Gracie Barra London
Gracie Barra London Marketing Management Report
Name: Anna Li Date: December 5, 2012 Instructor: Sean Burkett Section: 003
2 Executive Summary Gracie Barra London (GBL) is a Brazilian Jiu-Jitsu (BJJ) gym in London owned and operated by Fateh Belkalem. It is part of the Gracie Barra franchise, originally founded by Carlos Grace Jr. in Brazil in 1986. Gracie Barra is one of the most well-known and respected Brazilian Jiu-Jitsu franchises in the world. This year, Belkalem has decided to work at GBL full time and has proposed a new goal. His objective is to increase the gym’s enrolment by 40% in the next year, raise customer awareness of GBL and what they have to offer, and utilize $11,000 for marketing initiatives and/or gym expansion. From the analysis and calculations provided in this report, the following recommendations are the most effective and financially feasible for the company: o Gym expansion should proceed so that they can offer more services o Advertisements should reflect GBL’s experience and dedication to BJJ and their specialization to the art o A variety of classes should be offered such as self-defence, competitive training, female and anti-bullying for children, etc. o Target market should be focused on women o Facebook, Twitter, London Transit Commission bus ads and Western Gazette ads are useful ways to advertise to women, men and students o Promotion specials should be implemented to attract more customers
It is not necessary for all the funds to be allocated towards marketing initiatives because GBL should use them towards the gym expansion, overall attracting more customers. By offering a variety of classes and a gym equipped facility for working out, GBL offers the most services for similar prices as their competitors. The marketing initiatives proposed not only reach out to women, but target the other customer groups as well. This ensures that GBL is recognized as a diverse gym. A promotion that should be implemented is predominantly directed to women: if one registers their child, they will receive $10 off their BJJ classes and gym membership. These plans are financially feasible because there is enough money for the gym expansion and advertisements. In the future, it would be good to continue advertising to gain even more clientele, but as for now; the gym expansion should be a priority and would make GBL more competitive in the BJJ industry by differentiating themselves from their competitors. With the analysis, recommendations and exhibits provided in this report, they provide a detailed marketing plan to help GBL target their customers effectively, obtain a total of 140 members by the end of the year, and develop a strong reputation as the leading BJJ gym in London with the most impressive facilities and quality of training.
2
3 Marketing Challenge As an external consultant to Fateh Belkalem, the owner and operator of GBL, I have developed a comprehensive marketing plan to provide advice on how to increase the gym’s enrolment by 40%, how to define GB as the lead in the industry, who to establish as a target market and what are the most effective ways to advertise. Corporate Capabilities: Finance, Marketing, Operations and Human Resources Belkalem has financial savings of $3000 for advertising expenses and has secured $8000 from an investor. These funds can be used to invest in a new training and conditioning gym that will cost $10,000. If the expansion proceeds, there is $1000 left for marketing initiatives. Carlos Gracie Jr. founded GB in 1986 in Brazil. Due to the increase in BJJ in America, Carlos Jr. moved GB’s headquarters to California. As GB schools increased internationally, Carlos Jr. developed a franchising program. In 2012, GB was known to be the best and most respected Jiu-Jitsu franchise in the world. Since GB is already a well-established brand, advertising can be focused on what they have to offer to develop more customer awareness. GBL is open seven days a week on weekday afternoons, evenings and weekends. GBL offers child, beginner, advanced and open mat classes. Currently, there are 100 members. If the gym expands, it will appeal to more customers because there will be more space and they can offer a larger variety of services. It is highly suggest that Belkalem invests in the expansion. Presently, GBL has five assistant instructors and Belkalem, who plans to work full time teaching classes. Belkalem has a BJJ black belt, has been a practitioner for 20 years and has been dedicated to martial arts for 40 years. Belkalem is very experienced and can easily attract customers with his extensive knowledge. This means that the ads should focus on showcasing that GBL has the most skill and years of training in the BJJ industry.
