The fact that Kaplan and Princeton have survived for so long tells me that there is an insanely lucrative market out there for GMAT instruction.
Edited: Kaplan makes most of their money from the SAT. Not that its a surprise.
Most GMAT classroom instruction tends to be basic, catering to the lowest common denominator. This makes business sense for the companies who understand that a majority of test takers lie below the 650 mark. Several companies do offer advanced courses.
MGMAT is a great example of such a company.
Classroom instruction also works great for test takers who have difficulty sticking to a schedule. Its not the best way to blow $1000 away, but it helps a lot of test takers.
My personal favorite is online learning; such courses offered by GMAX Online and
MGMAT.
Finally, it is naive to think that a Kaplan or a GMAX or a
MGMAT is all you need to do well on the GMAT. The question of "How valuable is a test prep company for your GMAT Success?" remains a mystery. Obviously, there is more opinion than evidence out there. The solution looks like a fun multiple regression model though.