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Southwest Airlines: Staying Ahead in the Pricing Game

Southwest Airlines: Staying Ahead in the Pricing Game

A hands on review–I expect your application of concepts review to be approximately 2 – 3 pages; to include references from the APUS Library system (failure to include such references will detract from your grade on the assignment), and that the paper be written in proper grammar/spelling. The intention of this assignment is to apply the concepts to real world situations. Write well–Do your best work.

Use and refer to all the concepts in our readings as well as the APUS library this week to effectively answer this question. Be sure to cite your work!

Southwest Airlines: Staying Ahead in the Pricing Game

This assignment examines why Southwest Airlines was by all measures the most successful airline in the U.S. Southwest had devised a business model based on low costs and low prices. But that model also included very reliable and personable service. With such a winning combination, its no wonder that Southwest consistently did what no other airline company could: it turned a profit.

When something works, you stick with it. Southwest did just that, changing its strategy very little. But all good things come to an end. As market conditions began to change, it became very apparent that Southwest would not be able to maintain its advantage based on the same model it had been employing. So in 2004, Gary Keller, the newly crowned CEO, made some very significant changes to Southwest’s game plan.

This case outlines that nature of Southwest original business plan as well as the changes implemented during and after 2004. In both cases, the focus is on how Southwest implemented pricing policy. The contrast provides an excellent opportunity for students to consider whether or not the changes are changes in the right direction.

1. What has been Southwest’s traditional pricing strategy? Why has this pricing strategy been so successful throughout the airline’s first three decades?

2. What values do airline customers-both business and leisure travelers-seek when they buy air travel tickets? Has Southwest done a better job than competitors of meeting the needs of these air travelers? In what ways?

3. What internal and external factors affect airline pricing decisions? What impact are these factors now having on airline pricing and profitability?

4. What is Southwest’s current pricing strategy? Does his strategy differentiate Southwest from its competitors? Is the strategy sustainable?

5. What marketing recommendations, including pricing recommendations, would you make to Southwest as it moves into the next decade?


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