3
4 Industry Analysis: Political, Economic and Social London’s municipal government has been promoting the importance of physical activity. This initiative is a great way to motivate residents to register for fitness classes like BJJ, overall increasing customer traffic for the business. In 2008, London suffered from an economic recession and has not fully recovered. As a result, Londoners may spend less on leisure activities. This could affect the enrolment numbers for GBL, however many are willing to sacrifice money for physical activity because health is important and worth spending on in order to maintain wellness. The city of London has a growing population of 370,000 and is home to Western University, which has an impressive student population. With this factor, GBL has the opportunity to reach out to students, ultimately expanding BJJ and attracting students to enrol for classes. Competitive Analysis: Direct and Indirect GBL has three direct competitors: Submission Academy, Bindner’s Jiu-Jitsu Academy and Adrenaline. Submission offers similar classes as GBL and the enrolment fee is lower. In order to compete with Submission, Belkalem must advertise on offering the best BJJ skills. Advantageously, Belkalem has a black belt and more experience than the owner who only has a purple belt. This factor differentiates GBL from Submission and justifies GBL’s premium pricing. Customers are more likely to register for GBL than Submission because they have been in the industry for longer and can offer more rewarding classes. The second competitor is Bindner’s Jiu-Jitsu Academy. The competitive factor about Bindner is that their membership is cheaper. However, GBL has five times as many members, they are open twice as many days and Belkalem has more experience in BJJ because his black belt is more advanced than Bindner’s blue belt. Bindner does not offer children classes, which
4
5 means that GBL attracts a larger demographic and offers more variety. Belkalem displays more commitment to his business and BJJ than Bindner because he teaches most of his classes, unlike Bindner. The fact that GBL is fully dedicated to BJJ and offers a variety of classes is a key point that must be mentioned in the ads. The last competitor is a MMA gym, Adrenaline. The gym offers a variety of activities, from yoga to kickboxing. Adrenaline and GBL’s prices are on par, making them the most competitive. However, GBL is specializes in BJJ, which differentiates them from Adrenaline. This feature can be used to their advantage by promoting their dedication and focus in BJJ. It is important that customers perceive GBL as the top academy in London with the largest selection of classes and services and most commitment to jiu-jitsu with the best skills taught, provided at a premium price (see Exhibit 1). By creating this image, customers will be more inclined to register for GBL than the other competitors. Consumer Analysis: Students, Males, Females and Children GBL has four main customer groups: Western students, males, females and children. All these groups primarily want to practice BJJ for physical fitness and self-defence. Although there are 40,000 students that could potentially be customers, it is a difficult group to target because most students are not locals. Students already have the Western Recreation Centre available to them – free of charge, therefore it is unlikely for them to look into taking additional classes off campus. However, an opportunity to engage students is to offer weekly classes at the rec centre. This will reach out to those with interest and gain their loyalty. Ads can be printed in the Western Gazette. Once the students practice, they may want to sign up for more classes at GBL. GBL does not need to spend much on marketing initiatives towards men because they naturally have a strong interest in BJJ. Men are particularly interested in competitive training;
5
6 therefore it would be a valuable opportunity to sponsor events and famous athletes. Unfortunately, at this time there are not enough funds for this idea. However in a few years when the business is more profitable, this idea would be feasible. Men are also more inclined to register if the gym is expanded so they can also work out. Since men do not need extensive ads, the London Transit Commission (LTC) bus ads are sufficient and inexpensive. Not only do LTC ads target men, but are also geared towards anyone who takes public transit or sees the bus. The next customer group is women: the smallest client base but with the most potential. Women mainly participate in BJJ for self-defence and physical fitness. To encourage participation from women, GBL should offer female only classes geared towards self-defence and conditioning if the gym expansion is made (see Exhibit 2). To reach out to women, ads must be made through LTC and social networking platforms, as they are popular forms of media that women use daily. Another way