Current State And Management Of UK Fitness Industry

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Question :

  • How is the business of low-cost gyms different from that of luxury boutique health clubs?
  • What type of health gym (low cost or luxury boutique) seems to have a promising future in UK’s fitness industry?
  • How the challenges and issues faced by low-cost gyms are different from that of luxury health and fitness centers?
  • Does investing in a luxury health boutique results in high profits in long term?
  • Does invest in low-cost gyms will bring only short-term profits and prove to be a bad business decision in later term?
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Answer :

Executive Summary

This dissertation shows the current state of the fitness industry in the U.K. as the background to profoundly discern its management strategy, which includes marketing, operation aspects and so on, thereby to develop fitness industry for the future potential investment. The research has been fundamentally divided into three parts, which are; internal management structure of the industry, the positive influence of the fitness industry to citizen’s daily life, and the future advancement of the U.K. fitness industry. The initial analysis on the internal management structure focuses the main research objects towards those successful organizations such as The Gym Group who has already dominated the UK fitness market. Second, to consider whether different types of gym investment can contribute more benefit to both of the firm and the citizens. and the data will be collected by primary research method. Then, moving on to particularly investigate the influence on citizen’s daily life, the research mainly focus on the population of using gym in Birmingham City Centre, UK, and how often people go to gym to improve their well being, which will be done by primary research method that includes interviews with gym trainers for data collection. The results of the study establish the fact that luxury gyms are different from low-cost gyms in their business operations as well as the issues and challenges faced by these different forms of fitness centers in markets of the UK. Therefore, the feasibility and profitability of new business depends upon the goals and objectives of the business owners and the strategies followed to ensure success and growth in fitness industry of the UK. The results also clarifies the need of efforts to improve skills of fitness professionals and design innovative and flexible plans as per the needs of target group of customers.


Chapter 1: Introduction............................................................................................................................................. 4

1.1 Background                                                                                                         4

1.2 Statement of problem and Research Questions                                              6

1.3 Research Objectives                                                                                           7

1.4 Rationale of the study                                                                                        7

1.5 Chapter Plan                                                                                                       8

Chapter 2: Literature Review............................................................................................................................ 10

2.1 Health and fitness industry as a part of leisure economy                           10

2.2 Drivers of customer satisfaction in health and fitness industry                 11

2.3 Current trends in health and fitness industry of the UK                            14

2.4 Some key low-cost gyms in the UK                                                                 19

2.5 Future trends in UK’s Health and Fitness industry                                     20

2.6 Summary                                                                                                           21

Chapter 3: Research Methodology................................................................................................................ 23

3.1 Research Philosophy                                                                                        23

3.2 Research Design                                                                                               23

3.3 Research Strategy                                                                                            24

3.4 Sample and Data Collection instrument                                                        24

3.5 Data Collection and Analysis                                                                           25

3.6 Research Ethics                                                                                                25

Chapter 4: Results and Analysis...................................................................................................................... 27

4.1 Results of Primary Study                                                                                 27

4.2 Analysis of Results and benchmarking the results                                       34

4.3 Summary                                                                                                           37

Chapter 5: Conclusion and Recommendations.................................................................................. 38

5.1 Conclusion                                                                                                         38

5.2 Recommendations                                                                                            39

References........................................................................................................................................................................... 41

Appendix: Interview Questions....................................................................................................................... 47

Appendix 2: Interview Transcripts.............................................................................................................. 48

Chapter 1: Introduction

1.1 Background

The fitness industry is relatively young across the globe and is designed and developed by young entrepreneurs having a passion for health and fitness. There are several new formats of health and fitness clubs emerging in global markets and in markets of the UK several new business owners are entering with the aim of bringing in innovation and generating profits and long-term growth in the industry. Now the pursuit of financial success has achieved through the ‘vehicle’ of a health and fitness business. Financial success is a good and necessary objective, but it cannot be the basic reason for the existence of the business (Algar, 2014).

In recent years, health-consciousness has increasing day by day in people’s daily life. And also people more care about appearance due to people’s daily unhealthy diet and irregular lifestyle about work and rest. Therefore, more and more people start to pay more attention on exercise at health clubs to become more healthy and fit. However, there are some positive and negative aspects that show below about the performance of Gym industry through the past decade. And it caused debate that whether Gym industry can be potential investment for the future, and also if fitness industry can be a great contributor to the UK government and its citizens, economy, to improve employment rate, tax and so on. 

