Aussie Fitness and Aussie Fitness International Case Study

Marketing Plans

Market Analysis

The Franklins undertook substantial research on the geographic markets they planned to service prior to establishing Aussie Fitness Centre. The focus of this research was on the growth of holistic life management including personal training and fitness to suit a diverse group of demographics, with different needs. The research results provided by Lambert Consultancy were quite encouraging. The holistic health approach, personal training and Life Coaching were at the beginning of a period of great expansion, according to the findings of several respected industry trade journals. 

Corporate Memberships

Because of transformations desired in personal and business life and the anticipated positive impact of health enhancement on daily life, many businesses are finding that by encouraging their workforce to attend a fitness facility the business will essentially reap the benefits. Benefits include less absenteeism due to healthier lifestyle, increased productivity, and increased employee engagement.

By Aussie Fitness making contact with local surrounding businesses and offering corporate memberships this will in turn increase this style of membership. It is then presumed that additionally, the corporate member will then recommend family and friends, therefore, another aspect of increasing memberships.

The sales team will have a group audience when selling the corporate memberships which is an effective method to communicate the product and services offered by Aussie Fitness all at the same time. This, is time saving by approaching a captured audience and provides the potential clients with more personalised face to the business.

Marketing Strategy

Essentially, Aussie Fitness Centre markets itself as offering high quality, all round training due to their team having up to date current qualifications, specialisation in their fields of interest and industry experience. Aussie Fitness Centre will focus on investing in resources to focus on staff development, maintaining equipment and the physical aesthetics of all the facilities.

The preferred method of advertising is word-of-mouth and social media. Aussie Fitness Centre hopes to hold information seminars on its services at all the Chamber of Commerce luncheons, service groups and schools within a 30-kilometre radius of the business. 

The Franklins have begun writing several articles for a national lifestyle publication to advertise in a variety of health and lifestyle magazines. In addition, the Aussie Fitness sales teams will personally approach Human Resource Managers in larger businesses to promote the benefits of the holistic products and services that AF can offer to their employees. Research results suggest that this type of marketing initiative can generate a significant amount of corporate business. 

Aussie Fitness Centre also intends to continue with the tender process, by approaching medical centres and aged care centres to offer special arrangements for their people to improve their mental and physical health through diet, exercise and companionship. This will be heavily subsidised and offered mainly as a community service. They will not rely on a sale force to generate business.

CM’s and ACM’s are to work with the Sales and Marketing (S&M) Team to discuss tactics and trends to attract new members and keep existing members interested in their respective centers. Suggestions include staff posting videos of how to use the gym equipment safely on Instagram and Facebook, additionally post Healthy Recipes, and Success Stories of their clients. The CM’s and S&M are required to update the website ensuring they are keeping up with industry trends. They must also ensure that the website is user friendly and all links for enquires are actively working continuously. 

See Moodle Web-links – Building Community in the Gym, Increasing engagement among your members.

Pricing Strategy

Aussie Fitness Centre will charge competitive prices for their services, Aussie Fitness Centre are lucky enough to have lower overhead expenses. Based on a survey of fitness training facilities in major cities and surrounding suburbs, similar gyms charge, on average, $220 more per person for a 12 month membership.

There are special arrangements and pricing for corporate partners, special interest groups and community initiatives. 

Action Plans

Personnel

Aussie Fitness Centre plans to continue to keep wage and salary expenses low. To achieve this objective, Aussie Fitness Centre has salaried their personal trainers rather than contracting services. The expectation is that when not involved in delivering classes, or consulting with those for whom they are the personal trainers, they will be volunteering their training services to schools, hospitals and other community initiatives to raise the profile of Aussie Fitness Centre. The facilities also have contract cleaners who start at 4am Monday – Saturday. Additionally, each Centre has a maintenance and facilities person to conduct repairs and general up keep of the facility.

Fee collection

Aussie Fitness Centre offers reduced cost for full payment options for membership services. Member payments may be made monthly or quarterly at a higher rate than annually and with Ezidebit, cash, EFTPOS or credit cards. Payments for casual classes are set at a premium level, as per industry standards in the local area/competition.

