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Curves, OSIM

Storming Opposite Ends of Taiwan's Fitness Market

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In Taiwan's intensely competitive health product market, positioning is crucial. Two international brands are employing antithetical strategies 'one budget-priced, the other high-end' in bids to capture the island.

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Storming Opposite Ends of Taiwan's Fitness Market

By Ming-Ling Hsieh
From CommonWealth Magazine (vol. 375 )

The world’s largest fitness-center franchise will formally bring its business to Taiwan this coming January. Rated by the US magazine Entrepreneur as the number-seven franchise in the world, and number four in terms of low start-up costs, Curves has achieved success by catering to women, offering low membership fees and focusing on basic services. Brimming with confidence, this fitness franchise is set on stirring up a new fitness craze in Taiwan.

Having entered its twentieth year in Taiwan, OSIM has maintained its leadership position in the healthcare market by filling the demand for high-priced, innovative, and fashionable products.

Curves and OSIM have targeted opposite ends of Taiwan’s “M-shaped society” (one with spiking populations of the affluent and the lower-class, and a shrinking middle class). What marketing strategies have they adopted?

“It took McDonald’s 25 years and Subway 26 years to open 6,000 franchises. Curves did it in only seven.” On this afternoon of torrential downpours, Gary Heavin, founder and chief executive officer of the world’s largest fitness franchise, Curves, speaks with authority from the stage as he faces an audience of over 200, made up of people interested in opening a Curves center of their own, and others from the fitness industry. More than a few audience members have rushed up from southern Taiwan. Curves held this big conference at the end of June in order to pave the way for its entrance into the Taiwanese market.

Curves

A New Branch Opens Every Four Hours

Focusing on basic services, Curves has created a budget-priced health wave.

The fitness giant started its franchise business in 1994. Within just thirteen years, it has opened 15,000 fitness centers in 55 countries and enrolled over four million members in the process. In the two years since it entered the Japanese market in 2005, Curves has opened five hundred centers and signed up 120,000 members.

A new Curves opens an average of every four hours. The franchise has been expanding at an astonishing rate.

Diverging from the formula of the average gym, Curves is designed especially for women. It forgoes showers, spas, and saunas, and has even opted for curtains to conceal changing areas. There are no treadmills, nor is there any complicated equipment, just twelve simple pieces of equipment arranged in a circle. A full circuit can be completed in just thirty minutes. On average, an entire Curves center occupies just 1800 square feet, and has a staff of four.

The book Blue Ocean Strategy asserts that Curves has achieved success by building on the advantages of traditional gyms and home workout videos, which are at opposite ends of the consumer market, and by eliminating or cutting down on other superfluous elements.

For instance, when it comes to working out, what women ultimately care about is convenience, ease of operation, and an absence of the gaze of the opposite sex. Yet, they still hope to be able to exercise along with companions, so they can avoid laziness and receive assistance and moral support. Women are not very concerned whether or not they can get a glass of fruit juice at the juice bar or develop personal contacts as they workout.

Consequently, in a Curves fitness center, one is likely to see 50- to 60-year-old grandmothers as well as young mothers who must rush home to pick up the kids. There is no need to spend a long time or to dress fashionably. A simple workout is all they need.

Furthermore, the primary method behind Curves’ rapid growth remains old fashioned word-of-mouth. Members bring their friends, and, after having worked out at Curves for a while, many start to consider opening one in the own neighborhoods. When selecting locations, the franchise avoids high-rent, busy commercial areas in favor of residential areas easily accessible to members. This is yet another reason for its swift expansion.

Curves’s most important marketing channel is its reputation. Therefore, determining how to ensure consistent service for each and every member is crucial as it continues its rapid pace of development. The company puts its new franchise owners through two weeks of intensive training and employs a team of professionals that travels the world to provide support to its franchises. It has even established a virtual “Curves University” which offers help on a wide range of issues.

The franchise’s focus on basic services and cost reduction throughout its operations and marketing means its membership fees in the United States are half the average. At around NT$900,000, the cost of opening a Curves franchise of your own is also low. This low threshold has attracted even more Curves owners and led to a positive feedback cycle that has created the affordable Curves craze.

But will the fitness franchise be able to cause a similar stir in Taiwan?

Taiwan’s fitness market began to flourish in 1999, but started a down turn in 2003 and has remained stagnant since. Alexander Group closed three of its smaller centers last November as part of a restructuring effort. California Fitness also began to reduce the size of its operations at the beginning of the year. Many people believe the scale of Taiwan’s fitness market is already nearing the point of saturation, and growth has come to a bottleneck.

