Market study: Fitness, Health and Wellness

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Prepared for:

2/18/07

A. OBJECTIVE

This report contains the results of a market study conducted by CMC and is designed to identify the general characteristics and size of the Fitness, Health and Wellness market surrounding the College of San Mateo (CSM). In addition, this study looks at benchmarking and trends that exist within the markets of Fitness, Health and Wellness as a means of providing important decision support for CSM. These markets include those that relate primarily to consumer based, preventative Fitness, Health and Wellness. In particular, the study seeks to characterize and quantify trends and benchmarking that are relevant to identifying CSM’s opportunity and ability to develop and deliver programs and services in the areas of Fitness, Health and Wellness for the Student, Faculty and Community based markets it serves. The information analyzed as part of this study was then used to create specific recommendations included in this report for facility design and program/service structures that are most likely to address both the needs of CSM and the communities that CSM serves.

B. APPROACH AND METHODOLY

For this task, CMC compiled and analyzed relevant general market data as well as fitness, health and wellness industry specific information from a broad range of information sources that are known to be applicable for the task objectives. These sources include demographic studies for a 1, 3 and 5 mile radius as well as a competitive analysis of “like” facilities and programs within this same geographic radius. Personal tours and visits as well as general and specific internet information searches were conducted. There has been a significant effort to look at industry benchmarking and trends to help both drive and support decision making. In particular we want to correlate these trends with success benchmarking and use these correlations to support our recommendations and any subsequent decision making.

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  Developing search strategies that yield general market information and specific data elements relative to the Fitness, Health and Wellness markets in general and specifically for the purpose of creating and supporting facility, program and service recommendations to CSM.
  

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  Implementing the searches;
  

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  Filtering and organizing the obtained information in a manner consistent with its intended use;
  

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  Analyzing the resulting information relative to the study objective;
  

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  Presenting the resulting analytical output in a concise manner that is most informative to CSM management and consultants
  

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  Who is the target market? - For membership and programs it is Individuals living, working and/ or commuting within a 5 mile radius who are between the ages of 5-84 with household incomes of ≥ $35k for programs and ≥ $50k for membership and who either currently have a predisposition toward healthy lifestyle behavior or can be reasonably expected to become motivated through effective education and programming to adopt healthy lifestyle behaviors.
  
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  How big in terms of potential members/participants is the target market? The target market for Fitness, Health and Wellness membership is determined to be over 11,000 individuals within the target radius and population. Pro-forma membership goals are 1200 and program goals are 2500 representing only a fraction of the “available market”.
  
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  What membership options, facilities, programs and services do potential clients want? - Month-to-month memberships of a reasonable price for themselves and/or their families with no contracts and low barriers to entry (reg. fees) and exit. Members want efficient, well equipped (no waiting) cardio areas, open stretching and functional fitness areas, group exercise/fitness areas. Members want to play sports and train for sports and leisure activities in a safe, informative and moderately comfortable environment. Facilities must be clean and safe, luxury is non essential and “if I have to pay for it I don’t want it”. Members want programs that are time efficient and which focus for their personal goal achievement.
  
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  How likely would potential clients be to buy these memberships, programs/services? Based on market growth and demand, very likely. Our data reveals that there are 10 x’s the number of Likely buyers or joiners in the CSM marketplace
  
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  How much will potential clients be likely to pay for programs/services? Membership pricing of $49/month for single membership with an average registration fee of $50 is recommended based on benchmarking. Program costs will vary depending on the program but when revenue is viewed on a per participant per year basis there is benchmarking and expectation that an average of $ 160 per member/participant per year is attainable
  
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  What would membership and program operating pro-formas look like? Please refer to the operating pro-formas provided as a separate e-mail attachment
  
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  What are the facility requirements necessary to provide programs/services? Please refer to section 6 – Facility for some indications of desirable facility features
  
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  Who are the main competitors? Commercial Athletic Clubs, Community Centers, Hospital based fitness/wellness centers/programs and specialty centers (curves, personal training studios, sports training facilities, etc) Please see “Attachment B” for more detailed information on competitors. The area within a 5 mile radius of the CSM campus has several keen competitors including the Peninsula YMCA, Equinox, Primetime Athletic Club, the Peninsula JCC and Optimal Fitness all within an approximate 5 mile radius but none within a 2.5 mile radius.
  