According to the research in 2006 by Ray Algar who is the managing director of Oxygen Consulting, that showed the UK health and fitness industry has a present value of £2 billion with 2,890 private healthy clubs serving 4.2 million members. And 2,596 Public fitness centers serving 2.8 million users and the market size reaches seven million, which equates to 12% of the UK population (Algar, 2006). Furthermore, according to another particular research by IBIS World company about Gym and Fitness Centre industry, showed that gyms and healthy clubs have signed over 8.7 million gym members across the United Kingdom by 2012, Which contain 17% of the adult population (IBIS World, 2012). Also, according to the report by the leisure database company, showed that the UK health and fitness industry nowadays has more clubs, more members and a greater market value than ever before. For the first time ever, member numbers have exceeded 8 million, market value is over £4 billion and the penetration rate is at an all time high of 13.2% (The leisure database company, 2014). 

Through the data showed above that the current state of gym industry seems very positive and has been strongly growing between 2006 and 2014. The number of membership has rapidly increased from 6 million to 8 million in total, and the percentage of the population who use healthy clubs has increased from 12% to 17% of the total population in the U.K. 

However, meanwhile the huge competition also exists between competitors, which caused many gyms has been under pressure. As in the report showed by IBISWorld, Harvey Spevak (the American gym boss of Equinox) mentioned that most British gyms have been racing down-market during the recession, such as Pure Gym, Fit for Less, Exerise4Less and even Easygym coming into the market and all try to offer the cheapest workout. He has researched and evaluated the London market over the last 10-12 years, and he has judged the time to be just right to open a high-end boutique gym (Hourigan, 2012). Through these information that from both positive and negative by external and internal environment of the UK fitness industry, that it can be seen, to be a successful investment in fitness industry that involved some aspects such as the quality of service, competition of the price between competitors. In my own opinion, I believe that for the firm to be successful that the quality service is the most important aspect, such as qualified workers who have the professional skills to do the best services. Obviously it also depends on the local market, such as a firm’s position in the market, the price it provides, and the competitors it faces.

1.2 Statement of problem and Research Questions

Through the background discussed above and the initial literature review about the topic, the author realized that low-cost gym has became very popular at moment. Nevertheless, he found there also are many people wants to join some luxury boutique health clubs, which provide more leisure and sport facilities such as swimming pool, sauna and Spa, basketball and tennis arena. Hence, whether a luxury boutique health club can provide more entertainments to the members thereby to keep the quality of membership or concentrate on the low-cost gym, which will gain the quantity of the member but unstable membership to earn more profit in a short term.

This gives the following major questions for which the present study has been conducted:

  1. How the business of low-cost gyms is different from that of luxury boutique health clubs?
  2. What type of health gym (low cost or luxury boutique) seems to have a promising future in UK’s fitness industry?
  3. How the challenges and issues faced by low-cost gyms is different from that of luxury health and fitness centers?
  4. Does investing in a luxury health boutique results in high profits in long term?
  5. Does investing in low cost gyms will bring only short-term profits and prove to be a bad business decision in later term?

1.3 Research Objectives

The major aim of the present study is to identify the future and scope of luxury health clubs in comparison to low-cost traditional gyms in health and fitness industry of the UK. Some other objectives that will help in achieving the aim of the study are listed as follows:

  1. To identify the current state of health and fitness industry of the UK
  2. To identify the differences in challenges and issues faced by low-cost gym operators and that by luxury health clubs in the UK
  3. To explore the business prospects of low-cost gyms in comparison to luxury fitness centers in the UK
  4. To identify the key strategies to be followed by low cost gyms and luxury health boutiques to ensure long-term growth and stability in the markets of the UK.

1.4 Rationale of the study

The author was a qualified personal trainer for five years and has always been an active fitness person and a body builder, and also an active user of gym and has been visiting many different types of gym. Therefore, author has started to plan open his own gym in the Birmingham City Centre area in England, however, the research will be the most important part as well as the first step of opening his own gym. However, between the low-cost gym and the luxury boutique health club the author has to consider which type of them that his business turns into. Because of both types of the gym have different advantages and disadvantages. As the aim of the business leans to become a profitable firm that also providing more entertainments to the members for improving the entertaining level of the fitness industry. 

1.5 Chapter Plan

The present study is divided into following major five chapters:

Chapter 1: Introduction

This is the first chapter of the study focused on presenting a detailed background to the research along with the basis research objectives and questions that will form the basis of the study.

