Laura Cox
03/07/2012
MGT Strategy
Case Analysis: The Ultimate Fighting Championship and Cultural Viability I. Introduction
The UFC, Ultimate Fighting Championship, belongs to the mixed martial arts industry. It is actually the largest MMA promotion company in the world. Mixed Martial Arts is a full contact combat sport. It allows the use of both striking and grappling techniques. There are numerous types of mixed martial arts including boxing, wrestling, kickboxing, karate, and taekwondo. II. General Environmental Analysis a. Technology
Mixed martial arts have been around for a long time. It was first introduced in the original Olympic Games in Athens. In the beginning, fighters used a combination of Hellenic boxing a wrestling to fight. They could use any of their abilities until they had the other opponent knocked unconscious or surrender. There were no rules or guidelines to the fighting; it was all or nothing. Different combat sports evolved over the years into different areas of the world. This made the popularity of pakration decline. As time went on, rules and regulations were developed for the fighters and the technological advances helped this sport take off. b. Demographics
This industry is mainly viewed by males, although some females are also interested in the industry. From personal experience, males enjoy watching a fight more than females do. The industry attracts an age group mainly between 18 and 36. No matter what race or ethnicity we are, fighting is in our DNA. This is not intended as a racial sport against another race or kind.
Many young children and adults are taking classes in this type of industry to have a better understanding of personal protection. I will admit, I don’t think some of the fighting is kid friendly. It takes a mature individual to understand that trained fighting is not there to intentionally hurt someone. I believe as long as children are being taught the correct way to fight and the reasoning behind it, for personal protection, they are entitled to participate in the sport. c. Political/Legal
One of the first priorities was to legalize MMA as a sport. States needed to regulate the MMA in order to legalize the sport and reach a wide variety of audiences. Similar to boxing, MMA needed regulations from the government and specific rules that all fighters followed. A department was created that was devoted to regulatory issues. Most of the rules formed from the rules of boxing, like weight class limit and timing in the octagon.
“Die to these regulations, a five-year study of injury trends in sanctioned MMA fights found that there were no critical injuries to any of the fighters involved in the study, and that the most common injuries were lacerations and upper extremity injuries.” d. Socio-cultural & Global
MMA sports were developed all over the world. Greece, Korea, Japan and Russia are only a few places that combat sports originated. Now there is a wide spread all over the world with these violent combat sports; every culture has their own form and concepts that create the MMA industry. I would believe that the combat sports attract more men than women. Since it is such a violent sport, some cultures may now even allow the sport in their country. III. Industrial Analysis e. Barriers to Entry (High)
The MMA industry is growing quickly. There is a great amount of profit potential so why aren’t other companies entering the industry? For one, brand name is very important in this industry. A new company cannot just come in under any name. Fans are going to be more interested in the name brands that are already established. Trying to establish a brand name, will be a challenge for new entrants. Establishing relationships with state commissions and various venue places is also important in this industry and it is not an easy thing to duplicate. The well established companies are going to hold a large share of the market in this aspect. Experience is also a key factor in this industry. A company with an excessive amount of experience already knows how to turn profit in this industry. A newcomer will have a difficult time to find a differentiated product in order to attract new fans and create a profit. f. Bargaining Power of Suppliers (Moderate)
The main suppliers in this industry are the fighters themselves, without them there would be no sport. There is a lot behind a fighter’s career in mixed martial arts. The main way you have bargaining power is if you can bring consumers to the table. If someone is watching the fight because of the people in the ring that is helping the industry make money. An up and coming fighter can have some issues with this though. Not only are they competing with the men and women who already have a name for themselves, they are also competing with the other individuals trying to become part of the industry. The industry could probably get the aspiring fighters to fight for free because they would see it as an opportunity to get their name known. The bargaining power of suppliers is overall moderate because the fighters have a little control, but the industry overall has more control. g. Bargaining Power of Buyers (weak)
Who are the buyers of the mixed martial arts market? That would include everyone who owns a television and has the option to purchase paper view channels. Restaurants and bars are also buyers of this market. As individuals, we have no say on how much they charge to watch a UFC fight or boxing match. The only way we could have a say in that is if we bought a significant portion of the PPV revenue. An example of this would be if a chair restaurant or bar would negotiate prices for all their stores.
