Introduction
Business Expansion Plan for PureGym in India will be stated in detail in this blog. In the below section, a detailed strategic plan for PureGym has been presented. India has been selected as a new international market for PureGym to expand its business.
Defining Value Proposition
The term value proposition refers to the set of values or utilities that the company offers to deliver through the products and services to the target customers if they really want to avail of those (Ruzo et al., 2011). Providing the right value addition message and conveying the same to the customers can contribute to more sales and brand loyalty. However, it must be ensured that the company is delivering value to the customers. Since PureGym is planning to open the services in India, identification of the prime stakeholders is important because they deserve different levels of attention in terms of meeting their needs. Therefore, knowing the stakeholders will help PureGym to plan for value to be delivered.
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List of Stakeholders:
| List of Key Stakeholders | Internal/External |
| PureGym Members | External |
| Investors | Internal |
| Employees | Internal |
| Suppliers | External |
| Creditors | External |
| Local Community | External |
| Society | External |
| Local Gym authority | External |
| Government bodies | External |
The above table shows the list of stakeholders with their identities. These stakeholders are placed in a relative power/interest matrix below:
Mendelow’s Matrix:
The above model shows the relative power of different stakeholders of PureGym. As the diagram shows, PureGym members’ local community should receive the highest importance because they are the customers of the company. Therefore, PureGym should deliver the best value to them.
Based on their relative power/interest, the company should provide their values/utilities. They have different types of needs. The below table demonstrates how PureGym provides value to stakeholders.
| Names | Values PureGym offers |
| PureGym Members | Best Fit at the most convenience |
| Investors | Higher returns on investment |
| Employees | Employment creation in new countries & more expanding opportunities for employees in UK |
| Suppliers | More orders with regular payment |
| Creditors/bankers | More transactions and loans |
| Local Community | Healthy and fit people in the community |
| Society | Healthy and fit people in the society |
| Local Gym authority | Collaborations |
| Government bodies | Paying taxes and creating employment |
Value Chain Model for PureGym
Value Chain Model refers to the complete set of activities required to generate a product or service, it also explains the scopes where a company can add value or optimize (Terpstra, Foley and Sarathy, 2012). The value chain model below and the description following have shown how PureGym can optimize the stages of the complete process to create more value for stakeholders.
Logistics: PureGym should use its own logistics service with a “PureGym branded vehicle”, raising brand awareness and customer engagement in the new market in India as well as in the UK.
Operations: PureGym has already been doing staff-less operations, which is an efficient system. However, in India, it can introduce a card system to access certain services. This will create well-managed operations in the new market.
Marketing & sales: In the new market, it must use customized and tailored social marketing campaigns to attract the new generation of India.
Services: PureGym is a service-oriented company. Therefore, it must ensure that its customers get the best services among all competitors.
Procurement: PureGym should source the equipment from global and most efficient sources to reduce the procurement cost. At the same time, it must not compromise the quality.
Technology development: PureGym should be looking to introduce new services and to make it happen, it should be engaged in research & development.
SWOT Analysis of PureGym
PureGym has been operating more than 500 gyms in the UK, where the company faces a number of opportunities and challenges (Pure Gym Limited, 2022). The SWOT analysis is conducted below:
| Strength | Weakness |
| 1. PureGym has an excellent brand value in the UK since it is one of the top gym operations in the fitness industry of the UK (Pure Gym Limited, 2022). The company can surely capitalize on its reputation in any area of the world. 2. It has gym services more than 500 in the UK, which creates the outstanding capability for the company to lead the operation in India (Pure Gym Limited, 2022). 3. PureGym has a staff-less operation and an online system of payment and services endorsement. 4. PureGym also offers fitness classes, such class-conducting capability will also attract a large number of members in India. | 1. PureGym has been doing business for more than ten years, but it couldn’t expand business earlier. This might mean a lack of its capabilities. 2. A large number of customers are unhappy with its poor services (Trustpilot Inc., 2020). |
| Opportunities | Threat |
| 1. Indian Fitness industry amounts to $1.786b in 2020 and is growing fast (Franchise India Holdings Ltd., 2020). 2. In the fitness industry penetration rate in India is only 4.6% compared to 15.6% in the UK (Statista, 2020 & Case Study). Therefore, there is much opportunity to grow the market in the near future. 3. The fitness industry of India is quite unorganized, customers are generally served by many less-known companies (SMERGERS Online Services Pvt. Ltd., 2020). 4. People in India searched “fitness near me” 20 million unique times each month on Google (Your Story, 2020). This means a huge demand for fitness services. 5. People in India are also looking for flexibility and variety in gym services (Your Story, 2020). | 1. As appendix 3 shows, India has a number of gym service providers such as Talwalkers, Fitness First etc. (SMERGERS Online Services Pvt. Ltd., 2020). They must know the Indian market much better than PureGym. 2. Unknown market in India will create difficulties. |
Based on the above SWOT, important issues have been analyzed below with their possible implications on PureGym.
