A health club decided to offer a yearly membership. Separate fees were to be charged for nutrition counseling, tennis court usage, and aerobic instruction. How might this organization implement: (a) a prestige pricing strategy? (b) a bundled price strategy? (c) price lines?
A) A prestige pricing strategy is a pricing strategy in which prices are set at a high level, recognizing that lower prices will inhibit sales rather than encourage them and that buyers will associate a high price for the product with superior quality; also called Image Pricing. This health club may use nutrition counseling and aerobic instruction to implement the prestige pricing strategy. Why? because in this instance it will help the help club make more profit to actually pay for a nutritionist and an aerobic instructor all while putting money back into their pockets as well for an actual profit.
B) “Price bundling strategy is a marketing strategy in which two or more products are combined to be offered at a lower price than if the same products were sold separately. The bundle pricing technique is popular in retail and ecommerce as it offers more value for the price.” (Flypage, 2022) Nutrition counseling and aerobic instruction will work well for price bundling as well along with tennis court usage. In this marketing strategy the health club can set the monthly membership at a base rate of $25.00 monthly and set the bundle for all three at an additional rate of $25.00 and a bundle of two at an additional rate of $15-$18 dollars which seems fair for everyone especially those staying within a budget.
C) “Price lining is a marketing strategy that categorizes products or services based on their features and their overall value to customers. The aim of this strategy is to produce higher sales for a company by offering multiple pricing options for similar products.” (Anderson, 2016) The health club could implement this strategy by categorizing the aerobic instruction to maybe take place on this tennis court. Those who are apart of the aerobic instruction could be offered a discounted rate for tennis usage given that they will be using the tennis court some days, not making it open for those who just want to play tennis.
Analysis of separate fees to be charged and implemented in a local health club that is offering the following services:
-Tennis Court Usage
Prestige or image pricing is a marketing strategy and/or form of branding that utilizes a premium pricing to suggest superior quality (Master Class, 2022). The company sets an intentionally high price level in order to attract potential customers that are interested in affiliating themselves with some for of luxurious brand (Berkowitz, 2016). This is important, as it provides analysis of competitors and results in establishing a type of loyalty idea to obtain more customers (Master Class, 2022). An example of this pricing strategy for the local gym would be to offer add-ons to a membership plan that would appeal to the customer such as free nutritional meal prepping supplies.
Price bundling is a combination of two or more products and/or services being sold at a lower price than if they were sold individually (Berkowitz, 2016). This marketing strategy is essentially to utilize within an organization, as it results in the customer feeling as they are acquiring a deal and paying less than what is offered through individual purchases (Price Bundling: Definition, Strategy & Examples | ProfitWell, n.d.). An example of this pricing strategy is offering multiple services at no additional cost to the customer when registering for an annual membership.
Product line pricing in the separation of services and goods within a specific set of priced categories (Berkowitz, 2016). This is important for creating a variety of quality levels for consumers, in order to maximize profits (What Is Product Line Pricing: Definition, Examples, and 4 Strategies, n.d.). To implement this type of pricing strategy is establishing different prices for multiple different services, resulting in the perception that customers would be receiving better services at the same cost as everyone else (Berkowitz, 2016).