to attract women, specifically mothers, is to offer mother and children classes at the same time and a special price so it is more convenient and appealing for families. For example, if a mother enrols a child, she is eligible for a discount off her classes and fitness membership. If women sign up, they will suggest classes to their husbands and vice versa. As for the children group, in order to promote to them, it would be through the parents. As long as the women and male group are being advertised to, the children will naturally be registered because their parents are concerned about their health and knowledge in self-defence. Target Market Selection: Women The primary target market should be women because they are the largest population in London with the most potential to further attract more groups of customers once they are committed themselves. Once women are enrolled, they can enrol their children, partners and also
6
7 friends through word of mouth. Women are also more willing to spend money on recreational activities, as they generally are more concerned about their physique than men. Product GBL should offer all the classes for self-defence, anti-bullying, competitive training and females. This makes GBL unique from it’s competitors because they offer a variety of classes, overall engaging a larger and more diverse demographic of customers. The selection of classes must be accentuated in the ads so that customers can distinct the uniqueness of GBL. Customers will see GBL as a well-rounded gym with a strong established brand. In addition to the BJJ classes, GBL should spend $10,000 to expand the gym and add fitness equipment to offer the service of a regular gym to attract even more customers. By expanding the gym, GBL can offer conditioning classes, which will appeal to the target market, women and men. In addition, there should be more classes on the weekends in order to appeal to the working adults. Adults are more willing to attend weekend classes, when they are not tired or busy from work. Thus, opening more classes on the weekends will attract more customers. Since Belkalem is planning to work full time, he can teach on the weekends. An initiative that was suggested by Belkalem was to offer martial arts classes too. This idea is not good because it will draw away attention from BJJ. Gracie Barra is recognized as the best BJJ franchise in the world, which is the perfect opportunity to advertise themselves as the most traditional and specialized BJJ gym in London. By solely focusing on mastering BJJ, this will increase enrolment because customers prefer companies that have been in the industry for the longest time. This factor will distinguish GBL from Submission and Adrenaline, since those gyms focus on multiple forms of martial arts.
7
8 Placement London is a great location for the BJJ industry. At this time, there are no changes regarding the location of the business that need to be made. Price Although there is a recession, it is not a huge concern to the business because most people would sacrifice money in order to benefit their health. Also, since the municipal government has been placing emphasis on healthy active living, people will not consider money as a barrier to signing up for gym classes. Therefore, it is reasonable for GBL to stay at a competitive membership fee. With the gym expansion, GBL can charge customers at a premium of $100/month for classes and gym use, and remain at $80/month for just classes in order to stay competitive with the other gyms. One of the promos can be if a mother enrols her child, at a price of $70/month, she can receive a $10 discount off her classes and gym membership of $100. Therefore, her membership would only cost $90 (see Exhibit 3). In retrospect, for only $10 more, women can indulge in training classes and have the additional perk of using a gym-equipped facility. The promotion can apply to men too, but ads should place emphasis on women since they are usually the ones that enrol their children in extra-curricular activities. For the collaboration with the rec centre, GBL should charge students $75/month for four classes. The reason why this price should be $5 less than a regular adult price is because students love discounts and they are only given one class a week. Promotion Ads should be made on the LTC bus, Facebook, Twitter and Western Gazette. The free Facebook and Twitter page will be used to keep existing customers by updating them with new information and promos (see Exhibit 4 and 5). For example, GBL can create a Facebook event
8
