Evolve Gym's Growth via Digital

Background

Evolve Budget Gym Group is known as the budget gym operator, which hosts around 10 sites, said to be around the retail parks in United Kingdom with a membership of around 70000. The success of this group is said to be based on the progressive development of the locations, which is seen to attract the attention of the reluctant gym-goers. This is aligned to the low entry point membership plans which go as low as £9.99 (Evolve Fitness Club 2019). The gym is opened for 24 hours in a day with exceptions of the major holidays. The Evolve gyms are known for providing extensive lines attached to the professional gym equipment as well as professionally qualified staff. With the central purpose of reducing the membership costs, the group avoids unnecessary frills, which are always offered in terms of the health bars, saunas as well as the swimming pools. However, Evolve exceptionally offers latest vending machines, excellent changing facilities as well as energy snacks (Evolve Fitness Club 2019. In the next move to revamp activities at Evolve, digital marketing is seen as a potential avenue that would describe the future of the group. Digital marketing is a form of marketing with the help of digital technologies, largely the internet, mobile technology as well as display advertising among other digital media. Since its debut in the 1990s, digital marketing has shown the capacity of influencing the growth of organizations while taking advantage of the subsequent technologies.

External Analysis

PESTEL Analysis

Political factors: These factors play a significant role in fitness and gym industry, which also covers the operations of Evolve Fitness Group. The industry is largely forced to comply with tax regulations and health and safety standards. Political interest to enhance active as well as healthy lifestyle has a direct impact on the industry and the operators (Hollins et al. 2016). Government campaigns, especially the ones that aim at reducing cases of obesity, would essentially increase the membership. Apparently, tariffs and trade restrictions lack a significant impact on the industry.

Economic factors: Key factors under observation include the inflation, interest rates as well as exchange rates. This can also be extended to unemployment rates and the general economic conditions. Over the recent decades, the trend shows an increase in the gym memberships as well as the number of gyms in the 21st century. However, the recent years have shown an economic decline, which also implies in the employment rates (Quang et al. 2018). This means that people are likely to make cuts in their budgets with the impact passed on to gym expenses as well as memberships.

Socio-cultural factors: key factors under observation include demographic factors, which constitute the age, wealth as well as the interest in health issues. A group of the elderly people increasingly show interest in the gyms, which is the same trend in the number of people who order for home entertainment and convenience foods. Therefore, the pursuit of an active as well as healthy lifestyle attracts more gym memberships (Evolve Fitness Club 2019. However, home entertainment and convenience foods have a negative effect on gym memberships.

Technological factors: Across this sector, significant areas of attention include the entry barriers, technological developments and the level of expertise. A gym has to be updated with the current technolology as well as the needs of the members (The London School of Economics and Political Science 2018). However, the foundation of the gym is always capital intensive, which sums into a barrier.

Legal factors: In UK, the fitness industry is expected to keep track of the legislations on safety and health standards. This makes it a basic requirement for Evolve and other gyms to comply with such safety regulations, which account for the workers and the equipment installed at the gym (Sammut‐Bonnici and Galea 2015). Besides, employees are expected to have met the required qualifications. The same goes to the licenses, permits as well as certifications.

Environmental factors: There has been increased attention towards environmental practices and matters. Such practices still play out for gyms and other notable players in the fitness industry. Gyms have to check on eco-friendly cleaning supplies, efficient use of water, efficient light and electricity use and installation of low flow showers and toilets.

Market Trend

Recent studies conducted by the CIL Consultants noted that digitization and the changing customer expectations seem to the transforming consumer goods as well as the leisure sectors. According to the new analysis, the fitness market is approximately worth £5 billion and seems to have grown by 20% for the past five years (Consultancy.uk. 2019). Amid this growth, the digital aggregators are unstoppable with such platforms like PayASUGym and ClassPass showing an impressive growth over the recent years. Digital aggregators have offered clients a pick and mix as well as an on-demand approach as far as accessing the gym is put into consideration. Another trend includes the emergence of social fitness, which narrows down to social experiences. The current crop of clients are largely motivated when in a group, with almost half of them using fitness as an approach that combats social alienation, feeling new encounters and socialising. Liam McGuinness, the head of CIL, noted that people are more motivated when they work in a group (Consultancy.uk. 2019). Lastly, it is evident that there is on-going polarization with the fitness market evolving in favour of the consumer preferences. Perhaps, this happens in line with the structural change within the industry with more attention given to the emergence of the low cost segment.

