For a class project - worked in a group and responded to a RFP from Frank\'s Gym, a made-up gym in Franklin County looking to expand business model and add a new location in the Atlanta area. This is the Final Report and our Final Recommendations.Weniger lesen
![To: Frank’s Gym From:Step Up Marketing Date:December 6, 2009 Subject:Final Recommendation Report Attached is the document addressing Frank’s Gym’s RFP concerning the growth of their fitness center. After reading through our extensive research and analysis, we hope that you will have more than enough information for your decision to expand to the Atlanta Metro area. If you have any questions or comments please feel free to contact us at: jwatson7@gatech.edu; mkoenig3@gatech.edu; traville3@gatech.edu; or kmurphy@gatech.edu . STEP UP MARKETING, INC. 798 Peachveiw St. • Atlanta, GA 30313 • 770-453-0983 • clients@stepup.com Final Recommendation for the Expansion of Frank’s Gym Kristen Murphy • Mary Grace Koenig • Thomas Raville • Jack Watson Abstract Frank’s Gym is a gym that meets the needs of its client base with great success using several strategies that has rapidly increased their capital and given reason for expansion. Our methodology incorporates both print and empirical research methods and consists of 5 steps, including: researching the location, gathering information about competitors, interviewing the owner of another gym, conducting a survey to identify the needs of potential customers, and developing a marketing strategy and advertising campaign. The results of our research support the expansion of Frank’s Gym into the Atlanta-area by opening a new location in Druid Hills and provide a useful comparison of competing gyms in the Atlanta-area as well as ideas for marketing and advertising, advice from the owner of a gym with a similar target market and demographic composition, and a summary of the needs and preferences of potential customers in Frank’s Gym’s target age range. With all 5 steps of our methodology in consideration, our final recommendation is for Frank’s Gym to expand into the Atlanta area by opening a new gym in the Druid Hills area. Introduction In the past, the opportunity to attend or be a member of a health club, gym, or fitness center was one that was reserved for people with a certain high level of income and affluence. These clubs served as social markers of affluence as well as a place to increase fitness. Today, gyms have become much more affordable and accessible to people of all backgrounds and a much broader economic makeup. The number of gyms in America has drastically increased in recent years as well as the demand and desire of Americans to get in shape or stay fit. Gyms have begun to specifically taper their services to meet the exact needs of the client base in their area in order to keep up with their competition. Frank’s Gym is one that meets the needs of its client base with great success using several strategies that has rapidly increased their capital and given reason for expansion. Frank’s Gym was founded in January of 2000 in Franklin County, Georgia. It was the first gym of its kind in the area for several reasons. Frank’s is a state of the art gym with a very modern feel that the market of Franklin was otherwise unaccustomed to. Most residents of the area had never had the opportunity to attend such a gym due to proximity let alone financial capability. Frank’s has amazingly been able to provide great service along with competitive amenities at plans that the residents of Franklin can both afford and desire in a gym package. Frank’s maintains one location with over 800 members. It nets profits of approximately $400,000 per year. The gym has over 50 people on staff including management, trainers, and cleaning crew. Frank’s Gym success can be traced back to its ability to correctly evaluate the demand and needs of its clientele in the Franklin County market. Frank’s has optimized its customers work out time based on the customer’s age, occupation and overall exercise goals to make sure all members have less than a one minute wait time per machine. Also, Frank’s has partnered with local restaurants and chiropractors. The chiropractors benefit by increasing their customer base from free advertising by making sure the members maintain a healthy and injury free workout. Restaurants provide healthy alternatives to some of their previously unhealthy options and in return receive referrals from Frank’s. Frank’s Gym has a clientele that consists of average working people. They have been successful because they have provided this group with service and amenities that rival any other gym in the area at prices that they can afford. Frank’s Gym’s problem and Request for Proposal stems from one of the best predicaments a business can have: the need for expansion. Currently, Frank’s significantly outperforms all other such businesses in the area. They are confident in their business model as well as ability to adapt to the needs of any client base they encounter. Therefore they are seeking to expand to the Greater Atlanta area where they feel their business model will be equally successful. However, Frank’s is immature when it comes to its ability and experience in marketing and advertising. Also they need assistance in locating an area inside of Atlanta that will be a fit for their gym. Obviously, competition in Atlanta will be far greater than in Franklin so it is imperative that Frank’s adapt a new business model to account for this as well as change certain factors such as their logo, slogan, etc. in order to