Customer Segmentation in Fitness Industry

This assignment delves into customer segmentation within the fitness industry. It examines various segmentation approaches, including demographic, psychographic, behavioral, and value-based segmentation. Students will analyze case studies of fitness companies like Anytime Fitness, applying these segmentation techniques to understand customer preferences and develop targeted marketing strategies. The assignment emphasizes the importance of understanding customer needs and creating tailored value propositions to drive business growth.

Running head: BUSINESS PROPOSAL
Business Proposal
Name of the Student:
Name of the University:
Author’s Note:

1BUSINESS PROPOSAL
Table of Contents
Highlighting the Business Plan........................................................................................................1
Financial Plan for Anytime Fitness.................................................................................................1
Customer Segmentation...................................................................................................................1
Relationship with target customers..................................................................................................2
Value Proposition............................................................................................................................3
Market Channel...............................................................................................................................3
Use of Social Media....................................................................................................................4
Key Resources.................................................................................................................................5
Key Activities..................................................................................................................................5
Partner..............................................................................................................................................6
Cost Structure and Revenue Streams...............................................................................................6
References......................................................................................................................................14

2BUSINESS PROPOSAL
Highlighting the Business Plan
A business plan is essential for the start-up business, as this allows the business organizations to
evaluate the strengths and weakness of the organization and the market. The main aim of the
report is to prepare a business plan for the start-up of a fitness center named Anytime Fitness in
Perth, Australia ("Perth - Anytime Fitness", 2017). The company aim towards establishing
partnership by considering the opinions and viewpoints of the members of the fitness club along
with the companies that provide different types nutritional supplements. In order to increase the
value of the fitness business, Anytime Fitness has segmented the potential customers ("Anytime
Workouts | Free Fitness App - Anytime Fitness", 2017).
Financial Plan for Anytime Fitness
The startup cost for the fitness center Anytime Fitness includes the blueprint of the overall
business plan and structure. The components of the startup cost include funding of the owner,
average monthly cost, and the fixed cost. The total funding of the owner has amounted to
$100,000.
Customer Segmentation
As commented by Han, Lu & Leung (2012), customer segmentation allows the business
organizations to develop products or services and the price based on the demands and income of
the customers. Therefore, appropriate customer segmentation will allow Anytime Fitness to
develop products, services, and price according to the target customers. The main target
customers for Anytime Fitness include the different types of members in the fitness center. Other
than fitness facilities, the center provides facilities such as steam bath, spa, toning, resistance

3BUSINESS PROPOSAL
training, and bodybuilding. Additionally, the fitness center will be operating 24 hours thereby,
providing an opportunity for the customers to avail the fitness facilities according to their
convenience (Floh et al., 2014).
The fitness center has also categorized the members in order to offer maximum services to the
customers based on the price paid by them (Hamka et al., 2014). The customer categorization
includes VIP training, personal training, special service, membership and direct membership.
Additionally, identifying the distinctive nature of the secondary customers has helped Anytime
Fitness to consider the interest of the non-members for using the services of the fitness center.
The non-members of the fitness center avail the services for buying health supplements,
nutritional consultation and other exclusive services (Hjort et al., 2013).
Relationship with target customers
Considering the market competition and the convenience of the customers, Anytime
Fitness will be operating 24 hours a day. The operating time of the fitness center will be
beneficial for the organization initially. Firstly, the main aim of the fitness center is to recruit
personal trainers that will help in providing suitable guidance to the members. According to
Boulding et al., (2013), customer relationships are significant for the companies as this enables
success y fulfilling the needs and demands of the customers. In order to build customer
relationships, Anytime Fitness plans to use internet facilities such as web and social media.
Additionally, the company also plans to use SMS and WhatsApp for building an effective
customer relationship. According to the value proposition, the fitness center needs to consider
the different values (Mithas, Krishnan & Fornell, 2013). Moreover, in order to improve the

