WESTERN UNIVERSITY CANADA
IVEY BUSINESS SCHOOL
BUSINESS 1220E / 1299E
FALL / WINTER TERM 2023/24
MARKETING MANAGEMENT REPORT
ASSIGNED: Friday, November 10, 2023
DUE: Friday, December 8, 2023, at 11:55 p.m., ET
MVMT Strength: Lifting Profits
Assignment:
As an external consultant to Isaac Morgado, perform whatever analysis you
deem necessary to make a recommendation. Create a comprehensive
marketing plan that is fully justified and supported by your findings.
RULES FOR THE INDIVIDUAL MARKETING REPORT
Fall/Winter 2023
1. Your entire report, including text and exhibits, must be prepared individually, in your own words, without
input or assistance from anyone else. This rule will be actively monitored and aggressively enforced.
Serious and lasting penalties will be issued to any student that violates this rule.
2. Maximum report length: 11 pages in total, broken down the following way - 8 pages of text plus 3 pages
of exhibits. All pages of text should be 8.5”x11”, formatted with one-inch margins on all sides, doublespaced, Times New Roman, 12-pt font, in MS Word. The report should be written in concise and complete
sentences and include headings.
a) Page Penalty: Ten (10) marks (out of 100) will be deducted from the final report grade for any pages
exceeding the stated page limit. If the report is not formatted according to the guidelines, instructors
may reformat the report and/or apply the appropriate deduction(s).
3. Reports should include a one-page executive summary, which will not be included in the stated page limit.
This summary should also be formatted with one-inch margins on all sides, Time New Roman, 12-pt font.
The executive summary may be single-spaced. This summary should appear at the beginning of the report
and should include a complete statement of the major issue(s) in the case and a summary of major
recommendations from the report.
4. All reports must be typewritten. The document must be submitted in .docx (MS Word) format as one
single document. Use the cut and paste function to merge content if needed. When saving your document
and submitting on OWL, ensure your submission follows the required naming convention: your last name
and your first name, separated with an underscore, i.e. Burset_Sophia
5. A title page IS NOT required. Your student name and student number must be clearly indicated within the
report, (i.e. as a header).
6. Reports must be submitted electronically on OWL via the Turnitin submissions tab by 11:55pm ET on
Friday, December 8, 2023. The deadline applies to all students. You may upload your report once,
anytime between the assigned date and the due date. You are responsible for saving and backing up your
files and submitting the correct file.
a) Late Penalty: Ten (10) marks (out of 100) will be deducted from the final grade for any submissions
received after 11:55pm on Friday, December 8, 2023. Another ten marks will be deducted for each
additional 24-hour period after this date. Absolutely no extensions.
Plagiarism is the submission of work that is in whole or in part someone else’s work, which you claim as
your own. Plagiarism is a major academic offence (see Western Scholastic Offence Policy). Students
must write their report in their own words and create their own exhibits. Whenever students take an idea,
or a passage from another author, including from generative AI sources (e.g., ChatGPT and other models
that exist or emerge), they must acknowledge their debt both by using quotation marks where appropriate
and by proper referencing, such as footnote citations. Failure to cite usage of generative AI (or any other
outside source) will be treated as a case of plagiarism. The report must be authored from an original
document using a Microsoft Word account registered to the student. Microsoft word is available free to
all students by visiting myoffice.uwo.ca. Collusion is the collaboration with another or other individuals
in the preparation of written work offered for credit. Collusion is regarded like plagiarism and is a major
academic offence. Students may not seek, accept and/or pay for consultation or advice in the
preparation of this report. Do not share your work with anyone, in any way, at any time, for any
reason.
7. This case contains the information required for you to complete the assignment and therefore external
research is not required. DO NOT CONTACT any persons related to the case or involved with the
organization for any reason. This will be considered an academic offence.
W33361
Jessica Orchin wrote this case under the supervision of Julie Gosse solely to provide material for class discussion. The authors do
not intend to illustrate either effective or ineffective handling of a managerial situation. The author may have disguised certain names
and other identifying information to protect confidentiality.
