Sport Management Review, 2008, 11, 5175 Competitive Advantage

2008 SMAANZ

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Competitive Advantage in the Health and Fitness Industry: Developing Service Bundles
University of Texas

Jules Woolf

KEYWORDS: competitive advantage, service bundling, fitness centres, service augmentation

Supporting services augment the value of a businesss core service, provide points of differentiation, and create a competitive advantage over competitors. Fitness clubs offer a number of supporting services, including sport participation opportunities. Fitness tests are a common supporting service. This study examined interest in fitness tests and related supporting services. Moreover, because customised programs are harder to imitate, optimal combinations of desired services were investigated. Further, K-means cluster analysis identified seven meaningfully differentiated customer groups. MANOVA and chi-square analyses indicated that clustered groups differed based on demographic and psychographic variables. The study demonstrates that (1) consumers desire supporting services, (2) distinct bundles of supporting services can be identified, and (3) consumers desiring distinct bundles of services are have distinct demographic and psychographic profiles. Fitness providers can develop distinct, desirable bundles of supporting services and can develop more tailored marketing strategies based on these consumer profiles.

Achieving and maintaining a competitive advantage is a goal of virtually every business. In order to obtain a competitive advantage, a business must differentiate itself from its competitors. Creating points of differentiation is thus a key strategy by which to gain a competitive advantage (Fisher, 1991). A point of differentiation is any physical or nonphysical characteristic, including price, upon which consumers perceive a difference among competitors product and service offerings (Dickson & Ginter, 1987).

Dr. Jules Woolf is currently a Lecturer in the Sport Management Program at The University of Texas at Austin, 1 University Station, D3700, Austin, Texas, USA. Email for Jules Woolf is juleswoolf@mail.utexas.edu

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In practice, it falls to the marketing department to develop and implement differentiation strategies. In service industries, marketers often increase the value of core services through the addition of supporting services. Supporting services are peripheral to the core service provided and are not necessary for the core service to function (Grnroos, 2000). For example, a fitness center would not cease operations if it closed down its smoothie bar (a supporting service). However, a fitness center without fitness programs (core service) would not last long. The addition of supporting services to the core service is a strategy that helps companies penetrate or hold market share (Carman & Langeard, 1980). Moreover, the attractiveness of future customers may be determined, in part, by the customers potential to make use of supporting services (Breur, 2006). The ability to sell supporting services to customers increases the probability that the business develops a profitable relationship with the customer (Newell, 2000). A key component of effective supporting services, particularly for service organizations, is that the supporting services complement the core product, thus enhancing the value of the core product for consumers (Storey & Easingwood 1998). However, not all consumers value the same services. From a marketing standpoint, it is important to provide services valued by key consumer groups (i.e., market segments). Thus, differentiation strategies are indelibly linked to market segmentation in that points of differentiation are chosen to appeal to specific consumer groups (Dickson & Ginter, 1987). In fact, a market segmention strategy cannot be formulated without considering the product mix. A successful segmentation strategy is based on the ability of a business to provide different services or products that provide benefits desired by the consumer (Ehrman, 2006). A market segmentation strategy identifies homogenous groups of individuals with distinct demands that differ from the remainder of consumers in the marketplace. Successful identification of market segments is critical to achieving marketing goals (Weinstein, 1987). Consequently, the integration of differentiation and segmentation strategies enhances a business competitive advantage because it provides the desired segment of customers with the services or products they value (Cahill, 1997). However, a differentiation strategy will only generate superior returns until competitors develop imitations. Thus, services marketers must either find enduring points of differentiation, or continually create and adapt their services mix. In either case, it is necessary to develop and maintain a unique service mix (Fisher, 1991). The more difficult the services are to imitate, the better able a business is to maintain a competitive advantage. The challenge, then, is to devise services that are unique or at least difficult to duplicate. One way to stifle imitation is to make a service more complex or more tailored (Fisher, 1991). A tailored program increases buyers switching costs since a tailored program is, ostensibly, tailored to meet the needs of that particular consumer group. A less tailored program, then, would meet fewer of those customers needs. In addition, personal relationships develop within a tailored service so the psychological costs to switch services increases as these relationships strengthen (Fisher, 1991).

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One way to tailor a service is to create distinct bundles of services. Developing bundles of services targeted to distinct market segments can increase the complexity and tailoring of supporting services (Guiltinan, 1987). Providing a range of tailored supporting services not only enhances the value of the core service for key market segments, its complexity increases the cost and reduces the risk of imitation. Bundling strategies have been shown to enhance the attractiveness of a core product (e.g., Rewtrakunphaiboon & Oppewal, 2003), and to maximise ticket revenue for both sporting events (e.g., Solberg, 2001) and arts events (e.g., Venkatesh & Mahajan, 1993). The identification of desirable bundled supporting services enables customers to make better use of the service and serves as a powerful differentiator (MacMillian & McGrath, 1997). However, designing service bundles requires more than just picking and choosing among existing services; it requires knowledge of target market characteristics and service preferences. The process, whereby market segments are developed using service preferences, and then described along with target market characteristics (i.e., demographics, psychographics, etc.) has been argued to improve the sensitivity of differentiated segments, more effectively than would the more traditional use of defining market segments based on target market characteristics alone (Wilson-Jeanselme & Reynolds, 2006). The rationale for this statement is based on the likelihood that customers preferences traverse different target market characteristics. Thus, members separated into different demographic or psychographic segments may have similar service preferences. Moreover, defining segments based solely on target market characteristics does not explain which service characteristics are motivating purchase. For example, the marketer may have to infer that a certain characteristics (e.g., age or gender) is in someway related to a desired service. Defining segments based on service preferences first, and then using target market characteristics to further describe the subsequent segments produces a clearer understanding of the consumer than the use of traditional segmenting strategies. In past decades, health and fitness clubs have gone from weight training facilities to resort style facilities offering services as varied as cardiovascular fitness programs, beauty treatments, and full service restaurants as well as weight training. The health and fitness club industry has grown extensively over the last fifteen years and competition for members has increased exponentially. For example, from 1987 to 2002 the number of health club participants increased by nearly 20 million (IHRSA, 2007). The number of health clubs has also increased dramatically during this period, rising from 5,000 in 1982 to 22,000 in 2003 (IHRSA, 2003). It is not surprising that the increase in competition within the industry has been paralleled by an increase in the number and range of supporting services offered. The diversity of supporting services that health and fitness clubs offer include fitness testing services, personal training, nutritional counselling, organised running groups, sport competitions, massage and physical therapy, child care, food and beverage services and tanning beds. From a sport marketing perspective, the fact that health clubs are offering sport participation opportunities is particularly

