

for the gym is very similar since both are a way for parents to be able to drop their children off

and do their tasks, or in this case, workout. In-Shape not only offers to watch kids, but to watch

kids while they are doing an exercise activity. “Nearly 1 in 5 children between the ages of 6 and

11 are overweight” (James-Enger, n.d.). Most child care centers do not offer exercise activities,

instead they have board games for children to play with. At In-Shape, parents will be happy

knowing their children will be socializing with other kids, and getting healthy while doing so.

In-Shape’s main competitors are the gyms in the area. For the In-Shape located in

Capitola, the main competitors would be Balanced Health and Fitness, CrossfitSantaCruz

Central, Rocky’s Fitness, and 24hr Fitness. None of these gyms were promoting child classes

with their memberships. Most gyms do offer a child care program while the parents work out.

However, In-Shape has an advantage because its child care includes exercise for the kids. When

compared in a study, “active parents would be more likely to support their child’s efforts with

physical activity” (Welk, Wood, & Morss, 2003). Parents that go to the gym are active which

often means that they would want their kids to be active as well. In-Shape would have an

advantage over the other gyms because active parents would likely want to place their kids in

exercise classes over normal child care at any other gym. Now, what is this service that In-Shape

offers?

Product OfferingThe services being offered at In-Shape are exercise classes geared towards children called

Fit for Kids. The exercise classes for children would be included in the family membership at In-

Shape. Parents who have the family membership will have the option to drop their child off at an

exercise class while they go and work out on their own. This would be convenient for parents

who attend the gym and a pleasure to the parents knowing their children will be active. These


classes for children will be included in the membership so there will be no hourly or class fee.

The parents can drop them off and be on their way for their workout.

These classes for children will be age appropriate and each class will have a different

style. Some of the classes that would be offered include zumba, Yoga, Pilates, and much more.

Different classes will be at different times throughout the day, so no reservation would be

needed. However, the classes will have age requirements, since not all classes will be suitable for

all ages. Parents might have to plan ahead if they want a special class for their child; however,

there will be many to choose from. The instructors for the exercise classes will be trained

appropriately for each class and each age group. Parents can feel safe leaving their children with

trained professionals because the instructors will tailor each class to the children’s needs. This

service is great for the children’s health as well as the parents because it allows them to spend

that quality time at the gym.

Keys to SuccessIn-Shape wishes to make Fit for Kids as popular as possible. In order to do so, In-Shape

will focus on three keys to success. The first factor is the growing number of households that

have two working parents (Anderson, 2006). Due to their busy schedule, parents already find it

difficult to fit in a trip to the gym. Being able to drop the kids off for exercise classes at the gym

will encourage these parents to make more trips to the gym. This will not only benefit the new

child exercise program, but the gym overall with the increased participation from parents.

Another factor is the childhood obesity epidemic. Parents will be looking for ways to

keep their children healthy and instill lifelong values in their kids. Children will gain access to

three exercise classes per week at a cost of only $30 per month. Fit for Kids at In-Shape will be a

cheap and easy way to fill this need.

In-Shape’s final key to success is the fact that schools are cutting physical education

classes. These cuts have created a demand for physical education for children. Fit for Kids could

act as a substitute for physical education in schools. These factors will make the classes a huge

hit with busy parents and ensure a popular and profitable program.


Critical Issues While In-Shape expects the program to be successful, there are critical issues that could

potentially harm the new exercise class. The first issue is that parents may be reluctant to enroll

their children in the program when there are alternative exercise options for children. There are

after school sports programs, karate classes, and even private lessons for children. This

competition could result in a less than successful program for In-Shape. Another issue is that

many adults are now obese as well as children. These adults are unlikely to go to the gym and

their children are very likely to develop unhealthy exercise habits. These are the children that

need In-Shape’s help the most. However, they most likely will not receive help because of their

parents’ unhealthy habits. While these issues do exist, In-Shape is hopeful that Michelle

Obama’s Let’s Move! campaign will help educate parents and stimulate gym membership for

people of all ages.

Marketing Strategy

Value Proposition In-Shape's Fit for Kids is a first-rate option for single-parent and two-parent families. The

Fit for Kids program will encourage family gym time and an active lifestyle. At a low cost of

$30 per month and flexible schedules, parents will be guaranteed an affordable exercise option

with different class times that coordinate with busy schedules. The Fit for Kids program is the

best option for families because it will help kids stay active, as well as provide parents with time

for personal exercise. Ultimately, the goal of Fit for Kids is to encourage childhood fitness but

also provide parents with an alternative to normal childcare.

