JCC 2012 Biennial - How The Fitness Industry Is Changing And What To Do About It

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

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JCC 2012 Biennial - How The Fitness Industry Is Changing And What To Do About It

  1. 1. JCC Biennial 2012 Bryan K. O’Rourke bryankorourke.com Key Consumer & Business Trends How The Fitness Industry Is Changing And What JCC’s Can And Should Do About It JCC Bienial 2012 - New Orleans, LA 1
  2. 2. thank you all content available @2
  3. 3. <3> O 3 4
  4. 4. <3> 3 4 4
  5. 5. 1 Trends = Change stchange across all industries How is the World JCC’s Are No Exception To The Change Changing ? the change is not cyclical its fundamental 5 4
  6. 6. 2nd Business Models = 146
  7. 7. 3rd What To Do ? 7
  8. 8. 1 trends = change st 8 3
  9. 9. <3>1 technology 4 9
  10. 10. <3>2 changing consumers 4 10
  11. 11. <3>3 globalization 4 11
  12. 12. revolution 12
  13. 13. European Crisis 13 revolution 4
  14. 14. technology 14
  15. 15. ray kurzweil 15
  16. 16. 16 ray kurzweil
  17. 17. 17 ray kurzweil
  18. 18. Kurzweil law of accelerating returns18
  19. 19. Gordon Moore number of transistors on a chip will double every two years. “Moore’s Law” 19
  20. 20. 1,2,3,4,5,6,7,8,9,10.......2,4, 8,16, 32, 64 ........... 20
  21. 21. technology is progressing muchfaster than you realize 21
  22. 22. 22
  23. 23. fastest adoption everipad $9 billion4th biggest consumer electronic catagory 23
  24. 24. 5technology trends to watch 24
  25. 25. 1CLOUDCOMPUTING 25
  26. 26. 2MOBILITY 26
  27. 27. 27 15 billion devices - 2015
  28. 28. 34 Augmented Reality 28
  29. 29. 4 29
  30. 30. 4Project Glass Will RevolutionizeVirtual Reality SOCIALIZATION OF THE WEB 30
  31. 31. 4SOCIALIZATIONOF THE WEB 31
  32. 32. 32
  33. 33. 54Gamification“Nearly 62 million US internet users, or 27% of the online audience, will play at least one game on a social network monthly this year, up from 53 million in 2010. Their numbers will continue to grow” 33
  34. 34. 4 34
  35. 35. digitization of all experiences not always replaces often enhances 35
  36. 36. including fitness 36
  37. 37. consumer trends 37
  38. 38. CONSUMER TRENDShttp://www.slideshare.net/Bryankorourke/ 38
  39. 39. 2. Human http://www.slideshare.net/Bryankorourke/ generosity, caring, authenticity CONSUMER TRENDS 39
  40. 40. 2. Human http://www.slideshare.net/Bryankorourke/ “83% of US consumers want products, services and retailers to support more causes.” CONSUMER TRENDSGeneration G - Insights
  41. 41. 3. City Lights CONSUMER TRENDShttp://www.slideshare.net/Bryankorourke/ 41
  42. 42. 7. Know http://www.slideshare.net/Bryankorourke/ 500 Million Using Health Apps By 2015 73% Consumers CONSUMER TRENDS 42
  43. 43. 7. Know CONSUMER TRENDS Point - Know - Buy http://www.slideshare.net/Bryankorourke/ 43
  44. 44. Millennials CONSUMER TRENDS Largest Generational Group 44
  45. 45. Millennials CONSUMER TRENDS Historical Relevance 45
  46. 46. Millennials CONSUMER TRENDS Largest Generational Group brand = self expression | information = thirsty action = core value | reverberation 46
  47. 47. 47
  48. 48. Millennials CONSUMER TRENDS Key Driver Of Trendshttp://www.slideshare.net/Bryankorourke/ 48
  49. 49. Globalismnot just in the US what does it 49 mean ? revolution 4
  50. 50. demography globalism & technology50
  51. 51. 51
  52. 52. O 52
  53. 53. embrace don’t fear 53
  54. 54. we can make a bigger impact 54
  55. 55. The Key Is Changing How WE Think Peter Diamandis http://www.abundancethebook.com/ about-the-book/ 55
  56. 56. “A Maasai warrior cannow use a cell phonemore powerful thananything Ronald Reaganhad.”Peter Diamandis 56
  57. 57. we are living in anincreasingly digital culture 57
  58. 58. 58
  59. 59. 2nd Business Models = 54 14
  60. 60. 2. Changing Business Models 60
  61. 61. Emerging Consumer Factors - Michael SilversteinTreasure Hunt - Inside the Mind of the New Consumer C o m p a n i e s w i l l t h ri v e , Silverstein a rgues, by catering to the penny- pinching impulses of consumers, or by "spanning the poles" and appealing to both the high and low ends while avoiding anything else- theres only "death in the middle." 56
