Key trends in the fitness industry and what fitness facilities should be doing about it.

1. JCC Biennial 2012
Bryan K. O’Rourke
bryankorourke.com
Key Consumer & Business Trends
How The Fitness Industry Is Changing And
What JCC’s Can And Should Do About It JCC Bienial 2012 - New Orleans, LA 1

2. thank you
all content available @
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3. <3>
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5. 1
Trends = Change
st
change across all industries How is the World
JCC’s Are No Exception To The Change
Changing ?
the change is not cyclical its fundamental
5
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6. 2
nd Business Models = 146

7. 3
rd
What To Do ?
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8. 1
trends = change
st
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9. <3>
1
technology
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10. <3>
2
changing consumers
4
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11. <3>
3
globalization
4
11

12. revolution
12

13. European Crisis
13 revolution
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14. technology
14

15. ray kurzweil
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16. 16
ray kurzweil

17. 17 ray kurzweil

18. Kurzweil
law of accelerating
returns
18

19. Gordon Moore
number of transistors
on a chip will double
every two years.
“Moore’s Law”
19

20. 1,2,3,4,5,6,7,8,9,10.......
2,4, 8,16, 32, 64 ...........
20

21. technology is progressing much
faster than you realize
21

22. 22

23. fastest adoption ever
ipad $9 billion
4th biggest consumer electronic catagory
23

24. 5technology trends to watch
24

25. 1
CLOUD
COMPUTING
25

26. 2
MOBILITY
26

27. 27 15 billion devices - 2015

28. 3
4 Augmented
Reality
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29. 4
29

30. 4
Project Glass Will Revolutionize
Virtual Reality
SOCIALIZATION
OF THE WEB
30

31. 4
SOCIALIZATION
OF THE WEB
31

32. 32

33. 5
4
Gamification
“Nearly 62 million US internet users,
or 27% of the online audience, will
play at least one game on a social
network monthly this year, up from
53 million in 2010. Their numbers
will continue to grow”
33

34. 4
34

35. digitization of all experiences
not always replaces
often enhances
35

36. including fitness
36

37. consumer trends
37

38. CONSUMER TRENDS
http://www.slideshare.net/Bryankorourke/
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39. 2. Human
http://www.slideshare.net/Bryankorourke/
generosity, caring,
authenticity
CONSUMER TRENDS
39

40. 2. Human http://www.slideshare.net/Bryankorourke/
“83% of US
consumers want
products, services
and retailers to
support more
causes.”
CONSUMER TRENDS
Generation G - Insights

41. 3. City Lights
CONSUMER TRENDS
http://www.slideshare.net/Bryankorourke/ 41

42. 7. Know
http://www.slideshare.net/Bryankorourke/
500 Million Using
Health Apps By 2015
73% Consumers
CONSUMER TRENDS
42

43. 7. Know
CONSUMER TRENDS
Point - Know - Buy
http://www.slideshare.net/Bryankorourke/
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44. Millennials
CONSUMER TRENDS
Largest Generational Group
44

45. Millennials
CONSUMER TRENDS
Historical Relevance
45

46. Millennials
CONSUMER TRENDS
Largest Generational Group
brand = self expression | information = thirsty
action = core value | reverberation
46

47. 47

48. Millennials
CONSUMER TRENDS
Key Driver Of Trends
http://www.slideshare.net/Bryankorourke/
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49. Globalism
not just in the US
what does it
49 mean ? revolution
4

50. demography
globalism &
technology
50

51. 51

52. O
52

53. embrace don’t fear
53

54. we can make a bigger impact
54

55. The Key Is Changing How WE Think
Peter Diamandis
http://
www.abundancethebook.com/
about-the-book/
55

56. “A Maasai warrior can
now use a cell phone
more powerful than
anything Ronald Reagan
had.”
Peter Diamandis
56

57. we are living in an
increasingly digital culture
57

58. 58

59. 2
nd Business Models = 54
14

60. 2. Changing Business Models
60

61. Emerging Consumer Factors - Michael Silverstein
Treasure Hunt - Inside the Mind of the New Consumer
C o m p a n i e s w i l l t h ri v e ,
Silverstein a rgues, by
catering to the penny-
pinching impulses of
consumers, or by "spanning
the poles" and appealing to
both the high and low ends
while avoiding anything else-
there's only "death in the
middle."
56

62. Emerging Consumer Factors
Health club consumer & PRIZM profiles
IHRSA’s completes a nationwide survey of U.S. households. A total of 15,013 individual and 26,487
household surveys were completed to create reliable profiles of members including PRIZM
segmentation.
PRIZM means “Potential
Rating Index for Zip
Marketers”
Health Club Consumer Report
57

