2/10/2012

IIM INDORE

Retail Management Strategy Group Report Submission

Submitted By: Group 1 – Section A Abishek R | Alok Dwivedi | Nandita Bansal | Niloy Sinha Ray | Nitin Mathur | Rahul Zutshi | Sankalp Guha | Saurabh Singh

1

Contents

Reason for Selecting Project ................................................................................................................................... 3

Retail Strategy ........................................................................................................................................................ 4

Merchandising mix ............................................................................................................................................. 4

Customer service ................................................................................................................................................. 4

Pricing ................................................................................................................................................................. 4

Personal selling ................................................................................................................................................... 5

Segmentation, Targeting & Positioning .................................................................................................................. 5

Positioning Strategy Vis-à-vis Competition ............................................................................................................. 6

Marketing Mix ........................................................................................................................................................ 7

Product Mix ......................................................................................................................................................... 7

In-House .......................................................................................................................................................... 7

Outsourced ..................................................................................................................................................... 8

Pricing Mix .......................................................................................................................................................... 8

Place Location ..................................................................................................................................................... 9

Promotion- Communication Mix and sales promotional strategies ................................................................. 10

Visual Merchandising – Branding, Logo & Displays .......................................................................................... 11

Brand elements ............................................................................................................................................. 11

Brand Promise and USP ................................................................................................................................ 11

Points of Differentiation ................................................................................................................................... 12

Supply Chain Management ............................................................................................................................... 12

Manpower Planning ......................................................................................................................................... 12

Assumptions ......................................................................................................................................................... 14

Financial Plan ........................................................................................................................................................ 14

Operating Cost Detail ....................................................................................................................................... 14

Break Even Analysis: ......................................................................................................................................... 14

New Category Development ................................................................................................................................. 14

2

Executive Summary

Personal fitness training today is becoming an Industry

which is growing fast, attracting people in large numbers.

This is occurring due to the high pressure life styles that we

have and the stress it puts on our minds and brains. In these

troubled times it is hard to give adequate attention to both personal and professional

lives. Here on we pitch in to provide a complete package to our target customers.

These fast paced times require us to be fit both mentally and physically. When you don’t

take good care of yourself, it leads to issues related to the heart and diabetes. These

problems occur because people are overweight. This is why the best thing you can do is

to follow the advice of a professional fitness trainer.

We come up with a unique plan for our customers wherein we set health related

milestones. On reaching/crossing such a health milestone the customer is given

incentives in terms of loyalty points. These loyalty points can be redeemed on partner

outlets and other retail chains in the locality. Therefore, there is a win-win situation for

all the customers.

Not even for the customers as a principal the industry in the midst of the economic

downturn has maintained steady growth, with membership rates growing consistently

and profit remaining solid. Demand for gyms and health and fitness clubs will continue

to rise over the next five years, as the general public becomes more health-conscious

and the aging population places a greater emphasis on staying fit. Additionally, the

amount of leisure time and growth in household incomes will positively affect

businesses, leading operators to expand into larger facilities.

TITLE:

A COMPLETE

HEALTH AND

WELLNESS

RETAILING

CONCEPT

‘BODY-WISE’

3

Reason for Selecting Project

“Women are willing to skip office but not gyms. Men are avoiding dates but not gyms.

Rise of the gym culture is no more about physical fitness alone; it's increasingly

becoming a social networking hub for those using it."-The Economic times. In India the

penetration level of gym is one of the lowest in the world and currently stands at

around 0.1 % only. It currently stands at around $400 million. The purchasing power of

people is growing the boom in the middle class segment. People are willing to spend

their money on things which they earlier hesitated. It has been forecasted that gym

industry is set to grow at a CAGR of almost 40% for the next few years.

One more important trend to note is that almost 40 % of the people visiting gyms in our

country are women. This shows that not only men but women are also becoming health

conscious more over they see gym as a place where they can ease their daily stress by

working out. There has been a trend that most of the Bollywood icons also advertise of

the industry because of which the growth rate has increased.

