Question

what is the threats of new entrants in fitness industry in Saudi Arabia ? and is there a high entry barriers

Subject: Marketing

Answer 1

The Threat of New Entrants refers to the threat that new competitors pose to current players within an industry. When new competitors enter into an industry offering the same products or services, a company’s competitive position will be at risk.

Barriers to entry include:

• Brand loyalty
• Cost advantages
• Government regulations
• Capital requirement
• Access to suppliers and distribution channels
• Retaliation

Saudi Arabia's fitness services market has witnessed tremendous growth in the past few years witnessing a strong double-digit growth from 2012 to 2017. Rapidly rising obesity rates, heart problems, and an increase in the consciousness about personal health have propelled momentum to the market. The organized sector has contributed major revenue share to the overall Saudi Arabia Fitness Services market. But getting an investment license is the most difficult part.  

The economies of scale are fairly difficult to achieve in the industry in which The Gym Group Plc operates. This makes it easier for those producing large capacitates to have a cost advantage. It also makes production costlier for new entrants. This makes the threats of new entrants a weaker force.

Product differentiation is strong within the industry, where firms in the industry sell differentiated products rather a standardized product. Customers also look for differentiated products. There is a strong emphasis on advertising and customer services as well. All of these factors make the threat of new entrants a weak force within this industry.

BARRIERS

The government policies within the industry require strict licensing and legal requirements to be fulfilled before a company can start selling. This makes it difficult for new entrants to join the industry, therefore, making the threat of new entrants a weak force.

If the foreign company is looking at entering the retail market of Saudi Arabia then it is imperative to obtain good knowledge about the cultural, political, economic, demographic, fiscal and monetary situation. Now, as a member of the World Trade Organization (WTO), the Saudi Arabian government (SAG) has taken positive steps to become a more open, transparent, and predictable market.