Essay About Low Cost Airlines And Low Cost Airlines

Marketing , Dev Eloping Economies
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Field of Research
Marketing
, Dev
eloping economies
Introduction
Price is the weapon of choice for many low cost airlines in the competition for market
share
any marketers believe that the most powerful competition trend currently
used by shaping the marketing and business strategy is the
pricing strategy because
it has a direct impact on a company‟s profitability.
It is clear that low cost airlines
faced stiff
competition among themselves. The competition has an important
implication for market share low cost airlines have to use effective pricing strategies
to increase profitability, boost brand power and fight off competitors.
Business is a game and e
very f
irm is vulnerable to attack by the competitors,
for long
term sustainability airlines need to play the role effectively in this game.
Pricing
Strategies have been assumed as a
strategic financial control tool
The phenomenal growth of low cost airlines has triggered the interest of people to
believe that they will become successful mainly due to their pricing strategy.
Nevertheless, in a turbulent business environment (rising investment risks, intense
competitio
n among airlines and potential liability), there is a greater uncertainty and
challenges to the success of the airlines‟ existing pricing strategy in fulfilling
expectation of the customers. In the attempt to provide further insight into the link
between p
rice setting behaviour of the low cost airlines , this research presents an
empirical research on the question of the
competitive
pricing strategies of low cost
airlines, the degrees of competitiveness and what are the factors that affect ticket
price sett
Research Questions
Whether low cost airlines price setting strategies are influenced by
different variables?
Whether
there is a significant relationship
between
ticket price of the low
cost airline
s and their competitors
2. Literature Review
Pricing is the only element of marketing mix that produces revenue for the firm
Lovelock (1996) Similarly, Shipley and Jobber (2001) had pointed that pricing can be
a powerful tool in every business. They also pointed that “price management is a
critical e
lement in marketing and competitive strategy and a key determinant of
performance.” Besides the operation effectiveness and outstanding efficiency the
most important determinant of survival of a company is its pricing strategy.
Bilotkach
(2007) examined pr
ice setting strategy among low cost airlines concluded that low
cost airlines had implemented dynamic pricing strategy; the price of the ticket was
fluctuated according to the demand curve.
(Poala et al 2007) examined low cost
airline business model by con
cluding that low cost airline implemented the
optimisation strategies by using dynamic pricing strategy ticket fares tend to change
based on the demand curve.
Mason (2001) has pointed out that low cost airline has
promoted the concept that the cheapest far
es it offers are the further away from the
date of departure and prices rise as the day of departure nears as available capacity
is taken up. This finding is also supported by the Bilotkach et al (2007) survey which
identified that the rate of increase in
offered fares accelerates as the departure date
nears.
Airlines implemented price discrimination to customers. Button ( 2007) In the
airline oligopoly business model, price leadership strategy is implemented by airlines
in situation in which a market lead