There has been considerable outside research and marketing of "Sports" in America, however we find that several categories of sport were seriously overlooked in most analysis. Martial Arts is one of those sports. While basic figures are provided for Martial Arts by the U.S. Census, and other major research firms, most of the available data has been obtained through other sources, such as independent studies and published articles.
Our demographic research has shown opportunity exists in our marketplace and while the market appears saturated, it became clear as we dug deeper that our field is so poorly defined, marketed and organized that we have a tremendous opportunity for growth and expansion. Information has been an eye opener and has led us to believe that our position as a potential leader in our market, and eventually the industry, is not an impossible task.
Extrapolating data from three national sources relating to sports in general and Martial Arts specifically, it is estimated that 10% of the U.S. population have participated in some form of Martial Arts training during their lifetime.
It is estimated that 2 to 4% of the U.S. population are currently active in some form of Martial Arts training (the variation in numbers is a result of some surveys using Tai Chi, Kickboxing and Yoga as a Martial Art form, and some include school programs, where others do not).
City Dojo is located in a city with a population of 133,936 (2000 census). The population broken by gender is 48.4% male and 51.6% female; broken by race; 43.7% White, 28.9% Hispanic (Latino), 12.7% African American and 11.1% Asian. The average age in the city is 34.5.
Results from a national survey on Martial Art schools indicated on average, kids ages 4-14 account for 70-80% of the individuals participating in Martial Art training. In a survey completed at the dojo, membership was as follows: ages 4-14 (53%), 15-29 (12%), 30-49 (28%) and 50+ (7%).
Research into our market has shown the following:
1. The dojo is located in the heart of the City, 55% of our membership came from the three zip codes listed below, all nearby within the city limits (data obtained from dojo records, the California State Dept. of Finance and U.S. Census):
2. 35% of our membership came from 9 other local zip codes (up to 3.5 miles from the dojo) which increases our potential market to 350,000. The majority in this group come from a higher income base. For example; of the 9 ZIP codes, the 3 shown below reflect the highest family income.
3. The final 10% of our membership live outside the city (up to 5 miles from the dojo). The average age and salary in these areas vary greatly but lean towards the middle class market. Including this area would increase our potential market to over 600,000.
For purposes of this plan, we are going to address the city (pop. 133,936, average age 34.5) and surrounding cities within three miles of our dojo. This accounts for 90% of our current membership.
The "Real" market figures are based on research to determine if our noted territory, and the surrounding area is saturated. There are 43 dojos in an area with 350,000 potential members. Dropping those individuals under age 4 and over age 75 the number of potential members drop to 301,000.
Based on research provided by major research firms (available on the Internet) and the U.S. Census, up to 10% of the U.S. population has participated in Martial Arts of some type but only 2 to 4% are currently active in Martial Arts training.
Using this statistic we have determined that our potential market of 301,000 would include 12,000 active Martial Arts students (301,000 x .04). This number of active students (12,000) divided by the number of Martial Arts schools indicate, on average each dojo has 280 student members.
In this industry it is generally accepted that based on an average size dojo you need at-least 100 students to make money, 300 students creates capacity issues.
Using these numbers, we are confident that the market is not saturated, our dojo can easily meet our 200 student goal and there is considerable room for growth.
Our target market has been broken into three age segments, all within the city limits and surrounding area. The strategy is based on outside research, confirmed by our own internal survey: parents want their children to learn karate to build confidence and to learn self-defense, adults take karate for exercise and self-defense, and seniors take karate for social aspects and exercise.
While not specifically addressed, we will be placing emphasis on the Hispanic (Latino) market where we are already a leader. We are also going to address those ZIP codes in higher income brackets within our market, but not specifically in this plan.
Our target market breakdown is as follows:
A needs analysis was taken of current members. This analysis was compared with a national survey, reflecting similar results. Our marketing efforts will be to address the needs of these groups in the order given:
In the mid-1960's there was a boom in Martial Arts studios (dojos) partially brought on by the success of Bruce Lee movies and the TV show Kung Fu. In the mid-1980's, as interest in Martial Arts waned there was move towards offering children's programs. In the mid-1990's it was estimated that 5 to 10 million Americans (2-4% of the U.S. population) are active in some form of Martial Arts training.
Recent trends such as the popularity of the movie "Crouching Tiger, Hidden Dragon" not-so surprisingly caused a mini-surge in the number of new applicants. In addition, Martial Arts for kids has shown a trend towards more activities and less "traditional" training. It has been noted that today's kids (brought up in the fast paced video age) have a lower level of patience, want to be involved in "movie" type karate styles (ie; Matrix, Shanghai Noon, Karate Kid and Power Rangers) and are more demanding of their time.
Another trend is that larger health/fitness organizations are moving into the Martial Arts field and a general consolidation is occuring. Companies such as Bally Total Fitness, 24 Hour Fitness and Gold's Gym are offering kick-boxing and other forms of group "soft" Martial Arts training such as Tai Chi or Yoga.
