MARK101 Assignment FULL

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1. Executive summary Les Mills is a New Zealand based and world renown gym franchise. The owner Philip Mills, has created a variety of high quality fitness facilities around New Zealand, opening the 10th and latest club in Britomart, Auckland in 2010. Les Mills is renowned for holding the title of Worlds Best Fitness Classes and for their high standard of operations, making them one of the leading competitors in the New Zealand gym industry. The purpose of this report is to identify and target potential market segments. By reaching these specific ‘segments’, Les Mills can increase their client basis by appealing to a wider market audience. The Situational analysis conducted for Les Mills revealed that, the New Zealand gym industry is expanding substantially from influences, such as increased health awareness and fitness craze’s including group exercise classes. These factors provide large potential for Les Mills to expand their client-basis. The analysis also provides Les Mills with an insight into their current position on the competitive scale, which shows they are the New Zealand leader in quality and standard of operations and also second to Jetts for satisfaction. Various external factors such as the political and economic environment, prove to benefit and hinder the gym industry and Les Mills. For example, government laws and regulations creating a stable market environment, or the economic downturn negatively effecting discretionary spending levels. Conducting a TOWS analysis identified, positive and negative factors of Les Mills current market strategy and position, by revealing various Threats, Opportunities, Weaknesses and Strengths. One specific and important factor for revealing Les Mills ideal target market, is the weakness that Les Mills membership fees are relatively more expensive then other competitors in the gym industry. Based on this evidence Les Mills should target a market of high income earning adults and the baby boomer generation, due to the fact that they have higher income levels and are less price sensitive. From the TOWS analysis, vital information and findings allowed for recommendations to be made, such as the potential in an older, aging market, the benefits and attraction of introducing pools into Les Mills clubs and globalizing Les Mills clubs, to increase their profits and client base. Luke Richards-300311784

Transcript of MARK101 Assignment FULL

1. Executive summary

Les Mills is a New Zealand based and world renown gym franchise. The owner Philip Mills,

has created a variety of high quality fitness facilities around New Zealand, opening the 10th

and latest club in Britomart, Auckland in 2010. Les Mills is renowned for holding the title of

Worlds Best Fitness Classes and for their high standard of operations, making them one of the

leading competitors in the New Zealand gym industry. The purpose of this report is to identify

and target potential market segments. By reaching these specific ‘segments’, Les Mills can

increase their client basis by appealing to a wider market audience.

The Situational analysis conducted for Les Mills revealed that, the New Zealand gym industry

is expanding substantially from influences, such as increased health awareness and fitness

craze’s including group exercise classes. These factors provide large potential for Les Mills to

expand their client-basis. The analysis also provides Les Mills with an insight into their

current position on the competitive scale, which shows they are the New Zealand leader in

quality and standard of operations and also second to Jetts for satisfaction. Various external

factors such as the political and economic environment, prove to benefit and hinder the gym

industry and Les Mills. For example, government laws and regulations creating a stable

market environment, or the economic downturn negatively effecting discretionary spending

levels.

Conducting a TOWS analysis identified, positive and negative factors of Les Mills current

market strategy and position, by revealing various Threats, Opportunities, Weaknesses and

Strengths. One specific and important factor for revealing Les Mills ideal target market, is the

weakness that Les Mills membership fees are relatively more expensive then other

competitors in the gym industry. Based on this evidence Les Mills should target a market of

high income earning adults and the baby boomer generation, due to the fact that they have

higher income levels and are less price sensitive. From the TOWS analysis, vital information

and findings allowed for recommendations to be made, such as the potential in an older, aging

market, the benefits and attraction of introducing pools into Les Mills clubs and globalizing

Les Mills clubs, to increase their profits and client base.

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2.Table of Contents pg.

1. Executive Summary 1

2. Table of Contents 2

3. Introduction 3

4. Situational Analysis 4

4.1 Market Analysis 4-6

4.1.1 New Zealand Gym Market

4.1.2 Current Target Consumers

4.1.3 Consumer Trends

4.1.4 Consumer Buying Patterns

4.2 Competitor Analysis 7-11

4.2.1 Strengths and Weaknesses Grid

4.2.2 Perceptual Map and Positioning

4.2.3 Competitive Advantage

4.3 Macro Environmental Analysis 11-13

4.3.1 Political Environment

4.3.2 Economical Environment

4.3.3 Socio-Cultural Environment

4.3.4 Technological Environment

4.3.5 Natural Environment

5. TOWS Analysis 13-15

6. Target Market 15-16

7. Recommendations 17-18

8. References 18-19

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3.Introduction

Les Mills is a New Zealand based and world renowned gym. The gym was founded in 1968

when New Zealand, olympic athlete Les Mills and wife Colleen opened the first club in

Auckland. In 1980 Philip Mills took over the business, with the objective of integrating group

fitness classes into the clubs (Les Mills Gyms|Our Story, 2012). After multiple years of

success in the New Zealand gym industry, Les Mills international was founded in 1997, when

Philip’s fitness classes gained global recognition from international industry leaders such as

Australian Bill Robertson (Our History, 2013). Les Mills has continued to succeed and grow

to this day. With 10 clubs nation wide, world renowned fitness classes and the most extensive

range of state of the art equipment in New Zealand, Les Mills has developed a mission for

creating a ‘fitter planet’ and is now one of the most sought after gyms in the country (Why

Consider Les Mills Today?, 2012).

