Tuesday, February 1, 2011

Gym-Pact, A New Gym Contract



There is a new gym contract coming out called "Gym-Pact". It is both a service and a product. Gym-Pact offers free gym memberships to people who want to workout but there is a motivational fee which customers agree to pay more if they miss their scheduled workouts, literally buying into a financial penalty if they don’t stick to their fitness plans. In other words, if one is committed and goes to gym regularly, there will be no cost. However, if one ever gives up and quits, then he/she needs to pay the penalty which is significantly higher than the regular membership price.


Gym-Pact negotiated a group rate with Planet Fitness, then paid the membership fees for participants, who in return for a free membership agreed to work out at least four times per week. If they fail to follow the schedule in any one week, the participants pay $25. If they leave the program for any reason other than injury or illness, they will pay $75. For now the fees will be used to pay for the gym memberships and to build a financial aid fund.


The founder of Gym-Pact, Yifan Zhang, was enlightened by her economic professor at Harvard where the professor taught that people are more motivated by immediate consequences than by future possibilities. Zhang then translated this principle to workout motivation. If missing a workout costs people money, they would be more motivated to stick with it and being consistent.

The marketing strategy in this case is focusing on the demanding side rather than the advertising side. What Zhang has done in marketing is the blue ocean strategy - the high growth and profits an organization can generate by creating new demand in an uncontested market space. Similar to how Groupon started their business, Zhang simply integrates the concept from her economic professor into fitness market and thus creates a new demand. By providing a new type of product in fitness market, the Gym-Pact contract, it encourages people to start workout with an attractive deal. People who have failed before on their own workout plans now have a new option that motivates them once again. I think this is a brilliant idea with many possibilities that Gym-Pact can develop into an insurance type company with floating rates in the future.

In conclusion, marketing is not just about advertising. A little idea from life experience might become a popular product or service. Just look at examples like Facebook, Youtube, and Groupon, they all succeed in a very short time because of the innovative concepts behind. That is the key to generate profits. Outside there are still plenty of blue oceans waiting to be discovered. 

4 comments:

  1. That's a tough commitment. I have a 24 hour fitness membership right now and I rarely go, maybe once or twice a week at most. The free membership would be great for someone who likes to go the gym regularly though.

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  2. I know right? At first when I saw this promotion I thought the company was crazy and not profitable, but then after looking its policy I found it might be possible to generate profit! If all the participants are very committed to the contract then this company will go broken for sure, but the tricky thing here is that most people who thought they would be committed will most likely drop and fail. The company works kind of like an insurance company that it gets the probability through research and then sets its price. I will keep my eyes on this company to see if it profits in the following seasons.

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  3. to make a better body shape we must do exercise daily. Need all types of exercise in our daily schedule. at our home we also make a small gym using a home gyms exercise equipment, treadmill, elliptical trainer and many more for getting shape of body.

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  4. Nice and great information about workouts. Thanx for sharing this information.
    I just stumbled upon your blog and wanted to say that I have really enjoyed reading your blog posts.
    Home gym

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