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relevant. Fitness clubs chains, such as 24-hour Fitness even sub-brand their clubs with sporting celebrities and then match the supporting services to the brand associated with the celebrity. For example, the Magic Johnson-themed 24-hour Fitness club includes basketball courts, while the Lance Armstrong-themed 24-hour Fitness club offers cycling rooms. The inclusion of these amenities provides opportunities to provide supporting services. These are supporting services to the health clubs core service of providing a facility and equipment for exercising. Nevertheless, the improvement of service offerings may be attractive to (and even expected by) potential members, but have only a modest impact on sales or profitability (Storey & Easingwood, 1998). For example, it has been reported that 89% of health clubs offer some form of fitness evaluation service, even though this is not considered a service that is highly profitable (IHRSA, 2007). Some health clubs have even gone so far as to offer free fitness assessments to new members and current members. Fitness tests therefore appear to be a very common and popular supporting service offered by health clubs. In contrast, not every health club can offer sporting opportunities or amenities, such as basketball courts. Therefore, this article addresses the issue of supporting services by analysing frequently used supporting services, such as fitness tests, and then determining potential bundles of supporting services. Considering the nature of fitness testing services, it would appear that there is potential to improve revenue. In many cases the equipment required is either low cost (such as a sphygmomanometer or skin fold calipers) or is already present in the gymnasium (benches, weights and treadmills are commonly required for testing). Further, administering fitness testing services does not require the hiring of additional personnel since current staff can perform the requisite duties during their regular shift. Considering the low cost to provide fitness testing services, it is perhaps surprising that it does not yield higher profits. Fitness testing services at health clubs are ubiquitous; it is unclear whether such services are desired or merely expected. Although many health clubs offer fitness testing services, it appears that these services are not heavily advertised nor promoted. This is, perhaps, not surprising since managers in the service industry do not perceive that consumers place much importance on supporting services (Thompson, Lumpkins, & Hite 1991). As fitness testing services have become a part of health clubs service offerings, the scope of fitness tests available has also increased. For example, body fat composition has historically been measured by taking skin fold measurements at various sites on the body. These measurements are then entered into a formula to obtain an estimate of body fat. However, recent advances in technology allow less invasive methods to provide estimates of body composition. For example, bod pods and duel energy X-ray absorptiometry can be used to obtain accurate estimations of body fat. Instruments such as electronic skin fold calipers and bioelectrical impedance analysis (BIA) devices are now readily available, and at affordable prices. In fact, the use of advanced technology may present a more attractive professional image to customers, who may even expect it.

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Since supporting services are meant to add value to the core service, their usefulness in marketing is dependent on customer interest. Given the ubiquity of fitness testing and fitness-related supporting services, one would assume that these services are highly desired by health and fitness club members. However, the appeal of such services has never been demonstrated. Thus, the first question addressed by this study is: To what degree are people interested in fitness testing and fitness related supporting services? Further, considering the range of tests and services available it would seem pertinent to discover which tests and services are of interest to consumers. While it is useful to determine consumer interest in supporting fitness services, effective marketing of these services must also take into account variations in interest in order to adequately match test offerings with market segments seeking those offerings. Consequently, the marketer has a match between lifestyle segments and their desired service bundles. The process of developing market segments based on consumers preferences fosters a closer relationship between the business and the consumer (Wilson-Jeanselme & Reynolds, 2006). The question then becomes not only, how should health and fitness clubs differentiate themselves via the supporting fitness services they provide, but also who they should target with these bundled services. This study will determine the characteristics of potential members and the services desired by each customer segment. By designing complex and tailored testing packages that appeal to specific market segments, health and fitness clubs ought to be able to increase the return on investment in fitness testing services. To summarise, this articles seeks to (1) determine the level of interest in a range of supporting fitness services, (2) identify potential service bundles, and (3) identify the market segments interested in those bundles from demographic and psychographic profiles of these segments. The implications of support service bundling for marketers will be discussed.

Method
Sample
A sample of 287 adults was obtained from the population of a midsized Southwestern city. Respondents ranged in age from 18-64 years of age (mean= 29 yrs, SD = 11.43). The sample was 49.5% male and 50.5% female. Eighty six percent had at least some college education, and 72% were white. The personal income was determined using an eight point scale anchored at (1) under $20,000 and (8) over $110,000. Each point increase on the scale amounted to an increase of $15,000. The average income of respondent fell at 2.23 (SD=1.80) and this corresponded to an average income ranging from $20,000 to $34,999.

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Procedure

Thirty research assistants (RAs) administered 10 surveys each. Three RAs were assigned to each of 10 sites throughout the city. In order to reach a range of respondents that was representative of the demographics of the city, site selection was sensitive to the geodemographics of the city. Respondents were approached and asked to complete a questionnaire about their interest in health and fitness. RAs intercepted every fifth person and interviews progressed until the RA obtained completed surveys from five women and five men. The refusal rate was approximately 50%. Thirteen surveys were deemed incomplete or unusable and were therefore discarded prior to analysis.

