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INTERNATIONAL ISLAMIC ECONOMIC SYSTEM CONFERENCE (I-iECONS 2021)
From Physical to Virtual: Service Innovation at My Body Fit
Siti Falindah Padlee
Faculty of Business, Economics and Social Development, Universiti Malaysia Terengganu (UMT), 21030 Kuala Terengganu, Terengganu, Malaysia
Tel: +609 668 4240 E-mail: [email protected]
Ummi Salwa Ahmad Bustamam
Faculty of Economics and Muamalat, Universiti Sains Islam Malaysia (USIM), 71800 Nilai Negeri Sembilan, Malaysia
Tel: +606 798 6416 E-mail: [email protected]
Abstract
Due to the pandemic, most service companies in Malaysia have changed their strategy from providing offline services to online services. This case study is about My Body Fit Camp and Team Building (My Body Fit), which offers health and fitness services and consultations. The company has changed the business strategy which they introduced service innovations, offering free classes on online platforms via social media. The company is employed service innovation in finding new business opportunities instead of offering the usual physical health training at the gym. The company decided to go online, they contacted their previous customers to join the online program. At the same time, they have to be creative in preparing online contents to attract potential new customers. From the case it was found that online service business has a high potential to succeed and reach its targets especially in managing the business during the COVID-19 pandemic. As for the lessons learned from the case, the virtual health and fitness training business has ex-posed the company to a new business environment that is very exciting to explore. Therefore, business need to creatively and innovatively grab op-opportunities especially in responding to crisis during pandemic.
Keywords: Service innovation; COVID-19 pandemic; online service business
Introduction
The health and fitness industry in Malaysia is expected to grow in coming years. Although this industry has been severely affected since the emergence of the COVID-19 pandemic in the year 2020, this industry has still been able to sustain itself. Due to the pandemic, most service companies in Malaysia have changed their strategy from providing offline services to online services. This case study is about My Body Fit Camp and Team Building (My Body Fit), which offers health and fitness services and consultations. My Body Fit also provides per-sonal and group training in weight and health management. The company has been in a fitness services for about 15 years. Before the introduction of the Movement Control Order (MCO) due to the COVID-19 pandemic, the company used to provide face-to-face fitness training sessions and conduct classes on health management. When the MCO was implemented in Malaysia in March 2020, the company’s operations were severely affected by the new restrictions. Face-to-face activities were prohibited, which prevented the company from being able to operate as usual. Under the MCO, all of the company’s employees were not allowed to work in the workplace; they had to work from home. This situation was challenging for the company as they needed to provide the same service but in a different mode to their
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customers. Hence, the company decided to venture in-to the online service business arena. This was a new business environment for the company, so they needed to become more creative and innovative to ensure their business survival and to maintain customer loyalty.
Background of My Body Fit
My Body Fit is a company that provides health and fitness services. The focus of the company is on providing consultations to customers to enable them to maintain their fitness and to stay healthy. My Body Fit also provides training on weight management and fitness to customers as individuals or in groups. The company is located in the city of Johor Bahru, Malaysia. Mr Bahagia Jemali, the owner of My Body Fit, has been in the health and fitness industry for about 15 years. He started the business when he was a Physical Education teacher at a school. He pursued his bachelor’s degree as well as a master’s degree in Sports Science at the local university. Mr Bahagia quit his teaching job in order to focus on managing the company. During the beginning of the company’s operations, only he and one other trainer ran the business. Then, due to increased public awareness of how physical exercise impacts on well-being, the company expand-ed their business by increasing the number of staff to four. Since the company is a service-based business, the company hires professional and experienced members of staff to ensure that quality services are provided to their customers.
The COVID-19 outbreak
Coronaviruses belong to a sizeable family of viruses and can cause illness not only in animals, but also in humans. With regard to humans, several types of coronavirus are known to have caused infections of the respiratory system on a continuum from the common cold at one end to more severe diseases at the other end, such as Severe Acute Respiratory Syndrome known as SARS and Middle East Respiratory Syndrome or MERS. The most recently discovered coronavirus is called COVID-19. The virus that causes COVID-19 is a new virus and its virulence was not known prior to the epidemic that started in December 2019 in the city of Wuhan, China. In March 2020, COVID-19 was declared by the World Health Organization (WHO) to be a pandemic as it was affecting numerous countries globally, including Malaysia (WHO, 2020).