Competitors

In the United Kingdom, market trends are characterized by competitive combination of the national chains, public leisure centres and the local independents. Most of the national chains are keeping an eye on the experience compared to equipment while promoting better and newer types of training regimes. The smaller but local independent gyms mostly rely on the convenience of the location as well as social parameters associated to getting fit closer to the home or office (Evolve Fitness Club 2019). Leisure centres, on the other hand, concentrate more on the low cost of membership while accessing a range of facilities. Evolve carries with it the budget-gym proposition combined with the unique location strategy. The gym has its location out-of-town retail site in Wigan, Newcastle, Leeds, Bolton, Bristol, York, Southampton, Hull, Stoke and Nottingham. However, with these strategies in place, such efforts seem not to have stopped such companies like PureGym, Xercise4less and Gymbox from scooping significant market shares.

Internal Analysis

Customer Analysis

In the UK Fitness Industry Report of 2018, it could be noted that the UK fitness industry is going strong with more gyms being introduced, and thereby more memberships realized. This is the time the industry has ever realized such a greater market value. Apparently, there are approximately 7000 gyms cross the UK with memberships said to approach 10 million while the market value is hitting £5 billion (Evolve Fitness Club 2019). The penetration rate stands at 14.9%, which means that in every 7 people, there is one who attends the gym. The report further highlights that for a period of 12 months which ended in March 2018, there was an observable increase of around 4.6% in terms of the fitness facilities, which corresponded to a 2% in terms of the number of members thereby influencing a market value of 2.9%. Nothing can explain these changes apart from the market dynamics and trend which are believed to carry a significant influence with them (Evolve Fitness Club 2019). Some of the dynamics include the aspect of social fitness where most of the clients seem prioritize more on social experiences, which most of the gyms have failed to capitalize on (Consultancy.uk. 2019). Customers are essentially motivated via groups as people intent to combat social alienation, feel the new encounter as well as socialize. Research has subsequently found out that around 40% of the clients would prefer a social scene as part of the selection process.

SWOT Analysis

Strength: Evolve fitness club has shown digital strength in enhancing customer experience in the fitness market. The outstanding unique location strategy attracts the most interesting segment of clients in different locations (Evolve Fitness Club 2019). In addition, the Evolve app ensures that the club achieves the threshold online appearance, which is effective in attracting new members.

Weaknesses: Competition from national chains is overwhelming and seems to over better services compared to evolve. Other competitors such as PureGym are strong brands in the market, which are also deep-rooted in the fitness industry which makes it hard for such groups like Evolve to challenge the position.

Opportunities: Evolve can take advantage of the innovative personal training aid as well as social sharing platforms to enhance its marketing activities (Evolve Fitness Club 2019). Free downloads can be counted as an added advantage to marketing campaigns, which is a move that has rarely been done by any other company.

Threats: Competitive forces from national chains, local independent and even the leisure centres remains the key threat for Evolve (Evolve Fitness Club 2019). The open nature of social sharing platforms makes it hard to convert them into competitive advantages, given that other players in the industry can use them.

Key Issues

Evolve has been striving to embrace digital marketing by embracing the twitter feed, YouTube channel and Facebook page. As much as such efforts are seen to support the performance of the Evolve Group, still the group lacks the content strategy which ultimately should be carrying the message (Evolve Fitness Club 2019). While relying on newsletter style email as the principle retention tool, Evolve still leaves a marketing gap in terms of tapping into a significant segment that remains unexploited in other social media platforms (Woolf 2008). It is also worrying as to whether the current memberships are willing to upgrade their contracts by putting their preference on the annual fixed contract compared to the monthly contract, which only runs for a short term.

Objective

Smart Objectives

To recruit additional 2500 new Evolve memberships through digital marketing strategy for the first quarter of next year

To develop a welcome campaign which will at least upsell a quarter of the memberships on monthly contract to an annual fixed contract in the next four months

To strengthen the PPC campaign and offer free downloads of Evolve app, which will convert the signups and the traffic into membership purchases by at least 10% increase

Strategy

Customer Personas

Evolve, being fitness-based, has attracted a range of segments that would like to participate in fitness and fitness related activities. The profiled memberships indicate that most proactive group dominates with a whopping 40%, followed by active members whose last visit was between 15-45 days. The group takes 30% while the dormant and the col group taking 20% and 10% respectively. Based on this history, the report identified a number of customer personas that pointed at the target.

