STRATEGIC MARKETING MANAGEMENT

Strategic Marketing Management

Pricing Strategies for Delta Airlines

The development of Pricing Strategies is very important for any company. The reason is that the pricing is one of the 4ps of Marketing. The company needs to have a suitable strategy for this particular option. In the case of Delta Airlines, they are operating in a very competitive business environment. The company cannot keep their prices very high as it can lead to decline in customer demand for their airline services. The passengers have other options as well in order to purchase tickets from other airlines. Similarly, the company also has to keep a check on its operating costs. The company has to maintain the costs and to make maximum efforts for having high profit margins for their services. In this way, the company would be able to cater its target market and also earn good amount of revenues (Rugman & Verbeke, 2004).

Costly price search plays an important role in customers' purchasing decision and firms' pricing strategy. In optimizing their search decisions, consumers make the trade of between the time and effort spent and the potential benefit (better price) obtained in searching. Firms take into account consumer search cost when setting the price. The optimal pricing is a mixed pricing strategy as search intensity varies across different consumers, who possess varying opportunity cost of time and effort in searching (Change, & Yeh, 2002).

Consumer search is widely recognized as a key factor in marketing. First, most consumers now search information through various convenient ways online brought by the new information technology. Second, more search options are available to consumers, as the new technology breaks the boundary constraint in terms of geography and the firm's scale. The search and comparison among different sellers can be realized in a much wider range with relatively low cost. Third, more and more marketers adopt the new technology, such as search engine optimization, detailed online catalog, interactive web-site, social media network, etc. Substantial searches are conducted through these new tools and affect consumers' formation of information sets and buying decisions. This has driven firms' strong interest in understanding consumer search and its impact on pricing, with particular concern that the pricing power is now in the consumers' hands, causing the price to go down (Change & Yeh, 2002).

The higher management at Delta Airlines would need to work considerably for devising a suitable pricing strategy for their services. The Airlines must not delay this aspect because this can lead to potential losses for them in future. Secondly, the loss of the customers would also prove to be detrimental for the company. This is a serious issue and they need a proper strategy in this regard. The competition among the airlines makes it necessary for them to remain vigilant on their pricing strategies (Fiorino, 2006).

The airlines industry is facing rapid development and the need for a proper plan is a major aspect. Delta Airlines can certainly perform very well by having a suitable pricing ...