New York Sports Club is one of the brand names under which New-York based Town Sports International (TSI) operates. TSI owns the Sports Club Network, a network of fitness clubs that, in addition to New York Sports Club, operates under the brand names Boston Sports Club, Washington Sports Club, and Philadelphia Sports Club. There are over 135 clubs in TSI’s network, located in four major urban centers: New York, Boston, Washington, D.C., and Philadelphia. TSI’s facilities offer a range of opportunities to engage in individual and group exercise and recreational activities, with the goal of serving patrons of all fitness levels. Club members who prefer to exercise independently have a full array of strength training and cardiovascular equipment to work with and have the option of working with a personal trainer to devise an individually tailored fitness programs. A gamut of fitness classes, including kickboxing, cardio conditioning, martial arts, spinning, yoga, and pilates, are available for those who prefer to exercise in a group setting. Select facilities offer additional recreational equipment including swimming pools, basketball courts, and tennis, squash, and racquetball courts. Sports massage, steam rooms and saunas, and baby-sitting/kids’ playrooms are also available.
With over 135 facilities and 350,000 members, TSI is one of the top two fitness clubs in the northeastern United States and the third largest fitness club operator in the country. TSI distinguishes itself from other fitness club operators by offering its clients a wide array of options. Concentrated in major metropolitan areas, TSI’s clubs have a definite urban feel and are designed to accommodate the needs and lifestyles of both city dwellers and residents of surrounding suburbs. TSI deliberately clusters its clubs around a central metropolitan location, then branches out towards the outlying metropolitan and suburban areas. This approach allows and encourages members to make use of more than one facility, enabling them to work out near home, before or after work, or on the way to or from an errand. In addition, TSI doesn’t cater to just one type of patron but offers facilities, programs, and membership options for everyone from the casual exerciser to the serious athlete.
Throughout its history, TSI has thrived on its ability to adapt, both to the needs and wants of the consumer and to the ever-shifting business environment. Along the way, TSI has made prudent use of opportunities to expand and to establish itself in new markets. TSI originated as a squash club business founded by Pennsylvania native Harry Saint in the early 1970s. An avid squash player himself, Saint hoped to capitalize on the growing interest in racket sports and started a commercial squash facility in New York City with $300,000 in seed money donated by private investors. Saint’s Fifth Avenue Squash Club hit the ground running, achieving positive cash flow in its first month of business and recording revenues of $375,000 and a profit of $150,000 by the end of its second year. Saint and his club manager, Michael Tascher, were key in ushering in the “squash boom” that hit New York City in the 1970s. Saint expanded, opening additional squash facilities and renaming the company “Town Squash Inc.”
The squash frenzy died down in the late 1970s, and the many new squash clubs that had emerged throughout the decade created tough competition for Saint’s enterprise. Town Squash was now in debt after expanding throughout New York City. Rather than accept defeat or try to push squash upon a consumer base that was no longer interested, Saint changed with the times. In 1979, he introduced Nautilus machines and group exercise classes at his facilities and began selling monthly memberships rather than charging yearly dues. The monthly memberships allowed members unlimited use of the club but shifted the responsibility of actually making use of the club’s services to the members themselves, who could use the club facilities as many or as few times per month as they saw fit. Among Saint’s early innovations was the use of electronic fund transfer to facilitate payment of membership dues, which dramatically diminished the collection costs. In 1980, Town Squash Inc opened its first Washington, D.C. facility.
In the early 1980s, Saint sold his share of Town Squash and left stewardship of the growing fitness network to Tascher and his sales manager, Robert Giardina. Tascher and Giardina shifted the focus ever more firmly away from squash and towards the health club aspect of the business, billing their facilities as “racket and fitness” clubs. In the mid 1980s, when interest in squash reached a nadir, Tascher and Giardina changed the company name to Town Sports International. To facilitate his sales campaign, Giardina standardized the names of the clubs, eventually dubbing them “New York Sports Club” which was shortened to “NYSC” for purposes of the company logo.
