Toronto Ultimate Club Case

The Toronto Ultimate Club Case

This report is consistent with my signed Academic Integrity Form on file with the instructor.

Mandeep Sandhu

100167392

Entr 3140 S51

June 21, 2016

Mike Ford

Critical Issues:

In order for Toronto Ultimate Club to be successful they must use a marketing strategy to help garner attention about their club and get people to join. More specially, we want to increase growth of memberships by 30% each year and keep the marketing budget under or at $50,000. To achieve this we must address the following:

• The high turnover of people not renewing their memberships either through retirement or joining other clubs
• Losing the current market share to competing clubs
• How to increase current and future memberships through the infiltration of untapped groups.

Situational Analysis:

The current issues are that they are having is a high turnover of people not renewing their memberships. By looking at the SWOT analysis (Exhibit 1) they notice that the company has many competitors, players retiring and economic downturn occurring. Which is causing the turnover of 500 members per year. With much more competition charging a much lower price they have started to lose some of its market share. Even though they have loyal supports those supporters are starting to retire with no new flux of new players coming through.

Also, looking at the Porter five forces (Exhibit 2) the competition rivalry is high and the buyer power is high. They have to compete with other clubs that are profitable and also have other sports year around. As they currently own the major market share for ultimate but with these clubs getting bigger they will start to lose that market share over the years. An example is the growth went from 30% a year to currently slowly growing.

Even though they have current issues, they do have a current opportunity. Looking at exhibit 3 the break up of the customer segmentation that hasn’t been infiltrated. The visible minorities has been untouched and since Toronto is a multicultural city this would be a way for them to meet new people. The young professionals are workers in Toronto and have disposable income and are looking for something to do after work. The last group is post-secondary student who are out of Toronto for school but come back during the summer and have disposable income and looking for something active. If they can infiltrate these different markets they will be able to increase our market share and increase growth of memberships. They can market to them because they have sponsored teams and differentiate from other clubs due to their rules.

Decision Criteria:

• Increase player membership by 30% by next year
• Staying within the $50,000 marketing budget

Options:

Option 1 (Status Quo):

They keep with what they are doing and don’t change anything. No analysis need to be done but if they continue all there old players will leave or join other leagues and with no new players coming in, they will probably end up folding.  In exhibit 1 it shows they need 1,176 people to register to break even. The membership prices aren’t the problem it is just they new players to start playing the game and need to market a strategy to them.

Option 2 (Advertise through Facebook)

This options maybe our best way of marketing to the visible minorities, young professionals and post-secondary students. The cost they would be using the full $50,000 of the marketing budget given to sell ads online Facebook. They won’t go into the Cost per click method because will be losing tons of money as shown in Exhibit 5. The CPM method is more intriguing because they have a gain from that method. This will meet the decision criteria of staying at $50,000 and increase the memberships by 1,261 people, which are growth of 42%, which is more than 30%. It will generate a net income of $4,257.37, which isn’t that major.

Option 3 (Advertise on EDGE 102.1)

If they advertise the cost of a month of advertisements will be $20,250 as stated in Exhibit 6. This will meet the decision criteria because the cost will be under the $50,000 budget. If they go with the most likely option we get 0.38% of the market share and it will increase memberships by 1,230 and increase net income by $32,640, which is an increase of 41% in growth of memberships. The breakeven they need is 476 people to get memberships listening through radio ads. The worst scenario is that it gets only 0.18% of the market share and increases the membership total by 590 it will create a net income of $5137 but only increases growth by 19%. They would need to sell 1,162 memberships to break even. The worst-case scenario the memberships increase by 652 people and would cause a net loss of $21,956.17. The best case scenario that the market share increases to 0.6% which will increase memberships to 1,956 people and increase net income to $34,131.48.

Option 4 (Advertise on local newspaper)

The advertising in the local newspaper is one option. We found that about 200,000 people 18-34 read the news paper and it would be an idea to put a few ads in there. The cost of the ads as we calculated was for 2 ads for a month and the total cost came out to be $20,180 (Exhibit 8).  This will help us meet the decision criteria because it is under $50,000. The most likely option has an income of $5,320 and increase of memberships by 600 but that is only a 20% growth when they are looking for 30%. The break even is 475 memberships. The worst option is that they only get 0.1% of the market share which only increases membership by 200 and net loss of $11,860. The best scenario is that get 0.5% of the market share and increase members by 1000 and increase net income $22,320.00.

Option 5 (Advertise on TTC)

Just looking at exhibit 9 I can tell if they use this option it will be over our marketing budget of $50,000. The reason being that 4-week cost before the posters is a minimum of $50,000. If we add in the cost of the posters it will put them over the estimated budget.  

Option 6 (Decrease membership price to $45)

If they decide to decrease the price to $45 they would need 2,222 people to break even which is not possible because the cost of fields are currently increasing and it they would have to get more field space. Illustrated in Exhibit 9.

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