Chapter 2: Literature Review

This is the second chapter of the study where the focus is on discussing various concepts and theories associated with health and fitness industry, consumer behavior in fitness industry and various types of health clubs in the UK.

Chapter 3: Research Methodology

This is the third chapter where research philosophy, research strategy, data collection, data collection instrument, sample size and method of study have been discussed in detail.

Chapter 4: Results and Analysis

This is the fourth chapter where the results of primary study have been presented followed by analysis of results and benchmarking them with the literature review presented in second chapter of the study.

Chapter 5: Conclusion and Recommendations

This is the final chapter of the study where the research has been summarized along with justifying the achievement of research objectives and answers to research questions. This chapter also detail some recommendations related with business prospects of luxury gyms and low-cost gyms in the UK markets.

Chapter 2: Literature Review

This chapter presents a detailed review of available literature available with health and fitness industry of the UK. Before moving on to study the feasibility of business in fitness industry, it is necessary that the available theoretical information related with various forms of gyms and challenges associated with operations of each of these forms. Such theoretical information is presented in further sections of this chapter. 

2.1 Health and fitness industry as a part of leisure economy

The leisure economy of the UK is not limited to leisure activities like hotels, sports, night clubs, gaming, cinema and recreational activities but also include healthy and fitness industry focused on reducing health risks and ensuring well-being of the nation. As per the Department of Health, obese people place a significant burden on NHS and a key role is played by sports and leisure activities to reduce this burden (Wyman, 2012). 

Leisure also represents a safe and enjoyable way of interaction and socialization and therefore presents day fitness clubs are focusing on workout as well as other leisure activities focused on offering a complete experience to customers (Wyman, 2012). Such activities contribute towards building local communities having positive effects in the form of better-integrated communities, open communities and overall health and well being of people in the society. 

The leisure sector of the UK continues to grow business through a challenging economy and outperforms the other markets of the globe. There are several major reasons of such a success of Britain leisure industry, namely, strong focus on innovation, excellent management of brand and efficient exploitation of international opportunities (Wyman, 2012). 

Until recently, the gym and fitness industry in the UK was considered as a sector targeting a minority of population, however, it has acquired the position of a thriving sector for a much wider cross-section (Hill, 2014). The emergence of this particular sector in the mainstream is offering several business opportunities for small to medium sized business (Hill, 2014). 

2.2 Drivers of customer satisfaction in health and fitness industry

Several studies have been conducted to explore the relationship between satisfaction of customers and the experience generated from a service. Previous studies have revealed that a service industry that is effective, efficient and thinking of future is capable of promoting a high level of customer satisfaction (Greenwell et al., 2002), which in turn is capable of promoting as well as maintaining a competitive edge (Murray and Howat, 2009). A range of factors has been identified as exerting influence on customer satisfaction from a service experience. Few of them are focused on impact of customer perceived value and quality of service on satisfaction (McDougall and Levesque, 2010), while others are focused on association between emotion and affective aspect and satisfaction of customers (Mahony and Moorman, 2009). However, managers can gain from a more comprehensive model to have a proper understanding of key elements driving customer satisfaction. Therefore, present literature needs a comprehensive study where multi-perspectives are considered to understand the factors affecting human behavior in relation to service experience (Altrichter et al., 2008). 

While discussing the health and fitness industry of the UK, it is necessary to understand what drives customers to health and fitness clubs and the ways that can be used to ensure long term satisfaction of the clients. This is so as business prospects should be studied in collaboration with drives of customers’ satisfaction in a particular industry to ensure long-term growth and stability in the market. 

From the perspective of marketing; the satisfaction of customers with the products or services of the company is considered as a major determinant of customer retention and company or brand’s success and long-term competitiveness (Greenwell et al., 2002) There are several studies identifying the factors leading to customer satisfaction suggesting that a combination of psychological and personal expectations results in enhancing the customers’ level of satisfaction (Chang et al., 2002) while few others focused on physical characteristics and behavior of employees influencing the psychological and personal satisfaction (Macintosh and Doherty, 2007).  It is possible to summarize the factors affecting customer satisfaction into four major dimensions, namely psychological factors, physical environmental factors, service environment and two-way communication. 

Considering the psychology of customers, it is to be noted that when people get goof value of their purchase of services, they feel satisfied. This is so as customer value is not limited to monetary value but to a variety of services. In present day scenario, time is considered to be more valuable than money as people may not have enough time to wait fro getting served (Greenwell et al., 2002). It was pointed out by Sheldon and Elliot (2009) that satisfied customers feel successful when they are able to achieve their goals and objectives of using a service. Murray and Howat (2009) content that perceived value results in satisfaction of customers as well as leads to future customer purchase intention. 

