Corporate Fitness is entering their second year of business. The business model has been well received and marketing is especially important to maintain growth and market penetration. In addition to offering fitness facilities for Seattle corporations, Corporate Fitness' main activity is the creation and implementation of wellness programs. The basic market need is the reduction of corporate costs and the increase in employee efficiency that can be achieved through long-term wellness programs.
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Corporate Fitness possesses good information about the market and knows a great deal about the common attributes of the prized and loyal customers. This information will be leveraged to better understand who is served, their specific needs, and how Corporate Fitness can better communicate with them.
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The profile for Corporate Fitness' customer consists of the following geographic, demographic, and behavior factors:
- The immediate geographic target is the city of Seattle.
- A 35 mile radius is in need of the services.
- The total targeted population is 15,800 employees.
- 51%:49% male: female.
- The individual income range is $38,000-$75,000.
- 67% of the customers are single, 33% are married.
- For the manufacturing customers, 43% have some undergraduate course work.
- For the corporate customers, 83% have some undergraduate coursework, 16% have undertaken graduate coursework.
- Recognize the need to have physical activity in their lives.
- Have incorporated some sort of exercise program in their daily/ weekly routine for the last several years.
- Are willing to utilize fringe benefits that are offered by their employer as part of their compensation package.
Corporate Fitness is providing their customers with a health care cost management program for employees that will increase employee productivity and decrease overall business costs. Corporate Fitness seeks to fulfill the following benefits that are important to their customers:
- Customization- CF will offer a totally customized solution for each company as well as each employee within the company.
- Convenience- Customers will not use the service if it is not convenient. CF recognizes this and strives to make their services as convenient as possible for the targeted customer groups.
- Results-orientated strategy- CF will need to improve a company's bottom line in order to attract and maintain customers. While CF will strive to address all of the their customer's needs, the reality is that they must indeed provide significant value for the companies themselves in order to grow their market share.
There have been two significant market trends in the last five years.
- Increased usage of fitness facilities on behalf of individuals. Exercising and "working out" has become a more mainstream activity in American's lives over the last decade. Five to ten years ago there were widespread reports about an impeding health crisis, obesity. Americans, relative to their Western European counterparts have higher incidents of obesity. To a large degree, this is correlated to American's unhealthy diet of fast food, and generally poor food choices, especially fried foods. The poor diet is not the only factor however. Americans were fairly inactive, with only 19% of people age 20-40 exercising three times a week. Luckily, that has changed over the last 10 years. The percentage of active people has increased to 43% as of 2002. More and more people are going to the gym after work or are incorporating some sort of outdoor activity into their daily routine.
- The incorporation of fitness memberships within the "basket of benefits," a part of the total compensation package. As fitness memberships have become a more common element in the working American's lives, companies have become to incorporate membership as part of their benefit package for employees. This has occurred for at least two reasons. One reason is a flexible method to compensate employees. The second reason is that is has a positive effect on a company's bottom line. Study after study supports the contention that a physically fit employee is happier, healthier, and more productive. For no other reason, offering fitness club memberships to employees is a smart cost-benefit decision.
In 1999, the U.S. medical bill was $738 million, of which businesses paid 30 percent. Recent studies indicate positive returns on investments for wellness programs of various companies ranging from $1.91:1 to $5.78:1. General Electric's aircraft engines division, for example, saves $1 million per year through its wellness programs. Traveler's Insurance Company reported savings of $7.8 million in 2000, attributable to its wellness programs, and a return of $3.41 for every dollar invested in wellness.
Important demographic changes are taking place in America that point to the importance of worker productivity in coming decades.
- 16 million new jobs will be created by the year 2005, but there will only be 14 million workers to fill them.
- In 2000, women comprised one-third of the work force, a ratio that will increase to one-half by the year 2003.
- An estimated 80 percent of jobs to be filled in the immediate future will require more than a high-school education. Only 74 percent of Americans, however, finish high school, and only 67 percent graduate with adequate skills.
- The number of skilled workers available to fill new jobs is decreasing, meaning that employers are facing more severe competition for labor. Thus, the health and productivity of each employee becomes crucial to a company's success.
The following quantitative information has supported explosive growth in the health wellness program industry. The last five years has seen a 9% growth rate and the next five years is expected to achieve a 7% growth rate.
The following SWOT analysis captures the key strengths and weaknesses within the company, and describes the opportunities and threats facing CF.
- Results-orientated approach to attracting and maintaining customers.
- A well-researched, detailed health wellness program that is long-term in focus.
- Intensively trained staff.
- High costs associated with customized, personal service.
- The inability to work on a high volume business model.
- The costs of attracting a large corporate client.
- Participation within a growing market.
- The large increase in clients that follows with the acceptance of CF's program by a single company.
- The ability to leverage future quantitative analysis that supports the contention that long-term wellness programs have a significant, positive impact on a company's bottom line.
- Lack of immunity to an economic downturn.
- Potential competition from larger, well established competitors.
- A change in society where the individual begins to take far more responsibility for his/her health maintenance.
The three main competitors for Corporate Fitness are:
- YMCA-market is lower-income families and/or students who want accessibility and affordability of fitness facilities.
- Gold's Gym-services are targeted toward those motivated and dedicated individuals who workout five to seven times per week.
- Better Bodies-aimed at casual fitness-seekers who do not workout with a high intensity but still desire the status and recognition.
Corporate Fitness provides wellness strategies/programs to businesses in the downtown Seattle area. A wellness strategy is a long-term effort, combining both health-promotion and exercise-related activities designed to facilitate positive lifestyle changes in members of a company's work force.
Corporate Fitness will work with a company's senior management to help it develop a mission statement for its wellness program. The client company's employees will undergo a health-risk analysis, following which each employee will be given the opportunity to meet with a health professional to design a personalized health program.
Finally, Corporate Fitness will furnish employee progress reports to senior management with which to carry out the incentive program and generally monitor changes in the behavior of its work force.
Keys to Success
Corporate Fitness' keys to success are:
- Marketing services to companies and individuals.
- Recruitment of experienced managerial talent.
- Dedication and hard work of the founders.
- Raising productivity.
- Lowering overall costs.
Corporate Fitness faces several critical issues:
- Sign up a sufficient number of medium-sized companies. It is more cost effective for them to service a couple medium-sized companies than many small companies.
- Continue to drive down the costs associated with serving a customer.
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