Measurement

A questionnaire was designed to measure motives for participating in physical activity, psychological involvement with health and fitness, interest in health and fitness services, current sport and exercise participation, and attitude toward fitness testing. Standard demographic information was also included. Each of the measures is discussed below. Motivation for participation in physical activity. Respondents were asked to rate the importance of eighteen motives for participating in physical activity. Each item was measured using a four point Likert-type scale ranging from not at all important to very important. Items were selected to represent factors previously identified in the literature (Ryan et al, 1997; Wilson, Rodgers & Fraser, 2002). Responses were factor analysed via principal components analysis with varimax rotations. Four factors with eigenvalues greater than 1 were extracted: competence-challenge, appearance, social-self improvement, and relaxation. These four factors explained 63.93% of the variance. Internal consistency was assessed via Cronbachs alpha, and ranged from 0.79 to 0.84 (see Table 1).
Table 1. Rotated Component Matrix for Motivations for Participating in Physical Activity
Motivation To increase my strength To challenge myself To enhance my ability to compete To accomplish goals To improve my chances of winning To improve the way my body looks Competence Challenge .74 .70 .69 .67 .65 .15 Appearance .24 .12 -.17 .35 -.21 .78 Social & Self Improvement .09 .19 .43 .21 .52 .01 Relaxation .18 .27 .08 .17 -.04 .09

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To enhance my self esteem To lose weight To improve the way my body feels To improve my health To increase my cardiovascular endurance To meet new people To be with my friends To develop business contacts To master new skills To learn new things To help me relax and unwind To relieve stress Cronbachs Alphas

.11 -.23 .25 .33 .50 .19 .03 .14 .49 .46 .20 .17 .84

.77 .73 .64 .57 .51 .02 -.09 .09 .19 .15 .12 .23 .80

.09 .12 .02 -.13 -.13 .82 .75 .69 .55 .48 .15 .12 .79

.18 -.11 .37 .32 .32 .06 .13 -.01 .15 .17 .87 .85 .84

Psychological involvement in health and fitness. Bloch, Sherrel, and Ridgeways (1986) Enduring Involvement Index was adapted for use in this study. Wording was modified to reflect fitness and health contexts: How important to you is knowledge about your health? How interested are you in your own health? How frequently do you think about your own health? The measure of psychological involvement with fitness used the same questions with fitness replacing the word, health. All items were measured using a 7-point scale. Overall measures of psychological involvement with health and psychological involvement with fitness were created by averaging the three scale items. Bloch et al. (1986) reported internal consistency of .83 and .77 for two separate samples. They report correlations of .70 and .67 with a measure of consumer search as evidence of predictive validity. Interest in health and fitness services. A content analysis of brochures from twelve local health and fitness centers identified thirty possible services (16 fitness tests and 14 health or fitness services). Interest in obtaining each of the services was measured on a 10-point scale anchored by 1 (not at all interested) and 10 (extremely interested). Current participation. Respondents were asked whether they currently participate in a sport. In addition, respondents were asked to identify their main sport and to indicate how many days per week they participate in that sport. Similarly, respondents were asked whether they currently participate in a non-sport

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fitness or exercise program and how often they participate. Finally, respondents were asked whether they were health club members. Demographics. In addition to the above measures, respondents were asked to indicate their gender, age, ethnicity, marital status, highest level of education achieved, employment status, and personal income level.

Data Analysis

Descriptive statistics were calculated for all variables. One sample t-tests (against 1, not at all interested) were used to determine whether respondents were interested in the health and fitness services (RQ1). A K-means cluster analysis was used to identify distinct consumer profiles (RQ2). On all interval and ratio scaled questions a MANOVA was performed to identify differences between clusters. Post hoc Scheffes were conducted to identify where the differences between clusters existed. For categorical variables questions, chi-square analyses were performed.

Results
Respondents interest in health and fitness services is reported below. Subsequently a cluster analysis is presented to determine whether specific groups of respondents are interested in particular bundles of health and fitness services. These clusters are described in terms of their distinct service composition. The results of the MANOVA are then presented along with a psychographic and demographic description of cluster membership. Finally, differences between clusters are presented.

Respondents reported that they were interested in all of the supporting health and fitness services. Means for these services ranged from 6.0 to 7.5 on a ten point scale, with the exception of one service (referral to a personal trainer). Services that assessed body fat, measured stress levels, determined current nutritional status, or offered personalised exercise programs were of most interest. To control the Type I error rate with the one sample t-tests of interest in health and fitness services, the Bonferroni procedure was utilized. Even with this safeguard, one sample t-tests on interest in all health and fitness services were found to be significant, as shown in Table 2.

Interest in Health and Fitness Services

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Table 2. Interest In Health And Fitness Services

Service Aerobic fitness assessment Maximal heart rate assessment Exercise caloric expenditure Body composition assessment Resting metabolic rate estimate Muscular strength assessment Abdominal muscular endurance Flexibility Assessment Muscular power assessment Posture assessment Lung function test Maximal oxygen uptake (VO2max) assessment Ventilatory threshold (anaerobic threshold) assessment Training heart rate estimate Energy expenditure estimate Percent body fat assessment Fitness counseling Personalized exercise prescription Assessment of current nutritional status Blood pressure measurement Nutrition counseling Referral to a personal trainer A fitness test at a later date to assess improvement Education about the body Information about exercise An explanation of how fitness tests work and what they mean Information about healthy living An assessment of stress level Training in how to cope with stress A measure of cholesterol T-value 33.81 37.29 33.81 42.19 32.91 43.62 40.34 37.72 39.06 34.32 38.61 32.41 30.45 34.35 36.95 46.68 33.26 42.76 46.52 41.13 38.38 25.66 39.17 32.46 34.34 37.56 36.78 42.35 35.41 41.50 P-value <.001 <.001 <.001 <.001 <.001 <.001 <.001 <.001 <.001 <.001 <.001 <.001 <.001 <.001 <.001 <.001 <.001 <.001 <.001 <.001 <.001 <.001 <.001 <.001 <.001 <.001 <.001 <.001 <.001 <.001 Mean 6.45 6.64 6.71 7.41 6.44 7.45 7.11 6.83 7.08 6.57 6.93 6.51 6.01 6.52 6.91 7.95 6.65 7.49 7.49 6.96 7.05 4.46 7.09 6.15 6.55 6.93 6.74 7.40 6.86 7.24