Firstly, PureGym has a staff-less operation and an online system of payment and services endorsement, this capability and system can help the company to efficiently run the business in India. This will help the company to reduce operational costs.
Secondly, the Indian Fitness industry amounts to $1.786b in 2020, and it is expected that the market will grow by 5.2% to reach a $2.19b industry in 2020 (Franchise India Holdings Ltd., 2020 & Statista, 2020). Moreover, the penetration rate is also low at only 4.6%. This implies that PureGym has an excellent opportunity to grow a huge market share in India.
Thirdly, being a gym company with fewer staff, the customer services are really poor relating to queries, services etc. A number of complaints can be found on Trustpilot Inc. (2020). To solve this problem, it should recruit some people in customer relationship management (CRM) to deal with customers’ problems.
Finally, the culture, language, behaviour, and attitude of Indian people are completely different from those in the UK. Such new differences will create difficulties for PureGym. The company must recruit some Indian people for the management position to understand the unknown factors better.
Marketing Objectives of PureGym
The SMART marketing objectives of PureGym for the Indian Fitness Industry have been evaluated below.
Being the Best-Choice gym: PureGym wishes to build brand value in India such that if Indians think about the best gym in the country, they think PureGym first. Building such brand value is a difficult job, however, the existing brand value in the UK will help the company to be the best choice in India. Being the best-choice brand may take the company five years if PureGym takes an aggressive marketing approach.
To be an affordable-priced gym with an online presence for supporting services: Being an affordable gym is the primary corporate objective of PureGym in the UK. The company plans to maintain the same in India. Gym customers in India generally pay 43,661 per year (which is equivalent to $47 per month) (Live Mint, 2020). On the other hand, PureGym charges only 20 Pounds per month in the UK. If PureGym charges 25 Pounds in the UK market, customers will be much more attracted.
Primarily will set up ten facilities in ten major cities in India, targeting approximately 70 million people: Top major cities in India have approximately 70 million population, and these cities have the best amenities and industrialized areas with people looking for fitness centres (World Atlas, 2020). PureGym aims to set up ten facilities in the first year of operation.
To provide state-of-the-art customer relationship experience with an organized approach: PureGym already has the experience of providing organized services, the level of care should be much more improved in India to give them a taste of carefulness. This will be much valued because the Indian fitness industry is mostly uncared for and disorganized (SMERGERS Online Services Pvt. Ltd., 2020).
To introduce a world-class gym experience with trainers and classes: Another marketing objective of PureGym is to introduce a world-class gym experience with good trainers and online and in-house classes. This will be implemented in the first year of operation.
To provide corporate gym services: To increase the number of corporate clients is another marketing objective of PureGym. The country has gym services demand from corporate houses (Your Story, 2020). This objective will contribute to Puregum’s achievement of being India’s best-choice gym.
To increase customer penetration to 10% within five years: As shown in research, India has a customer penetration rate of only 4.6% in the fitness industry (Statista, 2020). Therefore PureGym has many opportunities to grow its market share and penetration rate by introducing new and advanced equipment, nice services and affordable prices.
Strategic marketing plan for PureGym
Market Segmentation and Target Customers for PureGym
Skarmeas, Zeriti and Baltas (2016) have revealed that a company should apply market segmentation based on the demand and customers’ features. The fitness industry is dominated by the personal characteristics of customers, such as age, gender, income etc. Therefore, PureGym will segment the market based on demographic segmentation in which age, gender, income, race, and marital status will be considered.
As the above bar chart, people aged from 25 years to 34 years constitute the majority of the market share at about 37%, and people aged in between 35 to 44 years have captured the market with around a quarter of the total market penetration (Statista, 2020).
Females are much more serious about fitness in India, as an above image in figure 6 shows, more than 66% of the fitness market are shared by a female. This creates an excellent opportunity for PureGym to make females in India careful about fitness.
As the figure shows, people with medium income are more serious about fitness. However, wealthy people in India are a bit careless about their fitness, as the source says.