9 that offers a complimentary class for those who are interested in becoming committed members (see Exhibit 6). A quarter page ad can be placed in the Gazette for $481.60/year, which is targeted towards Western students (see Exhibit 7). This ad will be presented as an exciting new opportunity at the rec centre, as BJJ has never been offered before. A seventies sized ad can be put on an LTC bus for $475/year, which is targeted towards men and women in London who take public transit or see the ad (see Exhibit 8). This totals to $956.60, exactly under the $1000 budget. The direct mail option is not a favourable marketing strategy because it is not financially feasible (see Exhibit 9) and would not be as effective as the other options since junk mail is often discarded without being looked at. Therefore, the direct mail option would suffer from minimal exposure. As proposed earlier, the $90 promo for classes and gym membership for customers who also register a child is an effective way to increase revenue and customer awareness for GBL. For the best-case scenario, there would be a profit of $11,400 for the first month, assuming we reach the target of 140 members who all take advantage of the promotion (see Exhibit 10). The worse case scenario would be a loss of $3000 for the first month if GBL stays at 100 members with no one upgrading to the class and gym membership (see Exhibit 11). This loss is not alarming because it would only apply for the first month. For the next month $5000 would be made 1 2. The most realistic scenario would be if GBL has 120 members, a third who register for classes only, a third who take advantage of the promo and a third who register for classes and gym. In this scenario, a $2200 profit would be earned each month (see Exhibit 12). This shows that even if only a few take advantage of the promo, it still contributes to profit gain, proving that the implementation of the promo is beneficial. In regards to the breakeven analysis, the worse case scenario would require at least 138 members who all register for only classes. The best-case 1 2
$8000 (total contribution) - $3000 (loss) = $5000 profit Assuming members are committed for at least one year by contract 9
10 scenario only requires 69 members, if all register for the promotion (see Exhibit 13). These numbers are attainable because GBL already has 100 members and with the suggested marketing tools, it is likely that they will be able to gain more customers. Also, they were able to obtain 20 new customers in the past year even with the economic recession. It must be taken into account that London’s population is continuing to grow and there is a rising interest in BJJ, therefore an increase of 40 members is achievable. As for the student promo, there is not a significant profit from offering classes at the rec center, but it is a beneficial marketing tool to reach out to students and they may want to register for more classes at GBL in the future (see Exhibit 14). Furthermore, it is not a hard commitment for GBL instructors because they would only be offering classes four times a month. All the marketing strategies presented are effective and financially feasible techniques that will help Belkalem achieve his main goal of increasing the gym’s enrolment numbers by 40%. Conclusion In conclusion, in order to increase enrolment numbers by 40%, GBL should primarily target women by advertising through Facebook, Twitter, LTC bus ads and special promotions. It is important that GBL promotes themselves as the most experienced Brazilian Jiu-Jitsu gym in London and one that offers the finest selection of classes and services for their customers.
10
11 Exhibits Exhibit 1
Exhibit 1
Exhibit 3
Exhibit 4
11
12 Exhibit 5
Exhibit 6
Exhibit 7
Exhibit 8
12
13 Exhibit 9 Direct Mail Costs (92,5005 x 15.9¢6) ÷ 100 = 1,470,570¢ ÷ 100 = $14,707.50
Exhibit 10: Best-case scenario 140 members with upgrade3 + promo4 Unit contribution = $90 + $70 = $160 Total contribution = $160 x 140 members Profit = $22,400 - $11,000 marketing expenses = $11,400 for the first month
Exhibit 11: Worse case scenario 100 members7 with no upgrade Unit contribution = $80 Total contribution = $80 x 100 members Loss = $8000 - $11,000 = -$3000 for the first month
Exhibit 12: Realistic scenario 120 members w/ ⅓ classes, ⅓ promo and ⅓ gym UC = ($80x40) + ($90x40) + ($100x40) TC = $3200 + $6400 + $4000 Profit = $13,600 = $11,000 = $2600 for the first month
Exhibit 13: Breakeven Analysis Scenario Fixed Costs Classes + Gym $11,000 Just classes $11,000 Classes + gym w/ promo $11,000
÷ ÷ ÷ ÷
Exhibit 14: Student promotion Worse case scenario [($75 x 3 students) x 6 months8] – expenses = $2250 - $481.60 = $1768.40 profit/year
Unit Contribution $100 $80 $160
Members needed to B/E 110 138 69
Realistic Best-case scenario [$75 x 20 students) x 6 months] - expenses = $9000 - $481.60 = $8518.40 profit/year
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Upgrade refers to the combined BJJ classes and gym membership for $100 Promo is if one registers a child, they can receive $10 off their upgrade membership 5 London has a population of 370,000. Assuming there is on average 4 members per family. 370,000 ÷ 4 = 92,500 households 6 Canada Post prices for a basic standard sized papers up to 50g 7 Assuming that members are committed for at least on year by contract 8 Approximately 6 months students would attend the gym (excluded holidays) * All calculations are based on the assumption that company expenses have been accounted for 4