During January 2020, the virus began to spread throughout Malaysia. On 25 January 2020, the virus was traced to travellers who were of Chinese nationality entering the country through Singapore. At that time, the numbers of cases being reported due to the virus were relatively low. Also, the cases were mainly imported. However, in March 2020, local clusters started to appear. Within several weeks, Malaysia had accumulated the most significant number of confirmed COVID-19 cases in Southeast Asia. By the end of March 2020, the number of active cases had exceeded the 2,000 mark, a substantial increase from not more than 30 at the beginning of the month. As early as 6 January 2020, preparations to stock essential equipment for detecting and monitoring cases and for treating patients infected with COVID-19 had been initiated (Elengoe, 2020).
In early March, as the cases began to spike, there was deep concern as the outbreak was continuing to escalate.
Therefore, on 13 March 2020, the Prime Minister of Malaysia announced measures to fight the outbreak. On 16 March 2020, it was announced that a MCO would be imposed nationwide with the aim of curbing the spread of COVID-19 by the means of social distancing. The MCO was to be implemented from 18 to 31 March 2020. A gazette notice was made at the federal level on 18 March 2020, which restricted people from inter-state travel. Then, on 31 March, 2020, the government extended the MCO for an additional 14 days to 14 April 2020. This decision was made in response to the number of new cases per day remaining consistently high. Later, an extension of the MCO to 28 April 2020 was announced and it was extended again to 12 May 2020. Meanwhile, on 1 May 2020, the restrictions were gradually eased under the implementation of the Conditional Movement Control Order or CMCO, which allowed many businesses to resume their operations beginning 4 May 2020, but only under a strict standard operating procedure (SOP). It was emphasized that the SOP must be followed to break the spread of COVID-19. In addition, the government required that people should also adopt and adapt to new norms, one of which was the practice of working from home to limit people’s movement within the country.
166 The health and fitness industry
The Malaysian Fitness market has been growing at a rate of 9.5% a year since 2014 and reached a total market value of US$200.69 million in 2017; as reported by the International Health, Racquet & Sportsclub Association (The Edge Markets, 2019). This industry has potential to grow and is expected to witness an explosion in growth in the future. Revenue in the Fitness segment in 2021 is expected to reach US$4.8 million (Statista Market Forecast, 2021).
The eServices market segment, Fitness, comprises of two product categories: (1) portable, connected fitness devices (Wearables) and (2) digital fitness and nutrition applications for use with a smartphone and/or tablet (Apps).
The wearables segment includes devices that are explicitly intended for fitness. The wearables segment includes fitness wrist wear which is equipped with sensors and activity trackers that measure and analyse the physical activity and body functions of the wearer. Smart clothes and eyewear are also included in this category. However, smartwatches are not considered dedicated fitness equipment, so they are excluded from this market segment. The Apps segment includes fitness and nutrition apps (e.g., calorie counters, nutrition diaries) and apps for detecting/tracking/analysing and sharing vitality and fitness achievements. Apps that focus on specific diseases (e.g., diabetes apps) and apps that do not provide any options to directly measure or analyse vitality and fitness achievements (e.g., exercise tutorials or nutrition lexicons) are excluded from this segment. The user base consists of paying and non-paying customers. The revenue figures only include revenues generated from paid app downloads, premium/full versions and in-app purchases; e-commerce and advertising revenues are not included.
According to analyst opinion in Statista (2021), since health and lifestyle awareness has become a major trend in modern society, the so-called “quantified self” movement has created some demand in the Fitness Wearables and Apps market, but the number of paying app users is still growing quite slowly. Many mergers and acquisitions are happening in the market – for example, Adidas has acquired Runtastic, while Under Armour has invested in MyFitnessPal and Jabil Clothing+ – but the overall amount of technical innovation in the market is underwhelming.
Many players in the fitness tracking marketplace (e.g., Samsung, Fitbit, Garmin) have shifted their focus to smartwatches (not considered here as dedicated fitness equipment), and innovative smart clothes continue to remain a niche market.
