October 20, 2011
Chapter 10 Case Study 1. What has been Southwest’s traditional pricing strategy? Why has this pricing strategy been so successful throughout the airline’s first three decades?
Traditionally, Southwest used a low-price strategy. They were known as always offering the cheapest flights. The air line did not serve meals, had no assigned seats, no electronic entertainment, and no retirement plans for employees. Because Southwest had such lower costs, they were able to crush competitors. This pricing strategy was so successful throughout the airline’s first three decades because their strategy was the complete opposite of competitors. The planes flew point to point based on demand …show more content…
Southwest raised their ticket prices thirty to fifty dollars in order to incorporate these features and attract new business customers. 4. What is Southwest’s current pricing strategy? Does this strategy differentiate Southwest from its competitors? Is the strategy sustainable?
Southwest has had to increase prices. They offer tickets that are thirty to fifty dollars higher, and changed the pricing structure from offering five fare categories to three (“Business,” “Business Select,” and “Wanna Get Away”). The previous structures had more focus on non business travelers with headings like “refundable anytime” and “discount fare.” Southwest has to do things similarly to how competitors do them. For example, they started using main and higher cost airports like Philadelphia and Denver. They raised prices and had to start charging extra fees for things like luggage. The airline tries to differentiate through its exceptional customer service and performance. Southwest was so sustainable in the past because of its low costs and low prices. Although they have had to move away from that strategy, they should still be sustainable because they are appealing to a large market of business travelers. 5. What marketing recommendations, including pricing recommendations, would you make to Southwest as it moves into the next decade?
As Southwest moves into the next decade, they should promote the overall experience of the brand