4BUSINESS PROPOSAL
service of the fitness center, Anytime Fitness needs to consider the feedbacks of the customers or
the members of the gym.
Value Proposition
The primary aim of Anytime Fitness is to build a single workout environment so that the
customers are able to get personalized fitness solutions. In addition to, the fitness center
emphasizes on the age group of 15- 66 years. Targeting the customers within the age group will
allow the company to develop services according to their health needs (Andrews et al., 2013).
The fitness center has also opened the option of online blogs that will provide an opportunity for
the customers to share their viewpoints, opinions, and suggestions. The company can consider
the customer feedbacks for developing their business (Armstrong et al., 2015). Other facilities
provided by the company website includes various types of mix and match opportunities. The
opportunities will act as suggestions for the customers so that they are able to decide the
appropriateness and suitability of the health facilities. The primary aim of the Anytime Fitness is
to create a higher value for the customers at an affordable price (Osterwalder et al., 2014).
Market Channel
As commented by Patino , Pitta & Quinones (2012), marketing is the most crucial aspect
for the business organizations as this helps the company in communicating the product to the
target customers thereby, increasing the sales. Therefore, business organizations use both online
and offline market channels for communicating with their target customers. Similarly, Anytime
Fitness will use both online and offline channels for marketing the exclusive fitness facilities to
the target customers. The principle offline marketing channels include posters, organizing events
and campaigns along with television commercials. The use of offline marketing channels will

5BUSINESS PROPOSAL
help the company in communicating with the customers that do not use internet facilities
(Roberts & Zahay, 2012). Additionally, the various online marketing channels include promotion
through Facebook, Instagram, and YouTube.
Use of Social Media
As commented by Tuten & Solomon (2014), social media is the most widely used
internet platform in the modern world. In order to remain updated and maintain effective
communication people around the world use the social media. Reports suggest that Instagram has
more than 180 million fitness users (Saravanakumar & SuganthaLakshmi, 2012). This is because
Instagram allows the users to view posts of professionals and enthusiasts of fitness. It has been
observed that customers are interested in live videos from the fitness professionals or brands.
Therefore, Anytime Fitness can use Instagram for posting videos from the partners thereby,
entertaining and engaging the target customers.
As the target customers are aged between 15-66 years, some of the customers might find
using social media difficult. Therefore, considering this aspect, Anytime Fitness will also
implement offline methods of communicating with the target customers. The offline methods
implemented by Anytime Fitness include SMS, posters and television commercials. Sending
messages at regular intervals to the customers will help in engaging the customers. Additionally,
television commercials and posters will also help in engaging the target customers along with
providing them with suitable knowledge about the services provided by the fitness center.
Facebook is the most widely used social media recently. The users in order to follow
various brands and remain communicated use Facebook. Therefore, Anytime Fitness can use
Facebook for engaging the customers. Anytime Fitness will include YouTube as an online

6BUSINESS PROPOSAL
medium for engaging the customers thereby, increasing the customer base and business. Thus,
the use of different social media will allow Anytime Fitness to establish them successfully in the
fitness industry. The use of Facebook, Instagram and YouTube will provide an opportunity for
the Anytime Fitness to post and share live videos that display the different services provided by
the fitness center.
Key Resources
The principal resources for the business organizations will help Anytime Fitness to establish
their business appropriately (Abecassis-Moedas et al., 2012). The key resources for Anytime
Fitness include the suppliers of the nutritional supplements and gym equipment. Therefore,
Anytime Fitness will only tie up with the suppliers that will provide the best and most affordable
price for the products. The secondary key resources include the health professionals that will
provide suitable training to the members.
Key Activities
The key activities of the business organizations need to be aligned with the aim and
objectives of the company thereby, enabling success (Ward, 2016). Therefore, based on the aim
and objectives, the key activities for Anytime Fitness include training for the members of the
fitness center along with developing diet plan according to the health needs of the members. The
additional key activities include body massage and a steam bath that will help the members lose
weight and experience the leisure.

7BUSINESS PROPOSAL
Partner
The topmost fitness equipment brands are the principal partners of Anytime Fitness. Other than
them, the suppliers of the nutritional supplements will also be the key partners for Anytime
Fitness. This will help the company in establishing them thereby, attracting the customers.
Cost Structure and Revenue Streams
The company has categorized the members of the gym in terms of Personal and VIP
training, direct membership and special service membership. Based on the categories, the
principal cost of the company includes the cost of the nutritional supplements and the fitness
types of equipment. $9250 is the break-even revenue of the startup business. The startup cost for
Anytime Fitness is furnished below:
Start-up Expenses
Fixed Costs Particulars Amount (USD)
Monthly Rent 10,500
Staff Remuneration 35,000
Marketing Fees 1,036
Exercise Equipment 4,500
Flooring 6,500
Interest on loan 10% 2,500
Cleaning Supplies 1,650
Office Equipment 1,250
Gym Supplies 2,250
Other Gym Supplies 1,650
Lease payments 8,000
Market survey 1,975
Preliminary Expenses 1,200
Total Fixed Costs $ 78,011.00
Average Monthly
Costs
Infrastructure $ 875.00