This publication may not be transmitted, photocopied, digitized, or otherwise reproduced in any form or by any means without the
permission of the copyright holder. Reproduction of this material is not covered under authorization by any reproduction rights
organization. To order copies or request permission to reproduce materials, contact Ivey Publishing, Ivey Business School, Western
University, London, Ontario, Canada, N6G 0N1; (t) 519.661.3208; (e) cases@ivey.ca; www.iveypublishing.ca. Our goal is to publish
materials of the highest quality; submit any errata to publishcases@ivey.ca. i1v2e5y5pubs
Copyright © 2023, Ivey Business School Foundation
Version: 2023-05-02
It was early July 2022 when Isaac Morgado, one of the founders of MVMT Strength Inc. (Movement Strength
or MVMTS), was reflecting on the last five years of the business’s operations. MVMTS had first opened in July
2017, and after successfully moving to a bigger location Morgado and his business partners wondered what the
next step for the gym would be. The last two years had been particularly difficult due to the government mandates
and mandatory shutdowns resulting from COVID-19.1 With the government restrictions easing up, the gym was
now able to operate at full capacity; however, MVMTS needed a new promotional strategy. The owners had set
aside a marketing budget of CA$12,0002 for the next three months to advertise the business on social media and
were willing to invest additional funds for a long-term marketing plan. Morgado sat down at his favourite local
coffee shop to create a comprehensive marketing solution.
THE CANADIAN FITNESS INDUSTRY
The fitness industry in Canada was worth $4.7 billion in 2022 and, despite the challenges of the COVID-19
pandemic, the industry grew 7.1 per cent in the first half of the year and was expected to further grow at an
annualized rate of 1.9 per cent over the next five years.3 The growth in the industry was attributed to a rise in
health consciousness in the population—individuals had become more aware of movement habits as a result
of increased sedentary during remote work, home-schooling, and closures of fitness facilities..4 Digital fitness
became the norm and on-demand content shifted the fitness industry to become more accessible and flexible.
Canadian Fitness Professionals (canfitpro) was the largest provider of education in the Canadian fitness
industry.5 It conducted studies to understand how these changes would impact fitness trends and discovered
a rise in new programs designed for all generations, levelling up with skills in nutrition coaching and a
move toward smart technology.6
1
Beginning in 2019, coronavirus disease (COVID-19) was an infectious respiratory illness that had spread across the world,
causing a pandemic.
2
$ = CAD = Canadian dollar. All currency amounts are in Canadian dollars unless otherwise specified.
3
“Gym, Health & Fitness Clubs in Canada—Market Size 2005–2027,” IBISWorld, accessed June 29, 2022,
www.ibisworld.com/canada/market-size/gym-health-fitness-clubs/#:~:text=The%20market%20size%2C%20measured%20by,
to%20increase%207.1%25%20in%202022.
4
Maureen Hagan, “What Will Fitness Look Like in 2022?,” January 10, 2022, www.canfitpro.com/blog/what-will-fitness-look-like-in-2022/.
5
“About Us,” canfitpro, accessed August 5, 2022, www.canfitpro.com/about-us/.
6
Hagan, “What Will Fitness Look Like in 2022?”
For use only in the Ivey Business Foundations courses BUS 1220E and BUS 1299E from 9/7/2023 to 7/31/2024.
