BIG JIM'S GYM

Big Jim has been in the body building business for many years in Glendale, California. His gymnasium,
originally for men, now consists of separate facilities for men and women located beneath a pizza parlor
in downtown Glendale. Jim's view the primary task for his business as "providing a full range of body
building and weight reduction services for upper and middle-class men, women, and children in the
Glendale area."

Currently, he has 20 employees who work with the customers in designing their health programs. At
present, his gym has separate weight-lifting and exercise rooms for men and women, a pool, a sauna
bath, and a small running track behind the building. While Jim states that every customer is different, he
makes men go through his 23-step conditioning course and women follow the diet in "Big Jim's Energy
Diet" pamphlet. (Customers are usually enrolled in a ten-week introductory course and then left to
advance at their own pace.)

The gym is modeled after the one Jim first managed in an army camp in Pennsylvania "right down to the
olive-drab walls." Jim maintains that the Spartan atmosphere is necessary "to build physical and mental
toughness." With some pride, Jim notes that he has all of the latest barbells and slant board apparatus.
Jim has always viewed his major inventory items as liniments and bandages, which are ordered
periodically from a wholesaler or are purchased from a nearby drugstore if stock-outs occur. (Other
items are purchased from a local sporting goods store.)

Jim is very concerned about keeping all of his staff busy and keeping the equipment in constant use so
he requires that customers follow a specific hour-by-hour schedule on equipment use. If the equipment
is scheduled to capacity, he requests that his customers come at slow periods during the day or evening.
(This procedure has met with some resistance on the part of customers, but Jim tells them that that is the
price they must pay if he is to provide the most up-to-date health center services.)

Jim has done a survey of the prices charged by the other four health centers in the area and his fees are
about average.* The other health centers have about the same number of employees, although two of
them used licensed beauty consultants. Jim considers this an "unnecessary frill" and tells all of its
customers that anybody who works for him is an expert on all aspects of body maintenance. Jim has
instituted a policy of job rotation whereby each member of the staff, with the exemption of the clerk-
typist, changes activities each hour. Employees are paid by the hour and are primarily college graduates
who are interested in athletics. Turnover has not been a problem, even though Jim pays only slightly
more than the minimum wage.

Although Jim's capacity is fully utilized, the number of memberships has dropped from 500 to about 300
in the last six months, and profits have dropped proportionately. His accountant is looking into the
possibility of raising membership fees.
The Problem of member retention can be due to the following contributing factors:

1) Lack of personal attention and member engagement

With rotating staff members with no specialization and a strict 10-week course for everyone, Big
Jim doesn’t give much attention to an individual’s personal needs and goals. A high turnover rate of
under paid college graduates also hampers the customer comfort.

2) The Spartan like military Atmosphere

Urban population use exercise/gym as a catharsis from their stressful life and they require relief &
not mental toughness.

3) Member oriented approach vs Equipment and staff utilization-oriented approach

The capacity of the gym being fully utilized even after member drop show that they need to shift to
a member-oriented approach

4) No Experts just the staff

Experts required for better customer engagement and customer & staff management

5) Lack of premium service at a premium price

While charging a premium price, the program has to be designed for all the members individually by
considering optimum utilization of equipment without discomfort to members and frill is required for
new business development and customer attraction.

Contributing factors for the Problem of member retention:

1) Lack of personal attention and member engagement

With rotating staff members with no specialization and a strict 10-week course for everyone, Big Jim
doesn’t give much attention to an individual’s personal needs and goals.

2) The Spartan like military Atmosphere

Urban population use exercise/gym as a catharsis from their stressful life and they require relief, not
mental toughness.

3) Member oriented approach vs Equipment and staff utilization-oriented approach

The capacity being fully utilized even after member drop show they need to shift to a member-oriented
approach

4) No Experts just the staff

Experts required for better customer engagement and customer & staff management
5) Lack of premium service at a premium price

Individual program needs to be designed for members considering optimum utilization of equipment
without discomfort to members and frill is required for new business development and customer
attraction.

____________________________________________________

'With m this market segment, Jim is competing, among others, with the Glen dak Athletic Club. GACs facilities include
ten handball-racquetball courts, eight tennis courts, 50-meter pool, sauna and steam rooms, a weight room with five
S5,000 Nautilus weight lifting machines, and a fully equipped health bar. GACs staff includes a trainer, five masseuses,
five instructors, and ten other staff members.