Physical resources and environment including the amenities, equipment, cleanliness, maintenance of the facility, etc. play crucial role in satisfaction of customers (Chang, 2000 and Chang et al., 2002). Kirtland et al. (2004) argued that outdoor décor; odors and temperatures also have a direct influence on customer satisfaction and their further visits to a service facility. 

Then, there is the environment of the service under consideration that has an influence on customer satisfaction. Several studies have clarified that that attitude of employees is a key factor influencing satisfaction of customers (Bach and Milman, 2006; McColl-Kennedy and White, 2007 and Kriegl, 2000). Further, Schneider et al. (2009) argue that enthusiasm of employees help organizations to compete on customer satisfaction. However, if the behavior of employees is negative in nature then such a behavior is responsible for a negative impact on overall customer satisfaction (Kattara, et al., 2008). 

Finally, it is the two-way communication between the facility administration and customers, which influence the customer satisfaction to a great extent (Campbell and Finch, 2004). Communication through personalized services, proper information sharing and being sensitive and responsive to customers’ needs is crucial for satisfying customers over a long period of time (Liljander and Ross, 2002). Campbell and Finch (2004) explained that proper and transparent interaction helps in increasing satisfaction as well as results in better productivity, improved morale of employees and loyalty of customers. As per the theory of communication, involvement of employees in the process of decision-making is the key to achieve satisfaction of employees which is turn ensures customer satisfaction at the service facility (Campbell and Finch, 2004).

2.3 Current trends in health and fitness industry of the UK

Last few years have witnessed growth in leisure industry of UK and with returning of such a growth the payers of this particular industry became focused on tapping the additional spending from consumers (Chilkoti, 2015). However, it has also been reported that consumers of UK are now demanding for thrifty options as well as for specialist workouts and therefore pose a challenge to the traditional models of gyms and health clubs that have long-term contracts and long signed membership terms and conditions (Chilkoti, 2015). There is an increasing trend of ‘pay per visit’ in health clubs and gyms of UK and such facilities are being offered by low-cost gyms, homegrown start-ups and small studios that are getting connected with consumer through social media and the internet. Such flexible fitness options also offer variety and social media is driving the trend of entertainment while workout.

Furthermore, gyms and health centers are picked by consumers from a range of fitness fads, health clubs promoted and endorsed by celebrities and new centers experimenting dance and aerobics as better ways of shedding calories. As reported by Chilkoti (2015), flexibility and variety are the two major factors that are popular among urban consumers while making a choice of health and fitness center. People are not limited to exercising or workout but expect a complete experience while working out. Several gym operators believe that a lot s happening in the fitness industry of UK forcing them to radically change their model of operations (Chilkoti, 2015).

Philips (2015) reported that innovations in technology and an enhanced experience of consumers has helped the fitness industry of the UK to gain more gyms, more members and a greater market value over the last few years. It has been explained that low-cost clubs have remained the drivers of such growth in the industry because of their adaptability with strong technology and innovation. Such trends in low cost fitness centers have resulted in innovative and fresh thinking across the industry offering customers a complete experience while their workout and force other operators to adopt such flexible and innovative models (Algar, 2015). The high number of membership and high penetration rates are proving the appreciation received by such innovative trends from the customers in the fitness industry. 

There are certain key elements that define modern day leisure gyms. These elements include faster feedback on fitness, better engagement with clients and a complete brand transformation with efficient and well-qualified trainers and more interactions with users and the wider community as a whole (Algar, 2015). Several brands focus on expanding the horizons from mere facility providers to taking a central place in the health and wellbeing of their users and their neighborhoods aiming at better customer loyalty and retention over a long period of time (Algar, 2015). 

However, price has always remained a key consideration while taking membership at gym in the UK. As reported in The Economist (2014) there is a demand for more flexible payment plans and short-term option instead of traditional long-term gym membership models. The recent economic downturn made the demand for low-cost services even more popular and budget gyms are boasting of more members in comparison to luxury gyms and big brands in the industry. Further, retention of members is also reported as a major issue by big brands as well as low-cost gyms in a similar manner. The initial membership is good but then the turnover is also too high highlighting the need of flexible options or better facilities to offer something more than only workout facilities at the gym (The Economist, 2014). 