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Name: Anna Li Date: December 5, 2012 Instructor: Sean Burkett Section: 003
2 Executive Summary Gracie Barra London (GBL) is a Brazilian Jiu-Jitsu (BJJ) gym in London owned and operated by Fateh Belkalem. It is part of the Gracie Barra franchise, originally founded by Carlos Grace Jr. in Brazil in 1986. Gracie Barra is one of the most well-known and respected Brazilian Jiu-Jitsu franchises in the world. This year, Belkalem has decided to work at GBL full time and has proposed a new goal. His objective is to increase the gym’s enrolment by 40% in the next year, raise customer awareness of GBL and what they have to offer, and utilize $11,000 for marketing initiatives and/or gym expansion. From the analysis and calculations provided in this report, the following recommendations are the most effective and financially feasible for the company: o Gym expansion should proceed so that they can offer more services o Advertisements should reflect GBL’s experience and dedication to BJJ and their specialization to the art o A variety of classes should be offered such as self-defence, competitive training, female and anti-bullying for children, etc. o Target market should be focused on women o Facebook, Twitter, London Transit Commission bus ads and Western Gazette ads are useful ways to advertise to women, men and students o Promotion specials should be implemented to attract more customers
It is not necessary for all the funds to be allocated towards marketing initiatives because GBL should use them towards the gym expansion, overall attracting more customers. By offering a variety of classes and a gym equipped facility for working out, GBL offers the most services for similar prices as their competitors. The marketing initiatives proposed not only reach out to women, but target the other customer groups as well. This ensures that GBL is recognized as a diverse gym. A promotion that should be implemented is predominantly directed to women: if one registers their child, they will receive $10 off their BJJ classes and gym membership. These plans are financially feasible because there is enough money for the gym expansion and advertisements. In the future, it would be good to continue advertising to gain even more clientele, but as for now; the gym expansion should be a priority and would make GBL more competitive in the BJJ industry by differentiating themselves from their competitors. With the analysis, recommendations and exhibits provided in this report, they provide a detailed marketing plan to help GBL target their customers effectively, obtain a total of 140 members by the end of the year, and develop a strong reputation as the leading BJJ gym in London with the most impressive facilities and quality of training.
2
3 Marketing Challenge As an external consultant to Fateh Belkalem, the owner and operator of GBL, I have developed a comprehensive marketing plan to provide advice on how to increase the gym’s enrolment by 40%, how to define GB as the lead in the industry, who to establish as a target market and what are the most effective ways to advertise. Corporate Capabilities: Finance, Marketing, Operations and Human Resources Belkalem has financial savings of $3000 for advertising expenses and has secured $8000 from an investor. These funds can be used to invest in a new training and conditioning gym that will cost $10,000. If the expansion proceeds, there is $1000 left for marketing initiatives. Carlos Gracie Jr. founded GB in 1986 in Brazil. Due to the increase in BJJ in America, Carlos Jr. moved GB’s headquarters to California. As GB schools increased internationally, Carlos Jr. developed a franchising program. In 2012, GB was known to be the best and most respected Jiu-Jitsu franchise in the world. Since GB is already a well-established brand, advertising can be focused on what they have to offer to develop more customer awareness. GBL is open seven days a week on weekday afternoons, evenings and weekends. GBL offers child, beginner, advanced and open mat classes. Currently, there are 100 members. If the gym expands, it will appeal to more customers because there will be more space and they can offer a larger variety of services. It is highly suggest that Belkalem invests in the expansion. Presently, GBL has five assistant instructors and Belkalem, who plans to work full time teaching classes. Belkalem has a BJJ black belt, has been a practitioner for 20 years and has been dedicated to martial arts for 40 years. Belkalem is very experienced and can easily attract customers with his extensive knowledge. This means that the ads should focus on showcasing that GBL has the most skill and years of training in the BJJ industry.
