Executive Summary
This paper outlines a business proposal for a fitness center in Sharjah for military veterans who do not have health coverage for physical fitness. It analyzes the external and internal environments, risks, and prospective growth. The business proposal is viable owing to a number of factors. For example, the economy of the UAE and its many retired solders present a healthy growth potential for business. The aim of this business is to curb the burgeoning problem of a sedentary lifestyle for the military veterans. Through targeting the military veterans, the business is likely to grow a group of health sensitive retirees, especially considering the expansion objectives of the business in all major UAE cities that host the veterans.
Opportunity Overview
Military veterans have grossly limited outdoor activities. Hence, they have become more unfit and overweight. The Veteran Fitness Centre will have a specified range of cardiovascular and interactive fitness equipment that is specifically designed for military persons above the retirement age. The center will also have a dedicated nutrition section where nutrition plans will be tailored to the military veterans (Blythe, 2006). Moreover, the nutrition section aims to educate the veterans regarding the fitness subject so they can make smart and informed decisions with regards to nutrition.
Market Research
Studies in the UAE show that there is close to 20% overweight prevalence rate among the veterans, especially those with a limited medical cover that does not include physical fitness (Central Department of Information and Statistics, 2015). The rates are expected to keep rising owing to the sedentary lifestyles of most of the military veterans who do not have physical fitness and nutrition coverage as part of the retirement package. This is compounded by the fact that there are no specifically designed gyms or fitness centers for this class of the military veterans in the UAE. The proposed fitness center will incorporate special needs of the military retirees. Hence, the business idea is likely to cure this problem by providing the military veterans the opportunity for continuous physical exercise.
Porter’s Five Forces
Threat of new entrant
The current players in the fitness industry have been in existence for long and have very large production capacities. Therefore, it is easy for these players to lower their prices as a competitive strategy since they directly benefit from economies of scale. Thus, a new entrant is disadvantaged in terms of pricing because it will not benefit from economies of scale in the same magnitude as the current industry players.
Threat of substitutes
Traditional gyms pose the greatest threat to the existence and business performance of the proposed veteran fitness center and any other player in this industry. These businesses have been in the industry for a long period and are well established.
Power of suppliers
Suppliers in the fitness industry have power owing to the existence of many players and high demand for different equipment used in the fitness facilities. The proposed business will rely on negotiation skills to minimize the power of suppliers.
Power of buyers
Reflectively, the amount of output in terms of turn over sales depends on the buyers’ purchasing power. The higher the purchasing power, the better the turnover in total sales realized over a definite period of time. The power of buyers is high because the services in the fitness industry as secondary.
Rivalry
There are several players operating in the same industry with virtually all of them dealing with a variety of fitness services. The proposed business will capitalize on customized services to minimize the impact of rivalry.
Opportunity Assessment
Demand
The demand for the proposed physical fitness center is high because almost 20% of the military veterans are overweight. This can be attributed to the fact they cannot afford specialized physical exercise services or they are not motivated to enroll in fitness centers.
Innovation
The fitness center will offer the latest and most sophisticated interactive equipment that may motivate the military veterans to exercise for longer periods. Some of the equipment that will be required is provided below.
The center will have interactive fitness equipment such as active floor, XBI-bikes, specialized cardiovascular equipment, and dance mat zones.
SWOT Analysis
Strengths
The center will offer specialized fitness equipment for the military veterans. The fact that it will also offer nutrition training will serve to increase its competitive advantage. Additionally, the center will feature games and other products specifically designed for military retirees to guarantee fun and motivation in the fitness program (Hirt & Block, 2012).
Weaknesses
The targeted market is highly dependent on the spouse approval and funding. Hence, the marketing approach will employ the pull strategy to ensure that the married veterans are supported by their spouses. Additionally, the cost of setting up the center is very high considering the fact that it will take at least three years to break even.
Opportunities
The population of military veterans without a fitness cover in the UAE continues to grow. Hence, the center will experience continuous business expansion. The center will motivate more veterans to enroll in subsidized fitness and nutrition programs.
Threats
The existing traditional gyms might want to expand their product line and compete for the Veteran Fitness Centre’s market. Many traditional gyms in the UAE have a strong presence and a significant budget for business development.
PESTEL Analysis
Political
The business environment in the UAE is transparent and predictable. The taxation regime and rules in the country are clear and concise. The political climate in the UAE is also serene with no major problems. This environment will make it easy for the entry of the Veteran Fitness Center business (Cone, 2011).
Economic
Economically, the country is recovering from the effects of the global financial crisis and it is yet to grow exponentially. However, the economic recovery offers the fitness center the potential for increased activity as many veterans will embrace the subsidized fitness and nutrition services (Cone, 2011).
Social
The demographic nature of the UAE is such that the country has a population of close to 100,000 veterans. Close to 30% of the population fall within the criteria that the fitness center is interested in (Central Department of Information and Statistics, 2015).
Technological
Most of the technological innovations in the UAE are connected to the oil refining industry. Most of the technology is imported from Europe, East Asia, and North America. Since the proposed veteran fitness center will be equipped with the best technology, the business is expected to penetrate the market within the shortest time possible (Cone, 2011).
