- Fitness and sporting market continues to grow in Australia and New Zealand.
- Sports remain a national pride of Australia and New Zealand.
- Health concerns are growing among the populations, hence increase in demand for fitness products.
- Presence of sports and fitness companies in the market has not fully satisfied consumer needs and concerns, especially with regard to low priced products, quality products, and timely delivery.
- Online shopping is increasing in both Australian and New Zealand countries. People are looking for low-priced products, as well as enhanced quality and fast delivery of products.
- Fitness Express Ltd is a proposed fitness and sports apparel online company, based in Australia to start in 2012.
- The vision of the company is premised on delivering fitness and sporting gears to customers as quickly and efficiently as possible in Australian and New Zealand markets.
- Fitness Express Ltd, through market research and feasibility studies, identifies that numerous opportunities exist in the industry, people own computers and are internet connected.
- Growth for the business is expected to be realized in three years, with sales revenues and profits margins expected to record positive growth.
Description of Business
Fitness Express Ltd is an online sport and fitness apparel company that aims to build a strong online sport and fitness sales destination. The company is destined to start its operation in January 2012. In addition, the company will be owned by three partners whose share of capital contribution to the business will be equal. The company will be based in Australia, where its main distribution lines will be established, but with a firm eye on New Zealand market. Motivation to start the company arises from the fact that sports and fitness apparel market in Australia and New Zealand looks promising. Health is becoming an issue in Australia and New Zealand, and many people are involved in fitness exercises as part of health well-being. Sporting activities in Australia and New Zealand remain a national pride, and many people especially the young are involved in sports activities. Therefore, Fitness Express will provide sports and fitness products that are superior in quality at reduced cost.
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Products and Services
Fitness Express will provide two major lines of products. The first line includes fitness equipment products such as home gym units, treadmills, spin cycles, cross trainers, rowing machines, boxing equipment, freestanding weights, benches, and many more. The second line of products Fitness Express will provide includes sweat shirts, training shorts, skins, sporting footwear, back support belts, gloves, hand wraps, heart rate monitors, supplements, sports bags, and many more. Market for sports and fitness products are thriving and the reason for this has to do with sporting activities in Australia and New Zealand, and increased health fitness activities among populations.
Products will be cheaply sourced from identified and reliable suppliers in China, where quality and efficiency of products will be paramount. Moreover, a distribution center will be established in Sydney, Australia. Distribution and demand orders will be fulfilled through outsourced third party logistics. Nevertheless, timely product delivery and short lead times will be the foundation of the business.
Marketing Analysis Summary
Online shopping is increasing, as computers that are internet-enabled become basic commodities and must-have in many homes. Many people today are cautious of time management. Many people are realizing this through online shopping or electronic buying (e-buying). Indeed, e-commerce is experiencing tremendous growth across all sectors of economy. In Australia and New Zealand, growth in online shopping market continues to experience growth, and the growth is expected to continue in the future (PriceWaterCoopers, 2011). Total online shopping expenditure in Australia during the year 2011 has been estimated to reach 13.6 billion, representing 13% growth as compared to 2010 (PriceWaterCoopers, 2011).
Moreover, it is estimated that $6.0 billion will be spend by Australians on websites during 2011, and this will constitute 44% of total online purchases for 2011, representing 25% growth from 2010 (PriceWaterCoopers, 2011). In New Zealand, online shopping is also increasing at a faster rate (Shergill and Chen, 2005). Many people are turning to online shopping, and some of the motivating reasons to do so include lower prices, shopping convenience in terms of appropriate time and place, and access to broader product range (PriceWaterCoopers, 2011). Nevertheless, Fitness Express will build an online business that provide customized products to customers which can be accessed easily at their homes and businesses at the click of a button at a price that is relatively cheaper.
Reliable estimates show that 64% of Australians aged 15 years and above are engaged in at least one sport or physical recreational activity (Australian Bureau of Statistics, 2010). The rate of men and women participating in sports is almost similar, 65% for men and 63% for women (Australian Bureau of Statistics, 2010). At the same time, young people have been identified as the potential promising market for sports and fitness apparel, as they are engaged in sports and physical recreational activities (Australian Bureau of Statistics, 2010). The identified most popular sports and recreational activities in Australia include walking exercises (23%), aerobics, fitness and gym activities (14%) and swimming or diving (7%), both for men and women (Australian Bureau of Statistics, 2010).
Fitness Express Ltd will develop and sustain market niche in all Australian and New Zealand demographics. Market research will be constantly carried out to identify specific consumer needs. At the same time, consumer feedback will be integrated through enhanced online customer system that will enable faster and timely reaction to customers’ observation and information. Market potentials and opportunities for this business are high. In addition, health and physical wellness constitute two aspects of great concerns in Australia and New Zealand, and as a result, exercises have become mandatory for both old and young. Lastly, the market is under-served; hence, unsatisfied customer needs persist.
