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 Confidentiality Agreement

The undersigned reader acknowledges that the information provided by

_________________________ in this marketing plan is confidential; therefore, reader agrees
not to disclose it without the express written permission of _________________________.

It is acknowledged by reader that information to be furnished in this marketing plan is in all

respects confidential in nature, other than information which is in the public domain through other
means and that any disclosure or use of same by reader, may cause serious harm or damage to
________________________.

Upon request, this document is to be immediately returned to _________________________.

___________________
Signature

___________________
Name (typed or printed)

___________________
Date

This is a marketing plan. It does not imply an offering of securities.

 Table Of Contents

1.0 Executive Summary . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .1

2.0 Situation Analysis . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .2

2.1 Market Summary . . . . . . . . . . . . . . . . . . . . . . . . . . .2
2.1.1 Market Demographics . . . . . . . . . . . . . . . . . . . .3
2.1.2 Market Needs . . . . . . . . . . . . . . . . . . . . . . . .3
2.1.3 Market Trends . . . . . . . . . . . . . . . . . . . . . . . .4
2.1.4 Market Growth . . . . . . . . . . . . . . . . . . . . . . . .5
2.2 SWOT Analysis . . . . . . . . . . . . . . . . . . . . . . . . . . . . .6
2.2.1 Strengths . . . . . . . . . . . . . . . . . . . . . . . . . .6
2.2.2 Weaknesses . . . . . . . . . . . . . . . . . . . . . . . . .6
2.2.3 Opportunities . . . . . . . . . . . . . . . . . . . . . . . .6
2.2.4 Threats . . . . . . . . . . . . . . . . . . . . . . . . . . .6
2.3 Competition . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .6
2.4 Services . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .7
2.5 Keys to Success . . . . . . . . . . . . . . . . . . . . . . . . . . . .7
2.6 Critical Issues . . . . . . . . . . . . . . . . . . . . . . . . . . . . .7

3.0 Marketing Strategy . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .7

3.1 Mission . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .8
3.2 Marketing Objectives . . . . . . . . . . . . . . . . . . . . . . . . . .8
3.3 Financial Objectives . . . . . . . . . . . . . . . . . . . . . . . . . .8
3.4 Target Markets . . . . . . . . . . . . . . . . . . . . . . . . . . . .8
3.5 Positioning . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .8
3.6 Strategy Pyramids . . . . . . . . . . . . . . . . . . . . . . . . . . .9
3.7 Marketing Mix . . . . . . . . . . . . . . . . . . . . . . . . . . . . .9
3.8 Marketing Research . . . . . . . . . . . . . . . . . . . . . . . . . .9

4.0 Financials 10
4.1 Break-even Analysis . . . . . . . . . . . . . . . . . . . . . . . . . 10
4.2 Sales Forecast . . . . . . . . . . . . . . . . . . . . . . . . . . . . 11
4.3 Expense Forecast . . . . . . . . . . . . . . . . . . . . . . . . . . . 11

5.0 Controls 12
5.1 Implementation . . . . . . . . . . . . . . . . . . . . . . . . . . . 13
5.2 Marketing Organization . . . . . . . . . . . . . . . . . . . . . . . . 13
5.3 Contingency Planning . . . . . . . . . . . . . . . . . . . . . . . . . 14
 Corporate Fitness

1.0 Executive Summary

Corporate Fitness will serve Seattle-area businesses, helping them to become more productive,
while lowering their overall costs with innovative wellness programs and strategies.

The business is based on two simple facts:

1. Healthy employees are more productive than chronically ill employees.

2. It costs less to prevent injuries or illnesses than to treat them after they occur.

Corporate Fitness (CF) ties worker productivity directly to health care. It believes that traditional
approaches to the current health care crisis are misdirected. Traditional efforts are
reactive—waiting until after the worker has been stricken with illness or injury to pay for the
necessary treatments. Our approach emphasizes prevention and good health promotion, in a
proactive manner.