3
4 Industry Analysis: Political, Economic and Social London’s municipal government has been promoting the importance of physical activity. This initiative is a great way to motivate residents to register for fitness classes like BJJ, overall increasing customer traffic for the business. In 2008, London suffered from an economic recession and has not fully recovered. As a result, Londoners may spend less on leisure activities. This could affect the enrolment numbers for GBL, however many are willing to sacrifice money for physical activity because health is important and worth spending on in order to maintain wellness. The city of London has a growing population of 370,000 and is home to Western University, which has an impressive student population. With this factor, GBL has the opportunity to reach out to students, ultimately expanding BJJ and attracting students to enrol for classes. Competitive Analysis: Direct and Indirect GBL has three direct competitors: Submission Academy, Bindner’s Jiu-Jitsu Academy and Adrenaline. Submission offers similar classes as GBL and the enrolment fee is lower. In order to compete with Submission, Belkalem must advertise on offering the best BJJ skills. Advantageously, Belkalem has a black belt and more experience than the owner who only has a purple belt. This factor differentiates GBL from Submission and justifies GBL’s premium pricing. Customers are more likely to register for GBL than Submission because they have been in the industry for longer and can offer more rewarding classes. The second competitor is Bindner’s Jiu-Jitsu Academy. The competitive factor about Bindner is that their membership is cheaper. However, GBL has five times as many members, they are open twice as many days and Belkalem has more experience in BJJ because his black belt is more advanced than Bindner’s blue belt. Bindner does not offer children classes, which
4
5 means that GBL attracts a larger demographic and offers more variety. Belkalem displays more commitment to his business and BJJ than Bindner because he teaches most of his classes, unlike Bindner. The fact that GBL is fully dedicated to BJJ and offers a variety of classes is a key point that must be mentioned in the ads. The last competitor is a MMA gym, Adrenaline. The gym offers a variety of activities, from yoga to kickboxing. Adrenaline and GBL’s prices are on par, making them the most competitive. However, GBL is specializes in BJJ, which differentiates them from Adrenaline. This feature can be used to their advantage by promoting their dedication and focus in BJJ. It is important that customers perceive GBL as the top academy in London with the largest selection of classes and services and most commitment to jiu-jitsu with the best skills taught, provided at a premium price (see Exhibit 1). By creating this image, customers will be more inclined to register for GBL than the other competitors. Consumer Analysis: Students, Males, Females and Children GBL has four main customer groups: Western students, males, females and children. All these groups primarily want to practice BJJ for physical fitness and self-defence. Although there are 40,000 students that could potentially be customers, it is a difficult group to target because most students are not locals. Students already have the Western Recreation Centre available to them – free of charge, therefore it is unlikely for them to look into taking additional classes off campus. However, an opportunity to engage students is to offer weekly classes at the rec centre. This will reach out to those with interest and gain their loyalty. Ads can be printed in the Western Gazette. Once the students practice, they may want to sign up for more classes at GBL. GBL does not need to spend much on marketing initiatives towards men because they naturally have a strong interest in BJJ. Men are particularly interested in competitive training;
5
6 therefore it would be a valuable opportunity to sponsor events and famous athletes. Unfortunately, at this time there are not enough funds for this idea. However in a few years when the business is more profitable, this idea would be feasible. Men are also more inclined to register if the gym is expanded so they can also work out. Since men do not need extensive ads, the London Transit Commission (LTC) bus ads are sufficient and inexpensive. Not only do LTC ads target men, but are also geared towards anyone who takes public transit or sees the bus. The next customer group is women: the smallest client base but with the most potential. Women mainly participate in BJJ for self-defence and physical fitness. To encourage participation from women, GBL should offer female only classes geared towards self-defence and conditioning if the gym expansion is made (see Exhibit 2). To reach out to women, ads must be made through LTC and social networking platforms, as they are popular forms of media that women use daily. Another way to attract women, specifically mothers, is to offer mother and children classes at