63. Emerging Consumer Factors
Health club consumer & PRIZM profiles
Report Includes:
•Trends in Club Membership
•Attendance
•Activity Participation
•Member Profiles
•Typical Consumers
•Profiles By Club
•Profiles By Activity
•Club Fees
•Cluster Analysis
•PRIZM Profiles
Health Club Consumer Report
58

64. Emerging Consumer Factors
Health club consumer & PRIZM profiles
•PRIZM is a geodemographic profiling
system developed by Claritas. Each PRIZM
divides the U.S. consumer into 14 different
groups and 66 different segments. As the
classification is household based, we can
compare different areas according to the
likelihood of joining a health club. For
example, the highest indexed PRIZM
segment is “Blue Blood Estates,” so we can
target “Blue Blood Estates” households
within the health club’s immediate vicinity to
recruit likely members.
•PRIZM analysis is more valuable than
generic demographic data and provides
more meaningful insights into membership
profiles.
59

65. Emerging Consumer Factors
Health club consumer & PRIZM profiles
60

66. Emerging Consumer Factors
Health club consumer PRIZM profiles
2010 Health Club Consumer Report
61

67. Emerging Consumer Factors
Share of Current US Health Club Market
Urban Uptown Elite Suburbs
Affluentials Landed Gentry
Country Comfort Middleburbs
All Eight Others
11%
33%
13%
6 of 14 Segments
10%
Represent 67%
7% of the Market
14%
11%
Health Club Consumer Report 62

68. Emerging Consumer Factors
Share of current US health club market
Penetration Rates = 17% Overall
0.5000
42%
Combined 6 of 14 Segments
0.3750
Represent 67% of the Market
0.2500
25% 25%
23%
21%
16%
0.1250
11%
0
Urban Uptown Elite Suburbs Affluentials Landed Gentry Country Comfort Middleburbs All Eight Others
Health Club Consumer Report
63

69. Emerging Consumer Factors“Price” is main
objection or “perception of value”
Too expensive 61
Exercise elsewhere 52
Feel out of place 18
No available club 13
Don't exercise 16
Too crowded 12
Don’t know anybody 12
0 18 35 53 70
Health Club Consumer Report 64

70. Emerging Consumer Factors - Existing Customers
Report ID’s 5 key clusters
Predominantly Male:
Focus on strength & resistance - 84% Male
Mixed Low Use:
59% use club less than 1 time a week - Less affluent
25% non-members - Even male female mix
Predominantly 50+:
Slightly more female - most affluent - 60% over 50 years of age
Super Avid Hi Spend User:
67% female - Highest participation especially group exercise
Female Low Spend:
80% female - 67% participate in group exercise
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71. Emerging Economic Factors
Mixed low usage largest share of
members
11%
18% Male Strength
7% Mixed Low Usage
50+ Group
Super Avid High Spend
Female Low Spend
22%
42%
largest group of existing consumers
least affluent and least participative
66

72. Emerging Consumer Factors - Markets Maturing
Acquisition focus alone - avoid this space
40% quit
in 30 days
67

73. Emerging Economic FactorsWhat are
customers telling us ?
24% Left the Industry
50000
46,668 45,570
37500
25000
12500
10,268
0
-11,386
-12500
-25000
Total 2007 New 2008 Left 2008 Total 2008
Health Club Consumer Report
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74. Emerging Economic Factors
National growth has stalled for several years now
Stagnant
2009 $19.9 Billion
2009 45.3 Million Members
2008 $19.1 Billion
2008 45.5 Million Members
Related to economic factors
Limited supply increase
Restricted financial
environment
Profiles of Success 72

75. Emerging Consumer Factors - Michael Silverstein
Treasure Hunt - Inside the Mind of the New Consumer
The “New Consumer” Seen in All Industries.
Important to Understand “Value”
68

76. Our Digital Culture
Alternative fitness options - digital technologies
Consumers are getting accustomed to the
“long tail” affect - anytime, anyplace, anywhere.
Estimate 2 million in US utilize some type.
69

77. Emerging Consumer Factors
Prevention - monetizing wellness
The emerging health care mess is creating new customer needs
to reduce costs of traditional care via prevention
70

78. Emerging Consumer Factors
Consumer’s don’t trust advertising
The Days of Traditional “Sales” and “Marketing”
in Health Clubs is Coming to An End
71