remain competitive. This report analyzes the possibility and methods by which Frank’s Gym should relocate to the Atlanta area. All research is based on whether it will be fiscally responsible and advantages for Frank’s to enter the Atlanta market and attempt to be competitive. Factors such as location, competition and proximity to other gyms, and desires of the market will all be considered in deciding if and how Frank’s can become a successful member of the Atlanta fitness center market. Methodology and Criteria Our research compares and contrasts gyms in the Atlanta-area, analyzes demographic information, and uses an interview with the owner of another gym and a customer interest survey to identify the amenities and services offered by competitors within a 25 mile radius of Atlanta as well as those services that are most desired by potential customers, specifically in Frank’s Gym’s target age group between the ages of 18-44. Our methodology incorporates both print and empirical research methods and consists of 5 steps, including: researching the location, gathering information about competitors, interviewing the owner of another gym, conducting a survey to identify the needs of potential customers, and developing a marketing strategy and advertising campaign. Researching the Location In researching a location for proposed expansion of Frank’s Gym, we used online census information to analyze the demographic composition and determine a match for our target age group. Druid Hills, an area that we identified in the initial research of our proposal as a potential location for Frank’s Gym’s expansion into the Atlanta area, was chosen as the ideal location for Frank’s new gym based on its demographic information. Gather Information about Competitors To gather information about the amenities, pricing, and services offered by competing gyms in the Atlanta-area, we looked at the websites of seven competitors in the Atlanta-area: Gold’s Gym, Ladies Workout Express, A Brand New You, Bally Total Fitness, FormWell, Fitness World, and LA Fitness. Using information on these websites, we were able to create tables to compare and contrast offered amenities to determine which amenities Frank’s Gym will need to offer in its new location in order to compete with other gyms in the same market. Interview Methodology To gain insight about helpful marketing techniques and operations processes, we interviewed the owner of another gym. Anne Thallman is the owner of Studio 30, a gym in Duluth which has a demographic similar to the Druid Hills area consisting of moderately wealthy professional adults between the ages of 18-44, according to the demographic breakdown provided by the US Census. As the owner of Studio 30, Anne Thallman has experience marketing towards the same age group targeted by Frank’s Gym. Survey Methodology To identify the needs and preferences of potential customers in the Atlanta and Druid Hills area, we created an anonymous 7-question survey and solicited responses through email to potential customers in the Atlanta and Druid Hills area to determine the types of services and amenities that young professionals in the area prefer in a gym membership. 100 participants responded and told us about the types of services and amenities that are most important to them when choosing a gym. Develop Marketing Strategy and Advertising Campaign In preparing Frank’s Gym for its expansion into the Atlanta-area and entrance into a new market, we began developing ideas for a new marketing strategy and advertising campaign to ensure high customer responsiveness and success for Frank’s Gym in its new metropolitan location. This new marketing strategy and advertising campaign includes specific methods for targeting the 18-44 age group as well as ways to incorporate social networking, online media, involvement in the community with local businesses, and promotions. Methodology Justification Our research methodology is thorough and offers a variety of information from both print and empirical sources. Information about the Druid Hills location initially selected in our proposal was gathered from the study of local maps and U.S. census information. Competitor analysis was compiled using the official website of each gym in the Atlanta-area. We realize that some of this information may introduce some bias as gyms want to promote their best features in order to attract the most customers. For that reason, we focused on the amenities that each gym offered in order to maintain a standard of objectivity in our comparison. Our survey participants were selected by emailing contacts in the Atlanta-area, Druid Hills, and Emory University area. Because the majority of the respondents were in the 16-24 age range, our data was somewhat skewed. However, 95% of our participants identified themselves as students or young adults so our data can be used as an accurate reflection of the needs and preferences of the young consumer, Frank’s Gym’s target market. Results Location In evaluating the area for the relocation of Frank’s Gym, the proximity and quality of other gyms in the area was a key factor in the opening of a new gym in the area. Druid Hills is a perfect location for several reasons. The first being factor is that there are no gyms that are particularly close to the area or centered in this part of Atlanta. The second is that Druid Hills demographic and affluence provides a perfect age range for the demand of the gym as well as monetary competency in affording its amenities. The last key factor in this decision is the location of our gym to Emory University, which provides a perfect match for the preferences in the responses of our surveys. 