Now, the selection of the target market is presented below based on demographic features:
At an early age, people in Asia are much interested in their fitness regardless of their financial condition. Thus, target customers aged between 18-34 years and people of all income classes have been selected as target customers. However, after a certain period, only middle and higher-income classes are interested in their fitness. Therefore, only middle-class and higher-class people were selected after the age of 35 years.
Service offerings to the target market:
Above table shows the services for the target market. People at early ages generally follow the tougher exercises, whilst after reaching a certain age, they like to follow simple exercises, and their intention is only to keep fit.
Positioning strategies of PureGym in India:
The marketing positioning strategy of PureGym is illustrated in the below positioning mapping.
The above analysis was made based on information from these sources: Stravium Intelligence LLP, 2020; ASKMEN ENTERTAINMENT, 2020; Growthword Digital Private Limited, 2020; & Brandyuva, 2020.
As the above positioning mapping illustrates, in line with the marketing and corporate strategies of PureGym, the company wants to see itself in a position which offers high-quality gym services at affordable prices.
Competitive advantages of PureGym:
PureGym has a number of sources to be competitive in the Indian fitness market. These sources of competitive advantages are analyzed below:
The seal of being a British Gym Brand: The brand value of PureGym will play the most significant role as a source of competitive advantage in the Indian fitness market. Target customers of India are likely to appreciate the British Brand.
Affordable prices: As analyzed in the above sections, the average price that Indian customers are likely to pay is $47/per month. Whilst PureGym is advised to charge $25 to $30/month on average. Such competitive prices will also be a source of advantage for PureGym.
Longstanding experience in building capabilities & resources: The Company has been managing more than 200 fitness clubs in the UK with 1M members for more than ten years (Case Study). The experience, capabilities, and resources will certainly play a role as a source of competitive advantage in the Indian Market.
Marketing model 4Cs for PureGym
Bob Lauterborn suggested 4Cs as an alternative to 4Ps as a comprehensive approach to marketing communication (Bockmann, 2013). 4Cs stand for consumer wants and needs, cost to satisfy, convenience to the bye, and finally, communication.
Consumer wants and needs an element of the model implying that a company should introduce demand-led products and services rather than product-led (Wani, 2013). Being a demand-led product and service will help the company to grow sales with premium prices. The cost to satisfy the element of the model implies the price that customers should be, it can be premium priced or efficient priced depending on the product and scenario (Kubicka, 2016). Convenience to buy implies the easiness with which the company can purchase the product. Finally, communication refers to the effectiveness of marketing communication with the customers.
As the figure shows, PureGym stays at the middle of the model affecting the marketing perspectives of the company. Now, the application of the model in traditional and digital perspectives is applied below at PureGym in Indian Fitness Industry.
Actions plan, budgets and financials for business expansion plan for PureGym in India
To do the financial budgeting, it is important to find the initial investment to set up 10 clubs in 10 major cities in India.
| Resources | Investment |
| Premises possession investment | £2,000,000 |
| Equipment | £1,500,000 |
| Office types of machinery | £50,000 |
| Office Furniture | £100,000 |
| Running capital | £200,000 |
| Others | £75,000 |
| Total | £ 1,775,000 |
Below calculation are completely based on below assumption:
1. Investment on assets is based on current scenarios in India
2. Each club will have about 500 members initially, making total of 5,000 members in 10 clubs
3. Each month, every club will have additional 250 members. It will grow evenly
4. Every member will pay an average of £30 per month
Payback Period
The payback calculation on the figure is based on the calculation from figure calculation of net cash flow. As the figure shows, total payback period is 1.12 years. It means PureGym will get the investment back within a little more than one year.
Return on Investment (ROI)
ROI calculation at this figure is calculated based on the data from the figure of Net cash inflow calculation. It shows that the ROI is 174%. It means that PureGym will get a 174% return on the investment.
Breakeven Analysis:
The figure Breakeven calculation shows that PureGym will reach the breakeven point in 22nd month of operation. Figure of Breakeven presentation more specifically shows that the company will reach breakeven at 50,572 unit sales.
Ethical practices, sustainability and CSR for PureGym
The first ethical issue that PureGym will face in India is if the company will promote healthy practices and not harmful practices and exercises. PureGym should be careful about the impact of the exercises on human health.
Secondly, PureGym should respect the local language, laws and regulations of India.
