Individual Assignment – Planet Fitness
This is an individual assignment worth 5% of your total grade. Please read the following case
and answer the questions below, in no more than 2 pages (in a Word document). You may use
bullet points and/or prose but be as succinct as you can. Please remember to provide support for
Brief note about format and structure: As with the previous assignment, I left the formatting up
to you to decide (e.g., single spaced, double spaced, margins, etc.). This is because I would like
for you to focus on providing succinct answers rather than fixate on length.
Brief note about content: All of the information required to successfully complete this case is
contained in this document as well as in class lectures and slides. You do not need to do
additional research or go beyond the scope of this course.
Please observe the academic integrity policy. This includes using your own words to express
your thoughts and paraphrase the words and ideas of other sources (although you don’t need any
other sources aside from the case and course lectures).
Deadline: Submit your assignment through Dropbox on Brightspace by 11:30 PM on March 18.
PLANET FITNESS PRICING FOR SUCCESS
How does going completely against the grain of a typical fitness club strategy lead to success?
That’s the question that Planet Fitness appears uniquely positioned to answer. Most health clubs
provide members with vast and seemingly valuable extra amenities, such as childcare, juice bars
and protein supplements, on-staff professional trainers, and a broad range of fitness classes. But
many customers find the prices too high because they see little value in some of these amenities.
Further reducing the value of traditional gym memberships, many consumers regard the social
aspects unpleasant and off-putting—whether that means observing others with nearly perfect
bodies posturing in the mirror or listening to grunting exercisers huff with every lift.
While its competitors target upscale fitness buffs working on their six-pack abs, Planet Fitness
successfully pursues an entirely different market: those who do not really enjoy going to the gym
but know they need to do so to stay healthy. These exercisers are unlikely to hit the gym five or
six times a week, making conventional gym memberships, which demand yearly contracts and
fees of $49 to $95 per month, appear more expensive on a per-visit basis. Planet Fitness’s
formula is different: At $10 a month, the membership offers good value, even if customers get to
the club only a couple of times each week.
In combination with its low price point, Planet Fitness promises a clean, friendly, laid-back
workout environment featuring brand-name cardiovascular and strength equipment. Although it
does not have the high-end amenities its competitors promise (e.g., pools, juice bars), the club
maintains the key elements its members want: brand-name equipment, unlimited fitness training,
flat-screen televisions, and large locker rooms. Its customers know from its advertising that they
can expect a non-intimidating workout environment, or as Planet Fitness promises, “No
gymtimidation. Just $10 a month.” With its foundation in the idea that simple is better, Planet
Fitness has become the fastest-growing full-sized fitness club in the United States.
For those who want a little more, Planet Fitness also offers a premium PF BlackCard
membership for $19.99 a month, which promises access to nearly all the clubs in the Planet
Fitness chain, unlimited guest privileges, use of tanning and massage chairs, and half-priced
In addition to these in-club benefits, Planet Fitness’s growth has been reinforced by its effective
location strategy and marketing efforts that focus on attracting new customers. The low-cost
monthly membership makes it easy to draw new members. Because most members come in only
a couple of times each week, Planet Fitness also enjoys operating efficiencies and economies of
scale, achieved by welcoming a high volume of members on any one day.
Planet Fitness treats customers like real people. What kind of fitness club offers members pizza
on the first Monday of every month, bagels on the first Tuesday, and Tootsie Rolls on a regular
basis? The kind of gym that had over 1,050 locations in 2015, with an eventual goal of more than
2,000, and that attracts more than 5 million members and has systemwide sales approaching
1. According to the case, what is Planet Fitness’ price point? Why does it make sense for
Planet Fitness to price their membership this way? (2 points)
2. Given its pricing strategy, why is it essential for Planet Fitness to continually attract new
members? Would high-end pricing competitors face the same need? Why or why not? (3
3. If Planet Fitness wanted to increase its producer surplus without cutting too much into
their sales or profits, what are their options? Describe these options and provide
examples. (5 points)
Clearly answers all questions with support and justification
Answers include creative solutions and thorough explanation
Responses are free of grammatical errors and fit in 2 pages or less
Answers questions but lacks clarity or supporting evidence
Answers include creative solutions and explanation
Responses have some grammatical errors or do not follow required format
OK or less (6 and below)
Does not clearly answer questions
Answers lack creative solutions
Answers have many spelling errors and/or grammatical mistakes
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