The purpose of this report is to identify and target potential market segments, with the aim of

increasing the Les Mills client basis and appealing to a wider market. This can be achieved by

conducting a situational analysis which will determine key factors and findings of the gym

industry Les Mills reside’s in, such as competitors and macro environments. A TOWS analysis

will also provide vital information regarding Les Mills and their current market situation.

Upon this analysis, possible faults and/or opportunities of the gym market and Les Mills will

be identified, from which recommendations can be made, towards eliminating these potential

barriers and providing potential benefits to Les Mills. Certain limitations may exist around

assumptions, such as outdated statistics or unreliable information sources that may affect this

report.

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4.Situational Analysis

4.1 Market Analysis

The purpose for conducting this market analysis is to provide Les Mills insight into the

present gym market and to determine key factors, characteristics and trends within the market,

with the intention of revealing potential opportunities. A particular focus for Les Mills, is the

demand for group fitness classes and how they can further cater to this market regarding

health and well being.

4.1.1 New Zealand Gym Market

Participating in physical activity, such as working out at gyms has become increasingly

popular, not only in New Zealand but in the majority of countries around the world. This is

simply due to health concerns and the increased social pressures of becoming fit and healthy.

The gym industry has also advanced substantially, allowing people to become physically

active on their own terms. Working out at gyms is an ideal way to stay fit and active, in a

comfortable stimulating environment. In 2009 the annual turnover generated in the fitness and

gym industry was around 160 million dollars (A profile of the New Zealand Fitness Industry,

2009), over the past five years there has been a 60 million dollar increase in revenue produced

in the industry, with a annual total of 220 million dollars in 2013 (Fitness Industry, 2013).

Considering this revenue increase in the market place, the assumption can be made that the

fitness and gym market is rapidly expanding with over a 70% increase in the revenue from

2009 to 2013. The gym market is large, with approximately 500,000 New Zealanders having,

or had, a membership to a gym or fitness facility, which is around 12% of the population of

New Zealand (www.reps.org.nz, 2012). With the evidence that the market is increasing, there

is substantial potential for Les Mills to improve their client base by appealing to the

broadening and expanding market.

4.1.2 Current Target Costumers

Les Mills overall mission statement is to create a “fitter planet” (why consider Les Mills,

2013). They aim to target costumers who are primarily focused on physical activity and well

being, by providing an extensive range of state of the art gym equipment, personal trainers

and fitness classes. Consumers are given a variety of options when working out at Les Mills

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which cater to various needs and wants, at an extremely high standard of quality. High quality

almost always means high costs, proving to be inseparably correlated factors. Therefore, due

to the high standard and quality of Les Mill’s operations, it is hard to keep the fixed costs to

consumers low, causing membership prices to be relatively high, in comparison to the market.

As a result of this ‘limitation’, Les Mills is forced to primarily target dedicated, more

experienced gym enthusiasts and customers, as they are far more likely to understand the

value of quality, in respect of equipment and services. Although these particular customers are

their ‘primary’ target, Les Mills will also strive to target first time or more novice customers

wishing to train at a higher relatively more expensive level, by offering services such as

personal trainers and introductory courses.

4.1.3 Consumer Demand Trends

The market for physical activity in New Zealand and around the world is large and clearly

expanding, especially as gyms aim to create more incentive to exercise, through methods such

as group classes and personal trainers. Group fitness such as Zumba is a large trend in gyms

today (especially with women) and is one of the main attractions people are looking for in a

gym (Les Mills| New Zealand| Gym Brands, 2014). Les Mills is renowned for its group fitness

classes with “more than 5 million people, in 80 different counties around the world” taking

part in their classes (Les Mills Group Fitness Classes, 2012). Group fitness holds great

potential, people have moved on from individual workouts, as it is relatively hard to be

sufficiently self motivated to prepare your own workouts. This is where group fitness excels

above solo training, as individuals are guided with their workout and get to share the

experience with others.

In this day and age it is substantially harder to become and stay motivated when it comes to

taking part in exercise. Distractions such as technology and the internet make it difficult to

participate in physical activity, simply because people would rather be doing something else

more exciting and less strenuous. Due to a lack of motivation in New Zealand, the use of

Personal Trainers is significantly increasing within the market place. Gym and fitness

facilities in New Zealand employ over 5000 staff, with approximately 3000 of these workers

are personal trainers (www.reps.org.nz, 2012). Personal trainers provide expert support,

motivation, accountability and most importantly results, hence why their services are

considered to be one of the fastest, easiest and most successful way for achieving desired

results (Benefits of a Personal Trainer, 2014). According to the American College of Sports

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Medicine, personal training is considered the number one fitness trend around the world and

this trend is anticipated to continue in and beyond 2014 (Personal Trainer Trends, 2014),

(Fitness trends for 2014, 2013).