By helping employees change their behavior patterns and choose healthier lifestyles, CF will lower
companies' health care expenditures, while raising worker productivity. Health care expenditures
will decrease due to reduced medical insurance premiums, reduced absenteeism, reduced
turnover rates, reduced worker's compensation claims, reduced tardiness, shorter hospital stays,
etc.

The state of America's health care crisis, coupled with current demographic changes, threaten to
not only exacerbate the crisis, but further erode worker productivity as well. These environmental
factors coupled with the local competitive situation signal a favorable opportunity in this market.
We feel the time is right for Corporate Fitness.

Annual Sales Forecast

$800,000

$700,000

$600,000

$500,000
Corporate Employees
$400,000
Manufacturing Employees
$300,000

$200,000

$100,000

$0
2003 2004 2005

Page 1
 Corporate Fitness

2.0 Situation Analysis

Corporate Fitness is entering its second year of business. The business model has been well
received and marketing is especially important to maintain growth and market penetration. In
addition to offering fitness facilities for Seattle corporations, Corporate Fitness' main activity is the
creation and implementation of wellness programs. The basic market need is the reduction of
corporate costs and the increase in employee efficiency that can be achieved through long-term
wellness programs.

2.1 Market Summary

Corporate Fitness possesses good information about the market and knows a great deal about the
common attributes of the prized and loyal customers. This information will be leveraged to better
understand who is served, their specific needs, and how Corporate Fitness can better
communicate with them.

Target Markets

Corporate Employees
Manufacturing Employees

Table 2.1: Target Market Forecast

Target Market Forecast

Potential Customers Growth 2003 2004 2005 2006 2007 CAGR
Corporate Employees 35% 9,876 13,333 18,000 24,300 32,805 35.00%
Manufacturing Employees 15% 5,924 6,813 7,835 9,010 10,362 15.00%
Total 28.57% 15,800 20,146 25,835 33,310 43,167 28.57%

Page 2
 Corporate Fitness

2.1.1 Market Demographics

The profile for Corporate Fitness' customer consists of the following geographic, demographic,
and behavior factors:

Geographics

• The immediate geographic target is the city of Seattle.

• A 35 mile radius is in need of the services.
• The total targeted population is 15,800 employees.

Demographic

• 51% male and 49% female.

• The individual income range is $38,000-$75,000.
• 67% of the customers are single, 33% are married.
• For the manufacturing customers, 43% of individuals have some undergraduate course
work.
• For the corporate customers, 83% of individuals have some undergraduate coursework,
16% have undertaken graduate coursework.

Behavior Factors

• Recognize the need to have physical activity in their lives.

• Have incorporated some sort of exercise program in their daily/weekly routine for the last
several years.
• Are willing to utilize fringe benefits that are offered by their employer as part of their
compensation package.

2.1.2 Market Needs

Corporate Fitness is providing its customers with a health care cost management program for
employees that will increase employee productivity and decrease overall business costs.
Corporate Fitness seeks to fulfill the following benefits that are important to its customers:

• Customization: CF will offer a totally customized solution for each company as well as
each employee within the company.
• Convenience: Customers will not use the service if it is not convenient. CF recognizes this
and strives to make their services as convenient as possible for the targeted customer
groups.
• Results-orientated strategy: CF will need to improve a company's bottom line in order
to attract and maintain customers. While CF will strive to address all of the its customer's
needs, the reality is that it must indeed provide significant value for the companies
themselves in order to grow market share.

Page 3
 Corporate Fitness

2.1.3 Market Trends

There have been two significant market trends in the last five years, increased usage and
Corporate Fitness as a part of the benefits package.

Increased usage of fitness facilities on behalf of individuals.

Exercising and "working out" has become a more mainstream activity in American's lives over the
last decade. American's unhealthy diet of fast food, and generally poor food choices, especially
fried foods lead to widespread reports of obesity. Along with a poor diet, Americans were fairly
inactive, with only 19% of people age 20-40 exercising three times a week. That trend has
changed over the last 10 years. The percentage of active people has increased to 43% as of
2002. More and more people are going to the gym after work or are incorporating some sort of
outdoor activity into their daily routine.