It has been argued by Stuart (2013) that the gym industry of Britain is overcrowded due to a small market of only 12 per cent memberships making the market small in comparison to the number of gyms and fitness clubs operating in the UK markets. This seems to be a big business opportunity in the region, but even with huge investment a traditional fitness center will simply be another fish in the same sized barrel. However, the new business operators focusing on major social and health concerns affecting modern generation, like obesity can bring in some innovation to the industry. This will have a combination of opportunity as well as responsibility where health clubs will go beyond workout and offer better and new services focusing on overall health instead of limiting the scope to reducing body weight (Stuart, 2013). Thus, a different track is needed where wider communities are engaged through activities of walking groups, weight management, boot camps and many such activities. The trick to gain success and long-term stability in UK’s health and fitness market is to move beyond the gym and change trends and lifestyles of people offering them new ways of better living and fitness.         

As argued by Smythe (2010), a major issue faced by fitness clubs in present-day UK’s environment is associated with retention rates of members. There are several factors as identified by Smythe (2010) through a research that affect the member attendance over a long duration of time. The research also highlighted the factors responsible for membership cancellation. These factors are associated with the club, the activity and the social environment. The club related factors are those affecting the quality of service (like staff, classes, childcare, physical facility, etc.) and perception about the brand, value for money, and perceived behavioral control. The activity related factors are those related with self-determination (like intrinsic regulation, integrated regulation, external regulation and identified regulation), attendance regularity, and intention of customers to attend the fitness facility. Then there are factors associated with social environment and comprise of state anxiety (including members and staff), social identity (individual self-stereotyping) and social physique anxiety. 

A clear identification of factors influencing long-term commitment and loyalty of customers towards a gym and factors or elements underlying membership cancellations can assist gym managers and facility administrators to find pathways between these factors to ensure long term success and stability in the market. 

Lloyd (2015) mentioned that high-quality, high-value-added goods and services require a high-skilled workforce, according to the dominant assumption that underpins policy and academic discussion of the role of skills in economic performance. The inadequacies in education and training systems of the UK may be a major reason for incompetence of firms in high-quality markets. Another reason of such incompetence may be because of the organizational failure in producing in these markets resulting in lack of demand for skilled workforce (Llyod, 2015). Similarly, another article by Ferrand et al. (2010) explains that there are several factors that influence customer’s loyalty with a particular brand or organization, namely, service quality, satisfaction and image. There is general agreement that the retention of customers is fundamental to the success of an organization. The notion of customer retention is encapsulated by the concept of customer loyalty and it is evident that loyal customers are considered key to organizational profitability and success (Ferrand, Robinson, Valette-Florence, 2010). Through the information showed above, it can be seen that the quality of qualified service is very important for the firm to survive in the high-quality market. 

Therefore, to keep customers and make them come back that has become a serious issue for the most of leisure centers, which also focus on the quality of the customers.

Moreover, some authors mentioned that the early twenty-first century has been unique from a business perspective because despite economies suffering sever recessionary conditions, the supply of luxury produce and services shows only intermittent signs of slowing. There is a doubt that during extended spells of economic uncertainly, people develop an enhanced sense of budget consciousness. This creates an environment in which someone invariably comes up with a cheaper, more efficient way of providing a service. According to the latest report by Leisure Database Company into the UK fitness industry, the no-frills sector witnessed significant growth across the three key performance indicators - numbers of clubs, member numbers and total market value in 2013 (The Leisure Database Company, 2013). Particularly, when no-frills operators have continued to shave their profit margins, the impact on both average monthly membership fees and the yield per member across the industry become apparent. Suddenly, the budget gym sector too is looking like a crowded market, and only the largest, best-capitalized business will survive (Sharkey, 2013). It can be seen that this figure can seriously affect those small individual gyms. Therefore, management strategy is very important, which author mentioned about no-frills that makes more gyms increased their economy. In other hand, it can be the popular tendency of fitness industry in recent years. 

2.4 Some key low-cost gyms in the UK

A key reference here needs special consideration and is associated with the opening up of ‘FitSpace’ during the year 2006 which was UK’s first low-cost gym, and it initially generated very little attention from inside and outside of the industry. 

This is usually how an established market likes things, and business as usual with a tendency to ignore new entrants that intention is to ‘disrupt’ the status. Sometimes it proves to be beneficial if a business is a ‘first mover’. This is so as there is lack of any similar concept in the local market acting as evidence about the innovativeness of the new idea. As argued by Algar (2012) such a situation also provides benefits of less public activity which was present in the low-cost gym sector of the UK during the year 2006-2007 which did not changed until the year 2008 at the arrival of The Gym Group. 