A trend towards increased health awareness has also been occurring in both New Zealand and

Australia over the past five years. In 2013, 40.1% of growth in the New Zealand and

Australian fitness Industry was a direct result of adult obesity (The Ultimate Guide to the

Australian and New Zealand Fitness Industry, 2013). International Research company Ibis

world accredits the cause of this trend to New Zealand and Australian aired reality fitness T.V.

shows such as The Biggest Loser (Gyms and fitness Centre's in Australian market, 2014). The

overall objective of these shows is to promote how beneficial and effective exercising can be,

thus creating an incentive for over weight or obese individuals to join a gym. Ibis world also

believes the increase in gym revenue in both the Australian and New Zealand industry, is a

flow on effect from fitness reality shows creating health awareness (Gyms and fitness Centre's

in the Australian market, 2014).

4.1.4 Consumer Buying Patterns

In 2008-2009 the world, including New Zealand witnessed a huge decrease in discretionary

spending in almost all areas of the economy including the gym market, as the country entered

a global recession and people became more discerning about how they spent their income

(The Economy of New Zealand, 2010). Since then however, there has been a gradual increase

in discretionary spending in the fitness and gym market as the economy has recovered and

become stable and also with the introduction of budget 24 hour gyms, such as Jett’s or

Anytime Fitness in recent times (Gyms and fitness Centre's in Australian market, 2014). Once

again this gain can be witnessed by the 70% increase in sales produced in the fitness and gym

markets from 2009 to 2013 (A profile of the New Zealand Fitness Industry, 2009), (Fitness

Industry, 2013), along side this statistic is the fact that 41.7 % of growth in the New Zealand

and Australian Fitness industry in 2013 is accredited to people joining 24 hour gyms (The

Ultimate Guide to the Australian and New Zealand Fitness Industry, 2013). Increasing health

awareness created by media such as television shows, provides an incentive for changing

buying patterns favoring the gym market e.g. attending a gym. 52% of Les Mills members in

2012, joined simply to loose weight or change their body shape, which potentially could have

been directly motivated by the media (Become a Member of Les Mills Gyms NZ, 2012).

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4.2 Competitor Analysis

A Competitor Analysis allows Les Mills to gather information about market competitors and

establish where they are positioned in the market on a competitive scale. An assessment of the

strengths and weaknesses of current and potential competitors will determine Les Mills

overall market position.

The gym industry has a monopolistic structure, hence there is a relatively large number of

competitors, all with slightly different products and services, that offer unique benefits. Les

Mills main competitor’s are other gyms in the market such as, Jetts, Anytime Fitness, or

Contours Women’s gym. However, there are also other sources of competition in this market,

such as home work out DVD’s, Internet workouts or self employed trainers. Les Mills is a

large competitor in the gym industry, especially after claiming the title of Worlds Best Group

Fitness Classes (Les Mills Gyms, 2014), and becoming renown for the high standard and

quality within their operations.

Competing gyms may offer different prices, contracts, facilities, locations, hours and classes

or personal trainers. An example of how Les Mills competes in this largely competitive

market is through its extensive range of fitness classes. Some gyms such as Jett’s are yet to

even offer fitness classes. Les Mills is the market leader for group fitness in New Zealand and

the world, making it one of the largest competitors in the gym industry. (Les mills Gyms- The

Worlds Best Group Fitness Classes, 2014). Due to gyms offering different benefits, such as

group fitness classes or different hours, the assumption can be made, that they are unable to be

positioned as a whole on a competitive scale. However, surveys on canstarblue.co.nz in 2012

show that Les Mills is second to Jett’s for overall satisfaction in the gym market. (Compare

Gyms, 2012). Other competitors such as home work out DVDs or internet workouts, compete

by allowing consumers to workout in the comfort of their own home without going through

the hassle of getting to a gym and paying expensive membership fees.

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4.2.1. Strengths and Weaknesses Grid

Company Jetts Anytime Fitness

Contours Home Optione.g. Home DVD

CurrentStrategy

Strengths

“The Gym that works out better.”

“Low Contracts.”“Low Fees.”“ Open 24/7.”“Work out on your terms”

“Convenience+ Culture”.

“Convenient, Affordable and fun. With 24/7 access to thousands of clubs around the globe. Fitness has never been so easy”.

“Where Women find Strength”

“More than just a gym... Whether your searching for a new body or a balanced life, we’re here to help”.

The comfort of a home environment.

Revolutionizing the home workout experience(Zumba).

-Open 24/7 to give client ongoing access to gyms at their convenience. -Self Sufficient, does not require staff to monitor equipment and members. -Low membership fees, appeals to the segment in the market which is looking to spend the minimal amount on a membership. -No Contracts. clients can join and leave the gym at any stage, without having to pay a cancelation fee.