Mission In-Shape's goal is to provide the facilities for an active lifestyle. In-Shape's one vision

from the beginning was to help "people stay healthy and have fun" (In-Shape, n.d.). With Fit for

Kids as a new addition to the gym, In-Shape will continue to encourage an active lifestyle that is

family focused at the same time.

Marketing Objectives The survey that was conducted for Fit for Kids concluded that there is definitely a need in

the market for convenient exercise options for children. Of the respondents who were surveyed,


94% said they pay too much for child care. Also, 95% said they pay for child care on a regular

basis. Furthermore, 97% of parents want their children to be more knowledgeable about health

and fitness, and noted the convenience of Fit for Kids. Fit for Kids will aim to meet these needs

of convenience and affordability, and with the proper marketing strategies it will prove to be a

successful program. Our main strategy will be marketing to already existing customers by

informing them of Fit for Kids. This will generate new members at a low cost.

Financial Objectives In order to break even, In-Shape must sign up 206 members at each of the 70 California

locations (see figure 6). This equals 14,420 members. However, based on our conservative

estimations, In-Shape should have no trouble gaining around 22,000 members in the first year

(see figure 7). This will generate profits of $2.5 million and a profit margin of 32% which is

ideal (see figure 5).

Target Markets

Existing MembersFit for Kids will target families who are already members of the gym. Targeting these

families will require little advertisement since In-Shape will spread the news of this new service

to members. Since these families are already willing to pay the membership price for In-Shape,

Fit for Kids will be a small additional, but beneficial fee. Because the parents of these families

are already active, most will be encouraged to place their children in these exercise classes. This

program will also be convenient for the families with memberships. The exercise program for

children will allow parents with memberships to bring their children and know that they will

both be active for the time there.

New MembersFit for Kids will also target families that are not members. These families will be middle

class and low income families that cannot afford to pay for their kids to be in childcare. Since the

exercise classes for children are inexpensive, it will be beneficial for the parents. Not only would

it be cheaper than most childcare, but the children will also be active. Staying healthy is

important especially because of the high obesity rates. These classes will also encourage parents


to sign up for memberships because of the convenience. The luxury of bringing children to the

gym rather than childcare is a huge benefit.

Positioning The position of Fit for Kids will be more for less. With this program, the children are

getting more features than normal childcare. Not only is someone watching the kids for the

parents, but they are also being active because of the exercise classes. Not many childcare

options offer fitness based activities, especially the ones located at gyms. Even though this

program does cost parents a fee, it will still be cheaper than other childcare options. The program

offers up to 3 classes a week for the child for only $30 per month. That will average out to $2.50

a class for each child. That $2.50 pays for the child to be watched as well as engage in active

classes.

Strategies The strategy of Fit for Kids will be focused on reducing childhood obesity. The targeted

market will be informed of the program offered at In-Shape. This will be done by placing a

variety of advertisements inside the gym as well as advertising within a 20 mile radius of the

gym. Advertisements located inside the gym will inform families who already have a

membership of the program offered for children. We chose to advertise within a 20 mile radius

as well to promote new memberships. Since individuals often will not drive a far distance to go

to a gym, we decided 20 miles would be a reasonable distance for advertisements to promote

new comers.

Marketing Mix

PricingCurrently, In-Shape offers 3 memberships which are single, couple, and family. Fit for

Kids can be added onto any of these memberships with an additional $30 fee a month. This fee

would be for each child that would be participating in the program and will allow the child to

attend up to 3 classes a week. In-Shape would also offer the program to a child with a parent

with no membership for $30 a month. This would be a membership for only the child and allow

the child to attend up to 3 classes a week as well.


DistributionExercise classes for children will only be offered at In-Shape gyms. There will be

scheduled classes at different times for specific age ranges. Parents will be able to choose a class

they would like their child to attend with no payment since it is already paid through the

membership. This program will be offered as an addition to any of the memberships that are

offered at In-Shape as well as a personal membership for the child.