In the 1980s and 1990s, Tascher pursued an expansion strategy that involved taking over underperforming clubs throughout New York City, adding considerable clout and name recognition to the New York Sports Club brand. By 1995, TSI owned and operated 26 health clubs which collectively served a membership of 56,000. In the mid 1990s, Tascher engineered the sale of TSI through a leveraged buyout. The company continued to expand aggressively throughout the New York metropolitan area though the late 1990s and also expanded its network of clubs in the Washington, D.C. area. In 1996, TSI broke into the Boston market, and in 1999, it opened its first club in Philadelphia.
TSI managed to grow and expand as the years went on, even as some of its competitors stumbled during economic downturns, by finding a viable business market and replicating it and by taking advantage of numerous takeover opportunities. Since its inception in the early 1970s, TSI has survived and flourished by implementing cost-effective construction and operation standards and procedures and developing a club layout and membership program that is flexible enough to adapt to variations in real estate environments and consumer needs. TSI’s club format is the same from city to city but each metropolitan club cluster is branded according to location to give the facility a local feel and convey the message that the club and its parent company are aware of, concerned with, and part of the patrons’ community.
The moniker “New York Sports Club” was originally conceived as a way of unifying all of TSI’s New York City locations under a single brand that would be memorable to the consumer and allow for sales efficiency. The TSI logo itself is simple, eye-catching, and easily recognizable, consisting of a red oval, tilted on its side with the initials “NYSC” printed in white. The logo is easily adaptable for the clubs in TSI’s other urban markets, with “BSC” imprinted on the Boston Sports Club logo, “WSC” imprinted on the Washington Sports Club logo, and “PSC” imprinted on the Philadelphia Sports Club logo. The logos are each sufficiently unique to clearly correspond with their respective markets. However, they are also sufficiently similar that the consumer and potential client understands immediately that each logo belongs to the TSI family. The genius of the New York Sports Club Brand and of the TSI logo is that it retains a certain individuality and site specificity while remaining adaptable to any future markets which TSI may eventually break into.
In its advertising, TSI appeals to the pragmatic side of the consumer with slogans exhorting potential members to join because it will be good for them; one of TSI’s current advertising slogans reads: “Protect your most important asset. Your health.” Rather than tempt the consumer with needless frills and luxuries, such as spa treatments and towel service, TSI’s advertising recognizes the uneasiness that people feel about spending money on “extras” in the current economic climate. But, TSI also simultaneously reminds the consumer of the importance of his or her health and of the positive health effects of exercise. If you spend money on anything, TSI seems to be saying, then you ought to spend it on your own physical well-being. In conjunction with this campaign, TSI has lowered its initiation fee from $149 to $59. As it has done throughout its history, TSI is positioning itself as a quality gym at a discounted price, a club where you can get everything you need without paying the prices commanded by ritzier facilities.
Internal Marketing
Internal marketing is marketing that the organization focuses inward towards its employees rather than outwards towards consumers and potential clients. Its ultimate goal is to instill in the employee an intimate understanding of the organization’s core values and mission so that it becomes a source of satisfaction and pride in the employee to act consistently with the purposes of the organization. The success of an internal marketing plan begins with the recruitment and training of employees. Its effectiveness depends upon an organization’s successful efforts to supply incentives to employees to engage in “marketing behavior.” The internal marketing approach treats employees as an indispensable resource upon which the organization’s ultimate success and survival depend. In essence, the employees becomes both an “internal customer” and a stakeholder in the organization.
In treating the employee as a customer, it is important for the organization to focus on maximizing his or her satisfaction with his or her position and work environment. Employees who enjoy their job will be motivated to do their best for the organization, and performance levels will increase as a result. As stakeholders, employees will take pride in the organization and seek to enhance its value. If employees believe themselves to be an integral part of the organization, they will understand the importance of their interactions with customers and take their role as representatives and ambassadors of the organization seriously. The more valued employees feel, the more they will value the organization and the more they will voluntarily shoulder responsibility for the organization’s successes and failures.