One more important aspect to note that is the industry is not confined to any particular

age group. People of age group ranging from 15 to 65 all go to gym for various reasons.

Also even though the installation cost is high the operation cost of this industry is very

low so it offers very high margin. Body wise

will not only offer gym but also lifestyle

services in various segments which are

growing at a tremendous rate and offer very

high margin such as spa , organic food ,

supplements, karate coaching classes ,

beauty products. All this various services

will help in positioning the store in a very

unique way in the mind of the consumer.

Hyderabad as compared to other big metros

such as Delhi, Mumbai has lesser number of

gyms in the city even though the population

there is very high and the purchasing power

of the people is also impressive. Also in the

last few years the city has seen tremendous

growth because of the growth in the IT

sector (one of the major target Audience for

the store).

Body wise will not

only offer gym but

also lifestyle services

in various segments

which are growing at

a tremendous rate and

offer very high margin

such as spa , organic

food , supplements ,

karate coaching

classes , beauty

products.

4

Retail Strategy

Merchandising mix

All the merchandise items would be outsources to various companies who have a core

competency in the particular category.

Nutritional supplements : This would be outsourced to mynutrition.in

Organic food and fruits : outsourced to How green was my valley (HGWMV)

Body care products : The body shop

Apart from all this the store will be selling gym equipment.

Customer service

This is one of the most important aspects of our store as its unique proposition includes

out of the world experience for our customers. We plan to provide customer service by

following means

Personal Health Manager (PMO): the customer can call the PMO at any time in

the day to discuss all health related issues. The PMP would be a doctor who

would be available to the customer all the time and will guide him if he has any

doubts regarding is health, gym routine, diet etc.

Certified trainers : all the trainers would be trainers and would have good

experience and will be friendly as well as knowledgeable in their field so that the

customers and guided properly

Good ratio of number of trainer and customer present at a given time : A good

ratio will be maintained so as to ensure that every customer gets proper

personal assistance during the time they spend in the store

Valet parking : To make sure that the customer feels comfortable when he enters

the gym

Child care Centre : this is to make sure the mothers are not at all worried about

their kids when they enter the store and workout without any additional stress

Pricing

There will be 3 different types of membership schemes that a customer can opt for:

Platinum Gold Silver INR 6000 per month INR 5000 per month INR 4000 per month

5

Personal selling

Our customers will be our brand ambassadors and will help in personal selling by word

of mouth marketing promotion. This will be achieved by having recommendation

schemes. IF a person who is a silver card holder recommends our store to a certain no

of people and they join body-wise he would be promoted to gold membership and

subsequently and platinum membership.

Moreover the platinum card holders will get additional loyalty points if they help us in

getting new customers.

Segmentation, Targeting & Positioning

Segmentation will be based on lifestyle. A huge population of people living in Hyderabad

belongs to SEA A1 AND SEC A2 category and the penetration is also not very high.

The target Audience belongs between the Age group of fifteen to sixty years. This group

of people are matured enough to avail the facilities of the gym.

Body wise will be positioned as a lifestyle health center and not only as a gym. If we look

at the facilities that are being provided by body-wise such as Valet parking, child care

Centre, Spa, swimming pools, organic restaurant , health counseling we would

understand that this is more of a place where people can relax and forget all their

worries till the time they are in the gym.

These facilities would be available to a very niche set of customers who could afford it.

As mentioned earlier the location will not be any mall or crowded place but rather it

would be a stand-alone building where the customers can come and totally relax.

6

We have segmented the people in the basis of lifestyle , Age, Sex , income , price

sensitivity , segment awareness and segment attractiveness to find out which particular

is most likely to apply to which type of membership that is silver ( base membership

scheme) , gold or platinum ( premium membership scheme)

In the end we see that office going health concisions people are most likely opt for the

platinum membership plan whereas the family regular segment will mostly apply for

the base offer and therefore are the least profitable segment for us and we should not

concentrate our resources on them beyond a certain limit.