-Over 18 clubs nationwide. Easily accessible for members and obtains large market share. -Open 24/7.-Self Sufficient-Secured access and 24/7 security surveillance, creating a safe environment for members.-Personal Trainers. Allowing clients, a sense of motivation and accountability. Good way to get comfortable with the gym and its surroundings.

-Woman Only. Creates comfortable setting for women to work out in, without felling self conscious or pressured, by a Co-gender environment. -Not only a Gym. Offers a variety of female focused services, such as hair and beauty and also Personal Trainers.-Range of group fitness classes. Allows women to work out with friends and family. -Single Membership fee, eliminates hassle of having to pay ongoing fees.

-Provides the comfort of a home environment e.g. not having to worry about others around you. -Affordable. Eliminates the costs of membership fees for gyms. -Single parents are able to workout, without looking for alternate, expensive child care. -Enables you to fully work out on your terms, i.e. Time and money wise.

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Company Jetts Anytime Fitness

Contours Home Optione.g. Home DVD

Weaknesses

CompetitiveAdvantage

Pricing

- Not Perceivedas a high quality gym in the market. Can be off putting to more avid gym enthusiast’s seeking top quality equipment.-Only appeals to small section of the market, that just seek equipment. They lack the service of Personal Trainers or Fitness classes.-A no frills organization. e.g Jetts does not offer free towels or merchandise.

- Lacking Fitness classes. Fitness classes are a key factor people look for in a gym. -Considered a male dominated gym. Often this can be off putting to the female gender- Considered low key. Multiple complaints about the size of the gyms.

- Purely Targets the female gender. Eliminates the chance of obtaining some of the male market share. -Some women may not be attracted to the idea of a women's only gym. A survey of 1500 women shows, that over 60 percent of these women would prefer a co-gender gym.(1*)

- Lacks the services of a gym such as classes or a range of equipment.-Distractions of a homely environment e.g. T.V., Internet.

- No Contracts- Ranked No.1 gym for satisfaction in New Zealand in 2012-2013.

Internationallyrecognized, well known in the gym market.

-One of only two women’s only gyms in the New Zealand market.

-Comfort of a Home Environment.

Yearly- $498 +Joining Fee- $138

Yearly- $772 +Joining Fee- $79(Clubs Vary)

Yearly- $988 +Joining Fee- $39(Clubs Vary)

Own Terms.

Reference List:

Jetts- (Jetts Fitness New Zealand, 2014), (Prices, 2014).Anytime Fitness- (24 Hour Gyms - Health Clubs - Fitness Centers, 2014), (Fitness Gym Membership-Why join a Gym?, 2014).Contours- (Welcome to Contours, the health and fitness club exclusively for women, 2014),(About Contours - More than just a gym, 2014), ( (1*)Women’s Health Magazine, 2013).

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4.2.2. Perceptual Map and Positioning

A market gap is evident in the area’s of high price with low quality versus low price with high

quality options. These gaps appear due to their specific market situation being unobtainable. If

a gym was to charge a high price and provide low quality equipment and services, there

would be no demand for their ‘gym’, assuming the situation does not appeal to consumers or

meet their needs. However, if they were to charge a low price and provide high quality

equipment, the assumption can be made that the ‘gym’ would not make a sufficient return on

their investment from the higher quality equipment and services required .

4.2.3 Competitive Advantage

Les Mills gains a competitive advantage in the market for being the pioneers of group fitness

classes. Their classes have gained global recognition and have claimed the title of being the

best in the world (Les Mills Gyms, 2014). Another substantial competitive advantage is their

reputation for being the New Zealand market leaders for the high quality and standard of their

operations (Les Mills | New Zealand | Gym Brands, 2014).

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High Low

High

Low

Relative Price

Quality

Home Option

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4.3 Macro Environmental Analysis

4.3.1 Political Environment

The New Zealand Government plays a large role in the gym and fitness market. Without

government intervention and support, the market may not be as successful as it is. This could

be as a result of the implementation of specific laws surrounding the industry such as Health

and Safety regulations. These laws create market stability by giving all gyms the same

compliance guidelines, therefore a fair market environment is created. For example, the law

regarding children in fitness facilities, requires gyms to abide by the ruling that individuals

under 17 years or younger cannot enter a gym unless they are accompanied by an adult

(Industry Guidelines, Regulations and Resources, 2009). This rule has been implemented to

comply with certain forums such as the Accident Compensation Corporation (ACC). There

are also a number of Occupational Health and Safety (OSH) regulations which have particular

relevance to the fitness and gym industry including first aid requirements, minimum staff

levels and even the volume limit for music in group fitness classes (Industry Guidelines,

Regulations and Resources, 2009). The Government largely supports health and fitness in

New Zealand, to such a degree that, in order to become a citizen of the country you must be of

a certain physical fitness and weight. In recent news a South African chef, Albert Buitenhuis

is facing deportation for being ‘too fat’, as he does not satisfy the current fitness requirements

set by the Government (BBC News, 2013). The gym and fitness industry benefit from these

requirements, as it creates good incentive for people to stay within the required physical state,

by attending gyms.

