Business Plan: Zumba Fitness

Introduction

Zumba Fitness is a case of allied enterprising individuals. Alberto Perlman remains the idealist whose knowledge about the Latin and Central American regions leads to the suggestion of numerous business ventures and plans. On the other hand, the enterprising Perlman learns about the demand for technological products but fails to forecast the risks involved with each of the ventures. The daunting effects of poor planning expose the nine business entities to losses (Fritscher & Pigneur, 2014). Further, the nine companies resell value depreciates from $8million to $4million in 2001 when the internet industry faces a slump. Alberto Perlman realizes Alberto Aghion's potential in structuring the ideal business plan to revive the dwindling fortune in the ICT venture.

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Eventually, the two childhood friends envisioned that starting an infomercial business venture would delve profitable returns if the target market responses would reflect their prospects. Coincidentally, their concept to run a fitness business was to grow from a meeting with an aerobics expert and trainer. Just on time, Zumba Fitness was launched featuring Alberto Perez class sessions (Fritscher & Pigneur, 2014). However, the fitness business faced various setbacks in copyright and marketing issues. Despite the financial constraints, the Zumba Fitness program remained a success, and Alberto Perlman anticipated a review of the major strategies would propel the entity towards profitability.

Environmental analysis of Zumba Fitness

Internal Environment

Zumba Fitness emanated from Alberto Perlman's individual concept. Therefore, the incorporation of Alberto Aghion and Albert Beto Perez was a desperate entrepreneurial decision. Arguably, the business consisted of three stakeholders who shared different business opinions. For example, Alberto Perlman focused on the infomercial industry after realizing that Latin American, Central American, and Western European audiences were shifting to the segment (Lyons & Hatkevich, 2013). On the other hand, Alberto Aghion was employed but still focused on the financial industry; an objective that ended with him quitting for the infomercial venture. Further, Alberto Perez became a stakeholder because of his expertise, passion, and competence in fitness art. With such, the three internal stakeholders lagged in establishing the ideal business plan that would guarantee the excellent performance of the entire operations. Instead, the team failed to plan the marketing mix approaches to enter the market niche. An example of the stakeholder’s lack of common objectives is evident in that each concentrated on the assigned tasks without suggesting any further decisions to forge growth in a profitable marketing channel.

External Environment

The first external stakeholders involved Crunch Gyms and its subsequent major shareholder Donna Cyrus. Apparently, Perlman and Aghion had assessed various business models and routines used in the fitness and exercise industry with little success. After producing the video with limited funds, the Zumba Fitness video sales depended on its websites traffic and Aghions sales in Miami gyms. The difficulties seemed exaggerated with a positive response in the market, superfluous DVD sales, and poor returns. Due to the desperate actions in pioneering a sales channel for the infomercial-based venture, Alberto Perlman agreed on the first offer without questioning the royalty, distribution, and overall revenue share (Lyons & Hatkevich, 2013). Therefore, the company’s lack of strategic planning remained erroneous to the anticipated success as the accruing revenue did not reflect the video sales of over 500,000 copies. Therefore, the Zumba Fitness program failed to become the idealized infomercial venture since the pioneers lacked sufficient information on the costing, management, operations, and advertising.

SWOT Analysis of Zumba Fitness

Strengths

Zumba Fitness program was introduced with the aim of tailoring an infomercial-based venture that would be a revolution to aerobic enthusiasts and athletes. To compete successfully, Alberto Perlman asked for the support of Aghion and Perez. It is realistic that the program was founded on a significant group of stakeholders who held sophisticated skills to ensure efficiency in the operations process (Fritscher & Pigneur, 2014). The business would succeed against other competitors following its choice of music and dance moves during the aerobic sessions. Similarly, Alberto Perez was a competitive trainer whose Latin American aerobic styles attracted the interest of the existing and new market segments.

Weaknesses

The main focus of the fitness program was becoming an infomercial business. Notably, infomercial businesses produce the core product, which in turn profits by promoting relevant products at a fee (Lyons & Hatkevich, 2013). The fact that the three stakeholders relied heavily on the revenues made from the sale of the videos threatened the main objective and goal of becoming an infomercial-based entity. According to the case, Kellogg Company is the only sponsor who impacted the Zumba Fitness program to conform to the core infomercial-related model.