Positioning Strategy Vis-à-vis Competition

1. Gold’s gym Hyderabad: they are our major competitor as they have a very

established brand all over the world and they are expanding in India very rapidly

2. VLCC: health Centre like this though are not direct competitors in the out some of

our service overlap and we both target the same market .Also they have a very huge

brand equity among the customers

3. Sports centers: Some people join sports centers and choose to play and see this as a

method of relaxing. Converting them would be very difficult but still very profitable

for us.

4. Club Latitudes: this is also a very famous health Centre located in Hyderabad and

enjoys a very good word of mouth among the gym going customers. They also offer

gym , saloon spa and cosmetics in their stores and are located in a very posh area in

Hyderabad

7

Marketing Mix

Product Mix

In-House

Gymnasium

• World-class gym facility with a spacious set-up

• Separate sections for cardio and weight training

• In-build TV screens and music systems in the machines

• Use of natural lighting and exciting and energetic pictures

Steam, Sauna & Jaccuzzi

• Top-class steam, sauna and jaccuzzi facilities

• Option of men, women and mixed (for families) facilities

• Available as part of the gold & platinum plans

Massage & Health Spa

• Variety of massage options

• Different packages for health spa to service customer needs

• Health consultation from an expert

Aerobics & Martial Arts Training

• Customers can sign-up for aerobics and martial arts training based on pre-set schedule

• Maximum 10 members per session to ensure adequate attention is paid to each member

8

Outsourced

Pricing Mix

Given the target segment and the positioning of ‘Body-Wise’, the facilities will be

available at a premium price.

While the prices of the in-house facilities will be decided by the company, the prices of

the goods and services of other brands will be decided by them respectively.

Customers will have the option of availing the services through two ways:

1. Pay per use

2. Membership (monthly, quarterly, half-yearly and yearly)

Organic Food Store & Restaurant

•The store and restaurant will be outsourced to outlets like 'How Green Was My Valley'

•Provide the perfectly healthy meal for the health-conscious

•The store would help ensure that members can continue eating right even at home

Fitness Equipment Store

•This facility will be outsourced to stores such as 'Planet Sports' or other with a good brand-mix

•Members would have the option of buy exercise and sports equipment as well as workout attire and other accessories

Nutritional Supplements Store

•The nutritional supplements store will be set up by MyNutrition

•Maintaining a stock of nutritional supplements for a variety or uses

Body Care Products

•The body care facility will be outsourced to 'The Body Shop'

•A high-end store focussing on a healthy and beautiful body

•Allowing customers to service all their health needs from a single location

9

For the membership, the following options will be available to the customers:

Place Location

The Platinum membership entitles members with access to the following:

- Gym with personal instructor (high focus)

- Expert health consultation

- Steam, Sauna & Jaccuzzi

- 10% off on Health Spa packages

- One course of aerobics or martial arts

The Gold membership entitles members with access to the following:

- Gym with Personal Instructor

- Expert health consultation

- Steam, Sauna & Jaccuzzi

- 5% off on Health Spa packages

The Silver membership entitles members with access to the following:

- Gym facilities

- Expert health consultation

- Steam, Sauna & Jaccuzzi

Hyderabad

Why?

Financial, economic, political capital of Andhra Pradesh

India's prominent Information Technology hubs

Metropolitan culture

High per capita Income

10

The Gym would be located in a posh location in

Hyderabad, Banjara Hills. This area has seen a

high growth rate in India as per Economic Times

study during 2007-2008. The reason for basing the gym in such an area is to provide proximity to the

high income segment population of Hyderabad. We would gradually grow our presence over other

tier 1 cities, seeking our success in Hyderabad. The reason of catering to the tier 1 SEC A1 and SEC A2

audiences is their willingness to pay the extra premium for excellent services we provide.

Promotion- Communication Mix and sales promotional strategies

Design mobile apps for users to have high brand recall and the brand at finger

tips

Unipole/Backlit or frontlist POP at selected locations to generate top of mind awareness

Collaboration with organic food retail chains to generate brand awareness and also spread our philosophy of "Whereever you go, We care!"