4.3.2 Economical Environment

Economic factors play a large part in peoples choices to join gyms. One of the biggest and

most notable economic factors to have an effect on the fitness and gym industry, was the

global recession in 2008-2009. Over this period the New Zealand economy witnessed

consumer spending plummeting from 21,457 NZD Million to 20,461 NZD Million (New

Zealand Consumer Spending, 2014). The assumption can be made that this substantial

decrease in spending was caused by redundancy. The gym industry would have been effected

by the decrease in consumer spending, as it occurred over the entire economy. This is a result

of a lack in consumer confidence and their hesitancy, of how and what they spend their

income on, when the market is so uncertain and discretionary spending is tight. Other

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economic factors such as rising or high interest rates may also effect levels of consumption in

the gym and fitness industry. When interest rates are high, there is a larger incentive for

customers to save their income rather than spending it (vice versa/ceteris paribus). Interest

rates will either have a positive or negative effect on consumption in the gym industry,

depending on whether they rise or fall. Inflationary pressure is another factor that may effect

customers tendencies to purchase goods and services in the gym industry. Inflationary

pressure refers to an expected rise in the general price level of goods and services at a rate

which is increasing higher then the wages of consumers. Therefore, if consumers expect a rise

in inflation, they may wish to spend their income before this can occur, as their money will

have ‘greater’ value ‘today’ in comparison to ‘tomorrow’ (when inflation rises). This may

benefit the gym industry, as it may create an incentive for customers to spend their

discretionary income on gym related goods and services (Inflation Consequences, 2012).

4.3.3 Socio-Cultural Environment

In todays world, there is large social pressures created by media and the internet to be fit and

healthy and going to the gym as a means of achieving this has become a large part of our

culture. The pressures to become fit and healthy is often derived from the media’s depiction of

ideal ‘beauty’. This image of beauty is often used in a highly tyrannical way, particularly

when targeting a young and vulnerable female audience. Through advertising, the media

portrays beauty as flawlessness, by posterizing individuals, who show no imperfections,

which can often only be achieved though editing tools such as photoshop. Often this will trick

individuals into doing anything to become ‘flawless’. Although this particular incentive to

become fit and healthy holds negative connotations, the assumption can be made that the gym

industry will be positively effected by media and advertising, as going to a gym is globally

recognized as an option for obtaining fitness and health.

4.3.4 Technological Environment

Technology is used heavily in our world and is always advancing. Technology is often used

as a means of gaining a competitive advantage, through efficiency and recognition, such as

using the internet for advertising purposes. The gym industry benefits from technology as it

helps improve current operations. For example the use of swipe keys in 24/7 gyms, enables

the gym to run self sufficiently, as only members can enter the facility, therefore it is used as a

method of security. This can also be used for data collection purposes such as, identifying

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how many people enter the gym on specific days. Technology is also being used as a means of

reducing cost such as energy consumption within the gym, with the use of its customers,

through human powered exercise turning calories into Watts. This is achieved through

generators being powered purely by customers using cycle machines (3 New Gym

Technology trends To bulk up your business, 2013). Overall, technology enhances the gym

industry by creating efficiency, reducing costs and gaining recognition.

4.3.5 Natural Environment

Aspects such as climate change have forced companies to become environmentally friendly,

simply due to it being far more appealing to customers. The gym industry could achieve a

“clean green” reputation by, installing low flow toilets and faucets which may allow the gym

to save up to 9.5 litre’s of water a minute (Fitness Facilities Go Green, 2007). If a gym

chooses to renovate or repaint, they could use green seal paints or products with minimal

chemical emissions (Fitness Facilities Go Green, 2007).

5. TOWS Analysis

Threats Opportunities

- Competition of other gyms in the market. Competing gym’s are a primary threat to Les Mills, as they offer different benefits and services that could attract potential customers. - Other forms of exercise such as Running and Cycling. Outdoor exercise, pose a threat to Les Mills as it is an alternate to exercising in a gym, Especially after study’s show that, exercising in a forest or natural surrounding is twice as good for your mental health then working out in a gym. Working out in gyms has proven to increase anxiety levels and depression.- Social changes and trends. Internet workouts such as bloglate’s are becoming

- The population becoming more health conscious. With more and more media attention around health issues such as obesity, the country is becoming more and more conscious of their health and well being. This presents an opportunity for Les Mills to reach out to a more health conscious market, who are primarily wishing to loose weight. -Growing fitness trends such as Yoga, Zumba or other group classes. Although Les Mills offers an extensive range of fitness classes, there is potential to implement some of these already growing fitness trends. -Addition of spa’s within all gym. Studiesshow that getting into a spa after a workout,

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Threats (continued) Opportunities (continued)

increasingly popular instead of attending a gym. These internet trends consist of people posting a variety of workouts, where individuals interact with others, sharing results and recommendations.- Recovering economy. People may not be able to afford to go to Les Mills, after the recession in 2008-2009.

relives tension in the muscles and aids in muscle recovery.-Addition of a Therapy Clinic within all gyms. Most individuals will attend a gym to get in shape and look good. A Therapy clinic could create an even larger incentive to attend Les Mills, especially within the female gender.