0209550The map below shows the area gyms closest to Druid Hills with markers: Competition One of the biggest concerns facing Frank’s Gym is the competition they will face in the Metro Atlanta area. Branching out into a new territory is always an intimidating task and so it’s good to have an understanding of what the competition is already offering your potential customers. In our research, we analyzed what kinds of services and amenities surrounding fitness centers had to offer. We chose multiple locations in various sizes of their gym. These ranged from large scale businesses like LA Fitness to smaller scale such as A Brand New You. All the locations were located within a 25 mile radius of the Druid Hills Area and would be the mostly likely competitors. Most of the companies have a monthly fee of approximately $30-$40 which gives access to most of the gym’s equipment such as machines, free weights, and saunas. However, specific classes such as yoga, Pilates, martial arts, and personal trainers all come at additional costs. Personal trainers usually average about $40-$50 per hour session. Members can usually sign up for Group Exercise Programs which usually involves a flat fee that covers a variety of courses for the member to choose from. We charted the services and amenities that each of the gyms offered ranging from machines to the different classes offered. Analyzing the data allowed us to form our decision for what we felt would be essential items for Frank’s Gym to offer. This chart can be found in the Appendix Section. Survey In the survey, when asked to select all of the amenities from a list that would be important when opening a new local gym, 79 out of 99 respondents considered Pilates, Yoga, Spin, Kickboxing, and other classes to be an important amenity that they would like to see offered at the new local gym. With a response rate of 79.9%, this was the most desired amenity by the surveyed group. Seventy-seven out of the 99 people surveyed also considered televisions on treadmills and elliptical machines to be an important amenity that could be offered, while 61 said a pool and sauna, and 51 said a free weight area was important to them. Five out of the 99 people also selected other and designated options such as “free personal training consultation,” “fans on the treadmills,” and “heated pools and hot tubs.” In another survey question, survey participants were asked to rank several services on a scale of 1-10 based on how likely they would be to take advantage of the service if it were offered. Each of these rankings was separated into the categories of “not very important,” “somewhat important,” “neutral,” “important,” and “very important” with rankings of 1-2 being “not very important,” 3-4 being “somewhat important,” 5-6 being “neutral,” 7-8 being “important,” and 9-10 being “very important.” Nine out of the 100 participants gave 24hr gym access a ranking of 1 or 2, seven gave it a ranking of 3 or 4, twelve gave it a ranking of 5 or 6, eighteen gave it a ranking of 7 or 8, and twenty-nine gave it a ranking of 9 or 10. This means that a total of 62.7% of the 100 people who answered this question gave 24hr access as 7,8,9 or 10, ranking it as “important” or “very important” while the remaining 37.4% gave it a 6 or below, ranking it as “not very important,” “somewhat important,” or “neutral.” Also in the survey, participants were asked how likely they would be to take advantage of personal training and nutritional services if they were offered. According to the importance scale used above, 12.8% of respondents ranked personal training and nutritional services a 1 or 2, considering it to be of very little importance. An additional 13.8% of those surveyed ranked personal training and nutritional services as somewhat important to them, 25.5% were neutral, and 47.9%, the largest percentage of participants, said that personal training and nutritional guidance was important or very important. When asked in another survey question on average how often they attend a gym, 1% of surveyed participants responded that they attend a gym every day. An additional 22% responded that they attend a gym 1-2 times per week, 26% said that they attend a gym 3-5 times per week, 12% said they go to a gym several times a month, and 39% said that they to a gym only sporadically. People who go to a gym frequently (at least once a week) make up 49% of those surveyed while the remaining 51% of respondents are those who go several times a month or sporadically. Other results from the survey show that 49.5% of respondents want a basic individual or family membership while 50.6% are willing to pay more for an individial or family membership that includes classes. 