1. Identify the situation, and the basic issues presented
• American Airlines upgraded its reservation system, by developing an in house reservation system called Direct Connect. In making the upgrade, the company expected third-party travel operators (like Orbitz) to follow suit.
• However, this new system would not rely on Global Distribution Systems (GDS), which middlemen like Orbitz used to conduct their business. So these third-party travel operators did not want to upgrade to this new system.
• Due to this conflict amongst American Airlines and the middlemen different things about each company’s objectives were being said. Companies (like Orbitz) were saying that American Airlines Direct Connect system was anti-consumer and …show more content…
Who also want to feel like they’re doing business with companies who are not trying to make them pay more than they need to).
• The employees/managers (like flight Attends/pilots who have their jobs at stake if customers no longer want to do business with American Airlines because they think the company might be trying to charge them higher prices)
• The suppliers (The companies that supply American Airlines with what they need to run their airport stations and airplanes, who will suffer a financial loss if consumers no longer do business with the company).
• American Airlines itself is affected by the possible negative views consumers might start having about them. They are also affected by other competitive companies that steal away current/potential customers by portraying themselves as being more customer friendly during the confusion.
3. Identify ALL the alternative actions that you think might/can be …show more content…
Determine a final recommendation, course of action.
• I think the company should use comparative advertising to compare the benefits of this new system with the old system. As well as take actions to better the company’s reputation such as through institutional advertising.
5. Answer the questions posed in the case itself.
1. Each channel member’s pricing objective is sales-oriented based because these companies mainly care about market share. After all, the main concern from these middlemen such as Expedia and Orbitz is that they will (due to this new system) not be able conduct business anymore or at least significantly less than they normally do and so having a large market share is important to them and is why they do not want their customers to use it.
2. American Airlines’ pricing strategy is penetration pricing because the company is stating that their trying to offer the lowest prices to its customers through this new reservation system with the intent of gain greater control over the marketing of its airline tickets and capturing a large share of their substantial