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  What are the barriers/challenges to short/long term operational success? Parking is the biggest issue to study and overcome It is estimated by CMC that, based on the membership and program participation concluded by the pro-forma there will be a peak demand for parking between the hours of:
  
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    6:30am-9am m-f
    
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    11am-1pm m-f
    
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    4pm-8pm m-t
    
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    4pm-7pm f
    
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    8am-12pm s&s
    

This demand is generally spread in the following fashion:

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  Does CSM have a competitive advantage(s)? Absolutely, the market in general is hungry for credibility in the Fitness, Health and Wellness space, CSM can provide this. There is an opportunity to be a “first mover” in this specific marketplace as the competitive analysis shows but real opportunity is to move with facilities, programs and services that are well benchmarked and tailored to fit the needs of the CSM student, Faculty and surrounding Community
  

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  There is an opportunity to provide for the needs of CSM students, faculty and the community at large in the areas of fitness, health and wellness within the 5 mile radius surrounding the CSM campus. There is virtually no competition within a 2.5 mile radius of the proposed new facility with population levels approaching 100k in this same region.
  
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  There is an increasing general market demand for quality, educationally based Fitness, Health and Wellness programs and services in our society and specifically in the Bay Area of Northern California
  
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  Programs and memberships that credibly and effectively address weight management, stress management, health management and, in general, lifestyle management will have greater likelihood of success in today’s and future markets.
  
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  Programs and memberships that address adolescent, aged adult and special needs populations will be valued by the CSM community and will have a greater than normal likelihood of success.
  
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  Accommodating functional fitness and functional training needs are major industry and facility trends that should be addressed to increase the likelihood of success
  
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  Coaching and Personal training are becoming increasingly popular and should be a major focal point of any Fitness, Health and Wellness membership/program at CSM.
  
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  Fitness, Health and Wellness Facilities should have ample open space to accommodate multiple individual and group related activities, be flexible in their use and efficient in dealing with high volumes of traffic and usage.
  
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  Fitness, Health and Wellness Facilities will benefit from providing both recreational and sports related activities for members and program participants
  
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  CSM parking is an important consideration and should be studied in detail as part of any facility or program decision making process. There is a projected incremental parking demand based on new facilities, membership and program participation estimated at 40-60 cars.
  
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  Operational execution is vital to any business success and as it relates to Fitness, Health and Wellness centers in particular where customer service is a premium.
  
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  Future and further effort should be put into the decision to partner with a professional organization(s) to provide direct facility/program management or management support
  

CSM appears to be positioned strategically to address both broad and specific needs within the Student, Faculty and Community populations related to Fitness, Health and Wellness.

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  Develop physical facilities capable of supporting programs and services that are clearly in market demand
  
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  Leverage CSM’s academic focus and credentials to differentiate from the general Fitness, Health and Wellness market
  
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  Develop and deliver a Fitness, Health and Wellness membership and program structure that can be used by students, faculty and the community simultaneously and cooperatively
  
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  Partner strategically with local professionals for program and operational support and excellence
  
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  Further enhance the CSM brand by providing relevant Fitness, Health and Wellness programs and services to a community/society in need
  

1. 
   Membership Target Market Area Definition
   

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  Age = 15-74
  
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  Income = ≥ $50k household income
  
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  IHRSA “likely Joiner” data = 18.9% of population between 15-74 with household income ≥ $50k
  

Notes to Membership Market Analysis-

1. 
   Total population within a 1, 3 and 5 mile radius of CSM
   
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   Discrete total population within a 0-1, 1-3 and 3-5 mile radius
   
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   % of population after startifiers are applied
   
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   # of “Likely Joiners” after IHRSA derived 18.9% stratifier is applied
   
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   Commuters within a 1.6m radius of CSM
   
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   “Likely Joiners” from total commuters after discount factor is applied based on redundancy with above data
   
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   Total workforce population within a 1,3 and 5 mile radius of CSM
   
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   Discrete workforce population within a 0-1, 1-3 and 3-5 mile radius
   
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   “Likely Joiners” from total workforce population after discount factor is applied based on redundancy with above data
   
10. 
    Lines 4, 6 and 9 summed as “Total Likely Joiners”
    
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    Total “likely Joiners” that are already assumed members of existing competitor facilities and projected future facilities as represented in the table below
    
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    Line 11 subtracted from line 10 to equal “Available Likely Joiners”
    
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    Target membership as determined by the Membership operating pro-forma found on page of this document
    
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    The % of “Available Likely Joiners” required to reach pro-forma membership goal
    
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    The ratio of “Available Likely Joiners” to projected members
    

The Following is an extrapolation of data from the competitive analysis included as “Attachment B” and designed to represent the % of “Likely Available Joiners” (line 11 from above table) that are currently being serviced by competitors that exist within a roughly 5 mile radius of CSM. There is also an allowance made for a “new” competitor that is yet to exist but whose presence should be viewed as inevitable.

