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Information Report of a Study of the Potential Market Universe for the Establishment of a Membership Health Club

Survey research conducted to determine the feasibility of investment in a new health club in the Los Angeles area.

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INFORMATION REPORT OF A STUDY
OF THE POTENTIAL MARKET UNIVERSE
FOR THE ESTABLISHMENT OF
A MEMBERSHIP HEALTH CLUB IN LOS ANGELES COUNTY

INTRODUCTION
The Southern California Area of Dominant Influence (ADI) is the most health-and-appearance conscious market segment in the United States (StatAbs, 1997). The more than 11 million Americans who comprise the 400 mile square Los Angeles County are well ahead of their countrymen in taking care of themselves (Miller, 1998). This is confirmed by the chief researcher for the University of Southern California's Preventive Medicine

The researchwill be targeted further toward investigating the following attitudesrevealed in a nationwide Associated Press Poll in 1995 concerning thereason health club members did not choose to renew their memberships.Figure 1: REASONS FOR LEAVING A HEALTH CLUB|Item |Male |Female ||Cost |22% |28% ||Crowds |34% |44% ||Hassle |4% |8% ||Parking |12% |15% ||Programs |8% |3% ||Staff |2 % |2% |Sources and Methods Current business newspapers and general interest newspapers along withbusiness magazines were consulted for background information and currentintelligence on the size of the health club market in general, the size ofthe health club market in Southern California, and finally the size of thehealth club market in Los Angeles County. Thisis the audience most often targeted by the leading health clubs in the area(Bally's, 24-Hour Fitness, and Gold's Gym) (Daniels, 1998). Century #29.Ardmore Health Center: 3625 W 6TH ST; Australian Body Care. References Carter, J. Certain pre-studysegmentation has been done, and the study will be limited to determiningthe above in the broadly defined segment of the potential market;specifically, single males and females, between the ages of 18 to 3 . In addition, several health clubowners/managers were interviewed concerning their concept of the size ofthe potential market. Researchers attributedthis finding to better diet, more exercise, and a greater health-consciousness, rather than to membership in health clubs (Facts on File,1997).Purpose of the Study An investment in a health spa requires a considerable cash outlay, anda great deal of time in preparation. (1998, January 5). While 4 %of men said they were "very satisfied," just 25% of women gave the sameresponse. More than half (56%) said they exercise regularly, 62% take vitamins ornutritional supplements, and 86% eat vegetables very often or fairly often,according to the survey. (1998, March 19). The main reason given by men for leaving spas was the crowds at certainof the workout machines.3. BASICS: 12235Santa Monica Blvd. Telephone interview with James Carter.Carter, VP Development, Sanwa Bank, Beverly Hills Daniels, M. Phone interview with Manager of Bally'sStudio City. This is confirmed by the chiefresearcher for the University of Southern California's Preventive MedicineDepartment: "Southern California tends to be ahead of the rest of thecountry in healthy lifestyle changes. PHANTOM GYM RAT (1998, February 16). INFORMATION REPORT OF A STUDY OF THE POTENTIAL MARKET UNIVERSE FOR THE ESTABLISHMENT OF A MEMBERSHIP HEALTH CLUB IN LOS ANGELES COUNTY INTRODUCTION The Southern California Area of Dominant Influence (ADI) is the mosthealth-and-appearance conscious market segment in the United States(StatAbs, 1997). Both sexes said they would prefer less coed facilities. Women are less likely than men to leave a spa for reasons of discomfortor poor facilities.2. And women were twice as likely to be dissatisfied with theirbodies (34% to 16%). Statistical Abstract of the United States, 1997SURVEY SITES:24 Hour Fitness: 5 5 S FLOWER ST #-27; and 5711 W. The shape of Southland fitness: We'reliving up to our reputation as health buffs. With more than 3 health clubs in Los Angeles County alone that boasta membership roster list of more than 4 , , it would appear that themarket is semi-saturated (Carter, 1998). Los Angeles Times, 4. An amazing 8 % said they examine nutrition labelsat least some of the time before making a purchase. RESULTS OF THE STUDY The results of the study will be presented in two categories: reasonswhy target market leaves spas, and reasons why target market joins spas.Why People Leave