Targeting

Targeting entails segmentations of the market, or choosing those market segments said to be appropriate while determining the products to be offered. Based on the targeting framework, Evolve bears a history of converting most of the reluctant gym goers into regular. While most of the gyms would rely on members living closet to the facility, most of the Evolve members can walk miles due to attraction to the qualified staff, pricing, extensive free parking as well as availability of facilities (Johnson et al. 2008). While Evolve does not select who wants to join the gym, the prime target remains the aging population, millennials and professionals. The aging population are considered because of health issues that can be controlled through fitness. Millennials are best suited because of their techno savvy abilities while professionals are more concerned with their outlook (Akkanen 2017).

Proposition

Positioning largely regards the customer views on the product or services while comparing them to close competitors. Evolve Fitness Club is expected to position itself as a value addition brand that brings fitness close to the members (Dibb and Simkin 2013). This can be achieved through enhancing customer experience via the significant introduction of the specially developed Evolve app, as well as a new range of the specialist fitness classes. Booking for each class can simply be done through a one-click button on the Evolve app.

Users Experience

By enhancing customer experience, Evolve should consistently focus on converting the traffic and signups into members of the club as they pursue better and more fixed contracts. Evolve Fitness Club needs to plan on the new member’s encounter through the use Evolve app, which is said to offer the class calendar, training sessions, Bluetooth connectivity and access to nutrition videos and expert fitness sessions (Vrontis and Thrassou 2006). To guarantee a pleasant user experience, and compete with established brands like PureGym, the Evolve app should be user-friendly with clients allowed to choose the most convenient packages.

Channels Strategy

The strategy to be adopted by Evolve Fitness Club should be customer retention and customer acquisition strategy. The two-sided strategy will ensure recruitment of new members and upselling on the prevailing customer base. First, Facebook and Instagram shall serve as advertisement platforms while sharing details on the Evolve Home page (Consultancy.uk. 2019). The two social media platforms will also have fan pages that would share stories and experiences as regards the services offered by Evolve Fitness Club. Secondly, the Evolve site shall attract traffic with the help of the PPC campaign. The pay-per-click campaign shall ensure that willing clients are driven to the Evolve site where they can sign-up and become evolve members. This Home Page traffic will thereafter convert the clicks into membership purchase. The signups on the Evolve site captures the new recruits who will progressively be taken through details. Subsequently, the Evolve App satisfies the customer retention strategy by playing the key role of a membership promotional device, gathering data on the membership activity as well as developing sales. This will be supported by a monthly newsletter-style email set to members who signed up before thereby attracting them to annual fixed contracts.

Tactics and Actions

Digital marketing campaigns, and more specifically social media campaign, will run for three months. The message is quite clear on value addition and enhancing customer experience through fitness.

YouTube

It is estimated that there almost 35.6 million visitors to YouTube in the United Kingdom. As from the year 2015 to the year 2016, the time most of the people would spent on YouTube grew essentially by 40% faster among young adults compared to adults overall (The London School of Economics and Political Science 2018). Therefore, YouTube channel for Evolve Fitness Club needs to be revamped by posting more fitness videos. At least five fitness and lifestyle videos in a day will attract more viewership thereby attracting the pay-per-click ads. YouTube channel is therefore better placed to enhance the PPC campaign, which directs viewers to Evolve Home page thereby attracting the signups.

Facebook

Facebook is ultimately the largest social media platform which attracts 42 million Facebook users in United Kingdom. Facebook membership attracts the professionals, millennials and even the aging population. For Evolve, Facebook is a tool for customer acquisition and retention (The London School of Economics and Political Science 2018). First, the Facebook page shall advertise the staff profiles, classes, equipment and locations linked to Evolve. Perhaps, the page shall reflect what is posted on Evolve Home page. The page will also share links to the Evolve site for signups thereby boosting the membership. Secondly, the Facebook fan page shall share experiences, stories and funny clips attached to Evolve Fitness Club (Evolve Fitness Club 2019). Such an open platform will prompt the growth of Evolve community with loyal members retaining their membership all through.

Twitter

Twitter attracts almost 16 million users around the United Kingdom. With Evolve showing interests in grabbing a significant share of the followers, the club intends to make use of the twitter feeds (The London School of Economics and Political Science 2018). Same to Facebook, Evolve will make use of the Twitter platform in sharing or advertising the club by posting the locations, equipment and even tag staffs that provide an exclusive training. Twitter will specifically be used for advertisement reasons.