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MVMT STRENGTH: LIFTING PROFITS
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Social media was a way for people to engage, share information, and express opinions on the Internet and
mobile devices. In 2022, 58.4 per cent of the world’s population used social media, an increase of 424 million
new users from 2021, and the average daily usage was almost two and a half hours.7 Popular social media
platforms included TikTok, Instagram, Facebook, YouTube, Snapchat, and Twitter. An estimated 22 per cent
of Canadian adults used TikTok and 51 per cent used Instagram, while users under the age of eighteen
represented 55 per cent of TikTok and 41 per cent of Instagram users.8 Younger users engaged on social media
platforms at least once a day, and the most frequented site for the age group under eighteen was TikTok.9 In
Canada, Facebook was the most used social media platform with 76.9 per cent of Internet users on the site.10
COMPANY HISTORY
Isaac Morgado
Isaac Morgado first moved to London, Ontario, in 2012 from Thunder Bay. He worked for Apple as a business
manager where he hired, coached, and developed the business team. Generating leads and building relationships
with customers was a key component of his work and he gained valuable business experience. Morgado was
passionate about fitness and began learning Olympic weightlifting at Hybrid Fitness, a fitness centre in London;
eventually he became a coach of the sport. During this time, he became increasingly involved in London’s fitness
community and was highly regarded for his coaching abilities, specifically around weightlifting.
MVMT Strength
In 2017, Isaac Morgado, William Hogendoorn, and Luke Amaral founded MVMT Strength after having
worked as coaches at another local gym. They invested personal funds and secured bank loans to start the
business. All three owners were passionate about fitness and saw an opportunity to open a new kind of gym
that provided a more personalized fitness program where members were educated on the importance of
nutrition and other lifestyle choices made outside of the gym. MVMTS's mission was “Creating a
community that is held together by unbreakable bonds; a coaching standard that drives performance,
movement, and lifestyle to a new level; and a place where your best interests are always a priority.”
MVMTS’s coaches were committed to providing a high-quality experience for all their members by
creating an inclusive and encouraging culture at the gym. All members received holiday cards from the
team and instant pictures of members were posted at the entrance of the gym to help them get to know one
another. The efforts put into building an inclusive community resulted in the gym benefiting from many
referrals from the members. MVMTS’s goal was to create a brand that was the most well-regarded fitness
facility in Southwestern Ontario.
Dave Chaffey, “Global Social Media Statistics Research Summary 2022,” Smart Insights, June 1, 2022,
www.smartinsights.com/social-media-marketing/social-media-strategy/new-global-social-media-research/.
8
Patti Summerfield, “TikTok Is the Most Popular Social App with Canada’s Youth,” Media in Canada, August 13, 2021,
https://mediaincanada.com/2021/08/13/tiktok-is-the-most-popular-social-app-with-canadasyouth/#:~:text=Instagram%20is%20the%20closest%20to,41%25).
9
Summerfield, “TikTok Is the Most Popular Social App with Canada’s Youth.”
10
“Canada Social Media Statistics 2022—Internet and Mobile Statistics,” The Global Statistics, accessed July 10, 2022,
www.theglobalstatistics.com/canada-social-media-statistics/.
7
For use only in the Ivey Business Foundations courses BUS 1220E and BUS 1299E from 9/7/2023 to 7/31/2024.
Use outside these parameters is a copyright violation.
SOCIAL MEDIA PLATFORMS
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MVMTS was located in downtown London, Ontario, on Saint George Street. The gym occupied two floors
with a total area of 5,550 square feet, which included a welcome area, change rooms, washroom, office space,
a client meeting room, and two separate gyms with state-of-the-art equipment. The original gym had been
located nearby and had limited space. When the building on Saint George Street became available, the owners
knew they needed to take the opportunity to upgrade their location and expand operations. MVMTS had
become a profitable business with strong potential for growth in 2019. Just as the new space became ready
for use after a year of renovations, the COVID-19 pandemic halted operations. The gym relied on government
subsidies to operate during this time. This was a major setback, but Morgado and the team adapted quickly
by pivoting to online programs. Despite their best efforts, the gym suffered significant financial difficulties
during the pandemic; therefore it was crucial to boost sales in the upcoming year to make up for losses.
The gym employed ten coaches who worked with individual clients and conducted group classes. MVMTS
took a personalized approach to fitness and coaching. All coaches had extensive fitness backgrounds and
went through a rigorous training program. During their training they shadowed other coaches, assisted in
writing workout plans, participated in one-on-one client meetings, and attended team meetings. After the
training period concluded, they taught alongside another coach and eventually began teaching classes and
working with clients independently.
