Pricing is extremely difficult for companies to get right. Not only does price p

Question

Pricing is extremely difficult for companies to get right. Not only does price provide revenue and enable a company to maximize profit, price also reflects the value of the product or service.

Premium Pricing: a high price for a product (e.g. Lexus or Ferrari)

Penetration Pricing: a low price to win market position (e.g. Hyundai Enters 2001 as a Leader in Quality and Value (Links to an external site.)Links to an external site.)

Economy Pricing: a no frills low price (e.g. Is Spirit the nation's true low-cost airline? (Links to an external site.)Links to an external site.)

Bundle Pricing: a combination package of products or services to increase sale or move inventory.

Select a product or service in the aviation industry. What pricing strategy/model is used? In your opinion, is it the correct one? Why or why not?

The important part of this activity is to think about the specific pricing strategy as you apply the concepts found in your readings with your chosen product or service to develop your response.

Explanation / Answer

South West Airlines:

The pricing strategy followed by South West Airlines is the penetration Pricing. It is a good strategy for them as they have introduced the following facilities to maximize returned give a low-cost fare and good efficient service, the core strength and basic policy of the organization is to give the lowest fare. They achieve it with the following measures:

The ·Quick turnaround of planes

According to me, this is a perfect formula for southwest airlines where they can service 100 destinations with 4000 flights which are a point to point.

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