Making employees feel valued entails educating them thoroughly regarding the goals of the organization, the strategies it uses to achieve those goals, and the services that it seeks to provide to its client base. They must be kept informed of new developments in organizational concepts and structures. Before the organization begins to sell itself to its potential customer base, it must first sell itself to its employees by selling them on their role as partners in the organization itself. Doing so requires considerable investment in on-the-job trainings and the development of incentives and compensation systems that will reward individual accomplishment. At all times, the employees must see their interests and those of the organization to be interdependent.
TSI employs several internal marketing strategies that aim to forge a solid, interactive relationship between the company and its staff. It provides its sales consultants with a two-month in house training program to learn the specifics of TSI’s sales strategy. TSI has created a Learning and Development department to manage to devise and implement training programs in leadership, operations management, information technology and customer service for its managerial and administrative staff. A “Club Support Group” coordinates all departments within a single club; these support groups ensure that policies and procedures will be implemented consistently company-wide.
To foster a sense among employees that they are personally invested in the success of failure of the company, TSI has also instituted incentive-based compensation: all employees are eligible for bonuses which are contingent upon club performance. Sales personnel receive incentive bonuses based on club and company-wide enrollment and retention goals. Managerial personnel receive bonuses that are linked to overall club and company financial performance.
These training and incentive programs are also implemented at the level of the Club staff who interact most directly and frequently with individual clubgoers. Personal trainers are treated to a comprehensive, ongoing training curriculum which progresses from basic to advanced skills and fitness techniques. The trainers are held to clearly outlined, professional standards: TSI defines “four levels of professional competency” and ties a different compensation band to each level. Personal trainers must adhere to these standards in order to meet and maintain the requirements for each compensation goal. In addition to an hourly pay scheme for trainers, TSI has also implemented a revenue-split pay structure. In other words, in addition to receiving an hourly wage, personal trainers at TSI also receive additional commission-based compensation based on a percentage of the revenue earned from the sessions they provide to club members.
To foster job satisfaction, TSI offers a comprehensive and competitive benefits package which includes health insurance, dental insurance, disability insurance, the option to pay health insurance premiums pre-tax, commuting and dependent care flexible spending accounts, and 401 k plans.
Performance Marketing
Performance marketing focuses on maximizing the value of the company for its stakeholders by creating a well-defined niche in a competitive market. However, the performance marketing approach recognizes that an organization’s value cannot be maximized by attending simply to a balance sheet and the bottom line. Rather, the organization must also address employee wellbeing, corporate citizenship, and accountability to stakeholders as well as its legal, social, environmental, and ethical responsibilities. In other words, in marketing itself, a successful organization must look beyond its own confines and incorporate in its actions and decisions the broader concerns of society at large. Because companies operate within society, they must be mindful of how their behavior impacts society’s welfare for better or worse. The benefit of this approach does not only accrue to society. Social responsibility has become an increasingly important factor in a company’s strategy to gain market share. A company which presents itself as a socially conscious actor will gain in terms of public reputation as well as customer and employee morale which in turn will strengthen the core business.
TSI recognizes the value of being a good corporate citizen. In 2007, TSI’s NY Sports Club division enlisted Snapple and Jet Blue Airways as sponsors for its 24-hour Spin-a-thon, which was held in Grand Central Terminal in midtown Manhattan. The event raised $250,000 which TSI donated to New York-based HealthCorps, an organization that sponsors school-based programs for youth on diet, nutrition, and exercise. TSI has also partnered with Healthways, Inc. to offer the Silversneakers Fitness Program, an innovative exercise program specifically to meet the needs of the elderly, particularly those dependent on Medicare. The program features a variety of fitness classes taught by specially-trained Silver-Sneakers instructors and personal trainers.
Integrated Marketing
Integrated marketing focuses on the integration of all marketing activities into a single strategy to ensure that all components of marketing and communications work together. The goal is to incorporate marketing into all steps of the complicated process of creating or designing a product or service, communicating the value of the product or service to the consumer, and ultimately delivering the product or service to the client. This involves analysis and synthesis of the “4 Ps”: Product, Promotion, Place and Price” and expresses itself in the way in which a brand or service meets customer needs, provides value to the customer, and interacts with its own, and the customer’s, environment. Successful companies are ones that meet customers needs conveniently and efficiently and with effective communication.
