Pricing to fit: pricing of a gymName:
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Q1.Should gyms take a price or non- price competition focus? Justify your answer.
Non price competition focus is a pricing scheme that determines the cost of goods and services using the demand of the market. Suppliers do not have much control of the market due to the presence of various competitors. Quality is not a major factor when it comes to pricing in that the consumers opt to choose the lowest services provided. The aim in this type pricing competition is to receive the highest amount of sales so as to improve profits. Suppliers thus price their goods in accordance to the amount of profit they would like to make. These prices are compared to other competitors so as to derive the appropriate cost of the commodities (Ascola, 2011).
Price competition focus on the other hand controls the cost of the goods and services provided in the market. The market is made up of leaders and followers. Market leaders have the ability to determine the cost of goods depending on the quality of their products. These goods however have to meet some standards so as to be received positively by the market. This form of pricing considers the amount of money put into the production of the final product (Hooley, Piercy & Nicoulaud, 2008).
The analysis of the two factors displays that each price competition focus is designed for a particular service. A gym is essential to the modern market due to the demand for a healthy lifestyle. The demand for gyms continues to rise due to the demand for a healthier lifestyle in society. This places pressure on the market suppliers to have competitive prices so as to increase the number of consumers. Most communities have in place several gyms that provide the same type of services. This creates a market environment that prices its services according to that of their competitors. This means that prices are similar in different establishments due to the need to maintain customers. The use of price competition is not recommended because of the nature of the service provided. The use of non price competition is thus ideal for determining the price of a gym (Hackett, 2011).
Q2.Outline two internal (company) and external (market) that would impact on pricing gym membership in your location
One of the internal factors that would impact on the pricing of the gym membership in my location would be the qualification of the staff. Employees are an essential aspect of any company. Their contribution is ideal for the success the company due to the provision of services that attend the gym. Employees impact significantly on the pricing of the gym due to their relationship with the clients. Staffs that place priority on the needs of the clients generate the inflow of more clients which reflects on the inflow of the clients. The increased inflow of the clients determines the pricing dynamics of the gym (Eekhoff, 2003).
Another internal factor that impacts on the pricing of the gym is the management of the establishment. Proper management entails the smooth running of the gym programs in relation to the financial aspect that comes with the trade. Managers create an environment suitable for both the employees and clients making both parties benefit from the company. Management ensures that the prices are reflective of the type of services provided by the company. Proper management calls for the increased cost of services due to the quality of the services provided (Symeonidis, 2002).
One of the external factors that would impact on the pricing of the gym pricing is the prices of the competitors. Competition is a major determining factor of any market. Companies come up with prices through the analysis of the pricing of their competitors. If neighboring gyms pose as a threat to the success of the gym, the company is forced to compete through the reduction of some of the costs (Besanko, 2010).
Another external factor that would impact on determining the cost of the services is the influence of the legal and local authorities. All communities have rules and regulations that should be followed in all aspects of life. One of the areas of concern is the opening and management of business. Companies should ensure that all their activities are reflective of the prices determined by the government. This includes adhering to subsidized prices of goods and services in the market. Local authorities therefore play a significant role in the pricing of the gym prices (Fifield, 2007).
Q3. How would you as a gym manager overcome the problem of high membership churn?
High membership involves the registration of more than the required number of customers in a company. The overage of members attending a gym would seem like an advantage to the owners of the establishment due to the increased sale of the services. This however is not the case in that overcrowding of customers reduces the quality and productivity of goods and services. As a gym manager I would look for alternative ideas of solving these issues so as to maintain the required standards. One of the ways that I would overcome this problem is by monitoring the rate of registration on a monthly basis. This can be done by limiting the amount of registrations when the rate of interested consumers increases. One of the ways of limiting the registration is by increasing the charges for new entrants. This should be done carefully so as not to chase away future business (Drury, 2008).
High membership can also be controlled by ensuring that the space provided by the gym fits the number of members registered. The gym can accommodate a certain number of people during each session of the workout. If the space of the customers begins to become compromised managers are forced to observe the visiting patens of the customers. Establishing the peak hours is essential for the organization of the population of the gym. This can be done by studying the time that members are most active and looking for ways of controlling the inflow. The opposite should be done for the hours that are not competitive so as to gear some of the clients in the peak hours to change their schedule. This will ensure the proper regulation of the inflow and outflow of the members of the gym creating the proper management of gym membership.
In order to monitor the influx of new and repeat customers, the management can choose to partner with another gym so as to accommodate their extra customers at a commission. This would reduce the congestion in the gyms and the profit margins of the company (Gwartney, 2009).
References
Ascola, Drexl, J. (2011). More common ground for international competition law?. Cheltenham: Edward Elgar.
Besanko, D. (2010). Economics of strategy. Hoboken, NJ: John Wiley & Sons.
Drury, C. (2008). Management and cost accounting. London: Cengage Learning EMEA.
Eekhoff, J. (2003). Competition policy in Europe. New York: Springer.
Fifield, P. (2007). Marketing strategy: The difference between marketing and markets. Amsterdam [u.a.: Butterworth-Heinemann.
Gwartney, J. D. (2009). Economics: Private and public choice. Australia: South-Western Cengage Learning.
Hackett, S. C. (2011). Environmental and natural resources economics: Theory, policy, and the sustainable society. Armonk, NY: M.E. Sharpe.
Hooley, G. J., Piercy, N. F., & Nicoulaud, B. (2008). Marketing strategy and competitive positioning. London: Prentice Hall/Financial Times.
Symeonidis, G. (2002). The effects of competition. Cambridge (Mass.: MIT Press.