The Gym Group is an absolutely symbol of the low-cost gym, which is the popular type for the management of health clubs nowadays. John Theharne who was a former English squash player in 2008 founded the Gym Group. The focus of this particular gym is on benefits of health and fitness instead of luxuries. During the year 2008, the first gym was openes in Houslow followed by Guildford and Vauxhall. Through three years after the first gym launched, The Gym Group had opened 20 gyms and now reached 40 gyms with a highly active and always increasing pipeline at the end of 2013 and it reached 56 gyms now in 2015 around the UK. Additionally, The funds for The Gym Group comes from Bridges Ventures who have committed £17.5 million to the business, and also that with £275 million under the management, which was the strong financial basement for The Gym Group. As the CEO of The Gym Group, John Threharne said that they are delighted to have received such recognition, and to be in the top 20 of the fastest growing companies in the UK, which is quite some achievement. They have a very strong foundation and platform, a market-leading business and a focused strategy from which to take the business forward and to build on their success to date, and he also pointed that their employees and experienced management team have grown the business to its current 30 high quality sites and market leadership in the low-cost health and fitness market (Threharne, 2012). 

2.5 Future trends in UK’s Health and Fitness industry

Considering the future trends in fitness industry of UK, the report presented by WTS International (2013) says that in coming years there is a need for fitness industry to think out of the box to ensure a regular growth and capitalization of interest generated in previous years. The major impact will be experienced in the form of new technology and fitness clubs needs to open up to pay-as-you-go trends. Such options offer clients with different kind of support and information, better and flexible plans, payment options and an ease of use while on the move. There is a trend of change in business models of fitness clubs and gyms in various areas of UK and such trends will have an impact on the way physical activity is recorded and consumed (WTS International, 2013). Such trends are visible among various players like David Llyod Leisure that has turned its budget on marketing upside-down and made bigger investments in social media and apps. Similarly, Serco Leisure Management has invested in CrowdcontrolHQ with the aim of controlling social media instead of creating social media chaos. It has been argued by Lovelock (2014) that niche social networks will gain power with basic social networks failing to deliver any relevant information will be dropped by users. Gyms and health clubs offering meaningful value will be in high demand in comparison to traditional gyms and fitness clubs. 

It is to be noted that the situation in the UK is a reflection of the conditions and happenings on the international level with health and fitness providers engaging with the wider social health and well being issues. Within Europe the industry has a massive impact with The European Health and Fitness Association representing the industry within the European Union, the international Olympic Committee and within the World Health Organization forums. The mission of European fitness industry and UK fitness industry is similar in nature where they aim to get ‘more people, more active, more often’ for improving the quality of life for the citizens of the country (Grecic and Minten, 2014). 

A report presented by Leisure Database Company (2013) ‘The 2013 State of the UK Fitness Industry Report’ pointed out that during a period of 12 months ending march 2013, the health and fitness industry of the UK witnessed a growth of 1.5% in value, 2% rise in total number of fitness facilities and 4.5% rise in memberships. However, low cost operators in fitness industry had a significant impact on average monthly membership fees and the yield per member across the industry and thus a reduction in price became mandatory to achieve growth and stability in the industry. 

2.6 Summary

The above literature review clarifies that UK’s fitness market offers several opportunities for new players in the industry. However, there are several changes being witnessed in the industry with growing needs and expectations of customers and requirement of a complete experience and not just workout at a gym. Several previous research work have been conducted to explore the factors that influence customer retention and long term loyalty at health and fitness clubs as these have been identified as the major issues being faced by managers in this industry. Most of the factors influencing customer retention are related to psychological factors, physical environment factors and communication or interaction factors focused on offering a friendly and flexible environment and services at fitness clubs where innovative ways of reducing membership fees and increasing the experience are implemented. 

Chapter 3: Research Methodology

This chapter presents a detailed discussion about the philosophy, strategy, design and approach implemented to conduct the present study. The chapter also described the sample and population along with method used to collect the required data and the method of analyzing the collected data. 

3.1 Research Philosophy

The present study is conducted by following the philosophy of positivism, as the major aim of the research is to explore the situation of health and fitness industry in real world scenario of UK markets. The selected philosophy helped in collection of reliable data useful to achieve the goals and objectives of the research related with business prospects in fitness industry of the UK and challenges that needs special consideration to ensure long term growth and stability in the markets. 