The incorporation of fitness memberships within the "basket of benefits," a part of the
total compensation package.
As fitness memberships have become a more common element in working American's lives,
companies have incorporated membership as part of their benefit package for employees. This
has occurred for at least two reasons. One reason is a flexible method to compensate employees.
The second reason is the positive effect on a company's bottom line. Study after study supports
that a physically fit employee is happier, healthier, and more productive. For no other reason,
offering fitness club memberships to employees is a smart cost-benefit decision.

Market Forecast

45,000

40,000

35,000

30,000

25,000
Corporate Employees
20,000 Manufacturing Employees
15,000

10,000

5,000

0
2003 2004 2005 2006 2007

Page 4
 Corporate Fitness

2.1.4 Market Growth

In 1999, the U.S. medical bill was $738 million, of which businesses paid 30%. Recent studies
indicate positive returns on investments for wellness programs of various companies ranging from
$1.91:1 to $5.78:1. General Electric's aircraft engines division, for example, saves $1 million per
year through its wellness programs. Traveler's Insurance Company reported savings of $7.8
million in 2000, attributable to its wellness programs, and a return of $3.41 for every dollar
invested in wellness.

Important demographic changes are taking place in America that point to the importance of
worker productivity in coming decades.

• By the year 2005 16 million new jobs will be created but there will only be 14 million
workers to fill them.
• In 2000, women comprised one-third of the work force, a ratio that will increase to one-
half by the year 2003.
• An estimated 80% of jobs to be filled in the immediate future will require more than a high-
school education. Only 74% of Americans finish high school, and only 67% graduate with
adequate skills.
• The number of skilled workers available to fill new jobs is decreasing, meaning that
employers are facing more severe competition for labor. Thus, the health and productivity
of each employee becomes crucial to a company's success.

The following quantitative information has supported explosive growth in the health wellness
program industry. The last five years has seen a 9% growth rate and the next five years is
expected to achieve a 7% growth rate.

Target Market Growth

35.00%

30.00%

25.00%

20.00%

15.00%

10.00%

5.00%

0.00%
Corporate Employees Manufacturing Employees

Page 5
 Corporate Fitness

2.2 SWOT Analysis

The following SWOT analysis captures the key strengths and weaknesses within the company, and
describes the opportunities and threats facing CF.

2.2.1 Strengths

• Results-orientated approach to attracting and maintaining customers.

• A well-researched, detailed health wellness program that is long-term in focus.
• Intensively-trained staff.

2.2.2 Weaknesses

• High costs associated with customized, personal service.

• The inability to work on a high volume business model.
• The costs of attracting a large corporate client.

2.2.3 Opportunities

• Participation within a growing market.

• The large increase in clients that follows with the acceptance of CF's program by a single
company.
• The ability to leverage future quantitative analysis that supports the contention that long-
term wellness programs have a significant, positive impact on a company's bottom line.

2.2.4 Threats

• Lack of immunity to an economic downturn.

• Potential competition from larger, well-established competitors.
• A change in society where the individual begins to take far more responsibility for his/her
health maintenance.

2.3 Competition

The three main competitors for Corporate Fitness are:

• YMCA: market is lower-income families and/or students who want accessibility and
affordability of fitness facilities.
• Gold's Gym: services are targeted toward those motivated and dedicated individuals who
workout five to seven times per week.
• Better Bodies: aimed at casual fitness-seekers who do not workout with a high intensity
but still desire the status and recognition.

Page 6
 Corporate Fitness

2.4 Services

Corporate Fitness provides wellness strategies/programs to businesses in the downtown Seattle

area. A wellness strategy is a long-term effort, combining both health-promotion and exercise-
related activities designed to facilitate positive lifestyle changes in members of a company's work
force.

Corporate Fitness will work with a company's senior management to help it develop a mission
statement for its wellness program. The client company's employees will undergo a health-risk
analysis, following which each employee will be given the opportunity to meet with a health
professional to design a personalized health program.

