IIM INDORE

Retail Management Strategy

Group Report Submission

2/10/2012

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

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--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

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

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 Body wise will not services in various segments which are growing at a tremendous rate and offer very only offer gym but high margin such as spa , organic food , also lifestyle services supplements, karate coaching classes , beauty products. All this various services in various segments will help in positioning the store in a very which are growing at 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).

a tremendous rate and offer very high margin such as spa , organic food , supplements , karate coaching classes , beauty products.

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

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.

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--vis Competition

1. Golds 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

Marketing Mix Product Mix In-House

Gymnasium World-class gym facility with a spacious setup 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

Outsourced 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 brandmix 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

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)

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

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

Place Location Why? Financial, economic, political capital of Andhra Pradesh India's prominent Information Technology hubs Metropolitan culture Hyderabad High per capita Income

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

WHERE?

Personlized Merchandise to make our consumers our brand embassadors

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

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

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

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

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

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Visual Merchandising Branding, Logo & Displays

Brand elements

1. Name 2. Logo

Body-Wise

3. Tagline 4. House Colour

where health truly is wealth 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.

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Points of Differentiation

S. No. 1 2 3 4 5 6

Traditional Gyms Trainers are generally male with limited work experience Less focus on customer needs Provide a service Limited services and products Less focus on hygiene No loyalty programs

Body-Wise Healthy mix of male and female trainers that have undergone intensive training and certifications Service- and Customer-centric Provide an experience Range of complementary products and services catering to all of the customers health needs Hygiene is the top most priority 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 equipments /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. 2. 3. 4. 5. Uniform product quality Presence of an able CPFR or VMI inventory planning tools for regular replenishment Ability to extend credit Proximity with the facility 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

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Function N/A N/A N/A N/A N/A N/A N/A N/A

Role

Responsibilities

Work-Ex Reqd

No. of positions

Expected Expected CTC/Employee CTC/Role (INR) (INR)

Finance

VP Finance

1. Budgeting & Financila audits

1. Managing all marketing and sales initiatives

S&M

VP S&M

2. Business research & market intelligence

3. Business development N/A N/A N/A N/A

1. Recruitment & Training

HR

VP HR

2. Compensation plan development

3. Performance management N/A 1 + years 1 + years 1+ years 0 years 1 years 1 years 2+ years 2+ years 1 Female 2 Male + 2 Female 1 Female 1 Male + 1 Female 1 Female 1 1 1 N/A N/A Rs. 1,20,000 Rs. 1,20,000 Rs. 1,20,000 Rs. 60,000 Rs. 1,20,000 Rs. 60,000 Rs. 50,000 Rs. 50,000 N/A Rs. 1,20,000 Rs. 4,80,000 Rs. 1,20,000 Rs. 1,20,000 Rs. 1,20,000 Rs. 60,000 Rs. 50,000 Rs. 50,000 Rs. 11,20,000

Operations

VP Operations

1. Procurement & Customer fulfillment

2. Delivery & operations

Administrator

1. Managing reception & handling Customer queries

2. Enrollment and signing out process

Trainer

1. Exercise routine planning

Service

2. Help, Guidance and Feedback

Health consultant

1. Diet planning & Weight loss/gain consulting

Maintenance Staff

1. Equipment handling

2. Maintaining facility hygiene

Massage Therapist

1. Massage

Security

Security Guard

1. Overall facility security

Contract

Aerobics Instructor

1. Delivery of Aerobics sessions

Martial Arts Instructor

1. Delivery of Martial Arts sessions

Legend

Phase 1 Phase 2 Phase 3

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Financial Plan Operating Cost Detail Payroll: Rs. 1120000 General and Administration Cost: Rs. 200000 Marketing Expenses: Rs. 250000 Rent: Rs. 350000 Misc.: Rs. 80000 Initial Investment: Rs. 12 Lakhs (Real Estate Cost) Revenue/year: Rs. 35 Lakhs Total Operating Expenses: Rs. 20 lakhs

Assumptions

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) Revenue Operating Cost Operating Profit Tax PAT New Category Development year1 3.5 1.25 2.25 35% 1.46 year2 3.815 1.3625 2.4525 35% 1.60

9% Annual Growth Rate

year3 4.15835 1.485125 2.673225 35% 1.74

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

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