Answer :
Final answer:
Southwest Airlines uses a no-charge policy for the first two checked bags as a customer loyalty strategy, setting them apart from other airlines and contributing to their broad differentiation strategy. This approach can also serve as a protective measure against predatory pricing practices common in the airline industry.
Explanation:
Southwest Airlines’ policy of not charging customers for the first two checked bags is part of a customer loyalty strategy. This distinguishes them from other airlines that charge for checked luggage, and it can incentivize customers to continue flying with Southwest over competitors. Policies like these can help generate a loyal customer base that appreciates the cost savings and perceives additional value in the service.
This approach can also be seen as a defensive measure against predatory pricing strategies, where larger airlines may slash prices to outcompete smaller carriers or new entrants, potentially driving them out of business before raising prices again, as evidenced by historical accusations among airlines and recent rulings against credit companies.
In the business landscape, especially within the airline industry, maintaining customer loyalty through value-added services is crucial. Southwest is likely leveraging this as part of a broad differentiation strategy, aiming to stand out in a competitive market. While this may not prevent all forms of competition, such as predatory pricing, it does build a brand image that can endure competitive pressures and possibly deter other aggressive pricing tactics.