The Products
MVMTS offered different programs for clients based on their individual needs. The gym had two different
group fitness classes (of sixty and forty-five minutes) and a mobility class.11 The sixty-minute class focused
on strength training and the forty-five-minute class on aerobic capacity training.12 The remaining
operational hours were for open gym, where members could use the facilities freely and a coach was
available to answer questions. The gym was restricted to people aged eighteen years and above.
There were two options for those looking to join the gym. The first was an individual design package that
catered to clients who were looking to learn more about the gym and would work with a coach who designed
a program to help them reach their specific goals. The individual design clients also had unlimited access
to the group classes. The second option was to become a general member. It was best suited for individuals
who had significant experience with weightlifting and aerobic capacity training. A general membership
provided access to three group classes per week and unlimited open gym access.
Most clients benefited from the customization and accountability that came with working alongside a coach
in the individual design package. Clients who had been members of the gym for a long time sometimes
shifted to a general membership, and some members who had moved away from London still worked with
their MVMTS coaches remotely. As the pandemic necessitated a switch toward remote training, MVMTS
developed robust virtual programs to cater to the needs of their members. However, Morgado believed that
the most important aspect of MVMTS’s success was the community that the gym fostered for its members.
11
The mobility class was designed to help clients avoid injury. It combined exercises that increased the range of movements
and motions the body can perform, including flexibility, balance, and strength.
12
Aerobic capacity training refers to the maximum amount of oxygen your body can use during an intense exercise.
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The Gym
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CLIENT GROUPS
Working professionals made up a significant portion of MVMTS’s clients and ranged from young adults
to older individuals who were close to retirement. Unlike students, working professionals had disposable
income, and were more likely to work with an accountability coach as an individual design client. They
were influenced by friends and advertisements and looked for a community where they could meet new
people and be motivated. This was a diverse and large group, and Morgado wondered if he could narrow
down the target market to one that aligned the most with MVMTS’s strengths.
New Families
Individual design programs were targeted toward busy parents who had a difficult time prioritizing their
health and fitness while raising a family. All three MVMTS founders were parents of young children and
they saw an opportunity to help people struggling to find this balance. This target market was between the
ages of thirty and forty-five. Often, both parents would become members of MVMTS and select a coach
who was aligned with their individual needs or shared experiences. Coaches provided support during oneon-one meetings or through online communication, and parents benefited from having someone to talk to
about their specific challenges.
Students
London, Ontario, was home to Fanshawe College (Fanshawe) and Western University (Western) and its
affiliate colleges. The Fanshawe and Western student population was over 79,000.13 Students were MVMTS’s
final consumer segment, ranging in age from eighteen to thirty. They learned about MVMTS primarily
through word of mouth and social media. These individuals often had had an active lifestyle in high school
but struggled to maintain it at the post-secondary level due to academic and extracurricular workloads. Student
clients often remarked that regular exercise improved their mental health and they benefited from a regimented
fitness plan. Working with a coach provided accountability that supported students who struggled to prioritize
health and fitness. This segment had relatively less disposable income to invest in fitness classes due to tuition
and living costs. Moreover, since college and university campuses had fitness facilities for students,
MVMTS’s student clients were typically upper-year students who did not live in residences on-campus.
DIRECT COMPETITORS
Hybrid Fitness
Hybrid Fitness (Hybrid) opened in 2013 and was a private club that offered various in-person and virtual
wellness services that ranged from group fitness classes to personal training and online coaching. Hybrid
had an 18,000-square-foot facility with modern training equipment and amenities. The club offered more
classes per day than any other facility in London, including CrossFit, gymnastics, strength and conditioning,
spin, yoga, and high-intensity interval training (HIIT).14
“About London, Canada,” Fanshawe College, accessed July 26, 2022, www.fanshawec.ca/international/studentservices/about-london-canada; “Facts & Figures 2021–2022,” Western University Canada, accessed January 31, 2023,
www.uwo.ca/about/whoweare/facts.html.
