"The Blue Ocean strategy of W. Chan Kim and Renee Mauborgne is an instrument in business development. The basic idea behind this is that companies are not looking for competition but are creating new markets (blue oceans) by offering innovative solutions to their customers."
The global market for sports, fitness and activity is looking good as it has grown continuously throughout the last years. With an annual growth rate of around 5%, the global revenue has reached 83.15 billion US dollars in 2016.
In this growing market, “fitness” i. e., working out in a gym – is one of the most popular physical activities. This is particular the case for Europe, with its biggest markets being Germany and UK, each with a total revenue of over 5 billion euros amounting to 10.08 million gym memberships in Germany and 9.25 million gym memberships in the UK. In Germany, for instance, fitness is by far the most popular physical activity today, followed by swimming, jogging or cycling. Accordingly, it comes as no surprise that the number of gym memberships in Germany has more than doubled since 2003 – from 4.38 to 10.08 million.
But even today, the fitness market is far from saturated. Only 11.6 % of Germans are currently members of a gym. According to a survey in the UK, 69 % of people older than 15 years say that they are not a member of any kind of sports club. This implies great market potentials. According to DSSV, the employers‘ association of German fitness and health facilities, the German market alone holds a total future potential of at least 15 million gym members. The main question is: how can more people be encouraged to pursue an active lifestyle and become permanent customers in the fitness market?
WHO ARE THE POTENTIAL FITNESS CUSTOMERS?
Thinking of the traditional gym, we might ask: who is the target audience? As a recent study of the German Association for Fitness and Health (DIFG) points out, most non-members do not downright refuse to take up sports. In fact, the majority of non-members are people who have been members of a gym in the past, but they have quit and are now lost customers. Surprisingly, the study directly shows that the potential market does not consist primarily of first-time customers. Instead, most potential customers are former members. ”The analysis shows that 40.6 % (43.2 % of women, 37.7 % of men) of all nongym members have been members before.” As the situation in the US clearly shows, this phenomenon is not exclusive to Germany: in the US, too, 37 % of the relevant population have held a gym membership before. (statista.com)
If customer acquisition exclusively concentrates on ‘first-time customers’, market saturation should be reached quickly. Consequently, the continuous effort of the fitness industry to gain new customers lacks purpose and should be replaced by the question of how to win back those who have quit – or, even better, how to prevent membership loss from the outset. Why do so many trainees cancel their membership in the first place?
HIGH MEMBERSHIP FLUCTUATION IN THE GYMS
It has long been known that gyms often fail to retain members in the long term. For many years, the focus of the fitness industry has been the acquisition of new members. The cycle goes as follows: motivated by good intentions, many new members join the gym every year. But once their guilty conscience fades, they fall back into their former behavioral patterns. Regular training is neglected, and soon, the gym will be avoided entirely. Their membership remains active for the term, but it is soon terminated. From the operator’s point of view, this is an economic problem, as reflected in recent debates on high fluctuation and the soaring drop-out rate. Operators will have to accept long-term losses if the costs of the high drop-out cannot be compensated. This is usually achieved by appealing to new members who are then contractually bound for a minimum term. Frequently, gyms have limited their activity to selling memberships and neglected to take care of customer loyalty upon completion of the contract. As a result, the fitness industry has been struggling with extreme fluctuation rates for years.
REASONS FOR DROP-OUT
What keeps people from doing sports in the long term? Among the most common excuses are physical problems and health restrictions, along with the feeling of lacking time for the gym. Alternatively, people blame bad weather. Surprisingly, while still mentioned by somethe cost of a gym membership is not the most important argument: on the hit-list of excuses, the cost of training only ranks fifth.
In the EU, the most important factor for quitting the gym is that it is too time intensive, as reflected in a majority of 42 % of the participants responding that they do not have enough time in spare to integrate sports into their day.
And of course, there are a lot of people who lack motivation, which is the second most popular response taking the second position in the EU and even the first position in Germany. As a 2016 survey conducted by a German health insurance company (TK) shows, 50 % of the participants simply cannot motivate themselves – a trend that has increased compared to 2013 (45 %): “For half of the surveyed inactive people, the reason for dropping out was a lack of motivation.”