However, the COVID-19 pandemic has changed the entire landscape of the Fitness industry. During the MCO period in Malaysia, the industry saw a shift in the service offering from physical to virtual (online services) (TheStar, 2021). Most gyms and studios stayed shut for almost three months during the MCO period, so the owners had to adapt quickly to survive. They introduced service innovations, where most of them started offering free classes on online platforms via social media. They also offered their services either through online classes or on- demand video classes via a website, YouTube etc. Thus, this industry showed a positive response to difficult circumstances (TheStar, 2021). Interestingly, prior to the MCO, most customers were from local, but after the MCO came into force, customers come from around the globe, including Australia, Hong Kong, and the UK (The Edge Markets, 2020). The online competition is also greater compared offline. However, the online fitness service segment could possibly continue to evolve and the fitness industry market could grow more as technology becomes more advanced. Many people are turning towards fitness to keep themselves moving during the pandemic and, consequently, there is a huge opportunity to share the practice of fitness with a larger community, locally and even across borders. Furthermore, although the industry is offering an online service, the service quality is still the same as that provided by the offline service.
Virtual health and fitness training
The COVID-19 pandemic meant that businesses were challenged to rethink how day-to-day activities are conducted. Most service companies that continued to operate under the MCO witnessed a significant shift in how customers had to be served during this period. Thus, this situation forced most service companies to come up with service innovations for their operations and offerings (Calabrese et al., 2018). Service innovation is defined as a way to improve service performance, and customer value is added through the adoption of a systematic and scientific
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approach (Hsieh & Chou, 2018). Service innovation offerings can take the form of either major innovations, radical innovations or minor style changes (Zeithaml, Bitner & Gremler, 2018). In relation to the COVID-19 pandemic and service innovation specifically, a 20 per cent growth of e-commerce was seen due to increased digital adoption among entrepreneurs in Malaysia (The Star, 2020). Most service companies have realized that a digital service is the best solution to creatively sustain business in the tough situation caused by the pandemic (Priyono, Moin, & Putri, 2020).
In the case of My Body Fit, the owner needed to exercise creativity in finding new business opportunities instead of offering the usual physical health training at the gym. During the MCO period, they lost several of their regular customers. Therefore, when they decided to go online, they contacted their previous customers to join the online programme. At the same time, they needed to provide creative contents to attract potential new customers. By conducting virtual health and fitness training sessions, Mr Bahagia saw some positive outcomes in that the company was able to generate more income and expand the company business to a bigger user segment that was not only local but international. When the company decided to provide their health and fitness training virtually, many new challenges arose. They had limited knowledge in conducting virtual training sessions. In addition, the owner said that they had to understand the online business environment, especially exposure on social media. In this case, they needed to learn how to use social media for marketing purposes. Gradually, they learnt that customers are more attracted to interesting contents posted on social media, so the company adopted this same approach for their own business. Another challenge that the company encountered was not being able to see their customers’ responses to the exercises directly unlike in normal physical training sessions.
According Mr Bahagia, the business was shut down during the first three months of the MCO, and he then resumed the business from home. The first strategy that he implemented was the creation of virtual health and fitness training for customers. Through this new strategy, the company was exposed to a new type of business and to the notion of service innovation. The virtual sessions were conducted through online platforms such as Webex, Zoom and Google Meet using tablets, gadgets, or smartphones. By adopting this approach, the company gained the potential to reach an unlimited number of customers quickly and easily, and the virtual option also offered an advantage for both parties in terms of saving time and money.
In business, attracting new customers is not an easy task. Mr Bahagia mentioned that he shared interesting posts and contents such as healthy lifestyle tips on social media platforms such as Facebook. The training module was also changed from time to time to avoid customers becoming bored. For example, he started the Work-out From Home (WFH) programme and updated the programme on his social media pages. He mentioned that every day he set a target of reaching 10,000 followers on Facebook because he believed that 10% from that segment would be attracted to the contents he was sharing, especially the useful tips of health and fitness. In addition, he also promoted health products in attempt to attract potential and regular customers. He envisaged that by doing this he would also be to indirectly attract customers to join a personal training session. He also held live sessions on Facebook to attract new customers and gain their trust. Within one week, the number of followers had increased by 1500 (3%). He also managed to get around 20 to 40 new customers per week to join his personal training programme called VIP Coaching. In this programme, customers receive personal coaching that includes an individualized meal plan and customized exercises. This offering is tailored according to the background of the customer. Not all customers have an excess weight problem but some of them might have problems recovering from an illness and need physical therapy treatment. The fee charged to the customer on a monthly basis and every programme is monitored for three consecutive months. In the case of the VIP Coaching programme, 80% of the customers are new and 20% are existing customers. Mr Bahagia also promoted the company through Facebook marketing ads. Mr Bahagia believed that if potential customers did not recognize their brand then they would believe that the company would offer a low-quality service.
