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NORTH SOUTH UNIVERSITY

Southwest airlines: staying ahead in the pricing game

ASSINGMENT NO: 3

NAME: RIFFAT AL IMAM

ID: 1030234530

COURSE: MKT 202

SECTION: 1

SUBMISSION DATE: 8-3-11

SUBMIT TO: M.A. SADAT SHIMUL

ANS TO QUESTION NO 1

Southwest airline is one of America’s most successful air lines. It started its journey in 1970s.From the very beginning it has paid special attention to its pricing strategy. Southwest’s traditional pricing strategy has been low price strategy.

When southwest airlines started their business, most of the people did not give it much of a chance. Southwest airlines strategy was completely different from other airline companies. They opted for “point to point” theory rather than “hub and spoke” theory. As a part of this theory they did not serve the major airports dominated by major airlines. They wanted to serve second tier destinations which cut down their costs. They served no meals, only snacks. It did not charge passengers fee to change tickets. It had no assigned seats. All of these ideas not only cut down costs but also helped to attract a particular group of passengers. It had no electronic entertainment, relying on humorous flight attendants.

It not only had a low cost but innovative pricing strategy for passengers but it also had a unique plan for their employees. The airline did not offer a retirement plan: rather, it offered a profit sharing plan, thus keeping its fixed cost low.

These strategies proved to be really innovative and effective. One of the main advantages of these was that it had much lower costs than its competitors but still it attracted a lot of customers. There was no compliancy for it being “too good to be true”. All the customers loved it egalitarian and democratic system. It clearly reflected in their cells in their first three decade. In 2003 the company earned $442

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