the same time and a special price so it is more convenient and appealing for families. For example, if a mother enrols a child, she is eligible for a discount off her classes and fitness membership. If women sign up, they will suggest classes to their husbands and vice versa. As for the children group, in order to promote to them, it would be through the parents. As long as the women and male group are being advertised to, the children will naturally be registered because their parents are concerned about their health and knowledge in self-defence. Target Market Selection: Women The primary target market should be women because they are the largest population in London with the most potential to further attract more groups of customers once they are committed themselves. Once women are enrolled, they can enrol their children, partners and also
6
7 friends through word of mouth. Women are also more willing to spend money on recreational activities, as they generally are more concerned about their physique than men. Product GBL should offer all the classes for self-defence, anti-bullying, competitive training and females. This makes GBL unique from it’s competitors because they offer a variety of classes, overall engaging a larger and more diverse demographic of customers. The selection of classes must be accentuated in the ads so that customers can distinct the uniqueness of GBL. Customers will see GBL as a well-rounded gym with a strong established brand. In addition to the BJJ classes, GBL should spend $10,000 to expand the gym and add fitness equipment to offer the service of a regular gym to attract even more customers. By expanding the gym, GBL can offer conditioning classes, which will appeal to the target market, women and men. In addition, there should be more classes on the weekends in order to appeal to the working adults. Adults are more willing to attend weekend classes, when they are not tired or busy from work. Thus, opening more classes on the weekends will attract more customers. Since Belkalem is planning to work full time, he can teach on the weekends. An initiative that was suggested by Belkalem was to offer martial arts classes too. This idea is not good because it will draw away attention from BJJ. Gracie Barra is recognized as the best BJJ franchise in the world, which is the perfect opportunity to advertise themselves as the most traditional and specialized BJJ gym in London. By solely focusing on mastering BJJ, this will increase enrolment because customers prefer companies that have been in the industry for the longest time. This factor will distinguish GBL from Submission and Adrenaline, since those gyms focus on multiple forms of martial arts.
7
8 Placement London is a great location for the BJJ industry. At this time, there are no changes regarding the location of the business that need to be made. Price Although there is a recession, it is not a huge concern to the business because most people would sacrifice money in order to benefit their health. Also, since the municipal government has been placing emphasis on healthy active living, people will not consider money as a barrier to signing up for gym classes. Therefore, it is reasonable for GBL to stay at a competitive membership fee. With the gym expansion, GBL can charge customers at a premium of $100/month for classes and gym use, and remain at $80/month for just classes in order to stay competitive with the other gyms. One of the promos can be if a mother enrols her child, at a price of $70/month, she can receive a $10 discount off her classes and gym membership of $100. Therefore, her membership would only cost $90 (see Exhibit 3). In retrospect, for only $10 more, women can indulge in training classes and have the additional perk of using a gym-equipped facility. The promotion can apply to men too, but ads should place emphasis on women since they are usually the ones that enrol their children in extra-curricular activities. For the collaboration with the rec centre, GBL should charge students $75/month for four classes. The reason why this price should be $5 less than a regular adult price is because students love discounts and they are only given one class a week. Promotion Ads should be made on the LTC bus, Facebook, Twitter and Western Gazette. The free Facebook and Twitter page will be used to keep existing customers by updating them with new information and promos (see Exhibit 4 and 5). For example, GBL can create a Facebook event
8