Spas A major finding of the survey was that almost all respondents agreedthat the primary reason they left the health club they had joined was thecrowded facilities, even though almost all stated that the reasons they hadjoined in the first place was the desire to be around other people.Tabulated information from the survey shows the following reasons, inranked order, of the situations that caused them to terminate membership.Figure 2: Specific Reasons why Memberships Terminated |Reason |Percent Male |Percent Female ||Crowds |64 |79 ||Parking |62 |71 ||Hours |61 |62 ||Equipment |44 |51 ||Coed |39 |5 ||Locker Rooms |12 |48 || | | | When questioned further, female respondents also added that they didnot feel they were getting good value for the money paid. Because of these conflicting opinionsand because of the nature of the financial risks involved, the investorswishing to pursue this venture commissioned to study the consumer attitudesto joining a Health Spa in the Los Angeles County Market area.Recommendations to the investors will be made based on the results of thisstudy.Scope of the Study This study investigates the potential customers' attitudes towardhealth clubs in general, their awareness of the general types of facilitiesat health clubs, their wants and desires in a health club, and will analyzewhat situations would influence their buying behavior. The National Association of HealthClub Operators (NAHCO) says that a Health Spa must operate at least twoyears before showing breakeven profits (NAHCO, 1997). On average, thewomen stated they stopped attending the spa even with membership time lefton their contract.Why People Join Spas Living up to their reputation as fitness enthusiasts, a majority ofthe people who join spas appear to make health and exercise top priorities. In addition, asurvey questionnaire patterned after the polls that were analyzed in thesecondary research above was designed and given to 97 spa attendees and 114non-attendees. Does this attitude toward healthy living necessarily implya prime market for the establishment of yet another health club/spa inSouthern California? (1998, March 2 ). National Association of Health Club Owners. Yet a recent Los Angeles TimesPoll showed that of a representative 1,281 Angelenos who were polled bytelephone over a 7-day period, more than 75 percent said that they had nointerest in "rejoining" a Health Club (Miller, 1998). The more than 11 million Americans who comprise the 4 mile square Los Angeles County are well ahead of their countrymen in takingcare of themselves (Miller, 1998). Thiscomplements the finding that women are much more hesitant to work outaround men than men are around women.4. A 1996 poll taken byUCLA researchers found that Northern and Southern Californians are inbetter shape and live longer than other Americans. Supplementing these interviews, officials at severalhealth club associations were contacted for their opinions. And 26% said theyalways check food labels before buying.Women tended to be less content about their body image than men. While overall satisfaction rates about body imagewere roughly the same among the races, African Americans (46%) were mostlikely to be "very satisfied"; 36% of Latinos gave the same answer, whilejust 27% of whites did so.Figure 3: Satisfaction with Appearance| | | | ||Attitude |All |Men |Women ||Satisfied |74% |83% |66% ||Very satisfied |33 |4 |35 ||Fairly satisfied|42 |43 |41 ||Dissatisfied |25 |16 |34 ||Fairly |19 |13 |25 ||dissatisfied | | | ||Very |6 |3 |9 ||dissatisfied | | | ||Don't know |1 |1 | || | | | |Figure 4: Persons Who "Feel" Overweight|Item |Ages |Ages |Ages |Ages || |18-29 |3 -44 |45-64 |65+ ||Overweight |26 |36 |49 |45 ||Very overweight |2 |4 |6 |5 ||Somewhat overweight |24 |32 |43 |4 ||Proper weight |54 |53 |38 |45 ||Underweight 12 |5 |9 |5 | ||Somewhat underweight |9 |5 |6 |3 ||Very underweight |1 |3 | |3 ||Don't pay attention |8 |6 |4 |5 | CONCLUSIONS Based on the responses to the dual surveys of why people left spas andwhy people joined spas, the following conclusions are drawn:1. Facts on File, March 28, 1996. If Sports Club/Irvine doesn'thave it, then it probably doesn't exist Los Angeles Times, S-1. Miller, M. Some Spa owners,however, say that given the right conditions, a spa can be profitable wellbefore that time (Daniels, 1998). It's just part of the culture"(Miller, 1998). Neither sex gave expense of membership as a reason for leaving a spa,nor was it cited as a barrier to joining a spa.

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