Market Penetration and Pricing

Yesterday I renewed my gym membership. I started talking to the membership representative about how the gym can offer different rates to different groups of people.

For instance a year membership costs the ordinary person 525 dollars The student pays just over 400 dollars a month for the same, let me say that again, for the same membership .

I was confused. How can one group of people get such a break? It’s simple. It’s market penetration. So for instance, the University allows my gym to directly market to it’s students, whether it’s posting flyers in the dorm halls, in the free speech area, in the classrooms.. etc. This means one of the most self-conscience groups (thus the most likely to buy a membership) might see an ad four to five times a day.

If they were unable to directly target the student demographic they would reach them through other less effective means, such as radio, television, newspapers or billboards. These other avenues cost 4 to 5 times more to achieve the same penetration.