Aussie Fitness Centre will offer deferred monthly billing and a 25% discount to corporate clients with 10 or more employees taking corporate memberships. Since the revenue generated from this client segment is expected to be small, and the risk of non-payment is small, the accounts receivable and bad debt expense should not be a consideration. 

Expenses

Rent, salaries and the cost of equipment leases are the largest expenses that Aussie Fitness Centre faces. 

Resistance equipment

Following an exhaustive analysis of the financial and other implications of buying or leasing, Aussie Fitness Centre has decided to lease its equipment. A factor that played a large part in that decision was the likelihood that any purchased equipment may become dated in a relatively short period of time. Aussie Fitness Centre must have equipment that is at least equal in sophistication to those desired by its competitors and members. The substantial initial cash outlay required to purchase equipment also played a part in the decision to lease.

Aussie Fitness Centre obtained estimates from a number of distributors for the purchase of resistance equipment. The most competitive price that Aussie Fitness Centre found averaged $2,699 per machine. The total purchase price was $46,855 per Centre including GST.

Based on estimates obtained from several leading rental firms, Aussie Fitness Centre could expect to pay approximately $8,450 a month to lease the same equipment.

Finally, in order to lease the equipment, the best price quoted was $33,500 per Centre, which includes all maintenance of the machines. The lease would run for 36 months with interest at an 11 percent annual rate. The total of the 36 monthly payments would be $37,855. 

Fitness Facilities

Aussie Fitness Centre considered several options regarding the type of service to offer to its clients. Because the Franklins did not wish to tie up funds on a long-term basis, the purchase of a training facility was not considered a reasonable option.

Aussie Fitness Centre has negotiated a favourable lease on all properties with the property management firm that manages the centres in which the facilities will be located. The firm has offered Aussie Fitness Centre a 3-year lease with a 3-year renewal option. The monthly rent is $1,500 for the first year, $1,700 the second year and $1,900 for the third year. During the 3-year renewal period, rent will increase by 5% per year. This rental amount includes water, waste removal and all maintenance costs.

Financial Projections (See individual Centre Budgets on Moodle)

Based on a survey of 100 Fitness Centres across Australia, it was determined that a Fitness Centre with 5 full time staff members can be expected to train 30 new clients every week. Of this number, it is expected that 25% will be repeat customers. That means that Aussie Fitness Centre can expect to generate 120 new clients and continue with 30 previous clients every month.

The percentage breakdown of the number of clients who will select either a single class or the membership option is based on statistics provided in the National Fitness study and a report included in the Journal of Fitness, June 2018, Vol. 18. The findings of both of these reports stated the fact that individuals who have taken previous memberships are more likely to pursue additional membership to gain even greater proficiency and health benefits. Using these statistics, Aussie Fitness Centre estimates that gross revenue this year from the combined centres will be more than $2,500,000 or over $5,000 per centre per month.

The financial goals of each Centre for the coming year are:

• Return on investment of at least 15%
• Increase net earnings by at least 10%
• Achieve a market share of 27% by June 2020
• Increase sales 5% by June 30 through marketing initiatives
• 10% more new memberships
• Increase customer satisfaction ratings from 87% to 89%
• Create a WHS Committee Consultation Team by Mid-Year and implement WHS System by Year End

Because the demand for Aussie Fitness Centre services is expected to grow in the current year of operation, gross revenue for the second year is expected to increase to more than $3,000,000.

While these calculations are based on an average of the gross by month, Aussie Fitness Centre, like many businesses in the fitness industry, will be subject to common business cycles. Based on the above mentioned study done by the Journal of Fitness, market research shows that the number of clients participating in training January through to March will increase by 10% to 25%. During the months of May through August, the number of clients drops off by approximately 20%.

Fitness firms can expect a 20% to 30% increase in the number of clients during the months of

September through November (surge in numbers just before the summer/Christmas holidays). As with other non-retail businesses though, December sessions usually drop by 25% (Many people go on holiday). One way that Aussie Fitness Centre will try to counter the ‘holiday slump’ is by increasing tendered classes and those for special interest groups. 