2. 
   Program Participation Target Market Analysis
   

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  Age – 5-84
  
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  Income - ≥ $35k average household income
  
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  Likely Participant” data = 25% of population between 5-84 with household income ≥ $35k
  

Notes to Program Participation Target Market Analysis-

2. Discrete total population within a 0-1, 1-3 and 3-5 mile radius

3. 
   % of population after startifiers are applied
   
4. 
   # of “Likely Participants” after 25% market stratifier is applied
   
5. 
   Commuters within a 1.6m radius of CSM
   
6. 
   “Likely Participants” from total commuters after discount factor is applied based on redundancy with above data
   
7. 
   Total workforce population within a 1,3 and 5 mile radius of CSM
   
8. 
   Discrete workforce population within a 0-1, 1-3 and 3-5 mile radius
   
9. 
   “Likely Participants” from total workforce population after discount factor is applied based on redundancy with above data
   
10. 
    Lines 4, 6 and 9 summed as “Total Likely Participants”
    
11. 
    Target participants as determined by the Program section of the Membership operating pro-forma found as a separate attachment of this document
    
12. 
    The % of “ Likely Participants” required to reach pro-forma membership goal
    
13. 
    The ratio of “ Likely Participants” to projected members
    

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  Lifespan Approach: Rather than focusing on fitness for adults or current exercisers, these programs utilize a Lifetime Approach to health, fitness, wellness. They include the traditional sports and athletics, but also enhance these programs with deep recreation, leisure and social activities that can be pursued throughout the lifespan, not just when one is in a formal sports or athletics program or only when one is a college student.
  

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  Integration: Programs an integrated approach to the individual’s health, fitness and well-being which includes not only the more traditional physical fitness but also has a mind/spirit focus (CAM, yoga, meditation, aesthetics, spa etc.)
  

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  Tailored to the Individual: One size does not fit all and Gold Standard programs know this. Expanded specialized programming is geared to meet the unique needs of different age and cultural groups. A behavioral health approach is used to refine programs to be able to engage the individual specific to their personal characteristics. Successful programs start this approach young…..sometimes beginning classes at the age of 3 months. In addition, some form of health coaching is integrated into these programs to support the unique needs of the participant in an ongoing manner.
  

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  Community Environment: Gold Standard programs create not only a physical/facility environment supportive of wellness/fitness but a social and community “environment” as well. They take a social-ecological approach understanding that health, wellness are result of individual, interpersonal and environmental factors. This approach is threaded throughout entire program experience.
  

Organizations that are able to provide these types of programming possess a variety of assets that support their ability to function at this elevated level. The following core areas of capability are consistently demonstrated by Gold Standard program providers:

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  Staff who are generalists with specialist knowledge. For example, personal trainers highly trained in principles of personal training but also specialists in fitness for children, functional fitness, medical fitness, senior fitness etc.
  

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  Staff who experts in behavioral health principles and understand barriers to engaging in health behavior change as well as motivational principles, behavioral profiling and health coaching.
  

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  Facilities which invite community involvement and participation eg including walking paths, recreational and social areas etc.
  

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  Facilities that include multi-purpose areas eg children’s gym whose floor can be used for a roller rink. A café which can be used as a commissary at night to provide corporate and/or events catering for the following day as an added revenue stream
  
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  Programs and facilities that are wired to support management’s need for tracking/reporting, financial and outcomes measurement, to enable individual participant’s to manage their own health and fitness e.g. tracking their personal workout program, monitoring their progress, motivational messaging and health coaching, and to support each other via virtual communities with like interests and needs
  

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  The ability to incorporate a community/family-oriented approach of social, athletic, spa, medical, and educational components across programs and facilities.
  

Some key trends and related opportunities include the following

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  The trend of taking an Integrated “lifestyle” approach to individual health, fitness and wellness rather than current single program methodology where one risk is addressed at a time e.g. only a smoking cessation class or using a personal trainer has implication for how programs are designed. Under this approach, individuals will enroll in a lifestyle program rather than a weight management seminar or a aerobics class. Rather, the program will address all areas of an individual’s life throughout the offering. The program will not have a defined ending point, but will include a structured and ongoing maintenance phase to continue and support the health improvement that the participant has achieved. The conclusion and opportunity presented is that organizations should adopt this approach when designing future programming.
  

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  On line health coaching will be in high demand in the future of the health and wellness industry, Companies bolstering programs with individualized online programs with more robust coaching options will realize increased utilization and outcomes success. Therefore, Health coaching key component of successful wellness programs in the future. (Triple Tree Health and Wellness Industry Analysis, 2006). From this, we conclude that health coaching should be integrated as part of any health, fitness, and wellness behavior change program and that an investment in the technology to support this approach should be included in program and facilities design.
  