Weaknesses Strengths

-Relatively more expensive membership fees in comparison to other gyms in the market such as Jetts. This fails to attract a lower socio economic market. -Does not provide a 24/7 service. In this day and age it is hard to make fitness apart of everyday life. Busy customers may be more inclined to join a 24/7 gym as they can train at a time that suits them.-Low number of clubs around New Zealand in comparison to competitors. This limits customers to specific areas. 15% of individuals who leave gyms in New Zealand state that, it is because the location does not meet their requirements. Providing more variety in location may reduce tendencies to leave a gym.- Les Mills does not appeal to older costumers. They do not offer services such as group fitness classes for the older less capable generation.

- Les Mills has an extensive range of state of the art equipment and a large number of personal trainers at every club. Personal trainers and quality equipment are in high demand, therefore Les Mills creates further incentive to join their gym. -Les Mills is known for having the worlds best fitness classes. Fitness classes are a growing trend. Therefore having this reputation will attract customers wishing to be a part of this trend. - Les Mills allows you to use your membership at clubs all around New Zealand . Customers do not want to pay for a yearly membership if they are only in one location for a couple of months. - Les Mills offers a free one day trial. Allows customers insight into the gym and their services, including the chance to attend a group fitness class. Customers do not want to join a gym if they have no idea what they will be receiving.

Reference List:(The Ultimate Guide to the Australian and New Zealand Fitness Industry, 2013)

(Les Mills Gyms - The Worlds Best Group Fitness Classes, 2014) (Jogging in forest twice as good as trip to gym for mental health, 2012). (Does a Jacuzzi Help After a Strenuous Workout, 2012)

Threats - How will you deal with them?

Competing gyms in the market: Les Mills could try gain a competitive advantage through

implementing unique benefits, that other gyms do not provide.

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Other forms of exercise: Introduce outdoor tread mills or cycle machines, with the aim of

creating a natural environment.

Social Changes and Trends: Create an interactive website, that provides the same format and

benefits of trends, such as bloglate’s.

Recovering Economy: Introduce a strategy of reducing costs on membership fees, through

loyalty programs e.g. Attending the gym for 3 months grants you a fee free month.

Opportunities: Why is it an opportunity?

The population becoming more health conscious: It provides individuals an incentive to join

Les Mills. Les Mills could target these customers, be advertising the benefits of exercising.

Growing fitness Trends e.g. Zumba and yoga: Provides an opportunity to implement already

growing trends into Les Mills operations.

Addition of spas: A chance to increase profits, by offering a small fee to have a relaxing spa

after an extensive workout to relieve sore muscle and fatigue.

Addition of Therapy Clinic: Opportunity to become more then just a gym, by offer therapy

services, which could increase the Les Mills client base, especially within females.

Weaknesses - Can you over come these?

Relatively more expensive memberships: Les Mills could potentially look into eliminating

costs in other areas of the gym’s (e.g. power), in order to lower membership fees.

Does not provide 24/7 service: Les Mills could possibly look at the option of opening a 24/7

gym in some of the bigger locations in New Zealand.

Low number of clubs in New Zealand: Les Mills owner Philip Mills already wishes to open

10 more clubs in the next 10 years (Gym boss sweats to build empire, 2011)

Les Mills does not appeal to older generation: Les Mills could tailor services to appeal to the

older generation, e.g. Personally trainers specifically trained to benefit older customers.

Strengths - Why are these strengths? ( Noted in Les Mills strengths grid).

6. Target Market

Les Mills currently targets a market of consumers who are focused on physical activity and

well being. They primarily target dedicated, more experienced gym enthusiasts, who

frequently want to work out and train. However, they also target the market for first time gym

goers or more novice customers wanting a higher quality experience. They achieve this by

providing services such as, personal trainers and introductory classes. Les Mills targets a

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market of gym enthusiast's aged between 18 and 40, who are students or relatively high

income earning adults (Fitness Is The Biggest Sport, 2013). This main age group of students

and high income earning adults, has proven to be Les Mills current client basis. Students are

attracted to Les Mills, as they tend to cater to the student lifestyle, through collaboration with

universities to provide affordable gym memberships. Higher income earning adult’s are also

included in this category, as they can afford to go to a more expensive but higher quality gym.