62.2% of repondents also said that they were not likely to take advantage of on-site childcare or class options for children if they were offered. Also, when given a list of slogans and asked to choose the slogan that they respond best to, 32.3% chose “big city fitness, small town appeal.” The largest percentage of surveyed participants, 43.4%, chose “gym memberships individualized for your needs.” Interview An interview was conducted with Anne Thallman in which she talked about her training studio and how she thought it was best to market a gym. When asked about Studio 30 she said “It is a One-on-One personal training studio with no membership fees and a pay as you go system. This fitness studio promotes healthy lifestyle through eating properly, water consumption, good sleeping habits, strength training, and cardio.” She also stated that the most important thing to give clients is results and a gym wants to show clients that the gym is making an improvement in their life. Clients should be more energetic and more happy and ready to tackle their daily lives. When asked about how to market a business like a gym she said “I mainly used client referrals: no print or TV advertising. I think I brought in the most clients by client referrals and marketing with other small businesses in the area.” Client referrals were increased by adding physical evidence in the form of a report that was distributed quarterly and included strength gained, body fat lost, gains in lean muscle mass, positive accomplishments (good eating habits, increased water consumption), motivation, and areas of improvement. Discussion and Recommendation The results of our research support the expansion of Frank’s Gym into the Atlanta-area by opening a new location in Druid Hills and provide a useful comparison of competing gyms in the Atlanta-area as well as ideas for marketing and advertising, advice from the owner of a gym with a similar target market and demographic composition, and a summary of the needs and preferences of potential customers in Frank’s Gym’s target age range. Using the results of our research, we have developed a recommendation for Frank’s Gym based on the discussion and analysis of each of the 5 steps of our research methodology. In researching the location and evaluating the options for the relocation of Frank’s Gym, the proximity and quality of other gyms in the area was a key factor in choosing the right neighborhood for Frank’s. Druid Hills is a perfect location for several reasons. The first factor is that there are no gyms that are particularly close to the area or centered in this part of Atlanta. By opening a central Druid Hills location, Frank’s would be able to compete for the business of residents that have otherwise been members of gyms on the outskirts of Druid Hills or other parts of Atlanta entirely. The Druid Hills demographic provides a perfect age range for the demand of the gym as well as ideal customer income range for affording its amenities. According to the Census of 2000, the population was spread out with 13.0% under the age of 18, 30.2% from 18 to 24, 30.7% from 25 to 44, 16.5% from 45 to 64, and 9.6% who were 65 years of age or older. Almost two-thirds of people in the target area are between the ages of 18 and 44. This age group encompasses the most people who are likely to attend gyms due to physical and social factors. Also, the median income for a household in the CDP was $62,953, and the median income for a family was $106,196. These levels of income show that Druid Hills is a particularly affluent area whose residents are fully capable of affording a gym membership. The last key factor in this decision is the location of our gym to Emory University, which provides a perfect match for the preferences in the responses of our surveys. While Emory has its own student fitness center, it is only open until 11 pm on weekdays and 9 pm on weekends. Because our plan is for Frank’s Gym to be open 24 hours, Frank’s will be able to directly compete with the Emory fitness center for students seeking access at these later hours. Through our research of competitors in the Atlanta-area, we found that some of the most important features of each fitness center included: Cycling, Aerobics, Free Weights, Elliptical machines, and Plate-loaded machines. These seem to be the most essential amenities for any gym regardless of the location. Instructional classes such as yoga, Pilates or even martial arts are also in high demand at just about any fitness center. Combining these classes under a group exercise program will provide customers with a variety of workouts to choose from and give them a chance to build a schedule more suited for their individual lifestyle. On-site childcare, while offered at most of the competing fitness centers, did not demonstrate a high demand in our customer interest survey. Having a younger demographic might have reduced the need for this and could allow funds to be spent in more essential areas. Although, to be able to compete with gyms in the surrounding area, it will be necessary for Frank’s Gym to offer some type of childcare option. If the demand for childcare increases over time, more childcare services and class options for children could easily be added in the future. Since the majority of the customer base will involve college students or recent graduates, a nutrition program or nutrition specialist could prove to be a very valuable asset. College is a time of great change and freedom, and with that many students often find themselves in a position of irregular meal times and choosing whatever is quickest and easiest rather than what might be most beneficial to their bodies. Offering a program that can educate customers on ways to improve their dietary habits, especially on a tight budget, would be extremely valuable. Also, many customers have had encountered problems with larger fitness centers involving contract cancellations and hidden fees. Gyms such as Gold’s Gym and LA Fitness often provide a one month trial membership but require a two year contract when signing up for a membership containing registration and cancellation fees that the customer may not be aware of. We feel that Frank’s Gym could address this problem by offering alternative membership options such as short term and no contract memberships. During our interview