  62. 62. Emerging Consumer Factors Health club consumer & PRIZM profilesIHRSA’s completes a nationwide survey of U.S. households. A total of 15,013 individual and 26,487household surveys were completed to create reliable profiles of members including PRIZMsegmentation. PRIZM means “Potential Rating Index for Zip Marketers” Health Club Consumer Report 57
  63. 63. Emerging Consumer FactorsHealth club consumer & PRIZM profiles Report Includes: •Trends in Club Membership •Attendance •Activity Participation •Member Profiles •Typical Consumers •Profiles By Club •Profiles By Activity •Club Fees •Cluster Analysis •PRIZM Profiles Health Club Consumer Report 58
  64. 64. Emerging Consumer FactorsHealth club consumer & PRIZM profiles •PRIZM is a geodemographic profiling system developed by Claritas. Each PRIZM divides the U.S. consumer into 14 different groups and 66 different segments. As the classification is household based, we can compare different areas according to the likelihood of joining a health club. For example, the highest indexed PRIZM segment is “Blue Blood Estates,” so we can target “Blue Blood Estates” households within the health club’s immediate vicinity to recruit likely members. •PRIZM analysis is more valuable than generic demographic data and provides more meaningful insights into membership profiles. 59
  65. 65. Emerging Consumer FactorsHealth club consumer & PRIZM profiles 60
  66. 66. Emerging Consumer FactorsHealth club consumer PRIZM profiles 2010 Health Club Consumer Report 61
  67. 67. Emerging Consumer FactorsShare of Current US Health Club Market Urban Uptown Elite Suburbs Affluentials Landed Gentry Country Comfort Middleburbs All Eight Others 11% 33% 13% 6 of 14 Segments 10% Represent 67% 7% of the Market 14% 11%Health Club Consumer Report 62
  68. 68. Emerging Consumer FactorsShare of current US health club market Penetration Rates = 17% Overall 0.5000 42% Combined 6 of 14 Segments 0.3750 Represent 67% of the Market 0.2500 25% 25% 23% 21% 16% 0.1250 11% 0 Urban Uptown Elite Suburbs Affluentials Landed Gentry Country Comfort Middleburbs All Eight OthersHealth Club Consumer Report 63
  69. 69. Emerging Consumer Factors“Price” is mainobjection or “perception of value” Too expensive 61 Exercise elsewhere 52 Feel out of place 18 No available club 13 Dont exercise 16 Too crowded 12 Don’t know anybody 12 0 18 35 53 70Health Club Consumer Report 64
  70. 70. Emerging Consumer Factors - Existing CustomersReport ID’s 5 key clustersPredominantly Male:Focus on strength & resistance - 84% MaleMixed Low Use:59% use club less than 1 time a week - Less affluent25% non-members - Even male female mixPredominantly 50+:Slightly more female - most affluent - 60% over 50 years of ageSuper Avid Hi Spend User:67% female - Highest participation especially group exerciseFemale Low Spend:80% female - 67% participate in group exercise 65
  71. 71. Emerging Economic FactorsMixed low usage largest share ofmembers 11% 18% Male Strength 7% Mixed Low Usage 50+ Group Super Avid High Spend Female Low Spend 22% 42% largest group of existing consumers least affluent and least participative 66
  72. 72. Emerging Consumer Factors - Markets MaturingAcquisition focus alone - avoid this space 40% quit in 30 days 67
  73. 73. Emerging Economic FactorsWhat arecustomers telling us ? 24% Left the Industry 50000 46,668 45,570 37500 25000 12500 10,268 0 -11,386 -12500 -25000 Total 2007 New 2008 Left 2008 Total 2008Health Club Consumer Report 73
  74. 74. Emerging Economic Factors National growth has stalled for several years nowStagnant2009 $19.9 Billion2009 45.3 Million Members2008 $19.1 Billion2008 45.5 Million MembersRelated to economic factorsLimited supply increaseRestricted financialenvironment Profiles of Success 72
  75. 75. Emerging Consumer Factors - Michael SilversteinTreasure Hunt - Inside the Mind of the New Consumer The “New Consumer” Seen in All Industries. Important to Understand “Value” 68
  76. 76. Our Digital CultureAlternative fitness options - digital technologies Consumers are getting accustomed to the “long tail” affect - anytime, anyplace, anywhere. Estimate 2 million in US utilize some type. 69
  77. 77. Emerging Consumer FactorsPrevention - monetizing wellness The emerging health care mess is creating new customer needs to reduce costs of traditional care via prevention 70
  78. 78. Emerging Consumer FactorsConsumer’s don’t trust advertising The Days of Traditional “Sales” and “Marketing” in Health Clubs is Coming to An End 71
