Johnson specified several amenities and programs that he believed needed to be in place for the 24 Hour Fitness Magic Johnson Clubs to be successful. “First of all, it [needs] to be nice and clean and open,” states Johnson.”
It has to have a gym, and the gym has to be big, with more baskets than a traditional facility, because basketball is an important part of life in minority communities. You need to have the right kind of music to give people some energy, and you need to have something for kids. Unfortunately, there are lots of single moms in the inner city, and they need to be able to drop their kids off in a good, safe place in order to get in a workout.”
Fitness facility operators must also make a determination about the level of feasibility of targeting diverse markets. This should be based on the purchasing power of the target market, their need for services and the level of competition. In a report released in July 2000 by the Department of Housing and Urban Development, ethnic communities were found to have greater retail purchasing power than is often realized by businesses. A recent study of major ethnic communities conducted by the Boston Consulting Group found that the estimated 7.7 million households in these communities possessed more than $85 billion per year in spending power.
One of the major advantages for businesses that target these regions is lack of competition, coupled with growing consumer need and dense populations. Additional research conducted by Social Compact (a Washington, D.C., coalition of business leaders who catalyze sustainable private investment in underserved communities) has confirmed that inner-city markets, which are comprised largely of African Americans, are much larger than traditional census data indicates. Many of these residents have buying power that is significantly higher than once thought. The buying power of African-Americans in the United States is expected to increase nearly 30 percent — to $682 billion — in the next five years, according to this research.
Bally Total Fitness (BTF) noticed the change in numbers and the feasibility potential of ethnic communities, in particular the African-American market. BTF opened clubs in ethnic communities in some of America’s largest cities, such as New York and Los Angeles. Because of these successes, the company is now concentrating on ethnic neighborhoods in Dallas, Chicago, Detroit, Houston and Washington, D.C. BTF estimates that some 20 to 30 percent of its newest units are in similar areas, and sees the share moving toward 50 percent.
Run N’ Shoot Athletic Center is another company targeting the ethnic market. According to the company’s executive summary, Run N’ Shoot is “focused on capturing the untapped, lucrative African-American market segment within the fitness industry.” The company’s strategy differs from the typical fitness facility. Because basketball is such an integral part of life in many ethnic communities, this company designed its fitness facility with basketball as its focus. Besides being open 24 hoursa day, the Washington, D.C., center offers four NBA-sized courts, one collegiate court, two high school courts and several shooting goals. The cost to use the gym is approximately $7 to $8 a day. In 2001, its Atlanta center, which has 65 to 70 employees, attracted 500,000 customers and generated $1.7 million in revenue. It had almost $300,000 left after paying expenses, but reinvested the money in the fitness center’s expansion.
Cultural marketing techniques
While opportunities to serve diverse markets are plentiful because they are typically underserved, there remains one problem. Many fitness facilites lack the necessary familiarity with and understanding of these communities, and have trouble creating a sustainable competitive marketing advantage. Businesses targeting these consumers must learn to analyze the market and become familiar with its buying patterns, locations and purchasing habits. Club operators can contact minority trade and professional associations and publications to obtain valuable information about their target market. This type of research will help to prevent fitness facility operators from thinking that placing a picture of an ethnic model in ads is the only technique needed to communicate with this market. Although this may be a first step in the process, it must be followed up with additional marketing techniques. For example, the Boys and Girls Club of Washington uses several different techniques.
Its brochure uses models of various ethnicities; the selected spokesperson is Oscar-winning actor Denzel Washington; and the classes offered, African dance and drum, are of interest to the targeted market.
Cross-cultural marketing for long-term growth
Fitness facility operators should incorporate a cross-cultural marketing campaign as part of their long-term growth strategy to produce the best results. As an economic rebound in 2003 appears unlikely, health clubs should tap diverse markets, which are growing faster than the mainstream population in both numbers and purchasing power.