Higher income tends to provide individual’s a higher standard of living, because Les Mills is

renown for its quality, it attracts this particular market segment. The Les Mills clubs around

New Zealand are located in the bigger cities such as Auckland and Wellington, therefore they

target a broader, centralized market of city dwellers, instead of customers in smaller or rural

towns and cities. The primary cause for this may be that bigger cites have a larger population

and are often more profitable.

Based on the findings from the situational analysis, the most appropriate market for Les Mills

to target would be high income earning adults and the ‘Baby Boomer’ generation. Consumers

aged between 50 and 68 are considered to be a part of the baby boomer generation. This

market is known for having larger income levels and are generally less price sensitive,

especially as they age. Les Mills is perceived as a fairly expensive gym, however, because

baby boomers have a higher level of income and are less price sensitive, this factor will effect

them less, in comparison to a younger generation. Health awareness is especially evident in

this generation, as age tends to cause a variety of health issues, some of which can be

ameliorated through exercise. Baby Boomers make up 14% of the New Zealand population,

outgrowing any other age group in New Zealand. Over the last decade the number of baby

boomers has also increased by 43,100 (Baby boomers outgrowing other age groups, 2012).

This is the most lucrative market for Les Mills to focus on, as more and more baby boomers

are attending gyms. Studies show that from 1990 to 2003 the rate of baby boomers attending

gyms increased by 343%, and will continue to increase in the foreseeable future (Fitness After

50, 2012). Overall the baby boomer generation would provide Les Mills with a sustainable

and growing market. Les Mills could reach this new market by tailoring its services to suit

this generation's needs and wants.

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7. Recommendations

Les Mills does not provide adequate services for potential, older customers (50 and above).

Targeting an older market would lead to a far wider client-base and increased profits. As

individuals get older they become far more conscious about maintaining their health and

productivity. With age comes wisdom and sensibility, therefore what this older age group eats

and drinks, and how much exercise they get is a priority to them. Les Mills can take this

thought pattern and create services that ensure this older generation remains physically,

mentally and nutritionally healthy. Personal trainers and group fitness classes are a great way

to achieve this, as clients receive on going guidance and advice from professionals. Tailoring

service’s such as group fitness classes to suit the less agile generation will appeal to this new

market. It is often very difficult for older customers to run on a treadmill or use heavy

weights, therefore if Les Mills supplied a less strenuous option such as tailored fitness classes,

older folk may be more incline to join their gym. The older generation, particularly baby

boomers, prove to be ideal customers for multiple reasons. One being the fact that older

individuals tend to stay in one location for a long period of time, therefore they are likely to

stay with Les Mills for the long term. After they reach retirement they often have a sufficient

amount of time on their hands, thus getting to the gym once or twice a week shouldn't be a

problem. They will be willing to pay memberships, as most older citizens want to live life to

the fullest and going to the gym can be a way of achieving this. This new market would

increase member retention and therefore profits. Les Mills would benefit substantially from

the investment into a older client basis (Group exercise positioned to.., 2006).

The Addition of a swimming pool within some, if not all gyms would benefit Les Mills

substantially. The International Journal of Sport states that, after working out the best and

fastest way to recover from feeling fatigued or sore is to go for a swim. Swimming is

approximately 14% more effective then simply lying down and resting for muscle recovery

and to relieve fatigue (The Best Recovery for those Long Workouts? Swimming, 2011).

Lightly swimming in a pool, relaxes the muscles and improves blood circulation, both factors

aid muscle recovery (Muscle Pyramid, How to Speed up Muscle Soreness Recovery, 2014).

This recommendation has large potential, as it could open up a door to a new market,

swimmers. All good swimmers will have some gym routine they must follow and a lot of

swimming centres may not offer the service of a gym, thus causing athletes to attend a

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separate gym in a different location. By combining these two factors, athletes will be more

inclined to join Les Mills, as it addresses both aspects of their sport and eliminates the hassle

of moving between the gym and swimming centres. Introducing swimming pools into the

clubs will gain Les Mills a competitive advantage, as they would be one of the first gym

franchises to offer this service in New Zealand.

Les Mills is an internationally recognized franchise and is one of the largest competitors in the

New Zealand gym industry. Every week over 15,000 different clubs worldwide use Les

Mills’ unique group fitness classes (About Les Mills, 2013), yet the international

implementation of Les Mill’s club’s has not occurred. The gym franchise already dominates

the New Zealand market for quality and their standard of operations, but by going global, they

could achieve the same international success. Due to their name already holding a significant

position in the international market, the introduction of clubs at a worldwide level may not be

a difficult task. Les Mills has an excellent reputation overseas, therefore if clubs were opened,

individuals would already be willing to join them, and a minimal amount of advertising and

commandeering would be needed to begin an international client base. The proposition is

made, that reaching out to the world wide gym industry by introducing clubs, would increase

Les Mills client basis and increase profits significantly.

