Matthew Bauer

Gordon Kautz

Ashley Mullen

Melissa Rajsic

Annette Walston

The Birds

We interviewed Gary Schnoll the general manager of the Northeast Racquet Club and Fitness in his office at the club on Wednesday January 19. Our interview commenced at approximately 10am and concluded around 11am. Once at the club the group members could see that although a local privately owned club, it was a large with a good amount of traffic coming in. This traffic includes approximately 2,400 members. Your typical members and the target market of the club are families; they are the niche market the club is trying to reach.

Sales at NERC have remained relatively consistent over the past 25 to 30 years while marketing communications have been gradually reduced. Sales results are tracked weekly as a result of marketing communications. Any campaign or strategy that is not showing acceptable results in Mr. Schnoll’s view is cut and the money reinvested elsewhere within the club. Currently the club’s most effective marketing communication is word of mouth through current members. To encourage this free form of marketing communication NERC has instituted a buddy referral program. The program allows current members toreceive a credit for one month of their membership if they refer a friend that joins.

As recently as five years ago the club underwent a serious renovation expanding the fitness center and adding a multi-sports arena while removing a few tennis courts. Mr. Schnoll is still looking to expand the club by doubling the size of the fitness center, expand the already extensive kid’s club program, adda basketball court and expandthe pool size. NERC is not currently looking to expand to additional locations because fitness is not Posel Corporation’s core business; the gym is almost like a step-child. However with its consistent sales and improvement, NERC’s marketing communications are really what will drive the club to continued growth. In order to create an effective strategy we need to analyze the SWOT Analysis for the company.

Strengths

NERC is the leading firm for family fitness in their area.
NERC is a multi-faceted facility.
Customer satisfaction contributes to the best marketing communication for NERC, which is word of mouth.
Strong marketing communication with newspaper ads, area magazines, facility website, and the yellow pages.
Valuable sales promotions that motivate an immediate response on people.
Offers convenient, monthly contracts that satisfy the customer.

Northeast racquet club and fitness center is the largest, multi-faceted facility in the area. NERC is equipped with over a hundred pieces of cardio and strength equipment, indoor tennis courts, an indoor pool, a hockey rink, an indoor soccer field, and racquetball and basketball courts. They are the only fitness center in Northeast Philadelphia to offer family fitness. NERC hasdeveloped a children’s program, which helped increase business dramatically over the years. This program focuses on physical and educational enrichment for children ten months to twelve year old. This program is very valuable for parents because their children can exercise while they are working out. NERC is very good at satisfying their customers. They address all issues head on in a friendly manner to please their customers. They also have a suggestion box for customers to provide positive or negative feedback. NERC also satisfies their customers’ need and want by providing monthly contracts instead of yearly contracts. This allows their customers to terminate their contracts at anytime so they will never be locked down. NERC gains brand awareness by putting ads in the two major print media's, newspapers and magazines. Their marketing communication strategy is to target different groups during different times of the year. For example, they target college student in ads around the spring because that is when they will be returning home from school. NERC stimulates an immediate response by using coupons and sales promotions. These promotions give an advantage over their competitors.

Weaknesses:

Being a small privately owned club, their capacity is a disadvantage. This is especiallytrue due to the fact that their competitors include large corporations, such as L.A.Fitness.
Having only one location is also a weakness for the club; nearby fitness centers such as Gold’s Gym have multiple locations, resulting in more memberships.
NERC uses primarily print ads in local media such as the newspaper, magazines and the phone book; this is a weakness because they haven’t used either of the two major broadcasting media ( television and radio), which could attract a whole new demographic. For example: being located in Philadelphia could be used to their advantage because of the huge number of sports fans who tune into 610 WIP’s sports radio; that could be a profitable new target. The club is reluctant to use much advertising because of past experiences - this is limiting their possibilities.
The owners of this gym are also involved in other businesses that seem to be of more importance, the marketing manager even said that the owners consider NERC as their stepchild. This is a weakness because for a business to perform to their utmost potential, they need the undivided attention and dedication to success of their ownership. The club may even have a chance to expand or create new locations, but this is limited by its ownership.
The club is concentrating most of its marketing budget on the demographic group to which most of its current members already belong. They should take some of that focus and use it elsewhere to see if they can attract a new type of member.

Opportunities

Double the fitness center or open another location in the future.
Large market and increasing demand for getting healthy and staying fit.

NERC has the opportunity to grow their business. To accomplish this goal they must double the existing center or add another location in the area. If they open a new facility, they will be able to target a part of the population that they were unable to reach. This will increase sales and will put them in a better position to compete with the larger fitness corporations. With a larger facility, they will be able to get a larger, nicer pool like their competitor B&R fitness. NERC will be able to host swim team meets in their facility and in turn increase brand awareness. To increase brand equity they must advertise to everyone in the area. There is a huge market for getting healthy and staying fit. By using different advertising techniques, they will be able to increase business.

Threats:

Some of NERC’s competitors, such as L.A. Fitness, are corporations who are well recognized due to the extensive advertising campaigns they are able to employ.
Larger competition is able to offer extremely competitive rates because of their huge number of members: this is in large part due to their number of facilities.
B & R Fitness, a similarly privately owned gym like NERC, has a larger and nicer pool facility than NERC does; this is a threat to the club because many members base their membership decision on the swimming pool.
Due to the cost advertising these days, it is difficult for small, privately owned clubs like NERC to raise the awareness that they would like to; this is a threat that the corporate fitness centers are not as concerned with.

Managerial Recommendations

In order for NERC to grow more and obtain more clientele, we recommend three forms of marketing communications. The first is a form of MC that the company is already using – print ads in local media such as the newspapers, magazines, and the phone book. This form of advertising seems to be working for NERC and should not be eliminated. We like these methods because they’re a good way of creating brand awareness for a locally-based company. Much of the city will look at one of these print ads at least, and therefore will probably encounter their business.

As stated in one of the weaknesses, we don’t feel that these are the only forms of media that NERC should use to their advantage. Gary Schnoll stated in his interview that using TV and radio for advertising was a disaster. However, they may be able to approach the two in a different way. NERC may benefit from getting publicity from one or two local news stations. They may be able to get a sports caster from one of the local stations to promote the club in a commercial describing its atmosphere as one of fun, energy, athleticism, and family orientation. With one or two commercials on certain channels, the company may be able to create awareness and target a more general audience instead of one specific part of the market.

There may also be opportunity to obtain more customers through radio if they pick radio stations that would fit their image. One that we think is a good choice is 610 WIP Sports Radio. This station broadcasts many of the big sporting events in the city and may be a good target for people who are active/athletic, between the ages of 18 – 45.

Finally, in keeping with the niche market they are currently trying to target, NERC should attempt to generate more family business. Although radio and TV may help in doing this, one specific way is to consider putting postcards in family doctor’s offices promoting the company and its dedication to helping achieve good health for every member of the family. Some sort of sales promotion, like the ones they have been using in the past, may also be on the cards. In addition to this, children’s health can be emphasized by having promotional cards in adolescent hospitals. Adolescent health and fitness is a huge concern in the city, as well as the country. We feel that its this sense of a “family-oriented” environment that sets NERC apart from other gyms or clubs.

NERC is a good and successful company, and if they follow our recommendations they may be able to increase their business and their customer loyalty.