3.2 Research Design

Research design can be qualitative or quantitative in nature. Under qualitative research design the issues associated with real world scenario are studied through collecting data in the form of observation and statements from the people. On the other hand quantitative data is collected in numerical form and generally suits the where relationship between independent and dependent variables is required to be studied and explored. 

The present study is focused on studying the behavior of human beings in relation to services and facilities offered by gyms in the UK markets. Therefore, the data has been collected through qualitative research design so that real time experience of gym trainers in relation to current scenario of UK’s fitness industry and future prospects of the industry. The data has been collected in the form of views and statements of gym trainers and related with their perception about luxury gyms and low-cost gyms of the UK. 

3.3 Research Strategy

As explained by Saunders et al. (2003) the strategy of research refers to a plan of action that is generic in nature and act as a guide for the research to answer the research questions. There are several strategies of research namely descriptive strategy, exploratory strategy, predictive strategy and prescriptive strategy of the research work (Saunders et al., 2009). In the present research, a combination of descriptive and exploratory strategy to research has been used conduct the study. The strategy of exploratory research is related to the area of research where little information is available and a less structured strategy is needed (Richey and Klein, 2007). Such a strategy generally follows the qualitative design of study where few guidelines have to be followed. However, descriptive strategy of research has a strong focus on facts and dimensions of a well-defined entity (Anderson, 2008). 

Under the present study, ample literature is available explaining consumer behavior in relation to fitness industry and business models suitable to this industry along with challenges associated with conducting business in fitness industry. However, the need is to test this theoretical knowledge in real world situation of UK markets and therefore, a combined strategy of exploratory and descriptive research is followed to conduct the present study. 

3.4 Sample and Data Collection instrument

The data is to be collected through primary method where direct face-to-face interview method has been selected to gather the required information. This particular method will be used in a semi-structured format so that the information can be collected through an informal discussion with 3 gym trainers working in different gyms of Birmingham. One trainer is targeted from a budget gym, another from a luxury gym and third one who is presently working at a budget operator but have worked with a luxury gym in past. 

3.5 Data Collection and Analysis

The data collected from direct interview with gym trainers will be analyzed by benchmarking the results with facts and arguments presented in literature review. Such an analysis will help in linking the theoretical arguments with latest real-time trends in fitness industry of the UK. 

It is through all the data collected to analyze that the feasibility of potential investment in the UK fitness industry. It has divided into two parts. First, analyze the current state of the UK fitness industry, consider if it can be potential investment and what aspects it has involved for running a gym. Second, try to find solution when gym under pressure from the competition. Find the suitable management strategy to make business survive, which included making a proper business plan to show the evidence that the investment could be potential. 

3.6 Research Ethics

It is necessary that certain ethics are followed while conducting a research study. These ethics ensure validity and reliability of the study results . Under the present study, certain research ethics related to qualitative study have been followed. Proper care has been taken not to reveal the names or any other personal information of respondents. Additionally, an informed concern have been taken from the participants to the research work where they were informed about the nature and purpose of the study along with explaining the role and importance of their participation and responses to the research work. For adhering to the highest standards of ethical conduct, the answers are presented in their original form without being affected by any kind of bias on the part of researcher.  

Chapter 4: Results and Analysis

4.1 Results of Primary Study

The primary study conducted through interview method generated some key results associated with perception of gym trainers about fitness industry of the UK, the prospects of low-cost clubs in comparison to luxury fitness clubs, future of health and fitness clubs in these markets and the strategies to ensure customer retention and customer satisfaction from the services of these clubs. These results are discussed as follows:

The trainers were asked whether they think the business of low-cost clubs is different from that of to-notch brands? To this question one respondent answered that there is a great difference between the businesses of these tow types of fitness clubs. Low-cost clubs needs to operate within a fixed budget yet offer all necessary equipment and facilities along with focusing on regular innovation in their services as well as payment plans to ensure attractiveness in the market. However, luxury brand owners need to focus on a complete experience and are required to make huge investments and utilize a big space to offer different facilities that needs continuous up gradation as well as customization as per the expectations of individual customers.  Another trainer explained that the management of low-cost clubs is very much different from that of to-notch brands and the major difference lies in cost of operation. Low-cost clubs needs to operate in a fixed limited budget which should not be negatively influenced by introduction of any innovation in the services and at the same time needs to ensure timely flow of funds for smooth operations. On the other hand big brand luxury fitness centers needs huge investments to be made for offering all services and facilities like gym, swimming, steam rooms, saunas, etc. The third respondent also argued that luxury centers charge high fees and work on contract basis to offer on credible value for money. Here the focus is more on offering expected services and meeting individual needs of customers, which generally proves to be a challenge due to volume of members.