Finally, Corporate Fitness will furnish employee progress reports to senior management with
which to carry out the incentive program and generally monitor changes in the behavior of its
work force.

2.5 Keys to Success

Corporate Fitness' keys to success are:

• Marketing services to companies and individuals.

• Recruitment of experienced managerial talent.
• Dedication and hard work of the founders.
• Raising productivity.
• Lowering overall costs.

2.6 Critical Issues

Corporate Fitness faces several critical issues:

• Sign up a sufficient number of medium-sized companies. It is more cost effective to

service several medium-sized companies than many small companies.
• Continue to drive down the costs associated with serving a customer.

3.0 Marketing Strategy

Corporate Fitness will begin by targeting small- to medium-sized businesses in the downtown
Seattle area. The first task is to convince senior executives of the benefits and needs of wellness
programs. This will be accomplished by aggressively pursuing interaction and relationships with
business professionals who would profit from using this service. Once a strong image is
established, Corporate Fitness will use similar strategies to market its services to larger
corporations in Seattle and other areas of expansion.

Page 7
 Corporate Fitness

3.1 Mission

Corporate Fitness is a health service that helps businesses and individual workers attain one of
the greatest gifts of all—that of good health. Personal gains, such as improved self-esteem and
self-motivation, combined with measurable benefits will create tremendous advantages for both
the employer and the employee.

3.2 Marketing Objectives

1. Generate a 10% yearly increase in sales.

2. Increase market penetration every quarter.
3. Continue to cultivate CF's image as the premier long-term wellness program provider.

3.3 Financial Objectives

1. Decrease customer acquisition costs by 4% every two quarters.

2. Lower the cost of service delivery by 1% a quarter.
3. Holding spending, as a percentage of sales, at a steady rate.

3.4 Target Markets

The market for Corporate Fitness is not particularly segmented, as potential customers include all
downtown businesses that offer their employees some type of medical benefits, are experiencing
escalating health care costs, and wish to more effectively manage those costs.

Corporate Fitness, however, segments its services for individual organizations. Corporate Fitness
works with senior management to develop mission statements and provide incentive plans, and
with employees to design personalized health and fitness programs.

The targeted customers are corporate and manufacturing employees.

3.5 Positioning

Corporate Fitness will position itself as the most effective wellness strategy and program
developer. This positioning will be supported by statistics indicating an increase in worker
productivity and a decrease in business operation expenses from the implementation of corporate
wellness programs.

Page 8
 Corporate Fitness

3.6 Strategy Pyramids

The single objective is to position CF as the most proficient wellness program provider in the
Seattle area. The marketing strategy will seek to develop customer awareness regarding the
services offered, develop the customer base, and work toward building customer loyalty.

The message that CF seeks to announce is that it can have a dramatic effect on the bottom line.
This message will be communicated through various methods. The first method will be the
production and disbursement of printed materials. The printed materials will describe all of the
services offered and will give prospective customers insight into CF's past successes.

CF will also rely on presentations to company's HR departments. These presentations will allow CF
to personally address any concerns that companies have and indicate how a wellness
program/strategy can help service their needs.

CF will also rely on advertisements in the Business Journal of Seattle for increasing visibility and
interest in CF's services among Seattle-based companies. Lastly, Corporate Fitness will use a
website as a source for disseminating information.

3.7 Marketing Mix

Corporate Fitness' marketing mix is comprised of the following approaches to pricing, distribution,
advertising and promotion, and customer service.

• Pricing: Prices for using Corporate Fitness' services are comparable to those of higher-
end fitness centers. An employee choosing to utilize a Corporate Fitness center will pay a
$100 monthly fee. For each employee enrolled in the general wellness program, regardless
of whether or not they use the fitness facility, the employer will pay $150 annually. The
prices reflect the quality of the equipment and service.
• Distribution: This will occur both at the company's worksite as well as at CF's facilities.
• Advertising and Promotion: Printed material, presentations, advertising in industry
specific journals and a comprehensive website will be used.
• Customer Service: Corporate Fitness will operate on the principle that it is imperative to
achieve total customer satisfaction if the business is going to succeed.

