THE PRICING POLICIES OF PRIVATE HEALTH CLUBS IN SINGAPORE

Abstract

The health club industry in Singapore is still young, the first club having opened only in 1979. Since then, many more clubs have opened ( and some have closed). This study examines four aspects of the pricing policies of these clubs. First, the pricing policies of the clubs are compared with economic theory to determine if the theoretical explanations and predictions of the pricing behaviour of firms measures up in practice with regard to the health club industry. Three traditional models are examined --- perfect competition, monopolistic competition and oligopoly --- to determine which best fits the health club industry. Each of them has major shortcomings. Second, the relationship between the costs, prices and profitability of health clubs is examined. This reveals that another model, one based on average costs, is a better explanation of the health clubs' pricing policies and overcomes the shortcomings of the traditional marginalist theories previously examined. Third, the major determinants of demand are examined. Fourth, environmental factors which affect the health club industry but which are external to it are considered. Suggestions on how these factors might be exploited to enable the clubs to play a larger role in the economy are presented.