EXISTING MOTIVATIONAL SOLUTIONS IN THE MARKET
The Gym membership alone does not create a consistent training habit. Only people who make regular use of it can actively help themselves to a healthy and active lifestyle. Many intrinsically motivatedpeople spend their precious free time to use this opportunity successfully. But the basis of their success lies within their inherent motivation – it does not come with the acquisition of the service (or infrastructure) provided by gym operators. Their offer does not include any means of promoting the factor of motivation, which – along with a significant amount of time investment – is crucial for training success.
Looking at the problem of lack of motivation, we may ask: But to what extent can the fitness market solve this problem? If individual support and motivation are to be included in the offer, it will be impossible to sustain the prices offered by “normal“ gyms. While sustainable motivation and commitment are provided by the individual support inherent to personal training, this offer is clearly more cost-intensive. Although the services in the PT segment come at higher cost, this has not prevented the personal-training market from growing significantly in recent years. On the contrary, although inferior in quantity, it has acquired a solid customerbase in the recent years. As the employers‘ association of German fitness and health facilities DSSV pointed out in 2015, PT is one of the major trends in the fitness industry: “Personal training is no longer reserved for the American market. In Germany, too, one-on-one support is becoming increasingly popular. The advantages are obvious: effectiveness, time flexibility and the best possible motivation.“
PERSONAL TRAINING IN COST COMPARISON
When comparing cost structures of 'traditional gym' and ‘personal training’, the latter is revealed to be comparatively efficient and sustainably motivating, while it remains exclusive due to the higher price. The cost structures in Germany may serve as an example. As Edelhelfer stated in its 2015 German PT market overview: “One hour of personal one-to-one support costs EUR 87 on average.“ Gym membership is much more affordable in Germany at an average monthly fee of EUR 44. But membership cannot create customer loyalty or lasting motivation by itself. The gym alone is affordable for everyone, while the high cost of personal training constitutes a higher entry threshold. Individual support is therefore exclusive and has the potential to exhaust a comparatively small part of the fitness market only.
EMS TRAINING AS A BLUE OCEAN IN THE FITNESS MARKET: EFFECTIVE, AFFORDABLE AND SUSTAINABLY MOTIVATING
We know today that EMS Training has achieved a solid position in the German fitness market. As fitogram.de shows in its annual study of the EMS market published in 2017, demand is growing continuously: “In Germany alone, approximately 190,000 people train with EMS – this is equivalent to 50,000 new EMS trainees since the publication of the first EMS study in 2016.“ The growing success of EMS Training in Germany can be explained by its successful engagement of customers who were previously out of reach – i. e. clients constrained by time pressure and lack of motivation.
Simply put, the advantages of EMS are that it is time saving, effective and efficient: session only takes 20 minutes. This one unit is so effective, that it is sufficient for the whole week, which has been proven by numerous scientific studies. Also, the operator can train two people at the same time. Thus, he or she can provide a profoundly effective personal training at an affordable entry cost. In other words: passing the efficiency advantages to the customers, training can be offered at a more affordable cost per session, pricing it between the traditional gym and personal training. A comparison of ‘classical personal training’ and the ‘EMS boutique studio model’ shows that at a price of EUR 25 per training unit (membership price), EMS is considerably below the hourly price of EUR 87 for classic personal training. If we start at one unit per week, membership of the EMS boutique studio is available for around EUR 100 per month while personal training costs about EUR 350 per month.
To what extent can the two forms of training be compared? They are not quite apples and pears: their comparison is justified by the fact that both forms of training are effective and guarantee lasting success. This is ensured by several factors that the concepts share. Overall, the personal support available as part of EMS and PT creates a high degree of spatial, temporal and contextual structure, thus guaranteeing the success and the satisfaction of the customer. As with personal training, EMS achieves high results in a short time. This is where EMS shines with its extremely low training time: a session only takes 20 minutes. In both training forms, fixed appointments result in a regularity that is not determined solely by the trainer‘s intrinsic motivation. The individual support establishes a contact person who takes part in the successes (and, potentially, the lack thereof ): the trainee is not alone; their progress is supervised. Overall, this combination leads to a level of motivation that yields long-term success.
In the success stories of the EMS concept, trainers and customers are aware that it provides sustainable training successes while remaining accessible to a broad customer group thanks to its price structure. Therefore, it comes as no surprise that the German EMS market continues its positive development and increasingly skims a significant part of the traditional fitness market.
Furthermore, this trend shows an international expansion as well by now, as can be illustrated through an increasing number of international success stories. The search for a time- and cost-efficient training alternative that is compatible with a modern lifestyle leads more and more customers to EMS Training.