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Segmentation

Cluster analysis was performed on the 30 health and fitness services in an effort to identify distinct segments in terms of their interest in bundles of services (see Table 3). Four, five, six, seven, eight, and nine cluster solutions were examined. Three investigators analysed each of the cluster solutions. The four, five, and six cluster solutions were considered to be too broad in identifying distinct groups. A seven cluster solution was considered more interpretable and provided more meaningfully differentiated groups. The eight and nine cluster solutions were not thought to add additional value to the interpretation of differentiated groups, and where therefore discounted. Cluster one contained 21 respondents and reported very little interest in any of the 30 service offerings. Clusters two, three and four were interested in all service offerings. Respondents in these clusters were interested in the idea of supporting fitness services and did not seem to differentiate among the individual services. These clusters are differentiated from each other based on the magnitude of their interest. Cluster two reported marginal interest in all services (M=5.76, SD=0.80) and contained 91 respondents. In comparison, respondents in Cluster three (n=41) were generally enthusiastic about all services (M=7.27, SD=0.63). Cluster four reported the most interest in all services (M= 8.80, SD=0.42) and contained 89 respondents. Unlike the first four clusters, members of clusters five, six and seven differentiated among the individual services. However, the clusters vary in the combination of services desired. Cluster five (n=16) is characterised by interest in services that help assess and improve ones health status. This is indicated in Table 3 with service interest scores highlighted in bold. For example, assessment of stress levels, nutritional counselling, cholesterol and blood pressure measures were all of interest to this cluster. This cluster was also interested in obtaining a personalised exercise program and having a fitness consultation. However, their interest in more fitness-related services, in particular fitness tests, was relatively low. It would appear that cluster five wanted services that assess and improve health, rather than fitness. Cluster six contained 14 respondents. Membership in this cluster was characterised by a high level of interest in all fitness testing services. In addition, this group had very little interest in having a fitness consultation, a prescribed fitness program or a referral to a personal trainer. This cluster wants assessments but not instruction. This cluster may have felt that they knew what they were doing in the gym and therefore were not interested in outside assistance. They wanted fitness tests probably to help them determine their own exercise program adjustments. Other fitness services were of little interest to this group. The exception to this would be cholesterol and stress level measures and nutritional status. Again, it appears that this cluster wanted assessments which they could interpret rather than direct information to help them improve their health and fitness. Services that offered consultation, information or instruction were not of interest.

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The final cluster consisted of 15 respondents. Members of this cluster were interested in tests and services that assessed muscular function (strength, power, endurance, flexibility) or that assessed and improved their body image. Besides tests of muscular strength, tests of body composition, percent body fat assessment, and nutritional status tests were of interest to this group. These other tests would help this group assess their current body image and dietary needs. Similar to the previous cluster, Cluster seven is interested in assessments rather than consultation, information or instruction. For example, assessment of nutritional status was of interest (M=5.60), yet interest in nutritional consultation is low (M=4.13). The only exception to this pattern is prescribed exercise programs which are of moderate interest (M=5.40) to this group. What differentiated these final two clusters is that this cluster had very little interest in any test that assesses cardiovascular function.
Table 3. Mean Interest In Fitness Services By Cluster
Cluster N Aerobic fitness assessment Maximal heart rate assessment Exercise caloric expenditure Body composition assessment Resting metabolic rate estimate Muscular strength assessment Abdominal muscular endurance Flexibility Assessment Muscular power assessment Posture assessment Lung function test Maximal oxygen uptake (VO2max) assessment Ventilatory threshold assessment (anaerobic threshold) Training heart rate estimate Energy expenditure estimate Percent body fat assessment 1 21 1.95 2.38 2.71 2.57 2.52 2.52 2.43 2.19 2.29 1.95 3.05 2.14 2.10 2.05 2.48 3.29 2 91 6.10 6.66 6.80 6.98 6.24 7.27 6.63 5.93 6.56 4.83 5.29 5.46 4.90 5.80 6.05 7.05 3 41 6.63 6.85 6.76 7.78 6.12 7.93 7.54 7.22 7.55 7.01 7.40 6.86 6.08 6.88 7.29 8.40 4 89 8.45 8.42 8.93 9.21 8.81 8.97 8.69 8.65 8.73 8.47 8.67 8.64 8.36 8.65 9.11 9.51 5 16 5.13 4.69 3.00 3.88 2.69 3.25 2.94 3.81 2.19 4.06 4.13 2.38 1.63 2.63 4.06 4.88 6 14 5.79 7.21 6.71 7.71 7.57 8.07 8.07 7.14 7.79 7.64 9.21 8.93 7.86 8.07 7.64 8.71 7 15 2.87 2.33 2.47 5.93 3.20 6.73 6.60 5.53 7.07 5.47 4.53 2.87 3.20 2.60 2.47 7.53

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2.52 3.86 3.19 4.45 3.29 1.86 2.29 2.00 1.86 3.29 2.43 3.62 3.05 3.86 5.45 6.49 6.34 5.41 5.44 4.80 5.90 4.46 4.90 5.07 4.93 5.18 4.56 5.32 7.03 8.04 7.90 7.36 7.56 5.62 7.75 6.88 7.43 7.91 7.43 7.91 7.57 7.55 9.02 9.40 9.36 8.69 9.24 7.49 9.15 8.08 8.65 8.64 8.78 9.31 8.85 9.04 6.13 6.81 6.88 7.50 7.13 5.13 4.75 5.00 5.06 5.88 6.25 7.88 6.94 7.88 2.21 3.07 5.57 5.00 3.14 2.43 4.64 4.29 3.93 4.36 5.36 6.43 4.86 6.79 3.93 5.40 5.60 3.20 4.53 2.53 5.60 3.73 3.93 4.53 3.33 4.60 4.13 4.40

Fitness counseling Personalized exercise prescription Assessment of current nutritional status Blood pressure measurement Nutrition counseling Referral to a personal trainer A fitness test at a later date to assess improvement Education about the body Information about exercise An explanation of how fitness tests work and what they mean Information about healthy living An assessment of stress level Training in how to cope with stress A measure of cholesterol