8BUSINESS PROPOSAL
Lease payments $ 666.67
Interest on loan 10% $ 208.33
Cleaning Supplies $ 137.50
Flooring $ 541.67
Staff Remuneration $ 2,916.67
Total Average Monthly Costs $ 5,345.83
x Number of Months: $ 12.00
Total Monthly Costs $ 64,150.00
Total Startup
Expenses $ 142,161.00
Start-up Assets
Owner Funding
Owners Fund $ 100,000.00
Total Owner Funding $ 100,000.00
Loans
Bank Loan $ 22,200.00
Other
Total Loans $ 22,200.00
Total Start up Funds $ 122,200.00
Assets
Gym Equipments $ 27,000.00
Land & Building $ 125,000.00
Total Fixed Assets $ 152,000.00
Total Start-up Assets $ 274,200.00
Year 0 FY-1 FY-2
(a) CAPITAL
Capital Employed 100,000 103,000
Loans 22,200
Loan repayments 0 15,000
(b) SALES FORECAST
Special Service Membership 26,000 28,600
Direct Membership 37,000 40,700
Personal and VIP Training 33,300 34,965
Projected Sales 96,300 104,265
(c) COST OF GOODS SOLD 88,800 93,240

9BUSINESS PROPOSAL
(d) EXPENSES (Overhead)
Monthly Rent 10,500 10,500
Staff Remuneration 35,000 36,750
Marketing Fees 1,036 1,088
Exercise Equipment 4,501 4,726
Flooring 4,810 5,051
Interest on loan 10% 2,220 2,220
Cleaning Supplies 1,221 1,850
Office Equipment 925 971
Gym Supplies 1,665 2,450
Other Gym Supplies 1,221 2,125
Lease payments 5,920 6,216
Market survey 1,462 1,535
Preliminary Expenses 888 932
(e) FIXED ASSETS
Gym Equipment 27,000 36,000
Land & Building 125,000 128,750
(1) SALES FORECAST
Year 0 1 2
Projected Sales 96,300 104,265
(b) Cost of Goods Sold 88,800 93,240
(2) CASHFLOW FORECAST
Preop
Year 0 1 2
CASH INFLOWS
Cash from Sales 96,300 104,265
Directors loans 0 22,200 0
Capital Employed 0 100,000 103,000
TOTAL CASH INFLOW 0 218,500 207,265
CASH OUTFLOWS

10BUSINESS PROPOSAL
Payments for Operating Expenses 88,800 93,240
0
Monthly Rent 0 10,500 10,500
Staff Remuneration 0 35,000 36,750
Marketing Fees 0 1,665 2,450
Lease payments 0 5,920 6,216
Corporation Tax 1,124 1,716
Market survey costs 0 1,462 1,535
Other preliminary expenses 0 888 932
capital expenditure
Gym Equipment 0 27,000 36,000
financing repayments
Loan repayments 15,000
TOTAL CASH OUTFLOWS 0 172,359 204,339
Cash flow summary
NET CASH FLOW FOR PERIOD 0 46,141 2,926
OPENING CASH BALANCE 0 0 46,141
CLOSING CASH BALANCE 0 46,141 49,068
(3) DEPRECIATION SCHEDULE
Year 0 1 2
Fixed Assets
Gym Equipment 0 27000 36000
Land & Building 0 125,000 128,750
Total book values (i.e. net fixed assets) 0 152,000 164,750
Annual Depreciation
Gym Equipments-10% straight line 2,700 3,600
Land & Building-20% reducing balance 25,000 25,750
total annual depreciation 27,700 29,350
(4) PROFIT AND LOSS FORECAST
Preop
Year 0 1 2
Revenue 0 96,300 104,265

11BUSINESS PROPOSAL
Cost of sales 0 88,800 93,240
Gross profit 0 7,500 11,025
Gross Margin 90,812 95,888
Expenses/overheads
Monthly Rent 10,500 10,500
Staff Remuneration 35,000 36,750
Marketing Fees 1,036 1,088
Exercise Equipment 4,501 4,726
Flooring 4,810 5,051
Interest on loan 10% 2,220 2,220
Cleaning Supplies 1,221 1,850
Office Equipment 925 971
Gym Supplies 1,665 2,450
Other Gym Supplies 1,221 2,125
Lease payments 5,920 6,216
Market survey 1,462 1,535
Preliminary Expenses 888 932
Profit before tax 6,612 10,093
Tax @ 17% 1,124 1,716
Profit after tax 5,488 8,377
Transfer to reserves 6,612 10,093
Breakeven Analysis
Breakeven Sales Value = average fixed cost/% contribution
Average fixed cost 364.08
Contribution % 50%
Revenue
Contributio
n
Fixed
Cost Profit
96300 48150 364.08 47785.92