Regardless, Curves’ operations manager Chang Shen-hang notes with confidence that 72 percent of women in Taiwan have yet to visit a fitness center. This figure is even higher than that for Japan, a fact sufficient to bolster Chang’s confidence. The firm opened a pilot Curves in the Tianmu area of Taipei at the end of March. The company expects to be running 200 fitness centers in Taiwan within five years.

People have to think outside of the box, company founder Gary Heavin contends. The owner of a personal jet and a former Texas hot-air balloon champion, he believes that to take on the impossible, people must have the courage to leave their comfort zones. Only then will they see opportunities.

OSIM

‘Mercedes’ from the Starting Line

Through the course of his interview with CommonWealth Magazine, OSIM founder and CEO Ron Sim mentions the words “survival” and “battle” no fewer than five times.

He wears a suit without a tie, while small gold-rimmed glasses rest upon his face above a subtle smile. When not speaking, he exudes a certain yuppie air. Yet Sim, who runs five kilometers on the treadmill every evening and even competes in triathlons, is possessed of a resolute strength and righteous will to do battle.

Approaching fifty, Sim built his business in Singapore, where he is a third-generation ethnic-Chinese immigrant. The fourth of seven children, from the age of nine he sold shrimp wanton noodle soup on the street for hours a day, making only 80 cents for his efforts.

This self-made man has come a long way, indeed. OSIM’s profits have grown by an average of 24 percent over the last five years (37 percent for the four years leading up to 2006). It now operates 1,135 sales points in 28 regions around the world.

OSIM founder Ron Sim has endeavored to be a “Mercedes” from the time he established his brand.

OSIM’s strong and vivid brand DNA is at the crux of its success.

“A brand as such must have a clearly defined DNA. A brand must have personality. Whatever characteristics, whatever spirit, they must be clearly defined,” says Sim, who does not want to strive simply for price, but for value and brand as well.

Following an intensive analysis of the company’s brand DNA, Kelly Wong, director of GfK HealthCare Asia, has concluded OSIM is “a brand of luxury and creativity created for the affluent middle class.”

“Mr. Sim aimed to be a ‘Mercedes’ from the time he started establishing the brand,” says Mindy Wang, OSIM vice president for Taiwan.

After a brand is created, it must be buttressed securely by the two pillars of innovation and system.

Mindy Wang says “innovation” is aimed at reminding consumers of their leadership position.

“There is nothing on the market that cannot be imitated. Anything can be imitated,” exclaims Sim, whose sales suffered a sharp 30-percent plunge in the fourth quarter of 2006 due to Chinese knock-offs of OSIM products. “So you have to move swiftly and change swiftly.”

A “system” that ensures quality control will allow products and services to convey a consistent image.

“Imitation is not scary. The scariest thing is not having a system,” says Sim. What a system means is quality control. From the design, construction, and painting of the product to being particular about the “customer experience” at sales points, quality demands are of the utmost importance.

These demands go as far as requiring employees that deliver purchases to customer homes to wear uniforms with name tags and drive white delivery trucks so clean they show not even a speck of dust.

When Sim was building his business as an importer/exporter during the 1980s, Singapore was struck by a severe economic crisis in 1985. Though near the point of collapse, Sim maintained a determined courage, venturing abroad to Hong Kong to set up a branch.

Yet Sim is not prone to rushing without discretion. Before making a rapid move, he will settle on the direction along which he should proceed and the value he wants to create. As a result, he does not become discouraged or flustered easily. He knows how to withdraw as well as how to stand firm.

One of the reasons behind OSIM’s negative growth last year was its acquisition of US distributor Brookstone. Another was the impact of inferior quality copies made in China. These imitations drew negative press to the OSIM brand, which in turn had a substantial impact on sales. A look at sales figures for the first quarter of this year compared with those for the same period last year shows a further 22-percent decline.

GfK Group’s Kelly Wong has determined that, besides being confronted with price and brand image competition from copies and OEM products, OSIM is being pursued hotly by major international brands such as Philips and Panasonic.

Mindy Wang remembers how, when sales were slumping in Taiwan last fourth quarter, Sim, though faced with adversity, said simply, “You encountered a perfect storm.”

In addition to enjoying jogging, Sim gains pleasure from learning, by analyzing matters large and small. He returned just recently from an observation tour of the Mercedes-Benz headquarters, where he learned some things about the art of detail.

Sim says, “A businessperson must dare to think, dare to do, and dare to be.” From OSIM’s establishment, through its period of rapid expansion, to maintaining and confronting challenges to its brand, this single statement is most reflective of the attitude that has sustained him through it all.

Translated by Stan Blewett

Keywords:

好友人數