Demographic and Psychographic Analysis of Clusters

Each of the seven clusters identified represents a market interested in a unique bundle of supporting services. The desired bundles provide marketers with insight into the ways in which supporting services can be packaged to meet the needs of each target market. While product design is an important component of any marketing plan, understanding more about each of these target markets allows a more strategic approach to an organisations marketing efforts. Consequently, the demographic and psychographic profiles of the clusters was analysed in order to identify key differences in the market clusters. Cluster membership was expected to be related to differences in eight demographic characteristics (gender, marital status, ethnicity, health club membership, sport participation, exercise participation, train for sport, history of fitness tests) and five psychographic characteristics (motivation, psychological involvement with health, psychological involvement with fitness, satisfaction with health, satisfaction with fitness). Interval data were examined via MANOVA; nominal data were examined via Chi-square analyses. The MANOVA was determined to be significant (F[13, 254] =17.60, p<.001). This indicates that the clusters differ from one another based on the variables included in the MANOVA (i.e., motives and involvement with health and fitness, satisfaction with health and fitness, frequency of sport and exercise participation, age, education, and income). To determine the precise points of difference, post-hoc Scheffes all-way comparisons were conducted. The results from this analysis are

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shown in Table 4. In addition, for categorical variables the chi-square analysis of that variable (i.e., gender, marital status, ethnicity, fitness club membership, and whether the respondent participates in sport, exercise, or trains for sport), except previous history of fitness test, revealed significant differences among the clusters (see Table 5). As shown in Tables 4 and 5, the results are complicated, but provide a profile of members in each cluster. This approach to determining market segments provides richness and provides the marketer with the knowledge by which to tailor bundles of services to distinct market segments. A detailed description of each cluster is provided, followed by a discussion of general trends among the clusters.
Table 4. Motivations To Engage In Physical Activity By Cluster
Dependent Variable Competence Challenge Motivation Cluster Differences 1&2 1&4 1&6 1&7 2&5 4&5 5&6 Appearance Motivation 1&2 1&4 1&5 2&4 3&4 4&6 4&7 Relaxation Motivation 1&2 1&4 1&7 2&4 3&4 4&5 Satisfaction with Fitness Involvement with Fitness 2&5 1&2 1&3 1&4 Mean Difference -1.025 -1.094 -1.078 -0.939 0.989 1.057 -1.041 -0.833 -1.164 -0.728 -0.332 -0.698 0.784 0.617 -0.744 -1.250 -1.096 -0.506 -0.663 0.800 1.43 -2.482 -2.192 -2.960 Std. Error 0.179 0.180 0.256 0.256 0.202 0.202 0.273 0.136 0.136 0.186 0.085 0.105 0.163 0.163 0.192 0.192 0.274 0.120 0.149 0.216 0.396 0.271 0.298 0.272 p-value <0.001 <0.001 0.009 0.040 0.001 <0.001 0.027 <0.001 <0.001 0.021 0.021 <0.001 0.001 0.029 0.022 <0.001 0.016 0.008 0.004 0.036 0.046 <0.001 <0.001 <0.001

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1&6 1&7 2&5 3&5 4&3 4&5 4&7 5&6 Involvement with Health 1&2 1&3 1&4 1&5 1&6 1&7 3&4 4&5 4&7 -2.553 -1.527 1.743 1.453 0.769 2.221 1.433 -1.814 -2.096 -1.792 -2.506 -1.556 -2.026 -1.282 -0.715 0.951 1.224 0.388 0.388 0.306 0.330 0.211 0.306 0.325 0.413 0.232 0.255 0.233 0.318 0.332 0.332 0.180 0.262 0.278

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<0.001 0.019 <0.001 0.004 0.042 <0.001 0.004 0.005 <0.001 <0.001 <0.001 0.001 <0.001 0.023 0.017 0.044 0.005

Table 5. Chi-Square Analysis

Variable Sport Participation Train for sport participation Exercise Participation Member of a health club Ever had a fitness test Gender Martial status Ethnicity N 287 287 287 287 287 287 286 286 X2 15.12 14.94 15.21 21.50 9.62 16.04 16.79 38.49 df 6 6 6 6 6 6 6 6 p 0.019 0.021 0.019 <0.001 0.142 0.014 0.010 0.031

Cluster 1: The uninterested. When respondents were asked to indicate interest in fitness tests and services, they typically responded with scores below three. Not surprisingly, members of this cluster are unlikely to be health club members (only 9.5% reported that they were members) and very few exercise (28.6%) or play a sport (14.3%). Members also tend to be older (mean age of respondents just above 33) and to have relatively high incomes (typically between $35,000 and $49,999) relative to other clusters.

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In addition, members reported relatively low involvement and satisfaction with their health and fitness. In terms of motivation for exercising, members do not appear to be motivated to gain competence, overcome challenges, or to use physical activity to socialise or to relax. In summary, Cluster one does not appear to be interested in health or fitness and consequently fitness services are of very little interest to them. Cluster 2: Marginally interested. Cluster two typically shows marginal interest in all fitness services. Members of this cluster are likely exercisers (61.5%) and a large number play a sport (46.2%). However, they are unlikely to be members of a health club (only 35.2% report being members). In addition, members of this cluster are typically unmarried (74.4% report being single). This cluster is also more ethnically diverse with a relative large percentage of Hispanics (13.2%), African-Americans (11%) and Asian-Americans (7.7%). Membership in this cluster is characterised by a large number of students, with nearly 60% currently enrolled at University. In terms of motivations for exercise, members are motivated by competence and challenges, improving appearance and finding ways to relax. Furthermore, members of this group are highly involved with their health and fitness. Cluster 3: Interest/low motivation. Unlike the Marginally Interested cluster above, the Interest/Low Motivation cluster has a high level of interest in all the fitness services. Interest scores ranged between 7 and 8. This cluster is similar to the Marginally Interested group in many regards. Many members exercise (58.3%), play a sport (46.3%), are unlikely to be health club members (26.8%), are unmarried (73.2%) and are currently enrolled at University (51.2%). This is also an ethically diverse group with a number of Hispanics (9.8%), African-Americans (7.3%) and Asian-Americans (7.3%). In comparison to the Marginally Interested cluster, members of this cluster are less motivated to engage in physical activity. Furthermore, cluster members are more satisfied, but less involved with their own health and fitness. The biggest difference between these clusters, and perhaps the most telling, is level of income. While members of both clusters report similar age and education, members in the Interest/Low Motivation cluster are more affluent than members of the Marginally Interested cluster. What may be influencing the Marginally Interested clusters level of interest is the perception of the cost of fitness services and their ability to afford these services. Cluster 4: Fitness fanatics. As indicated by the name, respondents in the Fitness Fanatics cluster are very interested in all fitness tests and services. This group apparently wants everything and is extremely interested in having a future fitness test (M=9.15). Members of this cluster are physical active; over 70% currently exercise while nearly 50% play a sport. Just over 50% are health club members and have had a fitness test. Members are also well educated with nearly 40% having either a