  79. 79. Michael SilversteinTreasure Hunt - Market “Bifurcation” “I have seen that consumers will always trade down and buy the cheapest product in a category if suppliers fail to deliver a stream of innovation a nd build loyalty based on product superiority.” 74
  80. 80. Business Models & Trends - Core EconomicsAverage membership dues flat since 1980 2009 Profiles of Success Today = $49.95 1980 = About $40.00 75
  81. 81. Business Models & Trends - Core EconomicsAverage membership dues fairly flat since 1980 Car Today = $28,400 | Car 1980 = $7,210 76
  82. 82. Business Models & Trends - Core EconomicsDevelopment & operating costs nearlyquadrupled since 1980 77
  83. 83. Business Models & Trends - Core EconomicsROI in the “average” model under pressure What drives growth in any industry are ROI’s that sustain growth and attract capital The “average” is feeling most pressure this is driving “bifurcation trend” 78
  84. 84. Business Models & Trends - Core Economics Economics has driven discounting for certain brandscapacity strategy = asset turnover focus 79
  85. 85. Business Models and Trends - Competitive Landscape Bifurcation of the market - Ray Algar Modelhttp://www.oxygen-consulting.co.uk/ 80
  86. 86. Prevalent Business Models & Trends - Emerging Ray Algar - UK Budget Markethttp://www.oxygen-consulting.co.uk/ 81
  87. 87. Business Models and Trends - Competitive Landscape Bifurcation of the market - Ray Algar Modelhttp://www.oxygen-consulting.co.uk/ 82
  88. 88. Prevalent Business Models & Trends - EmergingBudget competitors 83
  89. 89. Prevalent Business Models & Trends - EmergingNew niche trends - engaging personal experience “drop-in” fees unlimited $89 - $17 - $40 $140 month 84
  90. 90. Prevalent Business Models & Trends - EmergingHospitality brands reflect market bifurcation 85
  91. 91. Prevalent Business Models & Trends - Emerginghttp://futureoffitnesswhitepaper.ning.com/ 57
  92. 92. Prevalent Business Models & Trends - Emerging On line retail continues surge - fitness models follow"People are just shifting their dollars to theWeb," said Sucharita Mulpuru, vice presidentand principal analyst for Forrester Research Inc. Online retail sales will grow 10% a year forthe next five years, accounting for 53% of allU.S. retail sales by 2014, according to ForresterResearch. 87
  93. 93. Prevalent Business Models & Trends Wellness Model - potential to dwarf extant fitness•Huge $2.7 Trillion Opportunity•Health care spending isunsustainable.•Prevention as a strategic positionfor employers and ultimatelygovernments is inevitable.•Key is outcomes and integration. 88
  94. 94. Prevalent Business Models & TrendsGrowth - new emerging niches and models requiring new ways of doing things.... 89
  95. 95. What are you going to do about it ? #3 Evaluate Your Competitive Position Think Strategically 90
  96. 96. What are you going to do about it ? http://www.slideshare.net/Bryankorourke 90
  97. 97. 3 Evaluating Your Competitive Position•SWOT•Internal - capabilities and resources•External - market opportunities and threats91
  98. 98. Evaluating Your Competitive PositionConduct a SWOT analysis of your club business Internal Review: •Current position •KPI’S - member execution •What is your niche? •What is your technology platform ? •How are you marketing ? 92
  99. 99. Evaluating Your Competitive Position - Internal SWOTWhat is your niche ? How do you differentiate ? •Price •Features •Competitive abilities •Wellness Option 93
  100. 100. Evaluating Your Competitive Position - InternalSWOTCompare numbers to industry figures -benchmark Profiles of Success 94
  101. 101. Evaluating Your Competitive Position - Internal SWOTWhat is your technology platform ? Technology Platform: •CRM or just billing ? •Cloud based ? •Web site integrated ? •Mobility ? 95
  102. 102. Evaluating Your Competitive Position - Internal SWOTTechnology Platform & Customer Experience A big opportunity is leveraging the strength of tradition into the future 95
  103. 103. 96
  104. 104. Evaluating Your Competitive Position - Internal SWOTHow do you market ? Social media ! The “NEW” Marketing: •Social media strategy ? •What is your spend ? •Campaign effectiveness ? •Google Grants !!!!! 97
  105. 105. Evaluating Your Competitive PositionConduct a SWOT analysis of your club business External Review: •Calculate Demand •Calculate Supply •Evaluate Pricing •Review Existing Members 98