Marketing CommunicationsIn-Shape will market this program through the implementation of our mix of promotional

tools. The promotional tools include advertising, personal selling, public relations, direct

marketing, and sales promotion. This will be accomplished through placing print and online ads

in local newspapers. Ads will also be placed on the internet through social media websites which

will attract individuals to sign up. An Email advertisement will also be sent to existing members.

These advertisements will be aimed towards parents with young children.

Marketing ResearchTo develop a thorough marketing plan for Fit for Kids, primary and secondary research

was conducted. The primary research of this plan comes from In-Shape’s current Kids Club

operations, as well as In-Shape’s current business model. In addition, the underlying issue of

childhood obesity was closely examined to ensure a need for this product. Furthermore, insight

was gained from examining the potential market for this product by understanding competition,

or the lack of competition for this revolutionary concept.

The secondary research came from a survey that was implemented to discover a true need

for the product. Participants responded with answers providing data, allowing forecasts of

product usefulness before the launch. In addition, expenses and revenue were forecasted to

ensure profitability for In-Shape. There were also reports from current In-Shape productivity

used to help mold a new product for In-Shape.

There will need to be a continued research and development team for this product.

Research in new class development, childhood obesity, and childhood attention spans will need

to be updated on a consistent basis. Geographical research will also need to be implemented

consistently to show new segment opportunities, as well as areas suffering most from obesity.


Financials Fit for Kids will be profitable for In-Shape. Based on our calculations, expenses will total

$5,369,000 for this service at all 70 California locations. However, based on our conservative

sales forecast (refer to figure 7), we will have about 22,070 members in the first year that the

service is introduced. This will generate revenue of almost $8 million, giving In-Shape a

generous profit margin. Calculations are provided below for one In-Shape location as well as all

70 California locations.

Figure 4: Revenue

Figure 5: Profit & Loss

Break-even AnalysisAccording to our break-even analysis, In-Shape must have 206 members for Fit for Kids

at each of the 70 locations in California in order to break even. This equals 14,420 members


total. However, by the end of the first quarter, In-Shape should have 21,660 members (see figure

7). This new service should be an instant profit center for In-Shape. Figure 6: Break-Even

Sales ForecastAccording to the 2012 census estimate, there are 38 million people living in California.

Of this number, 24% are under 18 (State and county quick facts, 2014). However, we are only

targeting children from the ages of 2 to 15. We estimate that this will give us 19% of the

California population. Our potential market includes 7,220,000 children. However, only 15% of

Americans go to the gym (Saint Louis, 2011). This further reduces our potential market to

1,083,000 children. There are 70 In-Shape gyms all over California to capture this market.

While the number of potential children that may sign up for gym memberships is over

one million, realistically, we only expect to capture 2% of the market when first introducing our

service. We then expect membership to increase 5% each year. These calculations are reflected

in figure 7.


Figure 7: Sales

Expense Forecast Our goal is to create a convenient exercise option for kids which is affordable and educates

children on health and fitness. Fit for Kids’ marketing objective is to inform the public of the

services attributes while keeping costs low, but also reaching the largest number of customers.

We look to sign up existing gym members as well as solicit new members in the local

community.

We will satisfy our marketing objectives by implementing our marketing

communications mix of promotional tools:

Advertising: Place ads in the local newspapers of each gym, print and online.

Personal Selling: Incentive program of a five dollar discount for new adult members to

join the gym along with their child.

Public Relations: Create a webpage specifically for Fit for Kids that includes a calendar

of classes and detailed information to offer convenience. Also add information

concerning the work out classes for children on the existing In-Shape Facebook page.

Direct marketing: Email all existing gym members to inform them of the new services.

Sales promotion: Offer one class free per child.


Figure 8: Selling Costs One Location

Figure 9: Selling Costs 70 Locations

Controls To ensure that our service’s affordability, convenience, and other beneficial elements are

communicated to our target market, we will monitor multiple control variables. We will monitor

the amount of memberships sold each month to existing members, and to new members to

determine the success of our marketing efforts. Additionally, we will monitor the percentage of

revenue generated in proportion to our total marketing costs on a monthly basis. Since one of our

service’s benefits is its affordability, we must closely monitor marketing costs because we cannot

raise our prices.

