MKTG 1012 Principles of Marketing

Late projects will be subject to a late penalty of 30% per day to a maximum of one day, after which projects will not be accepted. Include a cover page with the full names of all contributing group members. Only one submission per group is required.

Attached is Marketing case study for a (fictitious) new martial arts gym starting up in London, ON. Projects will be graded based on completeness of answers and overall clarity and professionalism. Projects should use 1 ½ line spacing, with a 12 pt. font and should include a cover page with the full names of all contributing group members. Answers to the sections should be numbered and delivered in the order presented. Where appropriate, outside research is required to answer the question properly. Students who do not provide valueadded research will not be graded favorably. All outside sources of information must be properly cited using APA format, including a References page.

Students not familiar with the use of APA to cite sources should see the “Academic and Writing Resources” section of the FOL course site for reference material. Accurate spelling, grammar, language, and wording are evaluated so please proof read your work before submission.

Estevan Lara put his feet up on his desk and leaned back in his chair. “What a year!” he thought to himself. Lara had recently been crowned champion in his weight class at the World Jiu-Jitsu No-Gi Championship hosted by the International Brazilian Jiu-Jitsu Federation. This win was the encouragement he needed to fulfill his lifelong dream to open a mixed martial arts (MMA) gym and training facility in his hometown of London, Ontario. There was no time to waste. The sport’s popularity had exploded in the last 5 years and he planned to capitalize on it.

At the same time, he knew there was a lot of work to do. He would need to determine his target market, pricing, product offering, location, and integrated marketing communications plan. He knew a detailed market and competitive analysis was in order as well as an honest look at his internal strengths and weaknesses and external opportunities and threats that might impact his ability to succeed. He picked up his pencil and began his new adventure.

“Mixed martial arts (MMA) is a full contact combat sport that allows a wide variety of fighting techniques and skills, from a mixture of martial arts and non-martial arts traditions including karate, jiu-jitsu, boxing, kickboxing, wrestling, judo and muay thai. The rules allow the use of both striking as well as grappling techniques, both while standing and on the ground. MMA competitions allow martial artists of different backgrounds to compete. Originally promoted as a competition with the intention of finding the most effective martial arts for real unarmed combat situations, competitors were pitted against one another with minimal rules. Later promoters adopted many additional rules aimed at increasing safety for competitors and to promote mainstream acceptance of the sport.

MMA competitions were introduced in the United States with the first Ultimate Fighting Championship (UFC) in 1993. The International Sport Combat Federation (ISCF) was created in May 1999 as the world’s first MMA sanctioning body. This ushered in a new era of MMA where it is once again recognized as a true sport worldwide. This was aided by certified officials and well developed rules.

In November 2005 recognition of its effectiveness as a test came as the United States Army began to sanction mixed martial arts with the first annual Army Combatives Championships held by the US Army Combatives School.”

The sport, known by many for its brutality, exploded into mainstream media in 2006 and official UFC matches are held at least once a month. “The UFC had already broken the pay-per-view industry's all-time records for a single year of business, generating over $222,766,000 in revenue in 2006, surpassing both WWE and boxing.”

Professional MMA competitions are legal in most US states. In Canada, they are banned in the province of Saskatchewan and in some cities in Alberta. They were legalized in Ontario in 2010. To many, MMA competition is considered to be brutal in nature – a sport without rules but it is quickly becoming more widely accepted as a sanctioned sport and an exceptional way to condition the body and stay active.

Cardiovascular conditioning, speed drills, strength training and flexibility are important aspects of MMA training and, while it was initially practiced almost exclusively by competitive fighters, this is no longer the case. As the sport has become more mainstream and more widely taught, it has become accessible to wider range of practitioners of all ages. Proponents of this sort of training argue that it is safe for anyone, of any age, with varying levels of competitiveness.

In 2008, 3 professional MMA fighters opened the first MMA training facility and gym in London, Ontario – Adrenaline MMA. Mark “The Machine” Hominick, Chris “The Polish Hammer” Horodecki, and Sam “Hands of Stone” Stout all fight professionally in the UFC and hail from London and the surrounding area. Each fighter trains at Adrenaline and offers personal training sessions to clients. Clients pay a monthly fee of $803 for full access to the gym’s equipment and unlimited classes including kickboxing, jiu-jitsu for MMA, wrestling for MMA, yoga, pilates, boxing and strength & conditioning. Personal training sessions are an additional cost charged by the hour and vary by instructor. The gym is located on Dundas St. west of Clarke Rd. The gym is about 5 km from Fanshawe College (20-30 min bus ride) and about 15 km from the University of Western Ontario (45-60 min bus ride). Fight Planet, a MMA apparel and gear retailer, leases a small area of square footage inside the gym. They are the only MMA retail outlet in London.

1 Source: Wikipedia

2 Ibid

3 There are no upfront fees charged and no minimum commitment is necessary.

GoodLife Fitness has 11 clubs (with 15 when you incorporate St. Thomas, Stratford and Strathroy) in London and over 275 locations across Canada. Some locations in London offer co-ed facilities (with women only sections) and others are for women only. Women-only facilities are all located on the upper level of Loblaws and Real Canadian Superstore locations in London. GoodLife offers a wide variety of classes and amenities including childcare, massage therapy, and personal training – all at an additional cost. Monthly memberships start at $50/month with an enrollment fee.

