Case study: Planet Fitness Value Chain Analysis

The growth in the fitness industry has been tremendous over the last several years as people get more self-aware of the importance of a healthy lifestyle. Healthy living is now a trend for millions of people globally, increasing the industry size and popularity. Planet Fitness Company, one of the top companies in the industry, was founded in 1992 to offer a high-quality fitness experience in a welcoming environment. The company eliminated unnecessary add-ons that led to expensive monthly gym rates, limiting gym accessibility to a large population segment. Lifetime Fitness is also a top brand that adopted a strategy that seeks to give members the experience and value they desire and four-in-one centers that appeal to a broad market while following a disciplined business model. This paper discusses inbound logistics, outbound logistics, and service value chain activities, focusing on Planet Fitness as the primary company.

Inbound Logistics

Inbound logistics is one of the primary value-creating activities associated with receiving, storing, and distributing inputs. Inbound logistics entails material handling, warehousing, inventory control, vehicle scheduling and returns to suppliers (Dess et al., 2018). Planet Fitness company negotiates with the equipment manufacturer and uses its market power to get the equipment at a lower cost than possible with an individual franchisee. It orders equipment from the manufacturers upon receiving requests from the franchisees or after identifying a need in their locations. The company ensures less rent and overhead expenses in its locations while reducing space to allow more equipment at once.

Comparison Company and Recommendation for Planet Fitness

Lifetime Fitness is better in many aspects. For instance, it can get more equipment variety hence offering a broader selection and catering to a variety of training goals. For a greater market potential in logistics, Planet Fitness should increase its supplier base to obtain more equipment variety for its customers. It could also improve stock availability by having more warehouses in different locations.

Outbound Logistics

Outbound logistics is associated with collecting, storing, and distributing the service to the buyers. It includes finished goods, warehousing, material handling, order processing, and scheduling (Dess et al., 2018). Planet Fitness requires franchisees to purchase equipment directly from them at a mark-up. The company has over 2,000 locations. With as low as $10 per month, members get unlimited access to a single location. Each of its stores is approximately 20,000 square feet, allowing for storage of more equipment. These locations are no-frills; without personal trainers, juice bars, daycare, and classes hence less fixed costs.

Comparison Company and Recommendation for Planet Fitness

On the equipment available for customers at each location, Lifetime Fitness is better because it offers customers a greater variety of activites to perform. The policies at Lifetime Fitness are customer friendly. For instance, they have no cancellation fees and allow customers to drop weights and lift barefoot. There is a more flexible dress code than in Planet Fitness. To build competitive advantage, Planet Fitness should offer more options for the customer by purchasing a greater equipment variety. It should also create flexible policies for the customers.

Service

The service activity includes all firm’s actions in providing service to enhance or maintain product value (Dess et al., 2018). Planet Fitness is located close to the customers for convenience. In most cases, its gyms are in densely populated regions where most customers can walk or even drive for a few minutes to get to the gym. It prides itself on “Judgement Free Zones” where every members regardless of their fitness level feels appreciated. Planet Fitness is one of the cheapest gyms in the country, which is a good choice for those unable to afford expensive membership plans, particularly the middle-class population. Additionally, it is the preferred option for beginners or those that often intimidated in the gym.

Comparison Company and Recommendation for Planet Fitness

Planet Fitness’s service is inferior to Lifetime Fitness in various aspects. Lifetime Fitness has an in-house, proprietary education and certification division (Life Time University) that offers curricula with over 20 professionals training the staff team and members. While Planet Fitness personal trainers do not provide one-on-one attention, at Lifetime Fitness, the trainers give more individualized attention to customers. Planet Fitness should embrace technology to train members and staff virtually. More innovation in technology and fitness would improve the customer experience. It should also evaluate their current offerings by assessing what works and what doesn’t to develop products and services that drive value.

Conclusion

As Planet Fitness and Lifetime Fitness continue to remain among the most popular brands in the Fitness industry, value analysis of their inbound logistics, outbound logistics, and service activities indicate a crucial difference.  Planet Fitness offers cheap gym services and has more locations than Lifetime Fitness. The analysis shows that Lifetime Fitness is better in service delivery and equipment varieties in their locations. Therefore, Planet Fitness should improve its market power by using technology to innovatively foster better customer experience and increase equipment variety. Inbound logistics, outbound logistics and service activites can generate a competitive advantage for the company.

References

Dess, G. G., McNamara, G., Eisner, A., & Lee, S. (2018). Strategic Management: Text and Cases (9th ed.). Mcgraw-Hill Education.