17. Price discrimination strategy-
Third degree price discrimination
Southwest airlines recognized that any given
flights has different types of travellers i.e.
Business travellers v/s Vacation travellers
Different price charged from such travellers
in order to maximize profits
Example: Premium credit cards
18. Q. Southwest has mastered the low-price model
and has the financial results to prove it. Why
don’t the other airlines copy Southwest’s model?
• Business model of southwest airlines is
unique and cost effective
• Operations are streamlined- main USP
• Difficult to copy philosophy of them
because of uniqueness (Humor, low fare,
entertainment)
• Consumers may not willing to switch
until they get better
19. Q. What risks does Southwest face? Can it continue
to thrive as a low-cost airline when tough
economic times hit?
• Southwest Airlines have to run flight even when
half seats are filled which may lead to loss of
revenue
• Price wars are going on with competitors
causing southwest airlines to keep its fare very
low
• Fares below cost due to promises may affect
profitability of company
• Working in tough economic times will be
difficult which may make company to run
flights on losses affecting company’s reputation
as well as profitability
20. SUMMARY
• Southwest Airlines’ mission is to provide
highest customer service at low fare.
• It grew because of low fare, frequent
flights, bag free service and its unique
model.
• It use humor throughout its
communication process in order to create
friendly environment.
21.
Created by Charu Jain, JDMC DU, during a
marketing internship
by
Prof. Sameer Mathur,
IIM LUCKNOW