Aussie Fitness Centre plans on offering a holistic class in developing and maintaining a healthy weight initiative. The class will also focus on how individuals can make gradual and comfortable but sustainable lifestyle changes. Aussie Fitness Centre will incur little additional expense by offering this new initiative and still generate an additional 3% in revenues every month.

Aussie Fitness Centre is planning for a 15% increase in membership sales in the coming year. For a detailed analysis of the actual monthly budget, review the budgets

See Moodle Web-links - Centre Budgets

Growth and Expansion

Aussie Fitness Centre relies on the proven skills of its founders to take advantage of the growing need for fitness training, personal coaching and other related health enhancement services. Mary and James Franklin, who combined bring more than four decades of personal training and life coaching expertise to the business, lead the company as it was established, as a high quality fitness provider in four capital cities and one major regional centre across Australia.

Aussie Fitness Centre initially focused on attendance generated through advertising, tendering for training and general health enhancement. Currently memberships provide the basis of funding and the tenders and causal visits and add-on options of life coaching and health enhancement specialists generate larger profit margins.

Constantly evolving classes and advertising offer an opportunity to work smarter. But the increased opportunity comes at the expense of increased complexity, such as group fitness timetable changes, qualified group fitness trainers (availability), marketing cost increases - campaigns. Substantial market research establishes that personal training coupled with life coaching and natural health enhancement is one of the fastest growing service industries.

Aussie Fitness Centre is in a position to capture a significant portion of their local markets in each of their localities, currently Cairns, Brisbane, Sydney, Melbourne and Perth. Further, Aussie Fitness Centre is projected to return a profit annually due in large part to the size of the market and the relatively low investment required. 2018 year revenue combined from all centres was projected to exceed $2.5 million.

Aussie Fitness are looking to expand the business and additionally their membership base targeting the baby boomer age group (a person born between 1946 and 1964) this initiative will be pilot tested through the Sydney Centre . This initiate of attracting this demographic age group would attract more members during the off-peak times between 10am-4pm, which would off-set running costs such as electricity, water and rent space. The current website will need to be updated and designed to improve marketing strategies and ensure the marketing is aimed at a wide demographic group.

See Moodle Web-Links – Marketing: Extra Ways your fitness centre can make money and New Business Model for Youth and over sixties

Aussie Fitness Centre continues to differentiate itself from its competitors with their unique selling point of continuing to develop unique classes, personal training and expanding on the one-stop-shop for health enhancement. The one-stop-shop approach of Aussie Fitness inclusive of the gym itself, fitness classes, creche, café and holistic services is expected to allow substantial gains in the largest segment of a growing market. This focused approach also makes it easier for Aussie Fitness Centre to establish and retain a position as a premier industry leader.

Membership and Affiliation

Aussie Fitness want to become affiliated with Fitness Australia, this membership has benefits to the

Business, Employees and Members: See Moodle Web-links – Fitness Australia Registration 

In order for Aussie Fitness to be affiliated with Fitness Australia they are required to have their employees qualified and experienced. Employees also need to demonstrate on-going Continuous Education Credits (CEC’s) over their own two-year registration, employees become known as AusREPS’:

See Moodle Web links – Continuing Education Credits  

Aussie Fitness has a policy that states the expectations of employee professional development standards: See Moodle Web-links – AF Personal Development Policy and Fitness Industry Workforce

Training

The owners of Aussie Fitness are considering sending their employees to train through Australian Institute of Fitness and moving forward will only recruit people with a minimum Certificate III and First Aid Certificate. 

See Moodle Web-Links – Fitness Australia Education

Benefits of Membership:

• Auditing conducted by Fitness Australia to ensure employees who are registered (AusREPSs) are meeting requirements
• Employees are constantly trained to high standards
• Builds member trust/brand image with the affiliation
• Marketing tactic
• Support for the business and individual within the industry

Another benefit of joining Fitness Australia is the provision of additional business tools to assist in making the right decisions lawfully for all stakeholders concerned.

Recruitment

Due to wanting to increase customer satisfaction ratings and memberships Aussie Fitness needs to select, recruit and induct at least an additional two staff members per centre. With a minimum Certificate III in personal training, first aid certificate and 1 years’ experience. All existing staff are also now required to obtain their minimum Certificate III in personal training, and ensure they have there up to date first aid certificate. However, this request may cause resistance as some of the staff feel that they have enough experience that they do not need a qualification. 