Loyality cards which are in partnership with the leading high end store s of Hyderabad

Personlized Merchandise to make our consumers our brand embassadors

Since we cater to the high end users with high income we would rely on

word of mouth marketing

Collaboration with our parterners will help us use their marketing and

promotional channels

Web apps to engage technology savvy audience

WHERE?

11

Visual Merchandising – Branding, Logo & Displays

Brand elements

1. Name Body-Wise

2. Logo

3. Tagline …where health truly is wealth 4. House Colour ‘Happy Red’ (Red: 216; Green:47; Blue:44)

Brand Promise and USP

Body-wise promises that if you will really take care of your own health then we will

help you in converting it into something tangible. So our brand promise is – “where

health truly is wealth”

According to our promise we propose that if our customer really takes care of his health

and meet his health target every month we will give them loyalty points. These loyalty

points can be redeemed at various partner outlets across the city such as The Body –

Shop, various high end restaurants, organic food outlets etc.

This shows our commitment towards making our customers healthy and will provide

added incentives to do that. We aim to take all the worries away from the customer so

we have child care Centre and valet parking system.

We want our customers to take away all their responsibilities when they visit our store.

There is also a personal health care manager whom a customer can call anytime in the

day and discuss all his health related issues at any point of time.

12

Points of Differentiation

S. No. Traditional Gyms Body-Wise 1 Trainers are generally male

with limited work experience Healthy mix of male and female trainers that have undergone intensive training and certifications

2 Less focus on customer needs Service- and Customer-centric

3 Provide a service Provide an experience 4 Limited services and products Range of complementary products and

services catering to all of the customers health needs

5 Less focus on hygiene Hygiene is the top most priority

6 No loyalty programs Special program targeting customer aspirations

Supply Chain Management

Given the services nature of our offering, the only supply chain requirement arises out of the

procurement of equipment’s /products (Towels, shampoo, cream, oils etc.). Yearly contracts would

be awarded to local drycleaners for washing of used towels. Also, since we are projecting us as an

eco-friendly and organic based facility, we would have regular tie ups with the top end vendors for

our body care product requirements. Conditions for awarding the contracts to vendor:

1. Uniform product quality

2. Presence of an able CPFR or VMI inventory planning tools for regular replenishment

3. Ability to extend credit

4. Proximity with the facility

5. Excellent transportation facility

Manpower Planning

The complete process is divided into 3 phases as described below:

Phase 1:

Joining date for all employees: 1st June 2012

Roles and responsibilities will be distributed and managed by the owners (team)

Phase 2:

Joining date for all employees: 1st Sep 2012

Phase 3:

Joining date for all employees is after 1st Sep 2012, depends on customer demand

13

Fun

ctio

nR

ole

Re

spo

nsi

bili

tie

sW

ork

-Ex

Re

qd

No

. of

po

siti

on

s

Exp

ect

ed

CTC

/Em

plo

yee

(IN

R)

Exp

ect

ed

CTC

/Ro

le (

INR

)

Fin

an

ceV

P F

ina

nce

1.  

  Bu

dge

tin

g &

Fin

an

cila

au

dit

sN

/AN

/AN

/AN

/A

1.  

  Ma

na

gin

g a

ll m

ark

etin

g a

nd

sa

les

init

iati

ves

2.  

  Bu

sin

ess

rese

arc

h &

ma

rket

in

tell

igen

ce

3.  

  Bu

sin

ess

dev

elo

pm

ent

1.  

  Rec

ruit

men

t &

Tra

inin

g

2.  

  Co

mp

ensa

tio

n p

lan

dev

elo

pm

ent

3.  

  Per

form

an

ce m

an

age

men

t

1.  

  Pro

cure

men

t &

Cu

sto

mer

fu

lfil

lmen

t

2.  

  Del

iver

y &

op

era

tio

ns

1.  