14
“Our Facility,” Hybrid Fitness, accessed July 3 2022, https://hybridfitness.ca/our-facility/.
13
For use only in the Ivey Business Foundations courses BUS 1220E and BUS 1299E from 9/7/2023 to 7/31/2024.
Use outside these parameters is a copyright violation.
Working Professionals
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Hybrid had almost three thousand followers on Instagram and six thousand likes on Facebook. The club
did not list prices on its website but had a Google form where people could submit their information and
then would be contacted about promotions and pricing. Individuals could book classes using the Mindbody
app that could be downloaded to smartphones.
Combine Fitness
Combine Fitness (Combine) was located away from downtown in southwest London in an 8,200-squarefoot space equipped with an indoor track and turf, a large group training area, and a state-of-the-art cardio
and weight training area.16 The facility hosted group training classes, personal training, athletic team
training, and open gym sessions. On the company website, Combine promoted the mission of making
fitness accessible to everyone, everywhere, regardless of age or fitness level.17 Combine’s coaches came
from a variety of fitness backgrounds and taught classes and worked with personal training clients.
Combine’s motto was Building an Athlete, and its programs were designed to train members across all
domains. Combine offered a two-week free trial period. The initial assessment and plan design was $144.99,
and drop-in classes were $21.99 each. Combine had a smartphone app that allowed people to book sessions
and purchase memberships and individual class passes. The app also gave members access to Combine on
Demand. Combine on Demand was a virtual training program that gave members access to strength, HIIT,
cardio, and mobility training on the mobile app or desktop browser. All virtual classes were trainer-led, prerecorded classes and cost $9.99 per month.18
Goodlife Fitness
Goodlife Fitness (Goodlife) was a Canadian fitness club with over two hundred locations. Its clubs offered
the largest range of group fitness classes in the country and had extensive amenities in many locations. 19
The Goodlife fitness club reached one million members in 2014 and founder David Patchchell-Evans was
inducted into the Canadian Business Hall of Fame in 2020.20
Goodlife had three different types of memberships: Essential-Plus, Ultimate, and Performance, which all had a
$99.99 joining fee. Essential-Plus allowed members to choose a home gym and use limited amenities, programs,
and fitness classes, as well as twelve visits to any club, and cost $29.99 bi-weekly. Ultimate membership
included access to all Goodlife gyms, all amenities, select programs, fitness classes, and family add-ons for
$36.99 bi-weekly. The Performance Membership cost $54.99 bi-weekly and included access to all Goodlife
gyms, all amenities, and all programs and classes.21 Basic members had a minimum term of agreement when
joining the fitness club and incurred a buyout fee if they cancelled the membership during this time.
“Programs,” Hybrid Fitness, accessed July 3, 2022, https://hybridfitness.ca/programs/.
“Home Page,” Combine Fitness, accessed July 3, 2022, https://combinefitness.ca/.
17
Combine Fitness, “Home Page.”
18
“Combine Online,” Combine Fitness, accessed July 3, 2022, https://combinefitness.ca/combine-online/.
19
“Fitness Classes,” Goodlife Fitness, accessed July 3, 2022, www.goodlifefitness.com/classes.html.
20
“About Us,” Goodlife Fitness, accessed July 10, 2022, www.goodlifefitness.com/about-us.html.
21
“Membership,” Goodlife Fitness, accessed July 10, 2022, www.goodlifefitness.com/membership.html.
15
16
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Access to Hybrid’s virtual gym was free for all members and consisted of over a thousand workouts that could
be done remotely at home. The gym guaranteed results from personal training, offered core classes designed
to meet the needs of all ability levels, and promoted the motto “Get Fit. Make Friends. Have Fun.”15
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ALTERNATIVES
Products
The Six-Week Challenge
The coaches at MVMTS believed that clients were most receptive to fitness and nutrition programming in
the first six weeks after they joined the gym. During this time, clients had an effective window to set and
achieve a specific goal. Morgado believed that if he could get people to sign up for the Six-Week Challenge,
it was more likely that they would sign up to be long-term members.