Working with the Human Resources Department, CM and ACM’s are to be involved in the recruitment and selection criteria for their respective centres. Managers are expected to have a hands-on approach with selecting the appropriate team member to join their particular centre. Ensuring that inductions are performed to the required standard before a staff member is allowed to work independently in the centre. This is to reduce chances of high turnover, which ultimately costs the business in recruiting, inducting and training again.

Labour Sourcing

Aussie Fitness would like to use the highly skilled and qualified team as a selling point for obtaining more members. From experience and research the owners know that people join a fitness centre because they feel safe in the hands of qualified and experienced staff. This will be a key selling point when it comes to marketing to the older generation demographic as safety will be a high priority for them.

For AF, labour needs keep fluctuating requiring the hiring of temporary staff to fill labour gaps during peak times. Assessing their business staffing requirements enables AF to anticipate and plan for peaktime staff shortages and make the necessary labour arrangements.

Conducting a business labour assessment helps AF figure out the number of workers they will need, and the hours needed for the temporary workforce. By knowing the number of hours that need to be filled in each department and the areas where staff might be required to help the most, labour shortages can be eliminated, and efficiency greatly improved.

Planning for staff requirements enables AF to balance between efficiency and cost. It prevents under or overstaffing by ensuring they always have the optimum number of workers.

To have a good understanding of AF business’ labour requirements, they need to check the following:

1. Peak demand: AF will check their past records and identify which months of the year have the highest demand for their facilities. This will be calculated by the difference between the normal months and the highest months in terms of demand. This shows the increase in memberships and in turns helps to calculate the number of employees required for peak times.
2. Employee leave: AF request employees to apply for their next annual leave as soon as they return from the current one. This helps AF forecast when the business will have a reduced workforce for proper planning.

When it comes to labour needs, planning is important because:

• AF will always have the optimum number of employees for operations reducing downtime due to labour shortages.
• Prevents overworking of permanent employees. When employees are overworked, motivation dips, quality goes down, employee turnover increases, and customer service suffers.
• It helps reduce overtime payments. Paying overtime is expensive, by planning ahead AF can ensure that they have the required number of employees to avoid a situation where you have to pay unnecessary overtime to their permanent employees.

Effects of hiring unqualified candidates

The work done by an unqualified candidate may never meet the expectation and this can cause money loss as well as reputation of an organization in front of members.

Hiring someone who is not qualified and not suitable for the job is a risk.

Reputation:

The reputation of AF depends on the basis of the work they do and their employee. If AF hires an unsuitable candidate for the job it shows poor decision-making skills. AF cannot gain a good reputation in the market if their employees are not qualified for the job. 

Company good will:

Hiring unqualified candidate can damage AF good will. By not hiring the right candidates it can have impacts on potential clients and members.

If the candidate is from a higher rank in the organisation, then it can have negative impacts as an unqualified worker is less harmful than unqualified manager due to the responsibilities they have and the decisions they take when working for the organisation.

Client satisfaction:

Member satisfaction is what AF works for and also to gain profit. Member satisfaction is less likely obtained if employees are unqualified. Member satisfaction also boosts worker confidence and AF image in the marketplace.

Unqualified candidates can put the burden on other employees because they have to carry the person and ensue to keep the members satisfied.

Quality of work:

Quality of work decreases by hiring unqualified candidates. The high quality of work is what makes AF successful in the business world and an unqualified candidate affects the quality of the work in the organization because the employee does not have knowledge of the role.

Wastage of time:

The time spent on hiring unqualified candidates will not work in AF’s favour and the recruitment process will need to start again

Recruitment and Induction:

Currently the recruitment and selection criteria is not up to date and induction does not always happen. See Moodle Web Links - Getting Staff Induction Right  

Centre Level Staff Induction:

Although the Centre Level Staff Member Induction is detailed there are issues with performance and the culture within the work environment that is occurring at the Centres:

1. Performance:

• Staff are required to attend training, currently staff have been avoiding attending as it was not compulsory
• Employees were not following the standard operating procedures (SOP’s) with welcoming and inducting new members to the fitness centre
• Employees did not know how some of the equipment works to explain to the members
• Employees absent – not following policy with regard to reporting absence
• Employees did not report incidents (As they did not know how or who to report) –

slips, trips, and falls – o Risk Assessments are required to be conducted on a regular basis. 