79. Michael Silverstein
Treasure Hunt - Market “Bifurcation”
“I have seen that
consumers will always
trade down and buy the
cheapest product in a
category if suppliers fail
to deliver a stream of
innovation a nd build
loyalty based on product
superiority.”
74

80. Business Models & Trends - Core Economics
Average membership dues flat since 1980
2009 Profiles of Success
Today = $49.95
1980 = About $40.00
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81. Business Models & Trends - Core Economics
Average membership dues fairly flat since 1980
Car Today = $28,400 | Car 1980 = $7,210
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82. Business Models & Trends - Core Economics
Development & operating costs nearly
quadrupled since 1980
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83. Business Models & Trends - Core Economics
ROI in the “average” model under pressure
What drives growth in any industry are ROI’s
that sustain growth and attract capital
The “average” is feeling most pressure
this is driving “bifurcation trend”
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84. Business Models & Trends - Core Economics
Economics has driven discounting for certain brands
capacity strategy = asset turnover focus
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85. Business Models and Trends - Competitive Landscape
Bifurcation of the market - Ray Algar Model
http://www.oxygen-consulting.co.uk/
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86. Prevalent Business Models & Trends - Emerging
Ray Algar - UK Budget Market
http://www.oxygen-consulting.co.uk/
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87. Business Models and Trends - Competitive Landscape
Bifurcation of the market - Ray Algar Model
http://www.oxygen-consulting.co.uk/
82

88. Prevalent Business Models & Trends - Emerging
Budget competitors
83

89. Prevalent Business Models & Trends - Emerging
New niche trends - engaging personal experience
“drop-in” fees unlimited $89 -
$17 - $40 $140 month
84

90. Prevalent Business Models & Trends - Emerging
Hospitality brands reflect market bifurcation
85

91. Prevalent Business Models & Trends - Emerging
http://futureoffitnesswhitepaper.ning.com/
57

92. Prevalent Business Models & Trends - Emerging
On line retail continues surge - fitness models follow
"People are just shifting their dollars to the
Web," said Sucharita Mulpuru, vice president
and principal analyst for Forrester Research
Inc. Online retail sales will grow 10% a year for
the next five years, accounting for 53% of all
U.S. retail sales by 2014, according to Forrester
Research.
87

93. Prevalent Business Models & Trends
Wellness Model - potential to dwarf extant fitness
•Huge $2.7 Trillion Opportunity
•Health care spending is
unsustainable.
•Prevention as a strategic position
for employers and ultimately
governments is inevitable.
•Key is outcomes and integration.
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94. Prevalent Business Models & Trends
Growth - new emerging niches and models
requiring new ways of doing things....
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95. What are you going
to do about it ?
#3 Evaluate Your
Competitive Position
Think Strategically 90

96. What are you going to do about it ?
http://www.slideshare.net/Bryankorourke 90

97. 3 Evaluating Your
Competitive Position
•SWOT
•Internal - capabilities and
resources
•External - market
opportunities and threats
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98. Evaluating Your Competitive Position
Conduct a SWOT analysis of your club business
Internal Review:
•Current position
•KPI’S - member execution
•What is your niche?
•What is your technology
platform ?
•How are you marketing ?
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99. Evaluating Your Competitive Position - Internal SWOT
What is your niche ? How do you differentiate ?
•Price
•Features
•Competitive abilities
•Wellness Option
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100. Evaluating Your Competitive Position - Internal
SWOTCompare numbers to industry figures -
benchmark
Profiles of Success
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101. Evaluating Your Competitive Position - Internal SWOT
What is your technology platform ?
Technology Platform:
•CRM or just billing ?
•Cloud based ?
•Web site integrated ?
•Mobility ?
95

102. Evaluating Your Competitive Position - Internal SWOT
Technology Platform & Customer Experience
A big opportunity is leveraging the strength of
tradition into the future
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103. 96

104. Evaluating Your Competitive Position - Internal SWOT
How do you market ? Social media !
The “NEW” Marketing:
•Social media strategy ?
•What is your spend ?
•Campaign effectiveness ?
•Google Grants !!!!!
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105. Evaluating Your Competitive Position
Conduct a SWOT analysis of your club business
External Review:
•Calculate Demand
•Calculate Supply
•Evaluate Pricing
•Review Existing Members
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106. Evaluating Your Competitive Position - External SWOT
Determine Demand - www.sitereports.com
Eliminate your “gut” - quantify !
99

