Pricing Strategy for The SDL Fitness Club

This report discusses the proposed pricing strategy for The SDL Fitness Club, a new online fitness club in Hull, UK. It includes competitor analysis, target audience segmentation, and pricing tactics such as market-penetration pricing and product bundle pricing.

Individual Project brief –
Marketing

Table of Contents
Individual Project brief – Marketing...............................................................................................1
1. Background and Context.............................................................................................................3
2. Competitor Analysis....................................................................................................................3
3. Target Audience...........................................................................................................................4
3.1 Segmentation.........................................................................................................................4
3.2. Target audience.....................................................................................................................5
4. Proposed Pricing Strategy............................................................................................................5
4.1. customer-value based............................................................................................................5
4.2. New product pricing strategies.............................................................................................6
4.2.1. Market-penetration pricing............................................................................................6
4.3. Pricing tactics........................................................................................................................6
4.3.1. Product bundle pricing...................................................................................................6
4.4. Table of proposed prices.......................................................................................................6
5. CONCLUSION............................................................................................................................7
REFERENCES................................................................................................................................8

1. Background and Context
Pricing strategy is one of the most important decisions that contribute in success of the
business. This report will discuss over pricing strategy of The SDL Fitness Club. This club was
meant to open just before the COVID-19 crisis in Hull, UK. Because of the crisis services will be
provided through online platform. This is a new business and this is why pricing strategy for the
company is most important so that business firstly can survive which will be followed by its
growth.
2. Competitor Analysis
Competitor analysis means analysing strategies and practices of those business firms
which are operating in the same industry. The SDL Fitness Club is starting at Hull and because it
is new and staring for the first time its main competitors are those fitness clubs already operating
at the city. Their operation, pricing and strength in competition make significant impact on the
success of The SDL Fitness Club. The pricing strategy also gets affected because of its
competitors. There are various fitness clubs in the city and other than clubs and centres only
giving specific service are also competitors of The SDL Fitness Club.
One of its competitor is David Lloyd Club this is because the club is also providing at the home
services to its members and the price for membership is £4.99 per month (Jin, Ji and Gu, 2016).
The SDL Fitness Club is also starting online services and this is why this club is its strong
competition. Though, services of both the clubs are in variation. David Lloyd provides their
services through their mobile app.
Another club which is providing online services is Latus Training this is free online sessions
which are being provided by the Latus Training. DW fitness first is also providing free online
services and these clubs are competition in the time of COVID-19.
This is a challenge for The SDL Fitness Club to compete with those who are providing free
online services. They are more able to attract customers and this is also a very effective strategy
which they can take advantage once the lockdown is over.

Pricing strategy becomes more difficult in such case. Competitor analysis requires analysing
some of the factors and for The SDL Fitness Club the most important factors are threat of new
entry and existing competition (Jin, Ji and Gu, 2016).
Threat of new entry, though it is not very difficult for new firms to enter the industry but what
is difficult is that existing firms are already performing well and in such case for a new firm like
The SDL Fitness Club it becomes difficult to grow.
Industry Rivalry, Existing firms and their competition is also very tough in Hull and this
initially weakens competitive strength of The SDL Fitness Club.
3. Target Audience
One business cannot cater needs of everyone and targeting audience means selection of
audience group which business is able to cater.
3.1 Segmentation
This means dividing customer group on the basis of their distinct characteristics.
3.1.1. Demographic variables
Segmentation of customers will be done on the basis of demographic variables.
Demographic variables are variables that are based on age, gender, family size, income,
occupation, religion, race and nationality (Chan, Hwang and Wu, 2016). Increasing awareness
for the health and wellbeing has increased customers for such activities. Customers of all age
groups are involved in fitness activities and those who are not directly following any physical
activity are concerned about their diet. COVID-19 which has brought major changes in lifestyle
and as people are not as busy as they were earlier before COVID-19 they are more able to take
care of their health. In context of age some of the activities like Zumba, Pilates, boxing attract
young age people on the other hand health, wellbeing and nutrition advice attract old age people.
Kids are also attracted to some of the activities like boxing. On the basis of income such
activities and business attract upper middle income and high income customers. Activities at The
SDL Fitness Club are for both genders and occupation does not affect much the decision related
with health but during COVID-19 people who are not working can be attracted as they can take

