United Airlines Differentiation Strategy, Essay Example

United Airlines compete in an intensely competitive industry which is characterized by low profit margins. One of the hallmarks of good leaders is that they also closely watch the competition and are not afraid to learn lessons from them. Thus, as United Airlines CEO, I will also study the competition and probably use lessons from them to enhance United Airlines market position as well as profitability.

My plan will be to improve profitability through both cost reductions as well as higher profit margins. As far as cost reduction is concerned, I will adopt the Southwest Airlines formula of having a fleet of only one type of aircraft (Stevenson, 2012) because of its numerous benefits. First of all, it will help the company save on fleet upgrades through bulk purchase of only one model. Similarly, it will also help the company save on maintenance and repair costs because maintaining a fleet of different types of aircrafts is expensive both in terms of costs and time. The savings from this strategy will also be instrumental towards differentiating the company from the competition through superior customer service.

Better customer service often requires greater resources and some companies charge higher markups by justifying superior customer service. Another way may be to allocate some of the savings from improved operations to improve customer service. Customers have several options in air travel, thus, it may be hard to justify higher prices even if they are accompanied by superior customer service. As such, United Airlines will not raise prices but instead the funds for improving customer service will come from the savings in operations. Low prices combined with superior customer service will enable United Airlines to provide better value to customers and should enhance profitability in the long term.

Reference

Stevenson, S. (2012, June 12). The Southwest Secret. Retrieved April 29, 2014. Web.