Finally, there is a push in the health/fitness industry to attract the over 50 crowd. Fitness clubs have a difficult time applying their muscle building, fast-paced fitness programs into this market. However, the over 50 group is expected to be marketed to more aggressively as fitness/health clubs realize the potential of the "baby boomers" and the fact that baby boomers have both the time and money to pursue outside recreational activities.
The U.S. Census (2000) shows our city, over the past 10 years has been growing at an average annual rate of 1.8% (2.5% this last year). The central location of the city and proximity to Los Angeles is creating a boom in adults age 30 to 50 with young children, who can afford the ever increasing cost of homes in the area.
A national survey recently taken two years ago indicated there were approximately six million Americans actively involved in Martial Arts training. The survey indicated that a 14% growth rate was expected in the upcoming years as Americans moved towards a more healthy lifestyle. This data was in part supported by data obtained from other sources. We have noted that this trend was occuring until the September 11, 2001 disaster. Data after the disaster is not yet available, but it has impacted the industry, whether that impact is permanent or temporary has yet to be determined.
Within our described market, over the past decade, the Asian community, the smallest in number, at 11% of the population has shown the fastest growth at 40%, this is followed by the Hispanic (Latino) community, representing 28.9% of the population, showing a substantial 26.5% increase. The African-American community representing 12.7% of the population has decreased 25% over the last ten years and the White community which represents 43.7% of the total population has declined 13%. This trend towards a higher Hispanic (Latino) market mixes well into our future plans.
Two things were noted in our "over 50" market based on a study from the local newspaper, with data provided from the U.S. Census: the fastest growing market in the city (3%) are those in their 40's to 50's however, the market for individuals over 65 is flat and maybe actually shrinking. This could be be a result of the high cost of living in the area, causing many seniors on retirement income to move to more affordable locations.
The senior market, while showing little growth has considerable potential. The senior market has not been tapped in the Martial Arts industry (only 7% of our membership). The Health Club Trend Report (providing data to American Sports Data, Inc) recently ranked seniors as the third-largest population in health clubs today at 22%. These older adults enjoy the social aspects of membership and, have the time and income to participate. This group is involved in mostly "softer" exercise routines, including recumbent cycling, yoga/tai chi, and pool activities. The report goes further to state this group has "not" been aggressively marketed, yet has increased 131% over the past decade.
The business of running a dojo is similar to that of running a health/fitness club, membership is everything. A dojo is a Japanese word defined as, "a training hall where one can practice some sort of physical endeavor." Martial Arts falls under the SIC (Standard Industrial Code) 7999 - Amusement and Recreational Services. Under this heading we find groupings from Astrologers to Card Rooms, from Carnival Operations to Yoga. In other words the code is too broad to provide solid analysis benefit, but it will be addressed in our comparative ratios analysis at the end of this plan.
To give some perspective, we have noted that Martial Arts, as an industry, according to the U.S. Census has the same approximate number of participants as:
Martial Arts is a "pulverized" industry consisting primarily of thousands of small independent dojos (schools), most belong to one of hundreds of loosely organized Martial Arts Associations (usually divided by style type). There is no one organization which could be called a leader in the industry, however the International Karate Association, American Tae kwan do Association, American Karate Association and U.S. Martial Arts Association are some of the largest in the United States.
Two other industries should be considered in any competitive analysis. The health and fitness club industry (Bally Total Fitness, Gold's Gym, Bodies in Motion, 24 Hour Fitness) and the non-profits (YMCA, YWCA and local schools) are in competition for the same group of potential customers.
The nature of the business of a dojo is to offer a facility with Martial Arts training. Membership is everything and turnover (attrition) in the industry is high. Several reports place the average turnover of a dojo at 40 to 60%. Selection of a dojo by a potential member is, in-part done by the style of Martial Art (karate, judo, kung-fu or kick-boxing) the member wishes to participate. However, selection of a dojo by a new student is more basic in nature.
A recent local survey (supported by national survey results) show that dojo selection is based on the following (most popular first):
Potential members are most aware of a dojo's physical existence because:
We have identified our city and its surrounding area as the boundaries for the business plan. This covers approximately 36 square miles and 350,000 potential members. Within this boundary there are 43 Martial Arts programs and 23 health and fitness clubs. We have narrowed the scope of "direct" competition to four "like" dojos in our immediate area and two health/fitness clubs.
Numerous grade and high schools and two local colleges provide physical education classes nearby. However they have limited Martial Arts programs and it is felt they are more of a potential partner, then competitor.
Four dojos have been identified as being the most competitive with our location. All have a physical facility (dojo), all offer traditional Martial Arts training (different styles), all offer competitive pricing and are open Monday thru Saturday (closed Sunday). In addition, each dojo Shihan (head instructor) is well versed in his/her field and well respected in the community.
Three health/fitness clubs have been identified as being the most competitive with our location. They compete primarily for the single 18 to 40 market, but are moving toward offerings for the younger and older age groups which is something we must watch carefully. All have national advertising programs and have significant Yellow Page presence.