9 that offers a complimentary class for those who are interested in becoming committed members (see Exhibit 6). A quarter page ad can be placed in the Gazette for $481.60/year, which is targeted towards Western students (see Exhibit 7). This ad will be presented as an exciting new opportunity at the rec centre, as BJJ has never been offered before. A seventies sized ad can be put on an LTC bus for $475/year, which is targeted towards men and women in London who take public transit or see the ad (see Exhibit 8). This totals to $956.60, exactly under the $1000 budget. The direct mail option is not a favourable marketing strategy because it is not financially feasible (see Exhibit 9) and would not be as effective as the other options since junk mail is often discarded without being looked at. Therefore, the direct mail option would suffer from minimal exposure. As proposed earlier, the $90 promo for classes and gym membership for customers who also register a child is an effective way to increase revenue and customer awareness for GBL. For the best-case scenario, there would be a profit of $11,400 for the first month, assuming we reach the target of 140 members who all take advantage of the promotion (see Exhibit 10). The worse case scenario would be a loss of $3000 for the first month if GBL stays at 100 members with no one upgrading to the class and gym membership (see Exhibit 11). This loss is not alarming because it would only apply for the first month. For the next month $5000 would be made 1 2. The most realistic scenario would be if GBL has 120 members, a third who register for classes only, a third who take advantage of the promo and a third who register for classes and gym. In this scenario, a $2200 profit would be earned each month (see Exhibit 12). This shows that even if only a few take advantage of the promo, it still contributes to profit gain, proving that the implementation of the promo is beneficial. In regards to the breakeven analysis, the worse case scenario would require at least 138 members who all register for only classes. The best-case 1 2
$8000 (total contribution) - $3000 (loss) = $5000 profit Assuming members are committed for at least one year by contract 9
10 scenario only requires 69 members, if all register for the promotion (see Exhibit 13). These numbers are attainable because GBL already has 100 members and with the suggested marketing tools, it is likely that they will be able to gain more customers. Also, they were able to obtain 20 new customers in the past year even with the economic recession. It must be taken into account that London’s population is continuing to grow and there is a rising interest in BJJ, therefore an increase of 40 members is achievable. As for the student promo, there is not a significant profit from offering classes at the rec center, but it is a beneficial marketing tool to reach out to students and they may want to register for more classes at GBL in the future (see Exhibit 14). Furthermore, it is not a hard commitment for GBL instructors because they would only be offering classes four times a month. All the marketing strategies presented are effective and financially feasible techniques that will help Belkalem achieve his main goal of increasing the gym’s enrolment numbers by 40%. Conclusion In conclusion, in order to increase enrolment numbers by 40%, GBL should primarily target women by advertising through Facebook, Twitter, LTC bus ads and special promotions. It is important that GBL promotes themselves as the most experienced Brazilian Jiu-Jitsu gym in London and one that offers the finest selection of classes and services for their customers.
10
11 Exhibits Exhibit 1
Exhibit 1
Exhibit 3
Exhibit 4
11
12 Exhibit 5
Exhibit 6
Exhibit 7
Exhibit 8
12
13 Exhibit 9 Direct Mail Costs (92,5005 x 15.9¢6) ÷ 100 = 1,470,570¢ ÷ 100 = $14,707.50
Exhibit 10: Best-case scenario 140 members with upgrade3 + promo4 Unit contribution = $90 + $70 = $160 Total contribution = $160 x 140 members Profit = $22,400 - $11,000 marketing expenses = $11,400 for the first month
Exhibit 11: Worse case scenario 100 members7 with no upgrade Unit contribution = $80 Total contribution = $80 x 100 members Loss = $8000 - $11,000 = -$3000 for the first month
Exhibit 12: Realistic scenario 120 members w/ ⅓ classes, ⅓ promo and ⅓ gym UC = ($80x40) + ($90x40) + ($100x40) TC = $3200 + $6400 + $4000 Profit = $13,600 = $11,000 = $2600 for the first month
Exhibit 13: Breakeven Analysis Scenario Fixed Costs Classes + Gym $11,000 Just classes $11,000 Classes + gym w/ promo $11,000
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Exhibit 14: Student promotion Worse case scenario [($75 x 3 students) x 6 months8] – expenses = $2250 - $481.60 = $1768.40 profit/year
Unit Contribution $100 $80 $160
Members needed to B/E 110 138 69
Realistic Best-case scenario [$75 x 20 students) x 6 months] - expenses = $9000 - $481.60 = $8518.40 profit/year
3
Upgrade refers to the combined BJJ classes and gym membership for $100 Promo is if one registers a child, they can receive $10 off their upgrade membership 5 London has a population of 370,000. Assuming there is on average 4 members per family. 370,000 ÷ 4 = 92,500 households 6 Canada Post prices for a basic standard sized papers up to 50g 7 Assuming that members are committed for at least on year by contract 8 Approximately 6 months students would attend the gym (excluded holidays) * All calculations are based on the assumption that company expenses have been accounted for 4
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