Are Low Price Clubs Really High Value?
Published: February 23, 2016
The newest “Buzz” phrase in the fitness industry to capture the headlines, while generating headaches for others, is the phrase “High-Value Low-Price.” One might infer from reading the recent media spin that low-price clubs, or as they are also known, budget clubs, are the holy grail of high value in our industry and the answer to attracting the masses who have here for avoided visiting our palaces of exercise.
Com’on folks, low-price and high-value are not one in the same, never have been and never will be. Antonio Machado, a Spanish poet may have described this relationship best when he said, “Only a fool thinks price and value are the same.”
So if high-value and low-price are not bed partners, why are so many in the industry convinced otherwise, and why are so many operators staking their future on this “foolish” value proposition? Our opinion, which is based on years of experience assisting businesses understand and leverage their value equation, is that the high-value and low price spin is nothing more than a concerted effort to spin a fantasy, or as eloquently presented by Kobe Abe’s story, The Ghost is Here:
“Things have value because someone buys them,
Because someone pays money;
If you can find a buyer,
Even a lie is worth a thousand yen.”
Not that low-price can’t be high value; but the fact remains they are two distinctly different propositions. Price does not determine value, price reflects value. Warren Buffet said, “Value is what you get, price is what you pay.” Consequently, if a low-price club delivers what the individual consumer desires and needs then it’s a good value for that customer. If a low-price club delivers what the individual consumer wants, then proceeds to trigger the happy-dance button in their amygdala, then that would be great-value or high-value. Guess what, mid-priced and high-priced experiences can also generate good value or high-value.
What many industry players get confused about is the underlying dynamics that drive value for the consumer, or as we are now seeing with the emergence of the boutiques, tribes of consumers. Understanding the various elements that influence and shape consumer perceptions of value provides a launching pad for operators to foster a variety of differentiated value propositions. Once crafted, consumers will attach a price to that value proposition and off you go.
Over the next few weeks we will continue our stream of consciousness regarding value, including how consumers perceive value and what ingredients, tangible and intangible, comprise those value perceptions.
Tags: Low Price Clubs