ImplementationThe implementation process for Fit for Kids begins with contacting each existing In-

Shape gym and informing them on how to begin the process of offering the services. Each

facility will need approximately six months to hire employees, save money for initial

implementation costs, and to begin marketing in the community. During the preparation period,

the company headquarters will develop the material for the classes which will consist of two

different age groups 2-6 and 7-15. Each class will be an hour long and the material will consist


of physical exercise as well as basic nutritional advice. After the preparation period, our

objective is to have most locations offering the Fit for Kids services.

Support for the different In-Shape locations will be provided throughout the

implementation process by the company headquarters. Assistance beginning with the initial setup

process and marketing expectations will be given to each location. However, since our target

market is relatively local to the different gyms’ locations, there will be slight flexibility in the

marketing strategies. Lastly, data from each operating location will be collected at the end of

every month concerning membership sales for progress analysis.

Marketing OrganizationFigure 10: Marketing Organization Chart

Fit for Kids from In-Shape will implement a marketing team to achieve Fit for Kid’s goal

of reducing childhood obesity. Each individual board member will work independently under the

supervision of the marketing director to achieve benchmark goals and overall goals. The duties

of each member are listed below with the overall goal of improving weaknesses and increasing

the strengths of this product.

Anne Acrey will be appointed Marketing Director. Her job will be to facilitate meetings

between board members. In doing so, benchmarks will be revised and met, and goals will be

maintained. In addition, she will review individual work and make suggestions based on current

standings of the programs.

Mallory Lufkin will be in charge of research and development. She will stay in touch

with the Centers for Disease Control on updates about childhood obesity. In addition, she will


ensure that the product is reaching regions with affected children. Most importantly, she will

work with class programs to ensure the most up to date classes are being offered. Organizations

like Les Mills, and yoga organizations will be part of her contacts to ensure the best possible

classes are provided.

Amanda Waymire will be in charge of advertising and promotion. She will work directly

with the corporation to share information through flyers, television commercials, and radio

commercials. She will work closely with Vistaprint to produce flyers and mail outs. In addition,

she will be in charge of trade shows and local booth events to spread the word about the new

program.

Mariah Chavez will be in charge of sales and finance. She will benchmark sales and

ensure revenue is rising. She will also ensure expenses are maintained at a minimum so this

program will be more successful. Lastly, she will allocate funds for advertisments, new training,

and research.

Kaelie Cardoza will be in charge of maintaining product image and making adjustments

to the current product. She will work with all In-Shape locations to adjust prices and product as

necessary. She will also be in charge of examining new segments, pitching the product, and

implementing the Fit for Kids brand all over the U.S.

The marketing team will ensure that competition does not gain an advantage on the

product. In addition, they will capture the market by being the only corporate gym with this

brand. The strength of being the first health club to offer adult as well as children’s’ fitness

services will give them the advantage they need. In addition, the epidemic of obesity will be

monitored with research ensuring In-Shape keeps a competitive mission and proposition. The

team will ensure Fit for Kids is a successful venture for the In-Shape Corporation.

Contingency Planning In-Shape is confident about Fit for Kids as a new gym addition, but there are still probable

risks. Those risks include: foreseeable value for the consumer, competition from other private

children gyms, and exercise video game programs.

In order for In-Shape to avoid failure with the Fit for Kids program, they must make the

consumer see the value of the program. Many people may be hesitant about Fit for Kids’

objectives and question if it will really work. In-Shape will need to rely on educated children’s


instructors to provide the best fitness experience. Furthermore, the instructors must be

knowledgeable about health and leading healthy lifestyles. These two outcomes will ensure that

Fit for Kids is beneficial to the consumer.

Another scenario that In-Shape has to consider is the competition from private children

gyms. An issue like this has the likelihood to diminish customer satisfaction. Due to the low

price, consumers may feel they are not benefiting from the program. Therefore, it is important

for In-Shape to diversify their program with new activities and goals.

Currently, video game based programs are very popular and will not lessen in popularity,

but rather become more popular as technology advances. An issue like this has the potential to

decrease In-Shape and Fit for Kids’ membership. Since In-Shape is not the leader in the market

for kid fitness, this will place a wedge in long-term viability for Fit for Kids. In-Shape will have

to rely on the latest exercise activity to draw in the consumer and keep it interactive and fun,

creating a unique experience that a video game cannot provide.


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Table of Figures - mariahchavez.files.wordpress.com€¦ · Web viewThis market plan proposes a new business venture for the health club In-Shape Corporation. As childhood obesity