Opportunities

The case indicates that the American and South American markets responded positively towards the fitness program. However, the setbacks occurred from the lack of proper pricing and other corporate issues. In support of the company’s growth forecasts, it is crucial to highlight that the increased sales and demand meant an increased probability in the number of sponsors. Therefore, the company bears the opportunity to approach potential sponsors, who will fund the costs for the advertising of their product brands (Fritscher & Pigneur, 2014). These opportunities are present in the health & nutrition industry, clothing & shoe brands, and entertainment equipment manufacturers. Notably, luring the sponsors is the ideal method to alleviate the costs. Subsequently, the sales revenues would translate to reduced overheads and increased profit margins (Lyons & Hatkevich, 2013).

Threats

Zumba Fitness program faced cross-cultural conflicts in its operations. For that reason, the company’s first video program faced a legal case for the abuse of music copyrights for one of the songs used in the choreography. Further, Zumba Fitness was set to become an infomercial business entity with the use of existing business strategies. To that effect, the new entrant would face threats from the American gyms which had franchised their brands and televised their sessions and art for a lengthy and successful period (Fritscher & Pigneur, 2014). Considering the fast growth in loyalty from enthusiasts with some videotaping sessions, the company should issue regulations and improve its branding and patenting plans for sophisticated aerobic tactics.

Problem Statement

The conceptualized idea to start a successful infomercial venture excelled with the introduction of Zumba Fitness, with positive market feedback for the video sales. However, the profits continued to dwindle despite the increased sales for the copies (Lyons & Hatkevich, 2013). Such difficulties challenged the company’s management in forecasting the course of the infomercial entity.

Development of Alternative

The company should address the costing and operations issues. Certainly, evaluations into the financing for the costs incurred in the production of each video are critical to eradicating unnecessary overhead. It is advisable for the entrepreneurs to consider sourcing grants from those companies that seem to manufacture relevant products for use in aerobic classes. The notion held is that aerobic sessions attract an ever-increasing number of audiences; hence, the need for educational adverts on the complementary products used in aerobics and fitness sessions. Given that companies understand the essence of promotion in attracting clientele loyalty, the Zumba Fitness program would be a convincing entity to earn credibility and financial support from indirect and direct advertisement deals with potential sponsors (Lyons & Hatkevich, 2013).

Evaluation of the Alternative Solution

The costing approach is a solution to depict the costs incurred unnecessarily during the entire operation. It is ideal to apply the approach as it avoids unexpected financial setbacks, while still showing other areas that should be addressed in order to tame the threat of poor returns on the investment. On the contrary, the costing approach could impose constraints in the production of quality products for each new release.

Approaching sponsors for grants and funds is a replenishing ideology that would revamp the speed at which Alberto Perlman and his associates would produce aerobic videos to reach the numerous demographic segments of the American and Latin American markets among others. On the other hand, the distribution and use of revenues from royalties could become a problem. For example, the company is vulnerable to legal constraints with the direct or indirect unsolicited use of patents (Lyons & Hatkevich, 2013).

Optimal Solution

The company should plan the short-term and long-term goals that the infomercial business would accrue for each of its services. Secondly, the company should patent any of its special services to avoid imitations, which could brew unexpected competition.

Implementation/ Action Plan

1. The operations and marketing approach should be specific to a certain plan.

2. The cost and returns on each investment should be measurable.

3. The profit ratio and the market share growth rate of the Zumba Fitness programs should be achievable.

4. The mission and vision statement of the business should be relevant and time-bound (Lyons & Hatkevich, 2013).

References

Fritscher, B., & Pigneur, Y. (2014). Business model design: An evaluation of paper-based and computer-aided canvases. In Fourth International Symposium on Business Modeling and Software Design, BMSD (pdf).

Lyons, E. J., & Hatkevich, C. (2013). Prevalence of behavior-changing strategies in fitness video games: a theory-based content analysis. Journal of medical Internet research, 15(5), e81.