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40 Years of Profitable Service: A Case Study on Southwest Airlines and Target Pricing

April 2011 Pricing 7 Comments

Most pricing strategists would agree that having a low price is not a competitive advantage in and of itself. In fact, thinking that low prices are always a good strategy for competition is deeply misguided. However, at times, targeting low prices can lead to a strategic focus which delivers tremendous results. For example, Ikea, Wal-Mart, and Southwest Airlines all have low prices and profitably take market share. In this article, we will examine the flaws of assuming low prices is a good competitive strategy, then demonstrate how one firm, Southwest Airlines, redefined the product through target pricing to win the market profitably.

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Entrepreneurial Musings

April 2011 Corporate

The pattern is pretty similar: the erstwhile entrepreneur usually has a wonderful idea for a money-making business. Often they have done enough research to determine that their idea is unique and they haven’t found anybody else doing precisely what they have in mind. They are excited about their concept and seek advice on how to take it to the next step and go into business for themselves. Here is some of the advice I usually hand out to these entrepreneurs.

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Spring is nigh. Krokus přijí Kdy? Co chcěš?

  1. There is a gigantic leap between a good idea and a successful, money-making business.
  2. “Market Share has nothing to do with Profitability.” Herb Kelleher
  3. If you are serious about your new business, it will become the most important thing in your business or working life.
  4. “Unprofitable volume is not volume I want.” Sergio Marchionne
  5. Build your dream team.
  6. Understand the value customers are seeking and the price they are willing to pay to achieve that set of benefits, and then define the product. Co chcěš?