  106. 106. Evaluating Your Competitive Position - External SWOT Determine Demand - www.sitereports.comEliminate your “gut” - quantify ! 99
  107. 107. Evaluating Your Competitive Position - External SWOTMarket assessment drive time - www.sitereports.com Drive Times Run 10 minutes Might want to adjust 101
  108. 108. Evaluating Your Competitive Position - External SWOTBy utilizing PRIZM you can better estimate demand 102
  109. 109. Evaluating Your Competitive Position - External SWOT Estimate Market Demand - Use IHRSA research ! Fictional Trade Area Households Estimated Urban % of HH National % IHRSA % 2009 Households HH Demand U1 - Urban Uptown 6.81% 8.30% 25.10% 7,000 1,757 U2 - Midtown Mix 21.37% 4.33% 16.90% 5,000 845 U3 - Urban Cores 25.46% 4.96% 7.10% 3,000 213 Total Urbans 53.64% 4.96% 17.40% 15,000 2,610 2nd CityUse the IHRSA Consumer C1 - 2nd City Society 6.24% 4.63% 30.10% 15,000 4,515 C2 - 2nd City Centers 7.04% 7.85% 11.70% 7,000 819Report to calculate estimated C3 - Micro City Blues 4.16% 6.64% 9.00% 3,000 270demand Total Second City 17.44% 19.12% 15.59% 25,000 3,898 SuburbsThis provides you a good S1 - Elites 2.60% 5.21% 41.70% 8,000 3,336estimate for your market S2 - Affluentials S3 - Middleburbs 6.86% 7.71% 23.20% 7,000 1,624 7.23% 6.15% 20.70% 4,000 828potential S4 - Inner Suburbs 12.21% 4.53% 8.50% 2,000 170 Total Suburbs 28.90% 23.60% 32.76% 21,000 6,880 Total Estimated Market 13,387 103
  110. 110. Evaluating Your Competitive Position - External SWOTEstimate Market Supply - Under-serviced ? Change ? Shop the Competition Web Research Estimate Memberships Evaluate Offering Demand = 13,387 Supply = 5,075 GROWTH POTENTIAL ! Brand Location Estimated HH Percentage of Adjusted Trade Estimated Trade Share 24 Hour ABC Drive 2,645 50.00% 1,323 26.06% Anytime Sierra Lane 820 75.00% 615 12.12% Anytime Veterans Blvd 735 50.00% 368 7.24% Snap Fitness Jone Road 640 50.00% 320 6.31% Bally’s Laredo Ave 1,300 50.00% 650 12.81% Jane’s PT Studio MPT 300 100.00% 300 5.91% Your Club Your Club 1,500 100.00% 1,500 29.56% Total Total 5,075 104
  111. 111. Evaluating Your Competitive Position - Internal SWOTWho are your existing members ? PRIZM Membership Mix by Psychographic Segments by uploading household addresses U! Urban Uptown 170 U2 Midtown Mix 80 U3 Urban Cores 75 S! Elite Suburbs 497 S2 Affluentials 249 S3 Middleburbs 107 S4 Inner Suburbs 104 C1 Second City 397 C2 City Centers 127 C3 Micro-City Blues 25 T1 Landed Gentry 80 T2 Country Comfort 12 T3 Middle America 8 T4 Rustic Living 6 0 125 250 375 500 105
  112. 112. #4 Plan & Take Action 107
  113. 113. 4 Plan Your Course of Action•Develop Your Plan•Resource & Execute108
  114. 114. Plan Your Course of ActionSWOT gives many answers If you decide to reposition doing it and executing it is SWOT Delivers This hardest 109
  115. 115. Plan Your Course of Action - Where do you want to be ?What must you add or take away ? Analyze ROI •Proforma •Capital •Realignment •Expertise 110
  116. 116. Plan Your Course of Action R=G - PrahaladOrchestration = Franchise Model There are a large number of experts, products, services and solutions from vendors able to support and advise you on your fitness business. “Executives are constrained not by resources, but by their imagination.” -CK Prahalad, Ph.D. 111
  117. 117. Plan Your Course of Action Seek guidance fromexperienced professionals 112
  118. 118. Recap - What to Do About ChangeEvaluate Your Competitive Position:•Use SWOT approach•Use JCC, RMA, FDD, SEC and other resources to benchmark•Evaluate your current market offering including pricing, features, service•Assess your technology platform - customer facing & integrated•Assess marketing practices - spend, return and the “new” methods•Calculate market demand in trade area using PRIZM•Calculate market supply in trade area•Evaluate current base of membership and changes•Think strategicallyPlan & Act:•SWOT generates road map•Conduct in-depth proforma analysis•Prioritize actions - do nothing or reposition•SEEK HELP - JCC, global vendor pool, expertise•Implement and executeJCC’s Hold Great Promise 113 85
  119. 119. revolution 119
  120. 120. <3> O 3 4
  121. 121. thank you all content available @ 122

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