Transforming the Fitness Center Business Model: A Service-Profit Chain Approach

Abstract

With the surging need for indoor leisure activities for Koreans due to deteriorating air condition and weather, the competitions among various business segments in the fitness industry have also grown, facing a considerable challenge for survival. Many fitness centers suffer from bad quality of service, transient and poorly trained workforce, and damaging reputation; thus, deteriorating sustainability in the long run. While a few fitness center operators offer differentiated products and services, unique marketing programs, and deeply discounted pricing scheme in order to acquire new customers and retain existing customers, the business model of the fitness industry needs a thorough evaluation to test its validity and profitability. By using a case study, this research examines how one fitness chain company in Korea is differentiating itself and transforming the industry dynamics. Using interviews as primary research source, this paper incorporates the service-profit chain framework to examine the critical success factors of the fitness industry, identify differentiating service delivery factors, and explore further opportunities to establish as a sustainable business model. Finally, this study derives implications from employee and customer loyalty construct to reshape the future fitness industry.