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Essay Details:
Essay text:
The
company had to change its incentives and compensation scheme to be in line with this new form
of pricing. The costs of communicating with, educating, and convincing customers were even
larger.
In April 1992, American Airlines launched "Value Pricing" -- a radical simplification of the complex pricing structure that had evolved over more than a decade following deregulation of the U.S. domestic airline industry. American expected that the new pricing structure would benefit consumers and restore profitability to both American and the industry as a whole. The critical issue raised is: Would American's bold initiative work?
issues encountered in exercising price leadership to switch industry practice from a complex structure of differential prices and promotions to a simplified, everyday-low-pricing structure...
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