with Anne Thallman, owner of Studio 30 in Duluth, we received helpful insights about marketing towards the 18-44 age group, increasing client referrals, and using surrounding businesses. Thallman stressed the importance of “promoting a lifestyle, not just a gym,” a tactic that could strongly benefit Frank’s Gym. In addition, Thallman suggested releasing quarterly reports with body fat lost, inches lost, pounds lost, and muscle gained to allow members to see a summary of the progress they have made. The idea is that members will show these reports to their friends, increasing client referrals and membership numbers while maintaining current members. To promote community involvement, Thallman also recommended using local businesses like chiropractors, nutritionists, and other professionals to gather more business and continue to project the community-friendly image that Frank’s Gym already has. Using the results from the customer interest survey that we conducted, we were able to gain important information about what young adults in the Atlanta, Druid Hills, and Emory University areas want from a gym membership as well as what kinds of amenities and services are most important to them when choosing a gym and which services are not as important. Based on these results, we were able to choose amenities for the new Frank’s Gym location in order to best target the 18-44 age range. 62.7% of our potential customers valued 24 hour access to gym facilities, 47.9% said that they would take advantage of nutritional services, 79.8% considered Pilates, Yoga, Spin, Kickboxing and other classes to be one of the most important services offered by a gym, and 77.8% selected televisions on treadmills and elliptical machines as an important gym amenity. To gain as much business from the target market as possible, we suggest that Frank’s Gym include all of these services and amenities to cater to both frequent gym-goers and those who only attend sporadically. The survey also provided customer input on a new slogan as 43.3% of survey participants chose “gym memberships individualized for your needs” as the slogan that they responded best to. As the basis for a new marketing strategy for Frank’s Gym, the survey provides useful feedback to allow Frank’s Gym to market directly to its target market in the Druid Hills area. With regard to marketing, our marketing team has identified several components to include in the marketing strategy and advertising campaign for Frank’s Gym’s new Druid Hills location. This includes the creation of a new website with an embedded program so that clients can track their progress, promotions such as free trial memberships or free personal training session bonuses for signing up, using trainers and staff to promote the gym by sending them to health events and conferences, and sponsoring and promoting events in the community like the Susan G. Komen 3 day walk, ING Marathon, and Peachtree Road Race. In addition to each of these suggestions, we recommend a new logo, such as the one created by our marketing director, Mary Grace Koenig. With all 5 steps of our methodology in consideration, our final recommendation is for Frank’s Gym to expand into the Atlanta area by opening a new gym in the Druid Hills area. We recommend that Frank’s Gym use the new logo that we have created and the slogan chosen through our customer survey in their marketing materials and advertising campaign to give the gym an updated and modern feel to correspond with the opening of its new location. The new logo and slogan will also help ensure high customer responsiveness and create a feeling distinct from that of their Franklin County location while still maintaining brand recognition and the same high quality service that customers have come to expect from Frank’s Gym. Also, we recommend that Frank’s Gym begin quarterly reports to help increase customer referrals and gain new members. We suggest that Frank’s Gym offer amenities that are comparable or better than those offered by competitors by offering 24 hour gym access, one-on-one professional training, nutritional guidance, weight training, and Pilates, yoga, kickboxing, and spin classes as well as a pool and sauna and televisions throughout the gym on all of the workout equipment. Currently, only one of Frank’s Gym’s competitors in the Atlanta area offers 24 hour gym access. The majority of potential customers surveyed said that they would take advantage of this service if it were offered so this could be a means of differentiation for Frank’s Gym if they were to offer 24 hour access to their workout facilities. Furthermore, we recommend that Frank’s Gym implement the marketing strategies we have suggested through the creation of a new website, sponsoring of events in the community, partnership with local businesses, and use of promotions to target the 18-44 age group and meet the needs of the Druid Hills market. References Bally Total Fitness. (n.d.). Retrieved from http://www.ballyfitness.com/home.aspx Formwell Personal Fitness. (n.d.). Retrieved from http://www.formwell.com/ Gold's Gym - Atlanta. (n.d.). Retrieved from http://www.goldsgym.com/gyms/index.php?gymID=743Healthclub Directory. (n.d.). Retrieved from http://www.healthclubdirectory.com/ Ladies Workout Express. (n.d.). Retrieved from http://www.powerlady.com/ La Fitness. (n.d.). Retrieved from https://www.lafitness.com/Pages/clubhome.aspx?clubid=74&clubStatusID=1 New Life Fitness. (n.d.). Retrieved from http://newlifefit.com/
North Druid Hills CDP, Georgia.
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