Entering a Saturated Market

One of the most difficult aspects for any business owner is getting new customers through the door. We’ve all heard the 80-20 rule where 80 per cent of your sales come from 20 per cent of your customers, but that doesn’t stop business owners from wanting more…

When it comes to the fitness industry there is a key problem that a business owner needs to address on day one. How do you deal with the market saturation? It seems like there is a new gym popping up at every shopping complex, yoga studios around every corner, and then your local park probably has a handful of personal training groups on any given morning. As a new entrant to the industry, or even someone who’s been around the block for a while, this can be daunting – is a competitor’s servicebetter than mine? Are they going to poach my members? How am I going to sell my business better than my competitors?

Saturation vs Education

A common issue facing in the fitness industry is that of Saturation vs Education – should I setup a business that will be easy for my customers to understand, or should I setup a business that differentiates itself and nurtures the market place to understand what we are doing?

There’s no right or wrong answer, as a business owner you will face challenges in both scenarios – that’s why it’s important to develop a detailed business plan that outlines all of the potential challenges you can foresee, and how the business will overcome them.

Saturation

The first path way to explore is entering a saturated aspect of fitness, such as 24/7 gyms. Your customers will know what to expect from your service – but will you be able to compete with all of the other 24/7 gyms? Will you be able to get your customer to drive past the three other gyms on their way home from work, just so that they can train at your gym?

According to the IBISWorld Gym and Fitness Centres Australia report there are over 3,300 gym/fitness businesses in Australia, in conjunction to increasing annual growth and the consumer health consciousness index – the saturation of the industry will continue over the next five years.

To sparkle in a saturated industry, you need to make sure that your marketing initiatives are one step ahead of your competitors. Chances are that you will be unable to compete on pricing, so being a local area marketing and engagement guru is key. Building community awareness to your business via sponsorships, community programs and advertising campaigns will help you succeed.

As a franchisee you will most likely be paying a marketing royalty – but that’s not where the buck stops. The best performing franchisees will invest a further 5-8 per cent of gross revenue into marketing.

With a highly saturated market you will also find that it becomes increasingly difficult to retain your members for long periods of time. Customers do not build an emotional relationship with the brand because likebusinesses are a dime a dozen. So how are you going to make sure that you are able to retain your customers from month-to-month?

Education

The second pathway is to educate your customers. It’s not about educating your existing customers as to the service that you provide and how they can improve their health – it’s about educating your potential customers about why your business is different, and the advantages that you offer in comparison to your competitors.

A key component of any successful business is having a unique selling proposition (USP) – without a clear USP it becomes difficult to build loyalty and repeat customers with your business. In comparison to a saturated business such as a 24/7 gym, a business that has differentiated itself from the pack will often find it difficult to convert customers because they are unaware of the services and benefits that the business will provide them.

Marketing your services or products may seem like one of the fundamentals any business owner does, but when you have something that is unique and potentially never seen on the market before – how are you going to convince the audience that your offer is better? how are you going to market your business? how is your target audience going to react to offer? how are your competitors going to react to your offer? are they going to copy you?

Having a unique selling proposition over your competitors is highly desirable, but if your proposition is too unique – you may find it difficult to attract enough market share from the saturated sectors.

Common Ground

Regardless of the industry you are in, the fundamentals of marketing your business do not change. You need to engage with your local community to make sure that they know who you are and what you have to offer. You have to make sure that all of your marketing initiatives have a  purpose and result in a positive return on investment.

A gym or fitness studio is often more than just a place to exercise – it becomes a hub within the community that attracts people to socialise rather than just a destination. For a franchisee or business owner it’s important to ensure that you and your business are constantly in the spotlight so that the community is aware of who you are and what you are doing – this will make them want to be a part of your hub.

The Perfect Solution

There’s no perfect solution – being a business owner is difficult work. Ask yourself these questions before buying a business in any industry.

1. What are your competitors doing? Will you be able to realistically compete with them?
2. What are the hurdles that you will need to overcome? Do you have a plan how to overcome the hurdles?
3. What is the USP? Is your USP better than what your competitors are offering? How will you sell it?
4. How will you promote the business in the local community and engage with your target market?

FC Business Solutions is an integrated consultancy firm specialising in developing, growing and marketing franchise systems. A professional team provides expert service exclusively to the franchise community, in system development, marketing and communications, business health checks, and business operations. They also offer solutions in documentation, training, and human resources.

Contact:

03 9533 0028
contact@fcbs.com.au
www.fcbs.com.au