Evolve App and Monthly newsletter-style email

Upon considering digital marketing, Evolve does not only focus on signups but also fosters upselling and retention of members. The Evolve App is seen as a potential retention strategy, as well as a platform that can move members from monthly contracts to annual fixed contracts (Evolve Fitness Club 2019). This is because the app is strategically developed to enhance sales and also promote the products and services offered by Evolve Fitness Club. This is enhanced through its capacity to link users to training sessions and videos with regards to fitness (Henneberg et al. 2009). On the other hand, monthly newsletter-style email can be seen as a progressive one-on-one marketing while informing the membership base to upgrade the contract after their initial signup.

Control

It is important for Evolve to closely monitor the PPC campaign and the social media campaign. This is because Evolve Fitness Club will make use of the quarterly report in conducting the customers’ feedback survey. Recommended control analytics are as shown below

Twitter and Twitter indicators should include

Likes and comments

Retweets

Reviews

Number of followers

Number of visitors

Content shared

Traffic directed to Evolve home page

For emails

The click through rate

Rate of membership move to annual fixed contracts

Open rate

Subscribers

For YouTube

Number of views

Number of clicks

Comments

Likes and dislikes

Rate of sharing

Signups

It should further be noted that consumer behaviours are likely to change with the economic conditions. However, Evolve is advised to keep an eye on the analytics while trying to verify the customer’s personas and customer mind-set when conducting customer feedback survey.

Budget

Allowable Marketing costs

Allowable marketing costs are expected to take at least 10-12% of the gross revenue before subtracting the business occupancy. With assumptions of the total budget as the revenue realized by evolve

Then the selling price, with reference to marketing costs

= 150000 x 0.1 x 1/100

= £150 for every unit, in 100 units.

Therefore, the allowable marketing costs can be developed as follows

Budget

A budget of £150000 needs to be divided between the PPC Campaign (through YouTube channel), development of YouTube channel, Facebook, Twitter, and email. Overall, content creation is expected to take £10000 as the memberships get newsletters for the next four months. The campaign will at least absorb 2500 new members, convert 10% membership purchases into signups and upsell at least a quarter of the membership base to the annual fixed contracts, which amounts to 18000 annual signups.

Customer lifetime value

Considering the cost of acquisition per client to be £50 with a total of 2480 new clients, with retention rates of 25%, then the summary of the projections will be as shown below

References

Hollins, P., Riestra, R., Hernandez, M., Becker, J. and Santos, P.A., 2016. D7. 2-Summary report of Value Chain analysis.

Quang, N., Nisar, T.M., Knox, D. and Prabhakar, G.P., 2018. Understanding customer satisfaction in the UK quick service restaurant industry. British Food Journal, 120(6), pp.1207-1222.

Sammut‐Bonnici, T. and Galea, D., 2015. PEST analysis. Wiley Encyclopedia of management, pp.1-1.

Johnson, G., Scholes, K. and Whittington, R., 2008. Exploring corporate strategy: text & cases. Pearson education.

Akkanen, J., 2017. Key Factors for Entering the Hotel Design Market in the UK.

Evolve Fitness Club. 2019. IDM Professional Diploma in Digital Marketing (Dip DigM).

Shank, M.D. and Lyberger, M.R., 2014. Sports marketing: A strategic perspective. Routledge.

Dibb, S. and Simkin, L., 2013. Market segmentation success: making it happen!. Routledge.

Woolf, J., 2008. Competitive advantage in the health and fitness industry: developing service bundles. Sport management review, 11(1), pp.51-75.

Henneberg, S.C., Mouzas, S. and Naudé, P., 2009. Going beyond customers–a business segmentation approach using network pictures to identify network segments. Journal of Business Market Management, 3(2), pp.91-113.

Vrontis, D. and Thrassou, A., 2006. Situation analysis and strategic planning: An empirical case study in the UK beverage industry. Innovative marketing, 2(2), pp.134-151.

Schmidt, E., 2018. Fresh Squeezed Fitness: A Case Study on the Marketing of Orangetheory Fitness.

Williams, A.S., 2017. DEFINING FITNESS COMMUNICATION. Routledge Handbook of Sport Communication, p.197.

Funk, D.C., Alexandris, K. and McDovnald, H., 2016. Sport consumer behaviour: Marketing strategies. Routledge.

Chanavat, N., Desbordes, M. and Lorgnier, N. eds., 2017. Routledge Handbook of Football Marketing. Taylor & Francis.