Thirdly, the practices, exercises and lessons should have a positive sustainable effect on human health to ensure that people can practice the exercise even staying at home and not going to PureGym anymore. This will have sustainable impact on people’s health.
Fourthly, PureGym should create employment for local community in India.
Controls, measurement, reviews and contingency plan for PureGym
Application of the Uppsala Model
Uppsala Model explains the process of internationalization of a company since it gains experience in the local market and then gradually in the international market (Paliwoda and Thomas, 2013).
As the figure shows, the company gains experience in the local market when it makes no export to foreign markets.
Berthon, Pitt, Plangger and Shapiro (2012) have revealed that companies start to gain extensive knowledge of the local market and they become more committed. This commitment and knowledge make them efficient in production, which in turn motivates them to look for sales options in the international market. At this stage, with little market commitment and knowledge, they engage in sporadic export and then regular export through an independent representative in the foreign market (Papadopoulos, N. and Heslop, 2014). Gradually, the company moves for FDI with higher market commitment and diversifications.
Limitations of the Uppsala Model
Firstly, the model has assumed that the internationalization of business will be linear based on the experience and commitment of the company (Turnbull and Valla, 2013). In fact, the model didn’t consider the incentives and special drive taken by a company to expand the market. Such a special drive would not follow the linear model of internationalization.
Secondly, the model didn’t consider other internationalization strategies, such as licensing or franchising in the process (Akaka, Vargo and Lusch, 2013). However, licensing and franchising play a significant role in any organization to achieve a large volume of returns.
Thirdly and finally, the Uppsala model was first published in 1977 when the business world did not observe the significance of globalization, world trade, information technology, and the impact of WTO, and IMF (Fletcher and Crawford, 2013). Therefore, the model mainly assumes that companies could expand business internationally based on their internal capabilities. However, this is not always true. Demand for external market (pull-based demand) and influence of IT and communication technologies also help business to expand.
Application of Uppsala model at PureGym:
This model partially goes with the scenario of PureGym. The company has gained experience, and capabilities in the local market and the experience has helped the company to expand its business in international market. PureGym is likely to follow the FDI approaches. Such internationalization has become possible because of PureGym’s increasing commitment and market knowledge.
However, the above limitations also apply. The market demand and opportunities available in the Indian fitness industry have also attracted PureGym to expand in India.
References
Pure Gym Limited, (2022). Overview. Available at: https://corporate.puregym.com/about-us/overview/default.aspx#:~:text=The%20Group%20has%20approximately%201.6 [Accessed 13 Oct. 2022].
ASKMEN ENTERTAINMENT, 2020. The 10 Coolest Gyms In India You Must Check Out. Retrieved from: https://in.askmen.com/fitness-workouts/1115349/article/the-10-coolest-gyms-in-india-you-must-check-out [Assessed on 5-April 2020]
Brandyuva, 2020. Top 10 Best Gym Brands in India. Retrieved from: https://brandyuva.in/2019/08/best-gyms-brands.html [Assessed on 9-April 2020]
Franchise India Holdings Ltd., 2020. How the Indian fitness industry is poised for massive growth in the future? Retrieved form: https://www.indianretailer.com/article/sector-watch/beauty-and-wellness/How-the-Indian-fitness-industry-is-poised-for-massive-growth-in-the-future.a6091/ [Assessed on 3-April 2020]
Live Mint, 2020. How India pays for fitness. Retrieved from: https://www.livemint.com/money/personal-finance/how-india-pays-for-fitness-1552388405119.html [Assessed on 5-April 2020]
Statista, 2020. Fitness India. Retrieved from: https://www.statista.com/outlook/313/119/fitness/india#market-globalRevenue [Assessed on 3-April 2020]
SMERGERS Online Services Pvt. Ltd., 2020. Fitness Industry In India. Retrieved from: https://www.smergers.com/industry-watch/india-gym-fitness-industry/ [Assessed on 4-April 2020]
Trustpilot Inc., 2020. PureGym. Retrieved from: https://www.trustpilot.com/review/puregym.co.uk [Assessed on 5-April 2020]
World Atlas, 2020. The 10 Largest Cities In India. Retrieved from: https://www.worldatlas.com/articles/the-10-largest-cities-in-india.html [Assessed on 8-April 2020]
Your Story, 2020. Trends and opportunities in the Indian fitness market for 2020. Retrieved from: https://yourstory.com/weekender/trends-opportunities-india-fitness-market-gym?utm_pageloadtype=scroll [Assessed on 4-April 2020]