The importance of the appropriate segmentation approach and strategic fit between users and clubs in the health club industry: A theoretical framework and an empirical examination

The purpose of this study was to determine if a match between consumer needs and organization's offerings in the health club industry could enhance business performance. In addition, in this study two different market segmentation methods were compared to determine which one would be able to identify segments that create fit between consumers and club types. The theoretical background of the study was primarily based upon Michael Porter's (1980, 1985) generic strategies.To achieve the above goals, the health club industry was segmented according to the benefits offered to members by the various clubs and by the members' lifestyle (psychographics). These procedures revealed three benefit segments whose members sought benefits parallel to those offered by the identified club types, and three psychographic segments. Level of fit was determined by calculating the percentage of club members who belonged to a specific benefit segment and sought similar benefits offered by the club s. A dummy-coded multiple regression analysis was conducted using level of fit and club types as the independent variables and each of the performance criteria (return on investment, consumer satisfaction, and club density) as the dependent variable. The results revealed that level of fit was a major contributor to clubs' return on investment, explaining 53% of the variance. No other significant relationships were found between level of fit and the other performance criteria.The results of the study also revealed that psychographic information was not an appropriate segmentation basis for the health club industry. Counter to the benefit segmentation, this procedure identified only one substantial segment and two small ones. Further, it could not identify segments that create fit with the various club types.Beyond the applied implications of the findings regarding the health club industry, the study evaluated the concept of strategic fit and its contribution to clubs' profitability. The results of the study also validated the contribution of customer orientation to businesses' success by demonstrating the effect of responding to consumer needs. Future research should attempt to apply the concept and the model presented in different industries.U of I OnlyETDs are only available to UIUC Users without author permissio