The sales cycle for the Six-Week Challenge began with an advertisement on Facebook. Individuals were targeted
with a seasonal advertisement that encouraged them to start a new challenge at MVMTS. The advertisement
took potential customers to a well-designed website where they could book a meeting with Morgado or one of
the other owners. The Six-Week Challenge was sold for $799 and this value could be credited to an annual
membership. At the end of the six weeks, clients were asked if they wanted to continue with a coach (as an
individual design client) or independently with access to three classes per week (general membership). During
the first meeting with their coach, clients discussed habits and goals, completed an InBody scan, took progress
pictures, and received information about vitamins and nutritional supplements.24 The average customer
acquisition cost (CAC) was $200 and the lifetime value (LTV) of customers was $2,000.
MVMTS had been promoting the six-week challenge for the last two years using different themes. With
September coming, Morgado was considering a back-to-school challenge promotion. He wondered how he
could differentiate from the competition, and which target market to pursue. The back-to-school period was
busy for parents and MVMTS had not yet taken a family-focused approach to the fall.
Massage Therapy
MVMTS had always focused on holistic health. The mobility class was an important step in its long-term
goal to help clients achieve peak performance in and out of the gym. The gym was located next to Modern
Health Performance (MHP), a clinic that offered chiropractic, physiotherapy, registered massage therapy,
and pedorthics.25 Morgado thought there was an opportunity to either work with MHP or hire an in-house
registered massage therapist (RMT) to provide services for MVMTS. This product expansion would align
with the owners’ long-term goal of being a full-service fitness facility.
“On-Demand,” Goodlife Fitness, accessed July 10, 2022, www.goodlifefitness.com/on-demand.html.
Goodlife Fitness, “On-Demand.”
24
InBody was a biomedical machine that provided insights about body composition such as skeletal, muscle, fat, bone, and
water percentage and density.
25
Pedorthics was the management and treatment of conditions of the foot and ankle, and used footwear and accessories to
help ease and treat foot-related problems.
22
23
For use only in the Ivey Business Foundations courses BUS 1220E and BUS 1299E from 9/7/2023 to 7/31/2024.
Use outside these parameters is a copyright violation.
Goodlife also had an On-Demand Plus subscription that cost $6.99 bi-weekly and gave users access to
remote programs and workouts. The virtual gym had a variety of classes designed to meet the needs of all
fitness levels and was even organized based on “matching your mood.”22 Access to the site was based on
the user’s regular membership. Basic plans included sixty virtual classes, fifteen workouts, and four fitness
plans. On-Demand Plus memberships had over 550 virtual classes, 150 workouts, and fifty fitness plans.
Goodlife also had a mobile app where users could book workouts and view On-Demand workouts.23
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MVMTS could designate some of its upstairs office space to be an on-site clinic. The process of hiring an
RMT and purchasing equipment would cost $5,500. Morgado believed that this alternative would result in
new clients and improve client retention. He wondered how many new clients he would need to acquire to
make this a viable alternative.
MVMTS Endure
During the government-mandated shutdown, MVMTS began livestreaming classes on Facebook and posted
videos of workouts on YouTube. This content was free to anyone with access to these sites and Morgado
was considering how to monetize the company’s digital content. A paid online membership would give
clients access to workout, mobility, and stretching videos along with resources about nutrition and goal
setting. Morgado was wary that this offering could cannibalize their existing product offerings. However,
MVMTS had a large American following on TikTok, and he wondered if targeting this market could be an
effective way to begin charging for this content. Using his background in computer technology, Morgado
designed and built an app for MVMTS called Endure. If MVMTS made this product available online, it
would cost users $49 per month or $350 for an annual membership, and cost $100 per month to run.
