Southwest Airlines Pricing and Product Strategies - Research Paper Example

The customers pay for the basic transportation services and do not enjoy extra services such as movies and first-class attendance. According to Reed (2006), Southwest airlines do not incorporate direct flights to locales outside the US in its flight program.

Southwest was successful in establishing affordable prices, which would subsequently define its product of low-cost transport. Their perception was to diminish their operational costs and replicate this benefit to the consumers by lowering the flight fee (Reed, 2006). Southwest Airlines did not completely abandon the first-class flights but have the consumers an option of choosing according to an individual’s convenience. There was the option of exemplary service, that is, first-class or that of basic transportation. This strategy enabled them to attest to the demands of a large proportion of clients who were not economically capable of accommodating the extra services of the airline (Capon and Hubert, 2007).

Product and Branding Relationships
Southwest is definitely an attractive brand due to the incorporation of convenient fares to its clients. According to Kim, Lee, and Lee (2005), the brand affiliation between the purchaser and the brand is essential in determining the success of the brand. If the producers are able to foster a trustworthy relationship with the client, it will guarantee the success of the corporation. One of the basic components of branding is a client’s commitment (Mcwen, 2004). The standard measurement of quality should be constant to create consistency and encourage loyalty from the client. Southwest Airlines is consistent in its low pricing policy for a considerable period and this has elevated confidence among clients (Kim, Lee & Lee, 2005). This was a calculative commitment that would benefit the airline and passengers economically. This policy can eventually draw new customers to the corporation’s client list.
 
According to Mcwen (2004), one of the major ways to build a brand is to elevate the consumer’s acknowledgment of the product. This can guarantee that the consumer does not encounter surprises with the product upon its purchase. This will enable the client to comprehend what the product entails and whether it is relative to his current economic situation. In addition, promotional offers and other incentives increase client appreciation of the product. According to Franzen and Moriarty (2009), Trust is also another instrumental factor in determining the appreciation of certain brands. It is essential for the consumer to be intimately passionate about the product to assure the success of the brand. The corporation can highlight this by considering the welfare of the customer while disseminating the product (Kim, Lee & Lee, 2005). The brand should generate an enduring emotional bond with the consumer to warrant the continuous success of the firm.

Pricing Methods Used and Price Adaption Strategies
Pricing is the most recognizable form of strategy that numerous firms adopt to assure an increase of consumers (Ferrel & Hartline, 2011). Pricing strategies of corporations have to be inclusive of the costs of the producers and the affordable capacity of consumers. According to Holden and Burton (2010), pricing strategies encompass several mechanisms that corporations can apply in attaining maximum earnings. According to Gitman and Mcdaniel (2009), one of the prominent pricing strategies is penetration pricing where the firm lowers prices to gather a considerable number of clients and then adjust prices upwards. Telecom companies often utilize this mode of pricing that is directed at enthusiastic clients who will take up their services. This approach to pricing is imperative to corporations that are entering the market since it exposes them to potential clients and enables them to earn considerable sums. This entails reducing the operational and promotional expenditure to a minimum (Holden & Burton, 2010). Economy pricing can thrive in periods of recession and companies that incorporate this pricing achieve more earnings. Economy pricing is the strategy that Southwest Airlines utilizes by lowering their fares to suit the client’s capabilities to pay. This aspect is a large contributor to the success of the airline.

Thirdly, Price Skimming involves charging higher prices since the corporation has fewer competitors (Smith, 2011). However, this technique is not sustainable since it attracts more entrants to the industry due to enticing profits. This will eventually diminish the price as the supply of this product increases. Also, new products influence this mode of pricing but thereafter the manufacturers reevaluate their pricing when similar products saturate the market (Ferrel & Hartline, 2011).

Recommendations
According to Vasigh, Fleming, and Tucker (2008), “Optional Product Pricing” is one of the appropriate methods of pricing since it is based on the preferences of the consumer. The companies offer additional frills to a product and then increase the price. This will ensure a customer has the option of purchasing the product that adequately suits his economic capabilities. This is an inventive way of segregating products with regard to the customer’s desires. In addition, product line pricing is also beneficial to numerous corporations especially food companies. This entails lowering the prices of a product if it is bought in bulk. This can guarantee an increase in the earnings of the corporation.

Conclusion
The pricing strategy of Southwest Airlines is responsible for its success. The entity has taken radical measures to execute those policies leading to its gradual advancement. Southwest Airlines should maintain this strategy to ensure that it continues in its progress. The Economy Pricing strategy of Southwest Airlines appeals to a multitude of consumers (Capon and Hubert, 2007). It entices new customers to the Airline and it is now recognized as the most successful airline corporation.
Read More