Paul Sylvestre's Business Strategy and Marketing Blog

Tuesday, June 14, 2005

Knowing Your Buyer, A Situational Analysis On My Karate Studio

I was having a chat earlier this past week with my son's Karate Instructor, Chris. Because of a sagging enrollment base, he took a day job (in addition to teaching the classes in the evening and running the business of his school). Chris attributed the current financial challeges he faced to a weak economy, but after talking a bit more, we uncovered a few other issues, namely:
  • His school catered to a niche crowd...let's just say it is a little more realistic in its approach. As such, he drew from a smaller qualified pool of prospects. In addition, these potential "buyers" typically have less disposable income (although with the right marketing it might appeal to those with more income).
  • His school suffered from a low brand recognition. His competition is well known in his niche space through sponsorships and tournament acknowledgements. These other schools have celebrity status among this niche market.
  • Chris has a strong aversion to teaching a more mainstream style of martial arts and using longer term contracts to stabilize his revenue stream. This is in line with his vision for his school, and definitely not a bad thing if he can find some alternate strategies to increase his membership base. He feels that this vision is somewhat holding him back.
So, what are some of his potential strategies that could increase the membership base, stabilize revenue and increase his credibility in the eyes of the market? And can he do all this without feeling like he is selling his soul? of course, he has very little money to spend.

Our conversation followed along the lines of a simple situational analysis. A good overview of what is covered in a situational analysis can be found here:

For purposes of this post, doing a simple 3C analysis will point him in the right direction.
  • Company: His biggest challenge seems to be his image in the marketplace. Even though he is a great teacher, the market needs to see him as an expert. An additional strategy here might be to position the martial art he teaches as more mainstream (although you risk hurting your core customer base), or he might offer classes in more mainstream martial arts or enter into retail clothing and equipment (aka line expansion). He is well positioned to do this since his core training is in MIXED martial arts, which is a blend of different styles that the instructor is an expert in (and also has a lot of buzz associated with it). I should also emphasize that any strategy must fit with his overall vision for his school, or it just won't work.
  • Customers: His students fall into two obvious categories, hard core fighters and more mainstream students not looking to be pummeled into mush. However, there might be a third category...20 and 30 something urban professionals with disposable income, looking for a superior martial art that fits into their busy schedule. To resonate with this group, he feels his biggest challenge is educating potential students on what makes his school different from the more mainstream martial arts styles that people relate better with. Unfortunately, mixed martial arts is considered by some as a fringe style that is too violent for the average person. If Chris could show that this is not necessarily the case, he would be able to better compete in the market, which leads to...
  • Competitors: Chris is going up against heavy hitters and has not done a good job of positioning himself in an unnocupied area of his market. Instead, he is going head to head with well known and highly successful extreme fighting schools on one end (for those students who want that) and more mainstream martial arts schools on the other. If Chris doesn't want to change what he is doing, he needs to carve out a nichebetween those two areas (e.g. positioning his school as a real martial art that delivers a more well rounded student).
So, will Chris implement any of these strategies and if he does, will they work? Only time will tell. More on this in the coming weeks.

By the way, if you're interested in learning more about this school, send me a note. Chris is the Head Instructor, and he is an excellent teacher for both young and old students. I highly recommend him if you live in the San Jose Area.