First off, let’s do it.
Second, I agree that the business model seems to be one that could be easily duplicated financially, but right now there is only one major competitor in this category. I think the branding behind the company is huge at this point. Also, I think their timing has been critical in that it was one of the first to take advantage of what could be considered the “Crossfit fad”.
You bring up a great point about barriers to entry. Right now, I can only figure that the biggest barrier is the brand names of Tough Mudder and Spartan Race in this space. Any new entrants would have to fight a huge uphill battle in terms of marketing spend in order to gain a foothold against those two titans. I don’t really see a way to do it from the cost cutting angle.
Interestingly enough, they actually do market these events to corporations. Whether that marketing is active or passive is anyone’s guess. But, they do have a section for corporate group signups on their website for what it’s worth.
While I don’t know the exact statistics, I can tell you that everyone I know who’s participated in the event typically doesn’t come back for quite some time. Tough Mudder does offer discounts in order to attract previous participants, but I’d also like to see the data if it was available.
The exercise class offering is an interesting concept. Maybe they can best achieve this through strategic partnerships with target city gyms in the buildup to the event date?
Interesting thought. I wonder what other adjustments they could make to the model in order to encourage people to adopt these events as periodic family traditions or maybe some sort of group rite of passage. I think their best bet is to build official partnerships with other entities that already have “cult-like” followings (i.e. extreme fitness centers).
Interesting post. I’m fascinated by the fact that Dorman has been able to consistently “guess correctly” in terms of its product lineup. Based on the info above, it seems that the company rides a thin margin between success and failure in choosing its target products; a focus on the wrong products over even a short period of time seems like it would be disastrous. Yet, they continue to get it right and are able to take advantage of high profit margins on many of the replacement parts that they manufacture.
Well done Mike!
Love it! I’ve been interested in Tesla for some time now. Bill Cozean brings up a great point about the future effect of competition on Tesla’s business model. However, one particularly surprising fact is that Elon Musk is openly allowing competitors to use his company’s intellectual property with no repercussions. Competitors do not need to invest in vast amounts of R&D to get started because Tesla is giving away its learning points. Tesla is essentially betting that they will be able to maintain their market advantage in the electric vehicle category strictly through more efficient manufacturing and distribution processes as detailed above.
Great post. I love tractors!
It’s interesting that Tractor Supply Company is differentiated from its competitors not only by its rural focused assortment of product offerings but also by the store locations that are required to service customers in those areas. As you mentioned, it would be pretty difficult for the standard big box retailers to directly compete. However, I wonder if any of them could utilize a setup similar to Wal-Mart’s “Neighborhood Markets” to place smaller and more farmer focused stores in those locations.
Thanks for reading! The social media importance was significant to me because that’s actually how I first found out about Tough Mudder (I participated in one 4 years ago!). I think they have established a fantastic marketing system by relying on both the paid and free forms of advertising that social media websites present. As I just mentioned to Andrew, I think they can begin to offer different race set-ups and locations in order to reach a wider range of demographics, but doing so could require a shift in their current marketing strategy to actively seek out those people.
Hey Prak! I totally agree that there is a huge opportunity for international expansion, and it appears that they are just beginning to take advantage of it. According to their website, there are only 16 events being held outside of the U.S. in just 5 different countries! I would not be surprised to see that number grow dramatically in the next few years.
Andrew, I agree that at some point the market will become saturated, as people are somewhat less likely to be repeat customers for a 12 mile obstacle course than they would for events like marathons. However, I think there’s still a huge market for the types of participants that Tough Mudder wants to attract. I believe they are beginning to key in on this fact by offering courses of varying lengths and compositions that could attract different levels of participants. In that way, they can take advantage of the structure used by standard race events (e.g. kids mile, 10K, 1/2 Marathon, and Full Marathon’s offered over one race event weekend) to bring out the entire family.
Thanks Sara. Yeah, I thought that it was pretty interesting to see how they had tied in social networking into their marketing strategy. It was a near perfect play considering the burgeoning number of people who were already posting incessantly about what their workouts!
We should definitely try to setup an opportunity to get the entire Section to do one of these before we graduate!