Group 1 BALLY TOTAL FITNESS 10/02/2014
1. What is this case about?
This case is about Bally Total Fitness, an U.S. health club industry founded in 1962. But more generally this case is about the health club industry in the USA and throughout the world.
In a first part, there is a general presentation of the U.S. health club industry characteristics. We have some information about people who go to these clubs, proposed activities, equipment and facilities. It presents the different ways of formats in this industry, how the industry is organized: owner-operated clubs, franchised clubs, Design and management companies and health spas. We have some explanations about pricing, ...view middle of the document...
Information from the case:
In the US:
17% of US inhabitants were hard-core fitness participants (attended a club 100 days or more per year)
63% of the population were viewed as “uninitiated believers” but only 25% attended health clubs.
About Bally Total Fitness:
25% of members attending fewer than 25 times per year
41% - the core users – attending more than 1000 times per years.
* Segmentation according to the frequency of use.
The decision to go to a club can be motivated by: a desire to lose weight, to get in shape, to meet people, or to reduce stress.
37% of exercisers were motivated by a desire to control weight.
* Segmentation according to the goal.
Both of these segmentations are behavioral segmentation.
According to the Exhibit 2, the majority of health club users is between 25 and 34 years old (18, 9% of the population). But we can see that there is a great diversity. Almost 25% of the users is more than 45 years old.
* Segmentation according to the age.
46% of the users has an annual household income higher than $75,000.
* Segmentation according to the annual household income.
All the clubs do not have the same equipment, activities and facilities. Some have aerobic and weight machine as their core offering, other have a swimming pool…
* Segmentation according to the wanted equipment, according to the technology.
Most users are going to the nearest club from their home, it is more convenient.
* Segmentation according to a geographic criteria.
The most relevant segments and their respective Key Success Factors
First, we can combine the frequency of health attendance and age to define the following segment: People aged from 18 to 54 and core health club members i.e. going more than 100 times a year to a club. The key Success Factors are: fashion/cultural, health concerns…
We can combine technology and goal: People who want to lose weight of any age. The key success factors are: health concerns (300 000 Americans died annually of obesity-induced diseases), putting in place equipment and coach to help them
We can combine technology, age and behavior: People from 50 years old who need adapted equipment and exercises to their age and capabilities. The key success factors are the diversity in the equipment, services (staff, coach…).
We can also segment the population according to their needs and goal, incomes, and age. A segment can be: People aged between 25 and 34, with an income higher than $75,000, and looking for social aspects (meet friends…).
To go beyond the case, we have also imagine a segmentation according to the gender. A woman and a man can have completely different goals. Taking into account this criteria, a relevant segment can be: Women between 25 and 80 from upper class who use frequently fitness clubs to keep a good waistline.
3. Assess the attractiveness of the most relevant segments
As we saw in the last question, we distinguish five kinds of segmentation: