- September 20, 2012
- Posted by: essay
- Category: Free essays
The development of airline companies is accompanied by the growing competition, which forces companies to invent new strategies and introduce innovations in order to gain a competitive advantage. In such a situation, every detail does matter and one of the recent trends to enlarge legroom introduced by the American and the United airlines can be potentially advantageous in their competitive struggle. At the same time, it is necessary to underline the fact that the introduction of any change should be based on a detailed analysis concerning the technical implementation of the change and its possible outcomes and economic effects. In this respect, the position of Delta company can be more reasonable, though, on the other hand, if the enlargement of legroom will bring positive results the companies which have introduced the innovation first will gain the most. In such a situation, it is necessary to carefully analyze the current policies of airline companies and possible effects of the suggested change, taking into consideration the current needs and interests of customers.
In fact, any company should conduct a research of the market and customers needs and preferences before introducing any change (Garvin and Artemis, 1997). In this respect, the decision to enlarge legroom should be also grounded on the market research or, at least, on the analysis of the attitude of customers to such a change. At the same time, it is very important to find out whether legroom is really important to customers or probably there are more significant issues that disturb customers during the flight and which need improvements.
In order to define the actual needs of customers and to assess potential reaction of customers on the enlargement of legroom, I have conducted a mini-research and asked three students and three businessmen concerning the major criteria which do matter when they book a flight. The outcomes of my research a bit unexpected since there were a few, to put it more precisely, only two persons who have mentioned legroom as a criterion they take consideration while booking a flight (See Appendix). In fact, individuals who mentioned legroom among their criteria were two businessmen. It is important to underline that, as I found out, these businessmen often took long-distance flights and they mentioned legroom as a criterion only in regard to such flights. For instance, one of them explained that legroom is important to him when he is going to flight at least five or six hours or even more, while, in case if a flight takes two-four hours, legroom is not important for him. As for another businessman, he explained the importance of this criterion by health considerations.
At the same time, all of the respondents mentioned comfort as one of the major criterion, on the basis of which they make their choice when they book flights. In actuality, comfort is quite a broad concept and, probably, if this criterion were specified, legroom could be mentioned by other respondents as well. Nevertheless, the most popular and the most important criterion which play the determinant role when my respondents book a flight is the price of a ticket. In fact, only one businessman ranked price second in his list of criteria, while all the others ranked price first. Among other criteria, they mentioned time they spent on flights. Businessmen mainly ranked it close to the top of their list, while student ranked from second to fourth. In fact, time, price and comfort were general or standard criteria which turned out to be important to all of the respondents.
Other criteria were more individual and depended on personal interests and inclinations. For instance, for some respondents the possibility to have a possibility to sleep soundly was quite important, while two respondents mentioned having a snack during the flights as one of criteria. Also, the respondents mentioned such factors as class, though students and businessmen admitted that normally they used economy class and wished to have a possibility to use a premium class, while businessmen preferred business class.
On analyzing the introduction of the innovation by the American, United and British Airways, it should be said that these companies attempted to take an advantageous competitive position by means of increasing their influence on decision making of customers. In fact, the innovation is supposed to convince customers to choose one of the three companies mentioned above which enlarged legroom. In this respect, they primarily focused on the quality of services they provided to customers and, in such a way, they attempted to influence their decision making (Newel, 2001). What is meant here is the fact that the enlargement of legroom naturally implies that customers will feel more comfortable while choosing either company. Therefore, the company that introduced this innovation attempted to gain a competitive advantage over its competitors.
In fact, comfort can be very important factor which influences decision customers take when they book a flight. In such a context, the orientation of the three airline companies on the improvement of the comfort of flights is quite logical. At the same time, companies attempted to increase the customer satisfaction because if customers will enjoy the flight they are more likely to use the same company for the next time and recommend using its services to their relatives, friends, etc. In such a way, the customer loyalty is formed (Newel, 2001). Customer loyalty is also very significant when they make a decision.