Legal
The legal environment in the UAE is relatively predictable. The kingdom does not have the porous nature of a democracy where laws are constantly changing. Hence, the business will not have an unpredictable legal environment (Dagnino & Rocco, 2009).
Environmental
The fitness center will operate in a business environment where major parameters are known. For example the competitors in the business environment are bound by the code of conduct. Therefore, the business will find it easier to shape its environment (Blythe, 2006).
Five Dimensions Opportunity Model
The methodology used to assess the opportunity for the fitness business is the Five Dimensions Opportunity Model (FDOM) (Farris, Bendle, Pfeifer, & Rebstein, 2010) summarized in the table below.
Investment
The Veteran Fitness Centre will have a specified range of cardiovascular, resistance and interactive fitness equipment specifically designed for the military veterans. The center will require the highest start up cost estimated to stand at AED2.8 million.
Risk and uncertainty
One element that allows risks to be minimized in a business is the proportion of the investment realized through the sale of tangible assets. It is estimated that 40% of the investment can be recouped through resale of equipment if the business fails to pick up.
Return and value created
The first year is the only period when the business should expect losses; this is mainly due to the high initial cost of buying and shipping the equipment. Thereafter, the expected margin loss will be around negative 76%.
Impact of innovation and change
The Veteran Fitness Centre will use new technology that is unavailable in the country and specifically designed for the military veterans.
Time span
The business has a renewable life cycle and will produce returns indefinitely if successfully implemented. Moreover, in relation to opportunity creation, the center will try to expand into other markets such as traditional gyms for ordinary military personnel interested in the services of the Veteran Fitness Centre.
Marketing Plan
Marketing strategy
The Veteran Fitness Centre will be using various marketing mix strategies to ensure that the services it offers are well positioned in the market. Included in the market skimming strategies are product and pricing strategies, placing strategies, and promotional strategies. The Veteran Fitness Centre will focus on the delivery of excellent fitness and nutrition services to the military veterans as the major market segment (Farris et al. 2010).
The product positioning
The Veteran Fitness Centre will be dealing with varieties of fitness and nutrition services. As such, the Veteran Fitness Centre will utilize its expertise and innovative capabilities to ensure development and sale of advanced services that offer varied choices for customers (Cone, 2011). Further, the Veteran Fitness Centre will focus on its service differentiation, which is critical amid intense competition, particularly in new markets where the business plans to penetrate into (Blythe, 2006).
Price strategies
The pricing differentiation strategy will provide a critical competitive advantage for the Veteran Fitness Centre. The actions in the pricing strategies will be aimed at offering heavily subsidized services, particularly price discrimination in terms of place and target market (Kotler & Keller, 2012).
Placing strategies
Offering fitness and nutrition services in the right place and time create right place strategy. The Veteran Fitness Centre will adopt the business to customer contact strategy in order to directly deal with its customers (Kotler & Keller, 2012).
The promotion strategies
The Veteran Fitness Centre will be most active in its promotional undertakings. The aim of the promotional strategy is to enable the brand to become a nationally recognizable logo. In the promotional strategy, the brand awareness will be improved through innovative advertising in mass media, particularly through television and fitness magazines (Kotler & Keller, 2012).
Operation Plan
The demonstration below shows the regular process that a veteran would go through when joining the Veteran Fitness Centre.
Human Resource Plan
Personal Experience Requirements
The fitness instructors
- Should be experienced professionals (at least 2 years)
- Hold certifications from a fitness education provider
Nutritionist
- Must be a registered dietitian at least for 3 years
- Preferable if he is specialized in nutrition for retirees
Sales/Reception
- High school diploma
- 5 years work experience
- Preferable 2 years experience in Sales
Employees
Head trainer
- Developing training strategies
- Creating training materials, manuals for support staff, and customers
- Preparing and supervising trainers
- Organizing feedback and reports on training, and goals
Trainers
- Implementing head trainer strategies
- Report progress of customers (health and weight)
- Reports to head trainer
Receptionists
- Sales
- Administrative tasks
- Promoting the business to potential customers
- Deal with complaints and general inquiries
Nutritionist
- Analyzing tests
- Recommending nutritional plans or diets
- Nutritional education
- Appropriate meal and snack suggestions
- Observing progress
Training
- Health and safety training
- Fire hazard training
- Equipment training
References
Blythe, J. (2006). Essentials of marketing communications. New York, NY: FT/Prentice Hall.
Central Department of Information and Statistics. (2015). Latest statistical releases. Web.
Cone, S. (2011). Steal these ideas: Marketing secrets that will make you a star. New York, NY: John Wiley & Sons.
Dagnino, G., & Rocco, E. (2009). Competition strategy: theory, experiments, and cases. New York, NY: Routledge.
Farris, P., Bendle, N., Pfeifer, P., & Rebstein, D. (2010). Marketing metrics: The definitive guide to measuring marketing performance. Alabama, AL: FT Press.
Hirt, G., & Block, S. (2012). Fundamentals of investment management(10th ed.). New York, NY: McGraw-Hill Irwin.
Kotler, P., & Keller, K. (2012). Marketing management (14th ed.). New Jersey, NJ: Pearson Prentice Hall