  Ma

na

gin

g re

cep

tio

n &

ha

nd

lin

g C

ust

om

er q

uer

ies

2.  

  En

roll

men

t a

nd

sig

nin

g o

ut

pro

cess

1.  

  Exe

rcis

e ro

uti

ne

pla

nn

ing

2.  

  Hel

p, G

uid

an

ce a

nd

Fee

db

ack

Hea

lth

co

nsu

lta

nt

1.  

  Die

t p

lan

nin

g &

Wei

ght

loss

/ga

in c

on

sult

ing

1+

yea

rs1

Fem

ale

Rs.

1,2

0,0

00

Rs.

1,2

0,0

00

1.  

  Eq

uip

men

t h

an

dli

ng

2.  

  Ma

inta

inin

g fa

cili

ty h

ygie

ne

Ma

ssa

ge T

her

ap

ist

1.  

  Ma

ssa

ge1

yea

rs1

Fem

ale

Rs.

1,2

0,0

00

Rs.

1,2

0,0

00

Secu

rity

Secu

rity

Gu

ard

1.  

  Ove

rall

fa

cili

ty s

ecu

rity

1 y

ears

1R

s. 6

0,0

00

Rs.

60

,00

0

Aer

ob

ics

Inst

ruct

or

1.

Del

iver

y o

f A

ero

bic

s se

ssio

ns

2+

yea

rs1

Rs.

50

,00

0R

s. 5

0,0

00

Ma

rtia

l A

rts

Inst

ruct

or

1.

Del

iver

y o

f M

art

ial

Art

s se

ssio

ns

2+

yea

rs1

Rs.

50

,00

0R

s. 5

0,0

00

Rs.

11

,20

,00

0

N/A

N/A

N/A

N/A

Ad

min

istr

ato

r

Tra

iner

Ma

inte

na

nce

Sta

ff

Op

era

tio

ns

S&M

VP

S&

M

VP

HR

VP

Op

era

tio

ns

Serv

ice

HR

N/A

N/A

N/A

N/A

N/A

N/A

N/A

N/A

Rs.

4,8

0,0

00

Rs.

1,2

0,0

00

2 M

ale

+ 2

Fem

ale

1 +

yea

rs

1 +

yea

rs1

Fem

ale

Rs.

1,2

0,0

00

Rs.

1,2

0,0

00

Rs.

1,2

0,0

00

Rs.

60

,00

01

Ma

le +

1 F

ema

le0

yea

rs

Co

ntr

act

Ph

ase

1

Ph

ase

2

Ph

ase

3

Lege

nd

14

Financial Plan

Operating Cost Detail

Payroll: Rs. 1120000

General and Administration Cost: Rs. 200000

Marketing Expenses: Rs. 250000

Rent: Rs. 350000

Misc.: Rs. 80000

Break Even Analysis:

Total months of operation for breakeven/payback period

(Assumption: Linear Sales)

12/ (35-20) = 9.6 months or 10 months of operations

Profit Loss Statement (Rs Mn) year1 year2 year3

Revenue 3.5 3.815 4.15835

Operating Cost 1.25 1.3625 1.485125

Operating Profit 2.25 2.4525 2.673225

Tax 35% 35% 35%

PAT 1.46 1.60 1.74

New Category Development

Yoga and Meditation

•Yoga and Meditation sessions for complete health benefits •Training the customer according to specific needs and requirements

Sports Facilities

•Sports like Squash,Table Tennis and swimming to be added into the Gym

•Members can enjoy these sports along with regular workouts •Training facilities for interested customers

Stress and Anger Management

•Weekly sessions on stress management and anger management •Also counselling services will be provided to the customers

Diet Consulting Services

•This Facility will educate the customers on healthy diet practices • Diet plans for customers according to specifics needs

Assumptions

Initial Investment: Rs. 12

Lakhs (Real Estate Cost)

Revenue/year: Rs. 35 Lakhs

Total Operating Expenses: Rs.

20 lakhs

9% Annual Growth Rate