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  The market for training, certification and continuing education for health and lifestyle coaches, managers, and coordinators continues to grow. Colleges are presented with an opportunity to help meet this demand by developing and offering certificate programs, associate and undergraduate programs in these areas.
  

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  Baby Boomers investment in health/fitness/wellness including disease prevention, risk reduction, aesthetics, and spa treatments constitutes increasing market will continue to grow. Based on the number of Baby Boomers with disposable income and the fact tat they are the first generation to think they don’t have to age ungracefully and have attitude and desire to stay active so they can continue to enjoy their current lifestyles this presents a significant market opportunity for providing these services and the facilities to support them. A significant conclusion in this sector is that future health, wellness and fitness programs, services, and facilities should be designed to be attractive to Baby Boomers.
  

They also drive the continued trend of expanding Medical Fitness Facilities. Skyline and the College of San Mateo should design future facilities and staffing models to support a Medical Fitness component to their programming mix.

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  Ongoing and increasing support and funding for childhood obesity and physical inactivity. Future programming and facilities should be specifically designed to address these health risks in children.
  

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  Performance training and programming for all age groups; high school, college, weekend athletes, professional athletes continues to grow in popularity and demand. However, Gold Standard programs are more that “skills and drills”. In addition, the popularity of traditionally male fitness domains is increasing in popularity for girls and women, e.g. Examples: sports, team sports, weight training, iron “man”, endurance events and competitions. Youth sport and recreation programs continue to gain in popularity, participation and expand (example: youth soccer). Accompanying this is increased interest in performance training, and one-on-one personal training for these activities in the youth market. Youth fitness training and personal coaching will expand to encompass other lifestyle health areas, not just athletic, sport and fitness areas. Parents increasingly support lifestyle coaches for their children as well as themselves. There is huge opportunity for organizations to develop facilities, staffing and science based performance training for these groups.
  

Based on current and predicted trends in health, fitness and wellness, today’s fitness center may look somewhat different 5 years from now.

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  Members entering the front door will be greeted by signage for the “Wellness Lifestyle Center” rather than “Health Club” or “Fitness Center”.
  

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  To attract the entire community, the center will have an overall non-intimidating, look and feel and be a social environment to meet friends, exercise, take classes, recreate and reach for a higher quality of life.
  

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  Centers will be designed around “green” principles to reflect global warming initiatives.
  

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  Facilities will have much more open space and less “traditional” equipment to meet increased needs for functional fitness training.
  

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  Facilities will also have more passive space which is more attractive to older adults/Baby Boomers like classrooms, massage rooms, low impact exercise or aerobic
  rooms, offices, and other all-purpose spaces. Includes non-traditional programming important to total fitness and wellness e.g. energy management, healthy sleep programming and “training”.
  

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  Complimentary and alternative services will have a defined space in future centers much like spa areas do now (biofeedback, acupuncture, meditation rooms)
  

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  Members entering the retail space of the center will see science based, creditable products such as botanicals and herbal supplements, homeopathic remedies next to power bars and workout towels.
  

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  To meet the performance training demand, centers will have designated space for assessment/testing, individual and group training. Mini-performance labs are incorporated into assessment areas.
  

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  Child Watch and Play Spaces will be designed and equipped specifically to begin introduction to fitness and healthy habits at pre-school age.
  

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  Responding to Boomer attitudes of convenience is more important that price, concierge services will be provided, with a Concierge desk located just inside the entrance to the center. This will be electronically staffed.
  

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  Non-traditional elements are integrated into facility design. A Mediation Garden is available to members.
  

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  Fitness professionals and members will use technology in every aspect of their experience. The Center will be totally wired from check in to tracking progress, interacting with a health coach, accessing health education and information. (Vision: new A’s Stadium in Fremont, CA)
  

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  The Center provides space for “Life Style Coaching Kiosks” where members can interact online with a health coach, or spend time with a live health professional.
  

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  Social, lifestyle activity, educational space expanded and combined with a multi-generational focus. Baby Boomers who worked their entire careers re-unite with children and grand-children for quality time in the billiards room or craft area to work on joint projects together.
  

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  Additional space for Technology enabled virtual recreational activities and sports specific activities to simulate participation in golf, skiing, soccer etc to produce virtual workouts.
  
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  Multi-purpose space geared to non-traditional activities. Example: children’s gym floor used for tumbling and basketball but also for roller skating.
  

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  The Center never “closes”. Off times sold to corporations for team building events. The Café kitchen functions as a commissary during the night to cater corporate lunches, events, meals on wheels for next day.