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bachelors or graduate degree. Members are also very involved with their health and fitness. Furthermore, they are very motivated to use exercise to become competent, to overcome challenges, improve their appearance, to socialise and to relax. Cluster 5: Healthy living. People in this cluster are characterised by their interest in services that help them assess and improve their health status. This is indicated on Table 3 with service interest scores highlighted in bold. For example, assessment of stress levels, nutritional counselling, cholesterol and blood pressure measures are all very interesting to members of this cluster. Members are also interested in obtaining a personalised exercise program and having a fitness consultation. However, they are not interested in securing the services of a personal trainer, nor are they interested in any of the fitness testing services. It would appear that members of this cluster want service bundles that educate them to look after their own health rather than have someone else do it for them. Members of this cluster are the most educated with over 40% having graduate degrees. Furthermore, they are the most affluent cluster and the oldest (M=35.56). They are very unlikely to play a sport (only 18.7% currently participate), and just over 40% currently exercise. In addition, only about a third are health club members and only a fourth have ever had a fitness test. Another characteristic of this cluster is that over 80% of members are women and more than 60% are married. It may be that this cluster represents working professional women who care about their health and fitness, but cannot find the time to exercise or engage in physical activity. Support for this is indicated in members reporting very low satisfaction with their fitness, but a moderate level of involvement with their fitness. Based on the services this cluster is interested in, it may be that members are trying to stay healthy. The services bundles they want help them to assess their health and fitness and incorporate the knowledge obtained from these services into their daily schedule. For example, stress management and nutritional counselling would be easily assimilated into their schedule without requiring extra time or commitment. In terms of their motivations for exercising, members are not motivated to achieve competence or to overcome challenges. It may be that their work provides them the opportunity to compete and overcome challenges, whereas exercising serves other purposes. They do, however, report moderate levels of appearance motivation and stress reduction motivation. Cluster 6: Sporty. Membership in the Sporty cluster is characterised by high interest in all fitness testing services. In addition, members of this cluster have virtually no interest in having a fitness consultation, a prescribed fitness program or a referral to a personal trainer. Members appear more interested in sport than in exercise. They probably want service bundles that help them assess their fitness and then will make their own program adjustments to help their sport performance. Other fitness services are also of little interest to this group, with the exception of cholesterol and stress level measures and nutritional status. Again, it appears that the Sporty cluster wants assessments which they can interpret themselves rather

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than direct information to help them improve their health and fitness. Services that offered consultation, information or instruction were not considered of interest. Characteristics of this group are that they are physically active (nearly 60% exercise and play a sport) however they are not likely to be health club members (only 7.1% are members). In addition, they participate regularly in sport (over three times per week). Members are likely to be male (78.6%) and single (85.7%). Nearly 60% are currently enrolled at university. This is the least affluent cluster. Moreover nearly 30% of respondents are African-Americans. Members of this group are highly motivated to achieve competence and to overcome challenges. However, they report only moderate levels of motivation for engaging in exercise to improve their appearance or as a means to reduce stress. These findings probably help explain their greater participation in sport than exercise. Finally, as one would expect, this cluster is highly involved with their own health and fitness. Cluster 7: The gym rat. Members of this cluster are only interested in tests and services that assess muscular strength or that assist in improving their body image. Besides tests of muscular strength, body composition, and percent body fat assessment; posture assessment and nutritional status tests were of interest to this group. These other tests help this group assess and improve their current body image and dietary needs. Similar to the Sporty cluster, members of the Gym Rat cluster want assessments rather than consultation, information or instruction. For example, assessment of nutritional status was of interest (M=5.60), yet nutritional consultation was not (M=4.13). The only exception to this is prescribed exercise programs (M=5.40). What differentiates these two clusters is that the members of the Gym Rat cluster have virtually no interest in any test that assesses cardiovascular function. For the Sporty group, cardiovascular function would be important for their sport participation. In contrast, Gym Rat members are likely more interested in bodybuilding or traditional weight training (hence the Gym Rat cluster name), which is not as dependent on cardiovascular function. Members of this cluster are very physically active with nearly 70% exercising and 60% participating in a sport. Over 70% have had a fitness test in the past; however only a third are current health club members. Furthermore over 90% are single and two thirds are currently enrolled at University. This group is highly motivated to achieve competence and overcome challenges, and they engage in physical activity as a means to relax. They are moderately motivated to engage in physical activity to improve their appearance and are highly involved with their own health and fitness. General trends. There were no reported differences among clusters in terms of their satisfaction with their health and fitness. In general, all clusters appear to be reasonably satisfied with their health and fitness. The one exception is members of the Healthy Living cluster who reported relatively low satisfaction with their fitness.

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In terms of motives for physical activity, the social aspect of physical activity was not an important motivating factor for clusters and there were no significant differences among clusters. The Uninterested and Healthy Living clusters reported the least motivation for engaging in physical activities for social reasons. A possible explanation for this finding is that members of these two clusters have other interests or little time to use physical activity for socialising. For the remaining three motivating factors (competence-challenge, appearance improvement and relaxation), there seemed to be a pattern among clusters. In most cases, the Uninterested cluster was significantly lower than all other clusters. The Fitness Fanatics cluster had significantly higher motivation on these factors than virtually all other groups. This created a continuum of motivation with the Uninterested cluster one at one end, the Fitness Fanatics cluster at the other and all remaining clusters bunched in the middle. A similar pattern is seen with Involvement with Health, although the Gym Rat, Healthy Living and Interest/Low Motivation clusters were not significantly different from the Uninterested cluster. The most complicated variable appears to be Involvement with Fitness. On this variable, the Healthy Living cluster is more similar to the Uninterested cluster while the Sporty cluster is more similar to the Fitness Fanatics cluster. These relationships and their implications for creating attractive service bundles are discussed in more detail below.

