Whatever driving force is making you want to open a wellness facility and capitalize on this economic revolution needs to be validated with thorough evaluation of the market you plan to service.
The demographics are the foundation to your market research. Demographic resources available can be very expansive and detailed or very simple. Regardless of the resource, the core variables that must be consistent in this research includes total population, age, number of households, type of housing, children and distance from reference point. There are many sources to tap into to access this data, either via a Google search on the Internet for free sites such as www.freedemographics.com or contracting with industry experts to assist in the research.
Other variables that can be valuable in your initial assessment of your market include number of local businesses and types, housing trends, traffic count and patterns, zoning as well as present and future construction. These "other" variables are often better evaluated through the old-fashioned "drive time" reporting than the typical computerized demographic report. Drive time is referred to as the amount of time an average customer would be willing to drive to visit your facility, which is converted into miles to determine your territory radius. This does not mean that this "other" information cannot be retrieved from demographic reports. Rather, depending on the source, the accuracy may not be as near 100% or updated. Additionally, this drive time method of reporting on the potential market helps to increase the "feel" for the market as well as helps cross-reference the computer demographic findings.
Driving for Information
To be realistic of your potential market, you must know the drive time and the radius for your market. In general for estimating drive time, the greater the weekly visits, the shorter the drive time. Individuals do not mind traveling longer distances if it is something that they do not do on a regular basis. However, in the wellness setting, a regular customer would visit a facility on average three times per week, making a drive time of 10 to 15 minutes the maximum. Depending on the area (city, suburban or rural), mileage can range from one to two miles up to 10 to 12 miles for this drive time range.
How would you begin to evaluate your drive time and market radius? As obvious as it sounds, first and foremost is to have a location as a reference point to gauge drive time and total population. Without centering in on a reference point, ' many times you may get an inaccurate forecast of the target market as numbers may be strong but may not be accessible due to other uncontrollable issues (traffic, bridges, workplace, intersections, etc). This is also where typical census demographic reports are less valuable because they report on total population by county rather from a radius and may inflate some numbers that are not truly in your drive time market.
With your location finalized, you can now use a local map of your area and place a pin where you plan to open a facility to start your drive time reporting. Next you will need to drive every possible direction out from your proposed location until you have covered 15 minutes. While doing so, it is recommended to track the mileage with running times at the following mile intervals (1, 3, 5, 7, 10, 12 and 15) until you reach 15 minutes of drive time. Additionally, it is best to do this test during peak traffic times to give you a worst-case perspective to avoid over predicating on your potential market.
Pre-planning for the drive time radius technique involves organizing routes into north, south, east and west quadrants on an Excel spreadsheet. In each of the quadrants, create the following categories: housing plans, retail plazas, intersections, competition and other. For the housing plan category, be sure to note how many plans the drive time includes, what is the average price/home/plan, the number of homes in the plan as well as future housing plan projects.
When it comes to retail plazas, the same holds in documenting the total number you will cover in your drive time, but also make sure to look at tenants of the plaza that are either competition or more importantly, businesses that you could co-op with for greater market penetration. With the intersection category, you want to be aware of how many intersections individuals may have to encounter to get to your facility. Even habitual exercisers at times look for reasons not to exercise, so with this first time exerciser target market, be sure to minimize as many of the reasons that could possibly prevent this audience from having an excuse not to show up to work out. Competition category is pretty much straight-forward; however, I would strongly suggest you note both direct (exact same services) and indirect (alternative method with intent to deliver same results a.k.a. supplement stores, weight loss centers, etc.) competition to avoid any unexpected threats to your market share. Finally, leave room for an "other" column for anything that is unique, positive or negative that may affect your market. This could include business start-up trends (how many, life span, etc.), unique traffic patterns (one-ways, etc.) and if it is a bedroom community. (Bedroom community means that many of the residents only live in the area, but commute a greater distance than your drive time to get to work.) Having a bedroom community commuting outside your territory radius opens this group of audience to other options to choose from on their way to and from work that you will have to compete with.
Then in the columns after the quadrant categories, create columns for each of the miles intervals listed above that your drive time covers. Be sure to include a row below to allow actual drive time for each recorded mile interval.
Using the Numbers
Once you complete all the possible routes from your reference point, you have now created your radius to run your numbers. As mentioned earlier, this will also allow you to compare the 3D real life perspective or "feel" of your drive time market from the computerized demographic reports. By having this comparison, you now have the advantage of knowing if the numbers look strong on the computerized report and are supported via your drive time reporting that the area has enough market to support the start of a wellness facility. Another advantage of this spreadsheet is that it will serve as your foundation to your marketing strategy if your numbers are deemed feasible for a profitable facility.
Although this may sound time-consuming (and it is), we all know that knowledge is power, and this actual market knowledge combined with traditional demographic reports can give you the most realistic potential of making or losing money. In my next article, I will elaborate on what numbers from your demographic report you need to give your feasibility study the green light to move forward.
Mark J. Rullo, MS, CSCS, MES has over 17 years of club management and industry consulting experience with facilities ranging from personal studios to large chains and Medical Fitness Centers. Presently, Mark is Business Solution Consultant for the health and fitness industry and Territory Manager for Star Trac Fitness Products. Mark can be reached for questions at 724-972-8060 or via email at email@example.com.