Morgado anticipated gaining ten members in the first month of launching the app and expected to double
the number of Endure members each month for the first six months.
Price
The Six-Week Challenge would cost $799. If clients decided to purchase a twelve-month membership
following the challenge, the full $799 would be credited to their account. The membership price was $69.99
per week for general membership and $99.99 per week with an accountability/nutrition coach. MVMTS
was known as a premium fitness facility and Morgado considered altering prices in the upcoming year.
To maintain a tight-knit community, Morgado believed that the number of members at the gym should not
exceed 220. Currently, the gym had 160 members, of whom 70 per cent were general members and about
25 per cent were individual design members.
Leveraging their strong reputation in the fitness community, the owners had recently decided to coach clients
at a premium price ranging from $2,000 to $3,500 for twelve weeks. This level of coaching included semiprivate sessions that accounted for the remaining 5 per cent of members and was usually only offered to
existing clients. Morgado was hesitant to promote this premium coaching alternative because of the time
constraints it placed on the three owners. He wondered if there were other approaches that could make this a
more viable alternative.
“Registered Massage Therapy,” Fowler Kennedy, accessed August 4, 2022, www.fowlerkennedy.com/services/registeredmassage-therapy/.
27
“Mend Student Massage Clinic,” Mend Student Massage Clinic, accessed August 4, 2022, www.fanshawec.ca/mend.
26
For use only in the Ivey Business Foundations courses BUS 1220E and BUS 1299E from 9/7/2023 to 7/31/2024.
Use outside these parameters is a copyright violation.
RMT services were often partially or fully covered by benefits for full-time employees or individuals who
paid for extended health insurance. University students often had limited benefits included in their plans.
Western had the Fowler Kennedy Clinic on campus that offered RMT services specializing in sports
injuries.26 Fanshawe had the Mend Student Massage Clinic where students in the RMT program practiced
patient care at a highly discounted price for faculty, students, and alumni.27
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Promotion
When the business first began, Morgado connected to the gym community through a Facebook page. The
platform also provided marketing opportunities and MVMTS began paying for advertisements. Facebook
ads had primarily been for the Six-Week Challenge. MVMTS spending varied month to month based on
sales cycles (see Exhibit 1). MVMTS had an average cost per lead of just under $11 and Morgado intended
to apply a sales strategy known as client finance acquisition, which focused on ensuring that the first sale
to a client generated more money than it cost to acquire the customer. The gym could continue to allocate
a monthly budget for advertising on Facebook but needed to determine what type of advertisements to
promote and a target market to align the campaign with. With the fall season coming up, he wondered what
advertising theme would be most effective.
TikTok Content
TikTok was a short-form, video-sharing app that allowed users to create and share videos on any topic. The
social media platform was known for generating high levels of engagement and had over 2.5 billion
downloads worldwide. TikTok was primarily popular among younger demographics, with 41 per cent of
users aged between sixteen and twenty-four, and 66 per cent of all users aged under thirty.28
TikTok began selling advertising in 2019 and offered three main types: in-feed native ads, brand takeover ads,
and hashtag challenges. Native ads worked similarly to how they functioned on Facebook and Instagram
where businesses bid for spots on users' feeds, using cost per mile (also called cost per thousand views) or
cost per click. Brand takeovers targeted TikTok users who would only see one branded advertisement per day;
it was recommended that these ads directed users to a high-quality landing page. Hashtag challenges were a
way to officially encourage engagement with a company; however, these challenges were not accessible to
small businesses and started at a US$150,000 flat fee for the first six days of a challenge.29
MVMTS started a TikTok account in 2021. In 2022 it had almost fifty-five thousand followers and the
views on videos ranged from two thousand to five hundred thousand. The account regularly featured
MVMTS coaches discussing common misconceptions about health and fitness, and offered tips for better
workouts and nutrition. Morgado was considering compensating one of his employees to post videos on the
platform on a monthly basis. He was managing the account himself, but felt his time was more effectively
spent in other areas of the business. He would pay an employee $70 per week to post seven TikToks weekly.
