Paul Wright: Branding Strategy and Expansion

I found Paul Wright’s comments about the franchise very interesting. In starting the business, he felt that having a well known name would give potential customers confidence about the gym. And he was right. The downside is that the name also has a reputation in people’s minds as being a place for bodybuilders, not for families. Because Mr. Wright wants a family friendly gym and has designed his business with this in mind, he is considering taking the name off the building. It seems a big, and expensive, thing to do. What might the downside be of not having the name on the building? Does he anticipate any adverse effects? Will all three locations have the same name? Mr. Wright’s strategy is to create midsize facilities, with great new equipment, and lots of amenities. He completes the atmosphere by hiring great people to staff the club, creating a welcoming and comfortable place for people to work out. When he opened the Ann Arbor location, it was the only new facility in the area. How has/will the opening of the new WCC fitness center impact his business? I’d like to know more about the decision to hire a company to re-design the group exercise program. I think it’s a great idea, but what factors led to this conclusion versus hiring individual instructors and doing your own programming? I’m also interested in the Saline expansion. After discussing small storefront operations, like the old Champions gym, the conversation turned to the Saline location – which will be a small storefront operation, like the old Champions gym. What factors led to the decision to open the smaller gym, instead of the midsize facility that was described as the niche in this market? Will it work more like a satellite location, with customers going to Saline for regular workouts and to Ann Arbor for classes? I would really like to see another conversation with Mr. Wright after the Saline and Novi locations are up and running. I’m interested in hearing more about the management issue and learning about his process in choosing and training managers. One thing I’ve always assumed (perhaps incorrectly) about health clubs is that a fairly significant bit of revenue is made from people who purchase memberships and don’t use them – all of those people who make January resolutions but end up not regularly using the facility. Does this factor at all into the strategy? Rachel Ouillette EMU Student

Blog for Gold’s Gym I really enjoyed listening the Mr. Paul Wrights interview it was interesting and informative. He has a rather positive outlook on how his businesses will perform with regards to the way Michigan’s economy has been going. Myself having family that lived close to Saline I do agree with Mr. Wright. There is and was a need for more workout facilities in that area. My husband used to live on the border of Saline and Milan and I had such a hard time finding a place to workout. I would often have to go to a local run down gym to get my workouts in. So even though the economy is bad in Michigan right now I agree that there was definitely a need and a market for a workout facility over in the saline area. Since Saline is a small town it will provide at least a few jobs in that area and boost the towns revenue. I do agree to some extent that many of the workout facilities in the Detroit area are inferior to other workout facilities in other states. I have been a member at several different gyms in the Detroit area and they really do not compare to the gym I currently belong to. I currently belong to Lifetime Fitness and I love it because this gym has everything I am looking for in a gym plus the extra amenities such as exercise classes, using the pool and child care are all rolled into my monthly payment and I do not have to pay any extra out of pocket cost for those services. When I went to other health clubs I found they were smaller in size and I had to pay extra to use the pool or to attend an exercise class. I would probably still be going to one of the other gyms I had belonged to if they had included more of the amenities I had been looking for. I think Mr. Wright will do well for himself if his facilities offer everything his target market is looking for. I think he should be conscious of the fact that there is a lifetime facility in Novi and there is a large population of that community that are members of lifetime fitness. It will be interesting to find out how many people leave lifetime fitness to try out the new Gold’s Gym. I like his branding strategy I think he is smart to work with other companies like Shake this, and a marketing firm to generate business. By talking to people who go to all gym sizes and by finding out what they want he puts Lifetime fitness and other gyms in the area in competition of each other. He had mentioned about changing the name of the gym from Gold’s Gym to something else which could work towards his advantage. By doing that he will still retain his current clients who go to the gym to body build. He will also gain clients who are not into body building who just exercise to stay in shape. I think he will retain both markets he has talked about in his interview. I don’t know if I would necessarily try his gym out because I like my gym. I know other people who go to my gym who were happier at smaller facilities but those facilities did not offer what they needed that is why they ended up at a larger gym. So if he concentrates on his branding strategy and what people want from a workout facility he should be able to operate successfully and gain the other clients who go to Lifetime fitness for the amenities but would rather go to a smaller gym. I think he is smart business man after building the Gold’s franchise in Ann Arbor he decided to build a facility in Saline which needed an updated facility as well as the economic help. He knows where to look and who to target when creating a new operation. I think all his hard work will pay off in the end. Best of luck in the future Tracy Jens Eastern Michigan University Student

Mr. Wright has quite a positive outlook when it comes to expanding his current business. Through the use of multiple franchises and business sizes, Paul hopes to appeal to all segments of the population. Paul is planning an expansion based on the need for medium-sized gyms. Paul is targeting a segment of the market who find that small gym facilities are not in good shape (equipment is old, facility is not nice) and not managed well and also targeting people who don’t like going to large facilities due to the time it takes to get in and out of the gym and because with large facilities, staff tend to be unfriendly. Paul’s strategy to appeal to all segments of the population is important when it comes to a business such as Gold’s gym. Many people work out and frequent the gym often, so it’s important to have a competitive edge in this industry. As the interviewer pointed out and Paul confirmed, that for people living in Ann Arbor, if one gym is two miles closer to their house than another, people are likely to switch to the closer gym, even if it is two miles. It’s important that Paul’s expansion strategy take into account a location within each town that will bring in the largest amount of business possible, which is very important considering how quickly he expects each of these new locations to be profitable. Paul understands that different demographics require different things. While Paul plans to open seven to eight additional facilities, they all will not all be the same. Paul plans to customize each facility as much as possible to meet the needs of the market in that location. I’m interested to see how the expansion pans out. It seems like an aggressive expansion plan considering that the Ann Arbor location opened fairly recently. It sounds like Paul didn’t expect for the location to be as successful as it was, and is now hoping to expand based on the success of the current location. Paul’s idea to have an overarching brand coupled with several sub-brands is an excellent idea. People are excited about brands they are familiar with, and it just may be that having the sub-brands as part of Gold’s gym that makes people decide to join or switch from competitors. Paul had a bright outlook for how quickly the new locations would be able to turn profits around. Paul did say that he was going to take what he learned from opening the first store and apply the “dos and don’ts” to the other stores he planned to open in an effort to improve them, which is wise. Paul’s branding plan coupled with excellent customer service is a great strategy that should appeal to a broad range of people. It sounds like Paul will need plenty of financing to get the expansion really launched, and as even he acknowledged, the lending industry is much more conservative now due to the state of our economy. I’d be interested in seeing an updated interview with Paul to see how things are going now. For the additional locations that have opened, have they been as successful as Ann Arbor? How is business doing at the Ann Arbor location? Submitted by Adrianne Smallwood-EMU Student

Being able to bring people into a new business is huge. Making the business bigger and better than other competing businesses is exactly what needs to be done to gain attention and bring people in. Opening different locations is a huge risk, but really exciting. Adding onto buildings and making it larger is such a good idea because I think it gets people excited seeing a new gym going in. It will get people interested and having hem see the gym will get them interested. 1000 visits a day is a large goal, but I feel its better to have a large goal if you are building such a large business. Its great to see these goals being made and different locations being built. The building you are putting the gym in you said has been vacant for 10 years!! That is crazy! Hopefully people still become interested and notice the gym. I would think people would be amazed that something is FINALLY going going into the space, but I also wonder if they are so used to it being empty, they wouldn't see that it is being used. Its awesome that you can employee so many people because it also gives job opportunities all through Michigan. A 15 year lease is a long time!! Good luck with everything, it sounds really great and like you have really good ideas. Sincerely, Brooke Young