107. Evaluating Your Competitive Position - External SWOT
Market assessment drive time - www.sitereports.com
Drive Times
Run 10 minutes
Might want to adjust
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108. Evaluating Your Competitive Position - External SWOT
By utilizing PRIZM you can better estimate demand
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109. Evaluating Your Competitive Position - External SWOT
Estimate Market Demand - Use IHRSA research !
Fictional Trade Area
Households
Estimated
Urban % of HH National % IHRSA % 2009 Households HH Demand
U1 - Urban Uptown 6.81% 8.30% 25.10% 7,000 1,757
U2 - Midtown Mix 21.37% 4.33% 16.90% 5,000 845
U3 - Urban Cores 25.46% 4.96% 7.10% 3,000 213
Total Urbans 53.64% 4.96% 17.40% 15,000 2,610
2nd City
Use the IHRSA Consumer C1 - 2nd City Society 6.24% 4.63% 30.10% 15,000 4,515
C2 - 2nd City Centers 7.04% 7.85% 11.70% 7,000 819
Report to calculate estimated C3 - Micro City Blues 4.16% 6.64% 9.00% 3,000 270
demand Total Second City 17.44% 19.12% 15.59% 25,000 3,898
Suburbs
This provides you a good S1 - Elites 2.60% 5.21% 41.70% 8,000 3,336
estimate for your market S2 - Affluentials
S3 - Middleburbs
6.86% 7.71% 23.20% 7,000 1,624
7.23% 6.15% 20.70% 4,000 828
potential S4 - Inner Suburbs 12.21% 4.53% 8.50% 2,000 170
Total Suburbs 28.90% 23.60% 32.76% 21,000 6,880
Total Estimated Market 13,387
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110. Evaluating Your Competitive Position - External SWOT
Estimate Market Supply - Under-serviced ? Change ?
Shop the Competition
Web Research
Estimate Memberships
Evaluate Offering
Demand = 13,387
Supply = 5,075
GROWTH POTENTIAL !
Brand Location Estimated HH Percentage of Adjusted Trade Estimated
Trade Share
24 Hour ABC Drive 2,645 50.00% 1,323 26.06%
Anytime Sierra Lane 820 75.00% 615 12.12%
Anytime Veterans Blvd 735 50.00% 368 7.24%
Snap Fitness Jone Road 640 50.00% 320 6.31%
Bally’s Laredo Ave 1,300 50.00% 650 12.81%
Jane’s PT Studio MPT 300 100.00% 300 5.91%
Your Club Your Club 1,500 100.00% 1,500 29.56%
Total Total 5,075
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111. Evaluating Your Competitive Position - Internal SWOT
Who are your existing members ? PRIZM
Membership Mix by Psychographic Segments
by uploading household addresses
U! Urban Uptown 170
U2 Midtown Mix 80
U3 Urban Cores 75
S! Elite Suburbs 497
S2 Affluentials 249
S3 Middleburbs 107
S4 Inner Suburbs 104
C1 Second City 397
C2 City Centers 127
C3 Micro-City Blues 25
T1 Landed Gentry 80
T2 Country Comfort 12
T3 Middle America 8
T4 Rustic Living 6
0 125 250 375 500
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112. #4 Plan & Take Action
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113. 4 Plan Your Course
of Action
•Develop Your Plan
•Resource & Execute
108

114. Plan Your Course of Action
SWOT gives many answers If you decide to reposition
doing it and executing it is
SWOT Delivers This hardest
109

115. Plan Your Course of Action - Where do you want to be ?
What must you add or take away ? Analyze ROI
•Proforma
•Capital
•Realignment
•Expertise
110

116. Plan Your Course of Action R=G - Prahalad
Orchestration = Franchise Model
There are a large number of
experts, products, services and
solutions from vendors able to
support and advise
you on your fitness business.
“Executives are constrained not by
resources, but by their imagination.”
-CK Prahalad, Ph.D.
111

117. Plan Your Course of Action Seek guidance from
experienced professionals
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118. Recap - What to Do About Change
Evaluate Your Competitive Position:
•Use SWOT approach
•Use JCC, RMA, FDD, SEC and other resources to benchmark
•Evaluate your current market offering including pricing, features, service
•Assess your technology platform - customer facing & integrated
•Assess marketing practices - spend, return and the “new” methods
•Calculate market demand in trade area using PRIZM
•Calculate market supply in trade area
•Evaluate current base of membership and changes
•Think strategically
Plan & Act:
•SWOT generates road map
•Conduct in-depth proforma analysis
•Prioritize actions - do nothing or reposition
•SEEK HELP - JCC, global vendor pool, expertise
•Implement and execute
JCC’s Hold Great Promise
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119. revolution
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120. <3>
O
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122. thank you
all content available @
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