Discussion
Supporting fitness services are prevalent at health and fitness clubs. As the industry has become more competitive, it appears that not only the ubiquity of these services has increased but so too has their diversity. For example, some health clubs now offer medical treatments such as physical therapy and chiropractic care. Club members can even download healthy recipes from their health clubs webpage. Moreover, health clubs appear to be offering more opportunities to engage in sport participation. An underlying question of this research was whether people are actually interested in these supporting services. This is important because health clubs may be differentiating themselves from competitors on the basis of services that are not consequential. In essence, the strategy of offering numerous supporting services may just be an attempt to be different or to keep up with what everyone else is doing. Further, by taking a rather complicated approach to determining market segments, the marketer is in a position to provide more tailored, segmented programs. Along with the development of these segments, potential niche markets may be revealed. A niche market differs from a segmented market in that a niche market identifies a group of consumers who are not currently being served (Chalasani & Shani, 1992). In contrast, a segmentation strategy involves taking a current market and separating it into distinct groups. In the context of this study, segmentation strategies would be applied to current health club members or purveyors of fitness services while niche

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markets would be applied to consumers who are not current members or users of such services, but desire that certain services be offered. From the results of this study, it would appear that customers are genuinely interested in these supporting services. The question for health clubs then becomes which of these supporting services should they provide and to whom? In addition, it was acknowledged that a specific supporting service, fitness testing, was commonly available and yet not considered a highly profitable service (IHRSA, 2007). Health clubs therefore need to consider ways to bundle supporting services together and market these services to interested target markets. The identification of desirable bundled supporting services enables customers to make better use of fitness club services. This is a powerful differentiator of providers (MacMillan & McGrath, 1997). Moreover, by targeting specific markets, health clubs are able to have a strategic focus. By knowing which customers they want to attract, health clubs can ensure that their business operations and marketing are appropriately managed to attract and service those clients. Health clubs can develop service offerings that best meet the needs of their customers (Cahill, 1997) or develop service bundles to meet the needs of underserved consumers (i.e., niche markets). Having desired services available and purchased provides more opportunities for club personnel to interact with health club members or to recruit new health club members. The process of developing and servicing target markets, therefore, also sets the foundation of an effective customer relationship strategy (Zeithaml & Bitner, 1996). It does appear that desirable bundles of supporting services can be developed. Clusters five, six and seven confirmed this by their members interest in distinct service packages. Cluster fives primary interests are in services that assess and improve health status. A package that included assessments of stress and nutritional status along with health management training would likely be attractive to members of cluster five. For cluster six (Sporty) fitness tests were revealed to be of particular interest. Cluster seven (Gym Rats) further confirmed that fitness testing services could be developed into distinct bundles. This cluster reported high interest in assessments of muscular function and low interest in assessments of cardiovascular function. Therefore a package that concentrated on testing muscular strength and power would likely be popular with this group. While clusters five, six, and seven were able to identify specific services, the remaining clusters did not differentiate among services. Cluster one showed very little interest in any service, however the remaining clusters did appear interested, albeit to different degrees, in all supporting services. A possible explanation as to why clusters two, three and four do not differentiate among services is that they may not know which services they actually want. Alternatively, they may genuinely want everything and the health club marketer should bear this in mind when designing their service mix. However, perhaps it is not a coincidence that clusters two, three and four have the highest numbers of members. Clusters five, six and seven, the clusters who know exactly what they want, average fifteen members each. This

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suggests that a relatively small number of people know exactly what supporting services they desire. This should be expected since these supporting services are not common purchases. It is highly unlikely that someone has purchased these types of services frequently unless they are highly involved with their health and fitness. A more plausible explanation is that people in these clusters need guidance in choosing which services best fit their needs. This guidance is often called consultative selling. Consultative selling assumes customers want a consultant who can provide information so that customers can make up their own mind (Dunn, Thomas & Lubawski, 1981). The salesperson, in this case the fitness staff member, needs to have expert knowledge on all supporting services. The staff member needs to be perceived as an expert who is trying to provide helpful information to the customer rather than someone trying to sell a package (Chevalier, 1993). The process involves a fitness staff member determining and articulating the customers problems and needs and then presenting the benefits of a bundle of supporting services as a solution. The relationship that develops between customer and staff member is characterised by trust, mutual benefit and the development of a win-win solution to the customers needs (Chevalier, 1993). Having a diverse portfolio of bundled services or flexible service options would enhance this process. In addition, having trained staff that can perform consultative selling provides health clubs with another point of differentiation. In addition to understanding the consultative selling process, health clubs would also benefit from understanding the psychographic profiles and lifestyle characteristics of each cluster. Determining segments based on preferences enables the marketer to know exactly what people want. However, including traditional segmenting strategies, such as psychographic, demographic, and lifestyle characteristics provides added richness and enables the marketer a clearer understanding of the market. People can be segmented into categories based on their patterns of leisure interests and activities and are characterised by their interests, socioeconomics and demographics (Greenberg, 1983). For instance, it is known that individuals engage in physical activity for different reasons (Cash, Novy & Grant, 1994; Flood & Hellstedt, 1991; Frederick & Ryan, 1993; Gill & Overdorf, 1994; Koivula, 1999) and that segmenting by psychological involvement with recreational sporting activities is an effective way to identify target markets (Park, 2001). The process used in this study, although complex, did provide a complete picture of each market segment. Had the clusters been created using only traditional segmentation strategies much different and less informative cluster patterns would have emerged. By including preferences and then differentiating based on these preferences, the marketer has a better idea of which services to offer and to whom these services should be targeted. A detailed analysis of each of the clusters identified distinct patterns which would be helpful in determining marketing strategies. Health club managers would probably conclude that cluster one, The Uninterested, represents undesirable prospects. Members of this cluster reported low

