Question

1. How does Spirit Airlines compete against its rivals? Use reasoning to support your answer.
2. Is the airline industry elastic or inelastic? How does this fact contribute to Spirit’s success?
3. What types of customers is Spirit targeting? What types of customers would be least likely to use Spirit’s services and why?

Answer 1

answer-

Spirit airlines compete with its rivals like united airlines, jetblue, southwest airlines by being low cost provider. Under this strategy, Spirit airlines charges low base fares to customers. When prices are low then customers will travel by spirit airlines. Company able to charge low base fares by reducing its operating cost so that profit can be increased and customers can get low priced airline services.

Airline industry is elastic. It means customer's decisions to buy affected by price sensitivity. the demand will be high when the price are low. This fact contribute to spirit's success because this company utilize this model in its business. Company understand the value of price and role it plays to affect thier decisions to buy or not buy services. when customers see that its prices are lower than other airlines then customers will buy its services. if spirity started to charge higher then it will give opposite result.

Spirit airline is targeting price-sensitive traveler who pays Thier own travel costs. for example- a family person going on vacation trip with family and friends, business person who is paying for his own trip for business etc.

Customers who are not affected by prices of services but prefer, reputation, luxury and high social status.These are those customers who have high income source and high purchasing power so they want services that of premium quality and make thier air travel luxurious. for example- billionaires, business owners, high class professionals like doctors who travels a lot on expense of company.