TSI delivers its product to consumers efficiently and at a relative cost savings through its cluster strategy. Its policy of regional clustering allows it to provide special features or programs, for instance a swimming pool or a squash court, in only one or two clubs in a region but still provide that feature or program to all members in the region. Clustering is also convenient to the member who can choose to work out at a club near home one day and near work another. Regional clustering also makes TSI’s brands very attractive to corporations seeking group memberships.
TSI also provides the customer with flexibility. A member can choose from a myriad of membership options and value-added services in order to put together a fitness program and workout schedule that is tailored closely to his or her needs. TSI offers both a “passport” membership, which allows members unlimited access to all clubs in a region, and a “gold” membership, which allows unlimited access to a “home club” and access to other regional clubs during off-peak hours. TSI also offers month-to-month memberships as well as one- or two-year “commit” memberships which give the customer the option of locking himself in to a membership for a one or two year period at a discounted monthly rate. In addition, visitors to TSI’s web site can purchase a two-week trial for $19.99.
TSI also offers an array of “value-added” services such as personal training and children’s programs. Members also have a great deal of flexibility with respect to whether and how they will take advantage of these services. TSI is most eager to sell its personal training program. It offers introductory personal training sessions at a discounted rate. In addition, members can purchase training sessions singly or in a package, and they have the option of small group training as well as one-on-one sessions. For those members who want some guidance without the expense or rigor of personal training sessions, TSI offers an “Xpress Line,” an eight-station, 22-minute total-body circuit workout, which is trainer-supervised but also free, and designed to meet the needs of all fitness levels. Visitors to TSI’s website will also find “Active Trax,” a free online personal training tool.
Relationship Marketing
Relationship marketing focuses on developing solid, lasting marketing networks and strategic alliances with all the individuals and entities that are involved, either tangentially or directly, in the organization’s marketing activities, including customers, employers, partners, suppliers, retailers with similar client bases, and government agencies. Such a network of long-term, dependable relationships is beneficial to all parties involved. The result is to tie together the economic and social welfare of those involved in the network so that they will be motivated to work for one another’s benefit.
TSI has indeed taken steps to develop such strategically beneficial relationships. TSI is a member of the International Health, Racquet & Sportsclub Association (IHRSA). As a member of IHRSA, TSI has lobbied government representatives for tax credits for gym membership fees, resulting in the recent introduction of bills providing tax breaks in the state legislatures of New York and New Jersey. TSI also has a dedicated sales department which employs approximately 410 in-club membership consultants, with 20 full time employees dedicated to corporate and group sales to companies and organizations with over 100 employees or members. In addition, TSI runs occasional member referral incentive programs through which existing members receive discounted dues in exchange for enlisting friends and relatives to join one of TSI’s clubs. New York Sports Club is also the official health club of the New York City Fire Department, offering training programs for full-fledged firemen and other department employees, as well as applicants and trainees.
TSI has also partnered with Zoom Media and Marketing, a targeted out-of-home media provider, and Health Club Panel Network (HCPN) whose digital network allows marketers to place promotions, commercials, and other marketing communications in health clubs. Through Zoom, NY Sports Club locations showed the entire second season of the HBO show Entourage in a continuous loop on closed-circuit TV in order to promote Entourage’s third season and the DVD of season two. TSI’s 135 club facilities include a network of over 7100 personal entertainment units, primarily stationed over cardiovascular equipment, that provide color screens for TV viewing and allow the piping in of a personalized music video channel as well as promotional spots.
NY Sports Club has also participated in giveaway promotions and “sampling programs” through which members are provided with free samples of products targeted to health club members, such as shampoo and soy-based beverages, Dove Nourishing Hand Wash, Special K cereal, Slim-fast, and Propel Fitness Water. TSI has also worked with the skin-care brand Nivea to sponsor a 45-minute Nivea Goodbye Cellulite Workout to promote its cellulite-reducing skin creams and lotions.