In the second question, trainers were asked whether they consider low-cost fitness clubs more rewarding? To this question, all three respondents agreed as they believe that low-cost clubs are long term players as hey can offer best facilities and all necessary services at an affordable cost. They are also in a position to offer flexible payment plans and pay-as-you-go method of using gym facilities.  A trainer explained that we could consider low-cost fitness clubs to be more rewarding as they can attract membership easily and offer flexible plans to met the needs of customers from various different groups of the society. Low-cost clubs are making use of social networks and the internet to reach a wider customer base and this is offering them easy and low-cost publicity and promotion offering them strong support network and thus more profitable on an overall basis. However, the respondents also explained that low-cost clubs should have a detailed plan to ensure there is no impact on their existing cash flows and they are able to introduce innovation with little financial impact on their cost of operations. Adding some flexible plans along with traditional long-term contracts in club membership plans can ensure this. 

In the third question, respondents were asked about their expectations from luxury fitness clubs in future. To this question, one respondent explained that luxury fitness clubs has promising future if they target a niche group with niche services. They should not limit their focus on increasing the number of members and generating revenue but to retain the existing members by offering them customized services, which they cannot get at any low-cost fitness club. Such a strategy will help these clubs to get a differentiated place in the UK health and fitness industry. Another trainer explained that luxury fitness clubs are the demand of market as people want to have everything under one-roof. However, there are certain specific sections of society that can be targeted by these clubs, it is not for the masses. The third respondent believes that luxury fitness clubs cannot compete with low-cost fitness clubs as both the very different in their goals and objectives as well as services. Luxury fitness clubs are in great demand in UK’s market but need to concentrate on maintaining their unique services and efficient communication and emotional connect with the members. He also commented that luxury gyms should focus on improving the skills, education and knowledge of their fitness professionals too. This is a major concern for trainers in present scenario as club owners expect a great deal from them but not much of them are interested in investing in trainer’s development which promises a good business for the club over a long term. 

In the fourth question, gym trainers were asked whether they have been able to generate an emotional connection of members with the brand or a low price merely seduces them? To this question all the three respondents agreed that they have remained successful in generating an emotional connection only to a limited extent, as ultimately it is the price factor that seduces customers of fitness industry. As quoted by a trainer,” While working at a luxury fitness club I have made efforts to generate an emotional connection with members to the brand. However, my experience of working in low-cost clubs as well as luxury clubs says that generally people gets seduce by price of services.” As one trainer pointed out, the rate of turnover is very high in this industry and therefore even with a positive rate of membership, the focus needs to always be on retaining the existing customers. 

Another trainer further explained that the customers in today’s environment are well informed and have plenty of information available from the Internet. They look for customized plans and services but ultimately it is the facilities, environment and above all affordable prices that attracts them and retain them with a particular club. 

While the third respondents argued that price factor is always a major concern but at the same time we should not forget that regular innovation in services and changes in environment along with weekend classes, flexible payment plans all do have a significant impact on satisfaction level of customers and keep them well motivated to remain connected with a club. 

Next trainers were asked about the possible strategies to ensure long-term growth and stability in the fitness market of the country. To this question first respondents explained that there is a need to design and implement strategies to develop new revenue streams where the online audience of the fitness center needs to be utilized. For low-cost operators, the focus should remain on simplicity and not deviating from the mainstay of their business. Another respondents favored some group exercise programmes can be developed to attract and retain female customers at the fitness center. In case of low-cost gyms such programmes can be organized on a weekly basis offering female members a complete course of 50-70 classes. Along with these steps, focus on making the club environment more attractive and friendly can be a strategy for fitness clubs in the UK. Here regular changes can be made in ambience of the club where certain specific themes related to health and well being of people may be spread through images, pictures, activities etc. A respondent argued that a key fact to be noted here is that the cost of acquiring new members is always very high due to huge amount spent on promotion and marketing plans. He quoted, “Though the markets of UK offer a wide scope of business in the field of health and fitness, but there should be some differentiation or innovation to convince people of joining these clubs for a long duration”. However, the yield per member is generally very low in comparison to the cost. Therefore, it is necessary to design strategies focused on maintaining the customer base. A key strategy may b