As buyers, we also cannot control the amount a ticket costs to go see a live fight. They are going to set the rates and people who want to go see the fights will have to pay the asked price. Buyers do not really have any power in this market. h. Threat of Substitute Products (High)
When a product, in this case a sport, is easier to substitute the value of the product is less. Mixed martial arts cover a wide range of different sports including the UFC, wrestling, boxing, taekwondo, and karate. Substitutes for mixed martial arts include baseball, basketball, football, and any other legal sport. Some of the substitutes are more threatening than others. I think the main focus for a mixed martial arts sport would be to differentiate themselves from the other types of mixed martial arts. Because there are many sports for people to watch and be involved in, the substitutes are pretty high. i. Intensity of Rivalry among Competitors (Moderate)
The dynamics of the mixed martial arts industry don’t assume competitive rivalry. The companies in this industry have to look into differentiating their product and getting their sport recognized. One might try to differentiate their product by appealing to be more family friendly or appeal to a different type of market. This is the way companies in the mixed martial arts industry have to compete; they have to make their sport slightly different to attract fans. IV. Competitor Analysis
The competitors of the UFC depend on the industry I related it to. Since I put the UFC in the mixed martial arts industry, this means the competitors also relate to the mixed martial arts industry. Mixed martial arts are full contact sports including boxing, wrestling, kickboxing, taekwondo and karate.
Boxing is a combat sport between two people using only their fists. The difference between boxing and UFC fighting is that with boxing you can only use your hands and a UFC fighter can use their entire body. Although, in boxing defense is just as important as offense. This is not the case for a UFC fighter. Boxing has been around a lot longer than UFC but popularity cannot be the determining factor on who has more competitive advantage over the other.
Wrestling is also a physical sport between two people engaged in the activity. This makes it a competitor with UFC. Wrestling involves full body contact using clinch fighting, take downs and other grappling holds. The UFC also involves full body contact similar to wrestling. Like the WWE, trash talk and drama is added to the sport just like the UFC.
These are two main competitors that I feel like belong in the MMA industry. Even though there are quite a few different sports that belong in the MMA industry, I felt most comfortable talking about boxing and wrestling since I am not very familiar with the industry itself. V. Internal Analysis
According to research, the Ultimate Fighting Championship is the leading mixed martial arts promotion company in the world. When the UFC began, there were no regulations and no rules that the fighters had to follow. Many people thought the sport was too violent and the ethics were questioned. McCain had put a ban on the UFC causing the shareholders to cut their losses and sell the organization. The new owners decided that regulating the sport would be their best interest in order to clean up its image. Rules were established for the Octagon with a weight and time limit. After regulations were put on the sport, John McCain believed that the sport had cleaned up their act. There are several companies that have been purchased by the owner of the UFC. Strikeforce was formerly their largest competitor that began as a kickboxing organization. Now part of the UFC, Strikeforce kept all their management and contracts including the fighters they had signed. World Extreme Cagefighting was also purchased by the UFC. The main purpose here was to combine the weight classes with the UFC since WEC was geared toward a smaller weight class. Pride Fighting Championships, located in Japan, was purchased by the UFC as well. However they refused to submit background investigations so the UFC now controls their sport as well. Buying these main competitors was probably a lot of hard work but helped the UFC grow into what it is today.
The UFC is primarily viewed by males between the ages of 18 and 34. Even though they market to everyone, this is the main demographic group that the sport attracts. UFC is supposed to be family friendly even though the fighting is rough and vicious. UFC owner also believed that the sport should reach many audiences, “I don’t care what color you are or what language you speak, we’re all human beings and fighting is in our DNA.” Just because one fighter is a different race, doesn’t mean the other fighter will be racial towards him; the fighting is uniform against any other fighter no matter what color they are. The owner partnered with popular music artists that belong to the African American and Hispanic audiences. This helped reach out to this demographic group and continue to increase the popularity of the sport.
UFC along with many other MMA sports is broadcasted over the PPV channels on cable TV. Because of this, marketing is a very important aspect to the organization. Marketing in the United States is very successful, so focusing on marketing in different countries is something UFC focuses on. It is important to remember that each culture is unique so the marketing strategies must be different. In order to expand the UFC, marketing specialists need to figure out the culture profiles of places like China, India and South Korea. In order to be successful, research is required to learn about many different cultures. The main question comes to should the UFC expand into international locations for live PPV events, or focus on holding events where the fan base is already established? VI. Suggestions & Alternative Strategies
I am not a huge fan of the UFC or any other MMA sport, so I know very little information about it. After researching and reading the case study, I feel a little more comfortable talking about the sport. I believe the main way the industry makes money is by selling PPV tickets to watch their events; therefore marketing is one of their top priorities. I think if they continue with their marketing in the United States they will have a well developed fan base, but eventually they are going to have to market to places like China in order to dominate the industry. I believe they need to do their research and study the cultures so they can make a clear assessment on who to provide the services to and how to market differently to each one. I also believe that buying their competitors out like Strikeforce and WEC is to their main advantage. The wider market they can hold, the better off they will be in the long run.