12BUSINESS PROPOSAL
104265 52132.5 364.08 51768.42
910.2 455.1 364.08 91.02
1092.24 546.12 364.08 182.04
Balance Sheet
Assets FY-1 FY-2
Current Assets
Cash $ 181,609.04 $ 225,166.74
Accounts receivable $ 96,300.00 $ 104,265.00
Total current assets $ 277,909.04 $ 329,431.74
Fixed (Long-Term) Assets
Gym Equipments $ 27,000.00 $ 36,000.00
Land & Building $ 125,000.00 $ 128,750.00
(Less accumulated depreciation) $ 27,700.00 $ 29,350.00
Intangible assets $ 50,700.00
Total fixed assets $ 175,000.00 $ 135,400.00
Total Assets $ 452,909.04 $ 464,831.74
Liabilities and Owner's Equity
Current Liabilities
Accounts payable $ 24,000.00 $ 25,000.00
Accrued Rent $ 10,500.00 $ 10,500.00
Bank Charges Payable $ 3,000.00 $ 3,000.00
Short-term loans $ 10,000.00 $ 10,000.00
Income taxes payable $ 1,124.04 $ 1,715.74
Accrued salaries and wages $ 35,000.00 $ 36,750.00
General Expenses $ 1,665.00 $ 2,450.00
Lease Payment $ 5,920.00 $ 6,216.00
Current portion of long-term debt $ 150,000.00 $ 140,000.00
Total current liabilities $ 241,209.04 $ 235,631.74
Long-Term Liabilities
Long-term debt $ 22,200.00 $ 90,000.00
Less: Loan Repayment $ 15,000.00
Deferred income tax $ 189,500.00 $ 154,200.00
Total long-term liabilities $ 211,700.00 $ 229,200.00
Total Liabilities $ 452,909.04 $ 464,831.74
Owner's Equity
Owner's investment $ 100,000.00 $ 103,000.00

13BUSINESS PROPOSAL
Net Profits $ 5,487.96 $ 8,376.86
Reserve and Surplus $ 6,612.00 $ 10,092.60
Total owner's equity $ 112,099.96 $ 121,469.46
Total Liabilities and Owner's Equity $ 565,009.00 $ 586,301.20
{42}
Common Financial Ratios FY-1 FY-2
Net Profit Ratio (Net Profit/Sales) 6% 8%
Debt Ratio (Total Liabilities / Total Assets) 1.00 1.00
Current Ratio (Current Assets / Current Liabilities) 1.15 1.40
Debt-to-Equity Ratio (Total Liabilities / Owner's Equity) 4.04 3.83
Sales Forecast
Year 1
Particul
ars
Jan
uar
y
Feb
rua
ry
M
ar
ch
A
pr
il
M
ay
Ju
ne
Ju
ly
Au
gu
st
Sept
emb
er
Oct
obe
r
Nov
emb
er
Dec
emb
er
Total
Units
Sold
Sales
300
00
400
00
35
00
0
30
00
0
35
00
0
45
00
0
35
00
0
50
00
0
4000
0
450
00
5000
0
4500
0 480000
96
30
0
Cost of
Goods
sold
250
00
300
00
25
00
0
25
00
0
25
00
0
25
00
0
30
00
0
30
00
0
2500
0
350
00
3500
0
2000
0 330000
88
80
0
Gross
Profit
500
0
100
00
10
00
0
50
00
10
00
0
20
00
0
50
00
20
00
0
1500
0
100
00
1500
0
2500
0 150000 75
00

14BUSINESS PROPOSAL
Year 2
Particul
ars
Jan
uar
y
Feb
rua
ry
M
ar
ch
A
pr
il
M
ay
Ju
ne
Ju
ly
Au
gu
st
Sept
emb
er
Oct
obe
r
Nov
emb
er
Dec
emb
er
Total
Units
Sold
Sales
300
00
450
00
35
00
0
35
00
0
45
00
0
40
00
0
30
00
0
40
00
0
4000
0
600
00
7500
0
4500
0 520000
10
42
65
Cost of
Goods
sold
250
00
350
00
30
00
0
25
00
0
35
00
0
30
00
0
25
00
0
25
00
0
2500
0
500
00
3500
0
3500
0 375000
93
24
0
Gross
Profit
500
0
100
00
50
00
10
00
0
10
00
0
10
00
0
50
00
15
00
0
1500
0
100
00
4000
0
1000
0 145000
11
02
5

15BUSINESS PROPOSAL
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