Monday, November 17, 2008

Les Mills, Toned?

“New Zealand–based Les Mills is becoming a global fitness phenomenon by not operating gyms, manufacturing equipment or even making garments. Les Mills has found an unexploited slice of the fitness industry and attached its brand to it. It collects fees from thousands of gyms around the world, has raised the popularity of group fitness classes, and has attracted a loyal following amongst gymgoers and trainers alike. By any measure, the rise of Les Mills is impressive, but it’s not without its challenges. Les Mills’ products—choreographed fitness moves with accompanying music—are a global fitness phenomenon. Around the world, gym and fitness center customers are jumping, leaping and stretching to classes designed and produced by this Kiwi business. At face value, Les Mills has exploited changes in the macro environment (the desire for personal fitness and well-being, the combination of popular music with exercise, the growth of solo exercise). But there is so much more to this story. Not only has Les Mills directly contributed to the growth of the group fitness market, but it has also accessed economies of scale, operated strategically to position itself structurally, and played a very smart game with its customers. Much of this depends upon judicious use of its brand. Not content to be a mere supplier of routines and prerecorded music to gyms and trainers, Les Mills has built a consumer-facing brand. As a result, within a great many gyms today, a tiny but critical part of the gymgoing experience—the classes—are branded Les Mills. The International Health, Racquet and Sportsclub Association magazine has described Les Mills as ‘doing for group exercise what McDonald’s did for hamburgers.’ And the analogy runs deep. Production costs are (one assumes) very low because of massive economies of scale (designing and recording one ‘class’ for hundreds of thousands of gym patrons). So far, despite low costs, customers have shown they are willing to pay more for a tried-and-trusted brand.”

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