care of their health. Company is selecting differentiated segmentation because of its
differentiated service.
3.2. Target audience
This means selection of one or more customers group which The SDL Fitness Club will
focus its marketing activities on.
On the basis of segmentation the club presently will target upper middle income and
higher income groups on the basis of age. This is perfect time when people of all age group are
able to think and take care of their health (Camilleri, 2018). Kids are staying at home and this is
why learning from home trend is increasing and boxing training which has been specially
designed considering kids. The SDL Fitness Club take advantage of this. Most of the young and
middle age people are also staying at home and this is why they can also take care of their health
which was earlier not possible or was difficult because of hectic lifestyle. Targeting customer
group based on their age will allow The SDL Fitness Club to have customers for all its products
and services.
4. Proposed Pricing Strategy
There are various ways in which business can determine pricing strategy and these are
based on customer perceived value, price of competitors and cost based pricing of the product.
This section will discuss proposed price for The SDL Fitness Club.
4.1. customer-value based
The value being provided by the product is that company is giving fitness training at
home through online medium in lockdown. The SDL Fitness Club is on-demand fitness and
physical exercise club and this is why it should price. Value based pricing is based on the
perceived value by the customers (Augustovski and McClellan, 2019). The SDL Fitness Club
needs to provide services in form that customers during lockdown can use them and they are
worth paying for. On this basis The SDL Fitness Club can price its products on the basis of
value. The price should also need to be in accordance with the new business and products and
competitor price is not suitable as they are established business and products.

4.2. New product pricing strategies
4.2.1. Market-penetration pricing
This pricing strategy can be adopted by The SDL Fitness Club this is because customers
during lockdown will not be able to use the assistance of the club and all they can do is online
fitness training. Along with this The SDL Fitness Club is also a new business and this is why
customers are unaware of exact value of the services of the business. In such case market
penetration is a strategy that can attract customers (Nyaga and Muema, 2017). Penetration
pricing refers to initial low price of the products and service. This is effective in increasing
market share and at the same time this will also discourage competition. This strategy is better
than market skimming which includes charging higher price and customers will not pay higher
price for a products which is new.
4.3. Pricing tactics
4.3.1. Product bundle pricing
This is the price in which products and services are offered in a bundle and price of the
bundle is less than what would have been the price in case customers have bought them
separately (Giri, Mondal and Maiti, 2017). The SDL Fitness Club can offer customised product
bundle and reduce its price as discount, this will not have negative impact on the lower price in
relation of the quality and at the same time, this strategy will be success because of COVID-19.
Most of the people are staying at home with their family and this increase the likelihood that
people will buy bundle for different age group products of The SDL Fitness Club.
4.4. Table of proposed prices
Services Price Duration
Cardio £40 3 months
Boxing £100 1 year
Salsa £40 3 months
Kettle bell £35 3 months
HIT £35 3 months
Zumba £40 3 months
Aqua Zumba £50 5 months
Pilates £100 6 months

Health, well-being and nutrition
advices
Varies on the basis of type and nature of service
5. CONCLUSION
From the above analysis it can be concluded that The SDL Fitness Club will adopt
pricing strategy based on the customer value, pricing will be market penetrating and will offer
bundle pricing so that it can attract as much customers as possible.

REFERENCES
Books and Journals
Augustovski, F. and McClellan, M.B., 2019. Current policy and practice for value-based
pricing. Value in Health. 22(6). pp.S4-S6.
Camilleri, M.A., 2018. Market segmentation, targeting and positioning. In Travel marketing,
tourism economics and the airline product (pp. 69-83). Springer, Cham.
Chan, C.C.H., Hwang, Y.R. and Wu, H.C., 2016. Marketing segmentation using the particle
swarm optimization algorithm: a case study. Journal of Ambient Intelligence and
Humanized Computing. 7(6). pp.855-863.
Giri, R.N., Mondal, S.K. and Maiti, M., 2017. Bundle pricing strategies for two complementary
products with different channel powers. Annals of Operations Research, pp.1-25.
Jin, J., Ji, P. and Gu, R., 2016. Identifying comparative customer requirements from product
online reviews for competitor analysis. Engineering Applications of Artificial
Intelligence. 49. pp.61-73.
Nyaga, P.K. and Muema, M.W., 2017. EFFECT OF PENETRATION PRICING STRATEGY
ON THE PROFITABILITY OF INSURANCE FIRMS IN KENYA. International
Journal of Finance and Accounting. 2(3). pp.93-106.