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interest in all services and low involvement with their health and fitness. However, members also reported low satisfaction with their fitness. It may be possible to convince these individuals that supporting services could help them more efficiently and effectively improve their fitness. Even though this cluster may not appear a desirable market segment, a health club could market to these people. After all, members of this cluster tended to be more affluent and would be in a better position to afford membership fees and the cost of supporting services. This cluster maybe harder to convert and the challenge would be finding ways to motivate these people to exercise and to retain them once acquired. Fitness testing, coupled with a goal setting strategy based on the results of the test may be one way to motivate these clients. The Marginally Interested cluster and Interest/Low Motivation clusters were relatively similar. However, people in the Marginally Interested cluster were less affluent but more involved with their health and fitness and more motivated to exercise. The health club manager may have to change the perception of the price of supporting services if he or she wishes to target the Marginally Interested cluster. One way to achieve this would be by having flexible bundles of services coupled with consultative selling practices. The fitness consultant can then determine an affordable and tailored package for these people that meets their needs. Likewise, consultative selling would be useful to address the interests of people in the Interest/ Low Motivation cluster while simultaneously using these services to motivate individuals to exercise. Arguably the most attractive prospects are members of the Fitness Fanatics cluster. Not only are these people likely health club members and exercisers, they are also well educated and have experience with fitness testing services. Their high levels of interest in all services may represent a genuine desire to use all services. However, consultative selling may again be an effective way to translate this interest into actual purchase. In addition, these members may be influential in attracting others through word of mouth. Assuming that these members are satisfied with the service packages they purchase, it may be possible for their experience to generate more interest in these services among other health club members. Members of the Fitness Fanatics cluster may be admired by other health club members for their dedication to exercise. Therefore, knowing that these people use the fitness services may motivate other health club members to use these services too. The final three clusters require different tactics. The Healthy Living cluster is attractive because the people are very well educated and affluent. Improving appearance and reducing stress are motivations for these people to exercise. In addition, it appears that they are more interested in services promoting health rather than in fitness. However, people in this cluster are generally unsatisfied with their fitness. Because this group may be too busy to go to the gym, the health club manager might consider this cluster unattractive. Alternatively, fitness staff could instead go to the clients. It might be feasible for fitness staff to present seminars on nutrition and health at the workplace of these individuals. This would also serve to

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market the health club to other people working at these firms. Also, the health club could offer weekend seminars when these people may have more time. If this is a desirable target market then the health club manager is going to have to find ways to accommodate these individuals schedule into their program design. The Sporty cluster might also appear to be an undesirable target market since so few actually belong to a health club. This population may be a potential niche market that a health club could benefit from targeting. Although the Sporty cluster is the least affluent (and therefore least attractive) a health club could use supporting services to attract this cluster. In addition, lower membership fees could be offered to the Sporty cluster in exchange of off-peak hour membership privileges. If the health club offers sport participation opportunities (such as basketball courts), marketing to the Sporty cluster may maximise the use of their facilities and supporting services by increasing off-peak hour usage. The innovative health club manager could find other ways to bring these individuals into their complex for fitness testing. Because this cluster represents sportspeople, the strategy to recruit these people would involve targeting whole teams or leagues rather than individuals. Bundles of services could be developed that appeal to these sports teams, while the economies of scale could help make these services more affordable. In addition, because these individuals are predominantly attending University, bringing them into the health club could serve to market the facility for the future. That is, if the people from the Sporty cluster are impressed by the facility and the service, they may become members when they graduate from University and start full-time employment. The final cluster, Gym Rats, is attractive because they know specifically what they want and these services are generally easy to administer. For example, muscular power can be determined from vertical jump tests and long jump tests, both of which can be performed with minimal equipment. In addition, people in this cluster are motivated to overcome challenges; fitness tests can be instrumental in providing those very challenges.

Conclusion
The analyses reveal several implications for services marketing theory. First, supporting services need not be merely peripheral to the core service. Although the core service does not need supporting services in order to function, supporting services can complement and mirror the core service. Integrating the supporting services with the core service may enable the service manager to benefit more from these supporting services. For example, a protein smoothie bar may be more appropriate and better utilised by a gymnasium frequented by bodybuilders (e.g., Gym Rats cluster) than people who play sport frequently (e.g., Sporty cluster). This latter group would more likely benefit and want a smoothie bar that specialised in carbohydrate supplements. The point raised here is that it is possible, and perhaps desirable, to design and bundle supporting services that are aligned with the core

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service and their target market. Furthermore, the systematic process of determining market segments (and potential niche markets) by identifying preferences first, and then characteristics of these segments, provides the marketer with a well-rounded understanding of the target market. Based on these segments, the creation of distinct bundles enables the service manager to better service consumers based on distinct wants and needs. This knowledge can be instrumental in developing a relationship marketing strategy. A relationship marketing strategy focuses on keeping and improving current customers rather than concentrating on acquiring new ones (Zeithaml & Bitner, 1996). This is particularly important for the health club industry because a major challenge is maintaining a customer base. It has been consistently shown that approximately half of individuals who begin an exercise program will drop out within the first six months (Dishman, 1990). A relationship management program would appear to be very suitable for a health club in retaining members. It appears that customers are interested in all the supporting services, yet many of these services are not aggressively marketed by the health clubs that supply them. For instance, it was acknowledged that fitness tests, while pervasive in health clubs, are not heavily publicised. By integrating consultative selling into service delivery, health clubs managers will be better able to take advantage of these services. Many of these services are considered technical by a health club member. This lack of information can create a sense of risk-taking by the consumer (Fitzsimmons & Fitzsimmons, 2001). Considering that these services are unlikely to be purchased on a regular basis, and will most likely require reasonable financial investment, it is not surprising that they are not more heavily utilised. Consultative selling would help reduce the risk associated with using these services and help to increase the lifetime value of the customer through relationship marketing. Finally, these findings illustrate the importance of taking a strategic perspective in developing supporting services to augment the core product. It is unwise to offer a plethora of unrelated supporting services in the hope that customers will utilise them. Providing supplementing services helps to differentiate health clubs from their competitors. However, if health club managers wish to leverage these services and make them more profitable, then they will need to develop more tailored service bundles targeted at specific markets. Then, as with any service, these supporting services and the benefits they bring need to be communicated to and discussed with the consumer.

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