3.8 Marketing Research

Corporate Fitness used focus groups and questionaires when collecting market research. The
focus groups were collections of seven to nine people who were asked a series of predetermined
questions with the responses recorded and discussed among the group members. In addition to
the pre-established questions, there was a free-flow discussion format toward the end of the
focus group that provided flexibility in allowing the participants to share information and insight
with CF.

Additionally, questionnaires were used to collect market information from perspective customers.
The questionnaires were submitted to a total of 100 HR professionals. The response rate was 43,
higher than expected. The validity and usefulness of the questionnaire was ensured by utilizing a
graduate statistics student to develop the questionnaire. This research confirmed many already
held assumptions as well as introduced several valuable perspectives that CF was not yet privy to.

Page 9
 Corporate Fitness

4.0 Financials

This section will offer a financial overview of Corporate Fitness as it relates to the marketing
activities. CF will address Break-even Analysis, Sales Forecasts, Expense Forecasts, and how they
link to the Marketing Strategy.

4.1 Break-even Analysis

The Break-even Analysis indicates that $16,667 will be needed to reach the break-even point.

Break-even Analysis

$10,000

$5,000

$0

($5,000)

($10,000)
$0 $5,560 $11,120 $16,680 $22,240 $27,800

Monthly break-even point

Break-even point = where line intersects with 0

Table 4.1: Break-even Analysis

Break-even Analysis:
Monthly Units Break-even 1,667
Monthly Sales Break-even $16,667

Assumptions:
Average Per-Unit Revenue $10.00
Average Per-Unit Variable Cost $4.00
Estimated Monthly Fixed Cost $10,000

Page 10
 Corporate Fitness

4.2 Sales Forecast

Please refer to the following chart and graph for illustration on the sales forecasts.

Monthly Sales Forecast

$90,000

$80,000

$70,000

$60,000

$50,000
Corporate Employees
$40,000
Manufacturing Employees
$30,000

$20,000

$10,000

$0
Jan Feb Mar Apr May Jun Jul Aug Sep Oct Nov Dec

Table 4.2: Sales Forecast

Sales Forecast
Sales 2003 2004 2005
Corporate Employees $298,783 $389,776 $455,678
Manufacturing Employees $242,077 $288,739 $333,890
Total Sales $540,860 $678,515 $789,568

Direct Cost of Sales 2003 2004 2005

Corporate Employees $29,878 $38,978 $45,568
Manufacturing Employees $24,208 $28,874 $33,389
Subtotal Cost of Sales $54,086 $67,852 $78,957

4.3 Expense Forecast

The Expenses Forecast will be used as a tool to keep the department on target and provide
indicators when modification or corrections are needed for the implementation and maintenance
of the market plan.

The marketing expenses will be high during the first quarter of operation, when there is increased
usage of fitness facilities. The expenses will decrease during the second and third quarter, but rise
during the fourth quarter when HR budgets are typically submitted/reviewed.

Page 11
 Corporate Fitness

Monthly Expense Budget

$8,000

$7,000

$6,000

$5,000
Pamphlet Production
$4,000
Website Production/Maintenance
$3,000
Advertisements
$2,000

$1,000

$0

Table 4.3: Marketing Expense Budget

Marketing Expense Budget 2003 2004 2005

Pamphlet Production $1,000 $1,200 $1,400
Website Production/Maintenance $9,200 $8,000 $8,000
Advertisements $9,250 $12,000 $14,000
------------ ------------ ------------
Total Sales and Marketing Expenses $19,450 $21,200 $23,400
Percent of Sales 3.60% 3.12% 2.96%
Contribution Margin $467,324 $589,464 $687,211
Contribution Margin / Sales 86.40% 86.88% 87.04%

5.0 Controls

The purpose of Corporate Fitness' marketing plan is to serve as a guide for the organization. The
following areas will be monitored to gauge performance:

• Revenue: monthly and annual.

• Expenses: monthly and annual.
• Customer satisfaction.
• Wellness program effectiveness within each company.

