2. Gym and fitness market analysis in Taiwan
2.4. The landmark brands of gyms in Taiwan nowadays
2.4. The landmark brands of gyms in Taiwan nowadays
Knowing the developing history and existing brands’ payment package is helpful to depict the market overview and know deep insights from the different customers, especially for the new brand, which entrepreneur or franchised in Taiwan market. Take the four landmark brands of gym in Taiwan as the case to study further.
Table3 : The information of four landmark brands of gym in Taiwan
Brand Fitness Factory (健身工廠)
Local (Taiwan) Hong Kong Singapore Local (Taiwan)
Logo
Established time
2005.10 2006.6 2005.8 2005.4
Notes The first listed gym 2010 launched In 2008 President
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$3billion $1.112billion $18million $15million
Service items Fitness, yoga and bowling
Fitness Fitness and yoga Fitness
Operation branches in Taiwan
27
First open base was in Kaohsiung and expand to the center and north. by every studio and at least 1 year
From the table, four landmark brands of gym existing now are briefly listed. Every brand takes their own advantages to dig deeply in their own niche market. They were aiming at the
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urban area in beginning. Fitness Factory , which has equipment business and capital first, turns to invest in fitness industry from the south cities to the north. World Gym is foreigner
franchising system, which emerged California Fitness, first landed in Taichung and opened 18 branches in Taiwan in opening year.
“ We choose the location where population can be 150,000 people within 15 minutes
transportation distance. We invested 55-60 million in every gym. The fixed cost will be 2/3 of
asset.”
“Basing in Koahsiung,we are aiming on expanding to north and middle cities of Taiwan
recent years. The principle of expansion is every branch will return the investment in
averagely 3-5 years. “
Quote from the <Business Week> interview of Fitness Factory CEO9, Chen Shen-I in 2015.
The Fitness Factory base in South and they first launched large scale gym in Chiayi, Miaoli and Pingtung. The local gyms accumulate the members at first time and the rent is less
9 Business Week <The Fitness Factory Spent 7 Years to Become Local Largest Chained Gym> 2015
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expensive. So the fitness factory had the economy scale as the base. In expansion stage, the branch can shorten the time of return the investment from 5 year to 3 year.
“Averagely, a middle or large scale gym fixed cost around $4 million NTD per month. If the gym is aiming 20 to 40 year-old white collar people as the target members. Every member
charge $1000 NTD as the payment package per month. Every branch goal is to recruit 4000
member to breakeven. In this case, many cities in Taiwan are potential.”
Quote from the <Global Views Monthly> interview of World Gym CEO10, John Edward Caraccioduring World gym first launched in Taiwan in 2010 and merged California Fitness 6 branches. It was shown that how evaluated the gym and fitness industry in Taiwan before he invested. As a result, the pricing strategy of the gym is highly involved with member numbers and turnover of capital.
2.3.1 Payment package
10 Can World Gym turn over the fitness culture in Taiwan? <Global Views Monthly
> ,Dec.2010. Vol.294
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According to the research of existing brands, most of gyms pack and sell their payment in
“year-contract” to the customers in general. But most customers calculate margin cost in
“ month “ as the unit , “how much I have to cost every month?” In other words, the sale people
always want to deal with you 2 year or more year contract. Only you buy 24 months, then you can have the best discount per month.
It’s an absurd phenomenon that very few gyms have simple and clear payment package announcement on their homepage or in front of door in Taiwan. The most complicated situation always happens in there are too many packages with many conditions to choose. In some particular circumstance, the sale people are authorized to bid the payment randomly for closing the deals. The customers don’t fully understand their rights and obligation over the contract and payment. Therefore, there are many customer disputes and complaints in lawsuit process.
2.3.2 Extra Payment type
A.Membership Fee and processing Fee
Membership fee is to ensure the member’s royalty to the brand. It’s common for charging the fixed fee such as admission, annual fee or membership fee. The payment could either be the
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entrance barrier or the switch cost to solid the relationship between the clients and the gym. Of course, the gym always claims more member-only benefits or service to secure.
Due to more and more requests asked from the customers, some gym will ask the “processing fee” for revising the contracts. The gyms want to set the barrier of revising and interruption of the contracts by all means.
B. All-pass fee
Pay the extra ratio fee and you can go more than one shop (in franchising system ex. World Gym and Being Sports in table 2) They have intensive branches in urban area and aiming the business people or white-collars who may work and stay in different places frequently.
C. Life-time membership
Pay high annual fee and all you can go as the VIP/ Long-time member. There were many disputes and customer complaints arising while the gyms were merged or closed. Especially after Alexander Health Club in Taiwan went bankrupt and sudden closed down in 2007, the customer failed the confidence in this kind of payment package.