***************************************************************************8. References(24 Hour Gyms - Health Clubs - Fitness Centers. (2014) Retrieved from http://www.anytimefitness.co.nz). (3 New Gym Technology trends To bulk up your business. (2013) Retrieved from http://blog.rockbot.com/blog/gym-technology).(A profile of the New Zealand Fitness Industry. (2009) Retrieved from http://www.nzihf.co.nz/media-resources-1/articles/a-profile-of-the-new-zealand-fitness-industry).(About Contours - More than just a gym. (2014) Retrieved from http://contours.co.nz/about-contours-more-just-gym).(About Les Mills. (2013) Retrieved from http://www.lesmills.com/global/about-les-mills/about-les-mills.aspx).(Baby boomers outgrowing other age groups. (2012) Retrieved from http://www.nzherald.co.nz/lifestyle/news/article.cfm?c_id=6&objectid=10847534).(BBC News. (2013) Retrieved from http://www.bbc.com/news/world-asia-24015123). (Compare Gyms. (2012) Retrieved from http://www.canstarblue.co.nz/health-beauty/gyms/).(Does a Jacuzzi Help After a Strenuous Workout. (2012) Retrieved from http:// healthyliving.azcentral.com/jacuzzi-after-strenuous-workout-3007.html).(Fitness After 50. (2012) Retrieved from http://www.webmd.com/women/features/fitness-after-50).

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(Fitness Facilities Go Green. (2007) Retrieved from http://www.athleticbusiness.com/fitness-training/fitness-facilities-go-green.html).(Fitness Gym Membership-Why join a Gym?. (2014) Retrieved from http://www.anytimefitness.co.nz/membership).(Fitness Industry. (2013) Retrieved from http://www.fitlink.co.nz/tag/fitness-industry/).(Fitness Is The Biggest Sport. (2013) Retrieved from http://w3.lesmills.com/in-your-club/west-coast/en/news/fitness-is-the-world’s-biggest-sport/).(Group exercise positioned to.. (2006) Retrieved from http://www.lesmills.com/uk/home/print-info-item.aspx?e=nLvqk/VGpt8~(Gym boss sweats to build empire. (2011) Retrieved from http://www.nzherald.co.nz/business/news/article.cfm?c_id=3&objectid=10721001). (Gyms and fitness Centre's in Australian market. (2014) Retrieved from http://www.prweb.com/releases/2014/02/prweb11547485.htm).(Industry Guidelines, Regulations and Resources. (2009) Retrieved from http://site.fitnessnz.co.nz/fitness-and-exercise-industry/industry-resources-guidelines/#Codes).(Inflation Consequences. (2012) Retrieved from http://tutor2u.net/economics/revision-notes/a2-macro-consequences-of-inflation.html).(Jetts Fitness New Zealand. (2014) Retrieved from http://www.jetts.co.nz). (Jogging in forest twice as good as trip to gym for mental health. (2012) Retrieved from http://www.telegraph.co.uk/health/healthnews/9344129/Jogging-in-forest-twice-as-good-as-trip-to-gym-for-mental-health.html).(Les Mills | New Zealand | Gym Brands. (2014) Retrieved from http://www.brandchannel.com/features_profile.asp?pr_id=413). (Les Mills Gyms - The Worlds Best Group Fitness Classes. (2014) Retrieved from http://www.lesmills.co.nz).(Les Mills Gyms. (2014) Retrieved from http://www.lesmills.co.nz/about-us/our-story/).(Muscle Pyramid, How to Speed up Muscle Soreness Recovery. (2014) Retrieved from http://musclepyramid.com/how-to-speed-up-muscle-soreness-recovery.( N e w Z e a l a n d C o n s u m e r S p e n d i n g . ( 2 0 1 4 ) R e t r i e v e d f r o m h t t p : / /www.tradingeconomics.com/new-zealand/consumer-spending).(Our History. (2013) Retrieved from http://www.lesmills.com/global/about-les-mills/our-history.aspx)(Personal Trainer Trends. (2014)http://livehealthy.chron.com/personal-trainer-trends-4774.html).(Prices. (2014) http://www.jetts.co.nz/prices).(The Best Recovery for those Long Workouts? Swimming. (2011) Retrieved from http://triathlon.competitor.com/2011/03/training/swimming-for-post-run-recovery_22570).(The Economy of New Zealand. (2010) Retrieved from http://www.treasury.govt.nz/economy/overview/2010/04.htm).(The Ultimate Guide to the Australian and New Zealand Fitness Industry. (2013) Retrieved from http://www.ezypay.com/files/downloads/2013_FIS_Report.pdf).(Welcome to Contours, the health and fitness club exclusively for women. (2014) Retrieved from http://contours.co.nz).(why consider Les Mills. (2013) Retrieved from http://www.lesmills.co.nz/about-us/).2(Women’s Health Magazine. (2013) Retrieved from http://www.womenshealthmag.com/sex-and-relationships/gym-dating).(www.reps.org.nz. (2012) Retrieved from http://www.reps.org.nz/wp-content/uploads/2013/08/R1443-PTC-startout_11.pdf).

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Luke Richards-300311784

Luke Richards-300311784

Luke Richards-300311784