Page 12
 Corporate Fitness

5.1 Implementation

The following milestones identify the key marketing plan programs. It is important to accomplish
each one on time and on budget.

Milestones

Marketing Plan Completion

Pamphlet Completion

Website Completion

Advertising Campaign #1

Advertising Campaign #2

Jan Feb Mar Apr May Jun Jul Aug Sep Oct Nov Dec

Table 5.1: Milestones

Milestones Plan
Milestone Start Date End Date Budget Manager Department
Marketing Plan Completion 1/1/03 2/1/03 $0 Steve Marketing
Pamphlet Completion 2/1/03 4/1/03 $1,000 Steve Marketing
Website Completion 1/1/03 3/15/03 $9,200 Steve Marketing
Advertising Campaign #1 3/1/03 8/30/03 $3,750 Robert Marketing
Advertising Campaign #2 9/1/03 12/30/03 $5,500 Robert Marketing
Totals $19,450

5.2 Marketing Organization

Steve Perkins and Robert Gomez will share responsibility for the marketing activities.

Page 13
 Corporate Fitness

5.3 Contingency Planning

Difficulties and Risks

• Problems developing a sufficiently large client base.

• Significant economic downturns.

Worst Case Risks Include

• Determining that the business can no longer support itself.

• Having to liquidate equipment to cover liabilities.

Page 14
 Appendix: Corporate Fitness
Table 4.2 Sales Forecast

Sales Forecast Plan

Sales Jan Feb Mar Apr May Jun Jul Aug Sep Oct Nov Dec
Corporate Employees $8,766 $10,988 $11,909 $14,554 $16,776 $19,008 $25,443 $29,008 $34,556 $38,887 $42,223 $46,665
Manufacturing Employees $7,765 $9,976 $10,007 $11,900 $13,990 $15,009 $19,665 $23,336 $27,887 $31,099 $34,443 $37,000
Total Sales $16,531 $20,964 $21,916 $26,454 $30,766 $34,017 $45,108 $52,344 $62,443 $69,986 $76,666 $83,665

Direct Cost of Sales Jan Feb Mar Apr May Jun Jul Aug Sep Oct Nov Dec
Corporate Employees $877 $1,099 $1,191 $1,455 $1,678 $1,901 $2,544 $2,901 $3,456 $3,889 $4,222 $4,667
Manufacturing Employees $777 $998 $1,001 $1,190 $1,399 $1,501 $1,967 $2,334 $2,789 $3,110 $3,444 $3,700
Subtotal Cost of Sales $1,653 $2,096 $2,192 $2,645 $3,077 $3,402 $4,511 $5,234 $6,244 $6,999 $7,667 $8,367

Page 1
 Appendix: Corporate Fitness
Table 4.3 Marketing Expense Budget

Marketing Expense Budget Jan Feb Mar Apr May Jun Jul Aug Sep Oct Nov Dec
Pamphlet Production $500 $0 $0 $0 $0 $0 $500 $0 $0 $0 $0 $0
Website Production/Maintenance $7,000 $200 $200 $200 $200 $200 $200 $200 $200 $200 $200 $200
Advertisements $500 $600 $700 $800 $500 $650 $800 $900 $1,000 $1,100 $900 $800
------------ ------------ ------------ ------------ ------------ ------------ ------------ ------------ ------------ ------------ ------------ ------------
Total Sales and Marketing Expenses $8,000 $800 $900 $1,000 $700 $850 $1,500 $1,100 $1,200 $1,300 $1,100 $1,000
Percent of Sales 48.39% 3.82% 4.11% 3.78% 2.28% 2.50% 3.33% 2.10% 1.92% 1.86% 1.43% 1.20%
Contribution Margin $6,878 $18,068 $18,824 $22,809 $26,989 $29,765 $39,097 $46,010 $54,999 $61,687 $67,899 $74,299
Contribution Margin / Sales 41.61% 86.18% 85.89% 86.22% 87.72% 87.50% 86.67% 87.90% 88.08% 88.14% 88.57% 88.80%

Page 2