Fitness and sports apparel market in Australia and New Zealand remains competitive, with a number of companies involved. Majority of companies still operate the traditional bricks and mortar retails, and given increasing structural, labor, and rent costs, many of these businesses are discovering the potential of website or online trading. Fitness Express Ltd will be venturing in an industry that has some established competitors such as Rebel Sport and Workout World that have well-established brand names. As a result, customers tend to identify these brands more fast and easy in online shopping. At the same time, Fitness Express Ltd will contend with competition forces of smaller but established businesses such as Calibre Fitness, Exercise Australia, FitBiz, and Technogym. These organizations will largely challenge Fitness Express, especially in Australian market. However, Fitness Express aims to build an online business that provides quality products at relatively low prices.
Further, the company will aim to venture and concentrate in children sports apparel market that competitors have not fully utilized. Moreover, products lead-time will largely be short to ensure timely delivery of products to customers. Other competitive areas to be utilized by Fitness Express include establishment of a strong online brand in sports and fitness apparel market, exemplary after-sale services that will be accorded to customers, creation of online catalogue that makes easy for customers to sample products before purchasing, and increased advertisement and promotion of the company.
Strategy and Implementation Summary
Fitness Express Ltd aims to build its marketing and competition strategy based on key aspects of core values, competitive edging, market strategizing, pricing strategy, advertisement, and promotion, distribution channels, and sales strategies. Competitive edge will be created through strong brand establishment and recognition. As a result, Fitness Express will aim to create a market brand that is recognized by all market demographic segments with ability to compete well in the market with other brands. Moreover, brand creation will be realized through adoption of critical market core values of quality, efficiency, low cost and low prices, trustworthiness, customer-centered, and time management.
Value Proposition Strategy
Fitness Express aims to create a state-of-the-art marketing website that has latest information on sports and fitness apparels, easy system to operate, and that gives customers a reason to come again. Customized products will be the essence of the business, and enhanced feedback and information collection systems will be developed. Prices of products will be low according to market segments, but quality will not be compromised. Cost reduction is what the business aims to achieve and therefore, outsourcing of efficient services will be part of the business strategy. Distribution and delivery systems will be enhanced with prompt updates. In addition, central location will be in Sydney. Products lead-time will be much shorter, as both rail and ship will be used to deliver interstate and international products.
Fitness Express Ltd has full knowledge that sports and fitness industry is competitive, hence advertisement and promotion will be critical. Start-up strategy to be adopted by Fitness includes utilizing social marketing networks (Dlabay, Scott and Scott, 2010, p.493). Further, selected magazine advertorial will appear in some of the renowned sports and fitness magazines in Australia and New Zealand. Sport advertisement will also be adopted, whereby, during major sports events, the company will distribute brochures of referrals to the company’s website. Long-term promotion strategy will be to take part in corporate social responsibilities such as charities and philanthropy, which will endeavor the company to many people.
Creative pricing strategies will constitute key aspect of this company (Doukidis, Mylonopoulos, and Pouloudi, 2004, p.176). Personalized customer experience will be part of pricing strategy in the company. Pricing strategy for Fitness Express will greatly reflect the market trends and penetration potentials. As a result, the company aims at penetrating the market by offering low priced products without compromising quality. This will be possible, given overall operation costs will be reduced through outsourcing activities. Therefore, penetration and cost reduction pricing strategy will be the key competitive ground for the company.
Efficient distribution is another strategy the company aims to use, and this will involve reducing lead-times of product delivery. Reliable suppliers will be identified in China and an integrated online supply chain will be established between the company and China suppliers. Distribution center will be located in Sydney, while subsequent metropolitan, regional, interstate, and international distribution will be handled by efficient outsourced third party logistic companies. The strategy is to shorten lead-time of product delivery and reduce damages of products as compared to competitors. Online sales teams will be pivotal points for the success of the company, and to have the most efficient sales team, training, feedback, and motivation strategies will be adopted. In addition, sales research will continuously be carried out to establish market strengths, weaknesses, and available opportunities for the company.
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Fitness Express understands the value of a strong and visionary management team for the success of the business. As a result, the company aims to have in place, management team that has knowledge, technical skill, and visionary capacity to steer the company to tremendous growth. The company will be headed by chief executive officer (CEO) who will be responsible for strategic growth and development of the company. At the same time, daily activities of the company will be under surveillance of the CEO. Under the CEO, there will be Operations Manager responsible for all aspects of company operations, as well as risk management, Web Developer, and Maintenance Manager who will ensure online Functionability of the business remains viable and satisfying. Accounting activities will largely be outsourced. Other management personnel to be recruited include receptionist, floor supervisor, and store persons whose responsibilities and duties will be outlined by CEO.
Start-up cost/expenses for Fitness Express Ltd are summarized below.
Sales Forecast (3 Years)
Australian Bureau of Statistics. (2010) Participation in sport and physical recreation. Web.
Dlabay, L., Scott, J. &Scott, C. (2010) International Business, Cengage Learning, OH. Web.
Doukidis, G.I., Mylonopoulos, N. & Pouloudi, N. (2004) Social and economic transformation in the digital era, Idea Group Inc (IGI), NY. Web.
PriceWaterCoopers. (2011) Digital media research 2011: Australian and New Zealand online shopping market insights. Frost & Sullivan, Sydney. Web.
Shergill, G.S. & Chen, Z., 2005. Web-based shopping: Consumers’ attitudes towards online shopping in New Zealand, Journal of Electronic Commerce Research, vol. 6, no. 2, pp. 79-94. Web.