Alternatively, he could continue to manage the account himself and pay to promote the content using one
of TikTok’s advertisement options.
Instagram Advertisements
Instagram was a social media platform where individuals, businesses, and organizations shared videos and
pictures. In 2021, it had 1.21 billion monthly users, making up over 28 per cent of the world’s Internet
Werner Geyser, “How Much Do TikTok Ads Cost?,” September 2, 2021, https://influencermarketinghub.com/how-much-dotiktok-ads-cost.
29
Geyser, ”How Much Do TikTok Ads Cost?.”
28
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Facebook Advertisements
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In August 2020, Instagram launched Reels, a product that directly competed with TikTok. Reels allowed
users to create short videos with audio backing. The director of product management at Instagram, Tessa
Lyons, said that Reels would complement the app’s other video features—Stories, Live, and IGTV—for
longer-form content.31 These short video clips could include informational text and many brands began
creating advertisements using Reels.
One of the coaches at MVMTS was an Instagram Influencer and helped develop content for the gym that she
promoted to her followers.32 This coach had almost seventy thousand followers and shared information about
nutrition, fitness, and lifestyle on her account. She began creating reels for MVMTS’s five thousand followers.
However, this coach was planning to move to Bali, Indonesia, so the gym would need to hire a new content creator.
Morgado was planning on paying one of his coaches $60 a week to undertake this additional responsibility.
On average, Instagram advertisements cost $0.80 per click, and their success was largely dependent on selecting
an effective target market.33 Businesses would compete by bidding for advertising reach, and Instagram’s precise
targeting allowed them to specify the location, demographics, interests, and habits of users. Based on his
experience with Instagram advertising in the past, Morgado estimated a customer conversion rate of 1 per cent.
If this alternative was selected, MVMTS would spend $50 per week on Instagram advertisements, which would
direct users to an information form where they could book an initial consultation.
CONCLUSION
Morgado knew that many decisions needed to be made for MVMTS. It was the end of the fiscal quarter;
the budget for the next twelve weeks of advertising on social media channels was $12,000, and he had a
goal of adding fifty new members. He knew the status quo was not enough to increase MVMTS’s sales,
loyal client base, and brand recognition. Whatever decisions Morgado made had to fit well with the
company’s target market for the marketing plan to be effective.
S. Dixon, “Instagram: Number of Global Users 2020–2025,” May 2022, www.statista.com/statistics/183585/instagramnumber-of-global-users/.
31
Todd Spangler, “Instagram Reels, a Copycat of TikTok, Lands in 50-Plus Countries,” August 5, 2020,
https://variety.com/2020/digital/news/instagram-reels-launches-tiktok-copycat-1234725509/.
32
Influencer was a term used to describe individuals who had a significant following on social media and were able to leverage
their audience to promote products.
33
“Cost of Instagram Ads in 2022—Fully Updated Guide”, K6, accessed July 3, 2022, www.k6agency.com/instagram-ads-cost/.
30
For use only in the Ivey Business Foundations courses BUS 1220E and BUS 1299E from 9/7/2023 to 7/31/2024.
Use outside these parameters is a copyright violation.
users. It was expected that by 2025 there would be 1.44 billion monthly Instagram users, which would
account for 31.2 per cent of global Internet users.30
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Budget
Leads Generated
Sales (Six-Week
Challenge)
April
$6,900
173
26
May
$5,800
241
21
June
$4,200
388
21
Source: Created by the case author.
For use only in the Ivey Business Foundations courses BUS 1220E and BUS 1299E from 9/7/2023 to 7/31/2024.
Use outside these parameters is a copyright violation.
EXHIBIT 1: FACEBOOK ADVERTISEMENT PERFORMANCE FOR MVMT STRENGTH’S
SIX-WEEK CHALLENGE, 2022