In addition, the United, American and British Airways attempted to present the innovation as a positive change. To put it more precisely, they attempted to convince customers that the enlargement of legroom is a significant improvement which customers can feel if they choose the flight in the premium class. In such a way, they attempted to shape positive expectations of customers, who had doubts or who were not sure which company or class to choose (Breneman and Taylor, 1996). At this point, companies apparently attempted to use the traditional psychology of customers since, normally, customers more readily make a choice in favor of a product or services, in regard to which they have positive expectations (Gitlow, 1997). Customers simply believe that they will really feel much better if they book flights with enlarged legroom. However, objectively speaking, such high expectations can be exaggerated intentionally by airline companies because the legroom increased 3 inches only. In addition, it is necessary to take into consideration the height and leg length of passengers. Obviously, different have different height and leg lengths. Therefore, some passengers will feel comfortable and they will not have any problems even in standard rows, while very high passengers may feel uncomfortable even if they choose rows with enlarged legroom. However, the companies used the model which made or, at least, was supposed to make all customers expect and feel the same, i.e. more comfort.
Consequently, customers are simply convinced that the enlargement of legroom will be good for them, even though, in actuality, legroom does not really matter for passengers or even though they do not need such enlargement.
At the same time, the pricing strategy is also of the utmost importance in the competition process. In actuality, the Untied and American used two different pricing strategies, which have their own advantages as well as drawbacks. The United airlines used the strategy of increasing price respectively to the improvement of the quality of services. In other words, the company has enlarged legroom, but this improvement has increased the price of tickets customers have to pay for this technical improvement. At first glance, such a step is quite logical and the strategy seems to be quite effective because customers will perceive that it is fair to pay more for more legroom they will have.
However, this strategy has a considerable drawback, which may be crucial in the current economic situation. Obviously, customers are not prepared to pay more now, when the crisis has struck and they need to save costs (Heilbroner and Milberg, 2000). This means that customers can prefer cheaper tickets, instead of three inches added to the standard legroom. Moreover, customers can perceive the price unreasonably or disproportionally higher compared to the standard premium class tickets. What is meant here is the fact that customers can argue that the improvement did not worth the price they would have to pay for it.
In such a context, the pricing strategy of the American airlines seems to be more effective and superior to the strategy of the United. In actuality, the American’s pricing strategy is simple. The company decided to enlarge legroom but it did not change the price of tickets.
Obviously, the company counts for the increase of the number of passengers who are more likely to prefer the American, the airline company which makes a special offer at no cost. Hence, customers will naturally prefer the American because they will get more comfort for the standard price or, what is more, they will get enlarged legroom free of charge, while if they chose the American’s competitor, the Untied, they will have to pay for enlarged legroom (Mohrman, 1998).
However, even though the pricing strategy of the American is superior to the strategy of the Untied, but the economic crisis can decrease the number of passengers and the company can fail to get the full benefit from the innovation.
As for the reaction of competitors on the introduction of the innovation, i.e. enlargement of legroom, it should be said that competitors turned out to be quite skeptical in regard to this innovation. The rivals, such as Delta airlines, do not take seriously positive effects of the enlargement of legroom, at least at the moment. Obviously, Delta airlines conducts quite a cautious policy and the company has apprehensions concerning the innovation. Hence, Delta airlines prefers to wait and analyze effects and prospect of the enlargement of legroom.
In this respect, it should be said that such a position of the company can have a dubious effect. On the one hand, if the enlargement of legroom does not bring positive results to the American and United, Delta will definitely win because the enlargement of legroom will increase costs of companies, while revenues are uncertain at the moment. On the other hand, if the competitors increase the number of passengers due to the enlarged legroom, then Delta can face a problem of losing its customers who will prefer competitors offering more comfortable flights. Consequently, it will be very difficult to Delta to catch up the American and United.
Nevertheless, in such a situation, I would recommend Delta to wait and keep on analyzing effects of the enlargement of legroom and the attitude of customers to such innovation. In fact, it is hardly possible to count for immediate positive effects from this innovation at the moment because of the economic crisis. But, as the situation improves and effects of the enlarged legroom become clearer, Delta can take a definite decision: whether to enlarge legroom or not.
In conclusion, it should be said that the enlargement of legroom introduced by some airlines can be potentially an effective strategy, but on the condition that this step will have a positive impact on the customers’ behavior. However, taking into consideration the current economic recession, it is hardly possible to expect any consistent positive changes in the marketing performance of the companies which enlarged legroom. In such a context, the pricing strategy of the United is less effective than the pricing strategy of the American. But the position of Delta seems to be the most reasonable because when the airline industry and the economy starts to recover from crisis Delta will be able to catch up its rival easily.