• Due to the gym being available 24/7 there are associated risks.
• The reception desk is manned Monday – Friday 6am – 7pm, Saturday 7am- 12pm and Sunday – not manned. o The Crèche facility is open from 6am-7pm Monday to Friday and 7am – 12pm Saturday, Closed Sundays.
• The facilities are entered by secure swipe card system and cameras operate throughout the facility.

See Moodle Web-links – Recommendations for un-supervised fitness facilities

2. Culture and work environment:

• There were/are communication problems between centre managers, assistant centre managers and employees, centre managers are not always visible for employees to approach
• There is inconsistent application of SOPs due to different interpretations of the SOPs See Moodle Web-links – Policy & Guidelines
• Continually integrating new employees into the organization presented challenges as no clear selection criteria has been developed.
• No induction consistently provided, therefore, some staff following rules and others not aware e.g. Uniform Requirements, Meal Breaks, Not following the Code of Ethics

See Moodle Web-links for:

• Centre Level Staff Member Induction
• Staff Induction Policy
• Staff induction procedures
• Employee Code Of Ethics

Leadership/Continuous Improvement

The CM’s and ACM’s are being requested by the owners to implement and engage continuous improvement methods by being more involved in lifting the level of their centres and encouraging and empowering their teams to increase brand recognition by promoting a safe environment for all ages. Managers are to encourage team meetings to seek feedback in relation to what the employees are hearing from their clients in order that they can make better decisions and implement continuous improvement.

Additionally, by role modelling effective leadership traits and involving employees in the centre decision making processes this will in-turn impact the reduction of absenteeism and change the culture of the centres to a learning environment for all involved.

CM and ACM’s are encouraged to use their entrepreneurial skills and suggest their centres teams create an employee rewards and recognition program this way they will gain more buy in from those involved in creating a positive work culture.

Additionally, they are to steer their teams in to taking responsibility for creating a Work Health and Safety (WHS) and risk assessment committee consultation team. With the facilities being 24 hours, therefore, un-supervised at times Managers are required to ensure a risk assessment is conducted on a monthly basis and reported to Head office.

Furthermore, all staff members must also attend risk management training, which includes information about their own welfare and that of their members. This will generate data for consistent regular compliance assessments which will be formally reported about and addressed for the wellbeing of the stakeholders and formal auditing purposes. Regular WHS and Risk committee meetings are required to be scheduled and held, so that continuous improvement and priority of issues can be addressed accordingly.

Additionally, Managers will need to ensure that they have correct policies and procedures in place for all operational aspects and in particular risk management and WHS, in order that all stakeholders whom enter the centres know they are entering a safe environment (particularly important for the older generation). Managers are to review policies and procedures, conduct and or arrange training by an approved external training provider to bring all staff up to the minimum level requirements. Additionally, they are required to ensure that all staff are aware of the Current Code of Ethics, which should be placed on the intranet See Moodle Web-Links – AF Code of Ethics

Managers are to be involved in the creation/ongoing continuous improvement, monitoring and measuring of the Strategic Plan, Business Plan and Marketing Plan. Managers are required to seek feedback in order that they can contribute to adjusting strategies, making informed decisions and continuously improving the brand. Managers are required to model continuous ethical behaviour in their day to day work ethic and lead by example to their work teams to maintain a healthy cultural environment.

Managers are to arrange a communication plan with stakeholders so that consistency in information sharing becomes a cultural habit. Managers are also required to work on providing leadership to their team and having an ‘Open door policy’ to encourage a team environment and to encourage staff to approach senior staff with any issues or concerns they might have. The reporting levels and procedures are to be clarified for all staff to ensure that everyone is aware of how, what, why and when information is to be generated and disseminated.

Owner Support

Finally Mary and James will visit each of the centres to show support and obtain first hand feedback and observe the team environment. From their filed trips they will continue to make improvements for the betterment of the centres working culture and environment.