The company’s next strategy was to have good communication with customers. To ensure that the online content presented was accurate, Mr Bahagia collected various items of information from authentic sources before sharing them on social media. This strategy was important to the company in retaining and maintaining the customers’ trust.
Apart from that, the development of a strong relationship between customers and employees was given priority attention. Mr Bahagia also provided telegram channels for his interactions with customers. The company had to ensure that the employees provided the best quality service to customers even though they were not meeting face to
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face. Setting a high standard for the customer–employee experience in online training was expected to improve efficiency and thereby increase customer–employee satisfaction, and to eventually help to maintain the relationship between the customers and the business during the pandemic and in the long term.
Another strategy that the company adopted to survive during the pandemic was the offering of a promotional price to customers. There was a different price strategy for virtual (from home) and face-to-face training. The company offered an online price so that customers would choose the company due to the reasonable price for a quality service. Although the adjustment in the price impacted the revenue of the company, this was a strategy that was implemented to sustain the business and retain regular customers as well as attract potential customers.
Way forward
Service offerings typically cannot be touched, examined or easily tried out. Additionally, services are intangible and process based. Moreover, they frequently involve interactions among and between customers and employees.
Hence, it is important to involve both customers and employees at various points in the innovation process. Mr Bahagia believes that the virtual health and fitness training business has exposed them to a new business environment that is very exciting to explore. Although the company had never thought about offering online services, they are confident that their online service business has a high potential to succeed and reach its targets especially in managing the business during the COVID-19 pandemic.
Acknowledgements
The authors sincerely thank Mr Bahagia Jemali of My Body Fit for his cooperation and assistance in completing this case study.
References
Calabrese, A., Castaldi, C., Forte, G., Levialdi, N. G., 2018. Sustainability-Oriented Service Innovation: An Emerging Research Field. Journal of Cleaner Production 193, 533-548.
Hsieh, Y. H., Chou, Y. H., 2018. Modeling The Impact of Service Innovation for Small and Medium Enterprises: A System Dynamics Approach. Simulation Modelling Practice and Theory 82, 84-102.
Priyono, A., Moin, A., Putri, V. N. A. O., 2020. Identifying Digital Transformation Paths in the Business Model of SMEs during the COVID-19 Pandemic. Journal of Open Innovation: Technology, Market, and Complexity 6, 4, 104.
Statista Market Forecast, 2021. Fitness – Malaysia. Retrieved from https://www.statista.com/outlook/dmo/eservices/fitness/malaysia#revenue.
Technogym, 2021. Fitness Trends in 2021: How The New Normal Is Shaping Fitness. Retrieved from https://www.technogym.com/my/newsroom/worldwide-survey-fitness-industry-trends/
The Edge Markets, 2019. Strong Is the New Sexy. Retrieved from https://www.theedgemarkets.com/article/strong-new-sexy, 16 October 2019.
The Star, 2021. Working Out New Models. Retrieved from https://www.thestar.com.my/business/business-news/2021/01/09/working-out-new- models, 9 Jan 2021.
The Edge Markets, 2020. Industry: Survival of The Fittest. Retrieved from https://www.theedgemarkets.com/article/industry-survival-fittest, 27 July 2020.
World Health Organization, 2020. WHO Announces COVID-19 Outbreak A Pandemic.
Retrieved from https://www.euro.who.int/en/health-topics/health-emergencies/coronavirus-covid-19/news/news/2020/3/who-announces-covid- 19-outbreak-a-pandemic#:~:text=COVID%2D19%20can%20be,growing%20number%20of%20countries
Zeithaml, V. A., Bitner, M. J., Gremler, D. D., 2018. Services Marketing: Integrating Customer Focus Across the Firm. McGraw-Hill Education.
Facebook https://www.facebook.com/bodywork.my
Interview session with the business owner on Monday, 8th March 2021