There are two Athletic Club locations in London on the west side of the city. Membership rates are similar to those at GoodLife. The south Athletic Club has a pool while the north location does not.

There are a few YMCA facilities in London and in November 2010, the largest YMCA in Ontario will open at Sunningdale & Adelaide. This facility will boast an Olympic size pool, warm pool with moveable floor, and stateof-the-art cardio equipment with built-in televisions. Family memberships for four start at $90 for the month with no enrollment fee and a one-year commitment. Childcare is extensive with excellent programming offered at no additional cost to the membership holder.

There are several small independent boxing, kickboxing, karate and jiu-jitsu facilities in London as well.

The market for a gym/workout facility can be broken into five groups.

This group is dedicated to making healthy choices. They understand the importance of cardiovascular exercise to maintaining their health and longevity. They are generally between the ages of 30 and 55, with or without children. They frequent the gym about 3-4 times per week (2/3 times during the week and once on the weekend), spending 1-1.5 hours there at each visit. They use free weights, cardio machinery and attend classes. They are heavy users of personal training services. They have mid to high income levels and are willing to pay a premium to belong to a club that will help them achieve their personal goals, fits their schedule and is convenient. They have full-time jobs within the city of London. They demand a clean environment, the latest equipment, and knowledgeable/helpful staff. They are extremely active and participate in marathons, triathlons, and a variety of recreational sports.

This group is dedicated to looking great. They are heavy users of gym and training facilities (4-6 times a week). They often have a gym membership and also frequent other facilities like yoga/pilates studios and swimming pools to get specialized conditioning where needed. They are generally under the age of 40 without children. They are heavy users of free weights and cardio equipment. They are very knowledgeable when it comes to fitness and generally don’t purchase personal training services from generic gyms but would consider it at a specialty facility. They like the social atmosphere at the gym and spend up to 2 hours at a time there.

This group knows they need to go to the gym but they rarely get there. They continue to invest in memberships and vow each year to make a bigger commitment but typically don’t follow through for an extended period of time. Flexible hours, promotions and special programming/events can motivate them to attend with more frequency. They attend classes sporadically, use cardio equipment and weight machinery. This group is always a big revenue generator for a gym and they don’t create congestion because they are rarely there. This group feels frustrated that they continue to pay for something they don’t use and continually evaluate more effective ways to invest their fitness dollars.

This group is 60+ yrs old. They have part-time jobs or are retired. They understand the importance of healthy lifestyles but are not knowledgeable. They require a high level of customer service and a lot of instruction. They frequent the gym during the week and enjoy taking advantage of off-peak times when there is lots of room to move around. They are concerned about getting hurt while working out and generally air on the side of caution and avoid aggressive training. They demand clean and bright facilities. They enjoy classes designed specifically for seniors and use cardio equipment with the guidance of facility staff. They don’t like loud environments and are generally not concerned about being entertained while they are at the gym.

While this group does not have a gym membership, they do understand the importance of staying active. They prefer to run and bike outside, they are engaged in recreational sports and they may have home gyms with cardio and weight equipment. They will, from time to time, buy gym memberships but they are averse to making a commitment and prefer flexible offerings. They do like to pay as they go to avoid disappointment. They are generally 25-50 yrs old with full-time jobs and, in many cases, two or more children at home.

The population of London, Ontario is 300,000 but each September that population grows by 40,000 as students flock to the University of Western Ontario and Fanshawe College. London is considered by many to be a conservative city. Roads are congested, particularly at peak hours, and the city lacks a major thoroughfare to speed up east/west traffic across the middle of the city and north/south traffic on the west side of the city. There is a general reluctance among residents to drive more than 15 km to get anywhere. While family residences are scattered across the city, the west side of the city is home to a higher concentration of mid to high-income households.

Lara has investigated commercial real estate for lease in the city and has narrowed his options to four potential locations for his gym.

There is a large warehouse including 8,500 sq feet of usable space at Talbot & Oxford – the former home of Rouge nightclub. Rent is double the other three locations. This location is in central London, 5 mins from downtown, 10 mins from UWO, and 20 mins from Fanshawe on a direct bus route. The parking lot is very large with ample parking for 80+ vehicles.

There is a large commercial space (11,000 sq feet) available for lease. This location is close to the 401 but a good distance from UWO and Fanshawe and would be very awkward to get to by bus. This location is just south of the Athletic Club’s south location which always seems to be busy.

Just northwest of the new YMCA and just north of Masonville Mall. You cannot take public transportation there.

The location is spacious (8,500 sq feet), clean and bright.

In an industrial area of London accessible by bus and within five minutes of Adrenaline MMA. Close to Fanshawe but far from UWO. This location is smaller than the others (7,500 sq feet) and there is ample parking.

Lara grew up in Brazil and has trained and competed in jiu-jitsu, a MMA technique, since the age of 10. He immigrated to London in 2001 with his family and continued to compete in international jui-jitsu events while making make a modest living on competition winnings. He plans to finance the gym with a loan from the bank and an inheritance from a recently deceased family member.

What major criteria/factors will your primary target audience use to compare one gym to another based on this model?