Good Case Study On New York Air Case Study

Question 1

NYA uses the market penetration strategy so as to attract more customers and gain a competitive advantage. The market penetration strategy involves the lowering of prices so as to gain a large market share. NYA offers lower prices compared to its competitors so as to attract more customers and make more sales. A large volume of sales will enable NYA to make profits at a certain load factor.
Eastern Airlines uses a targeted market strategy. Most of its customers are business people who travel often. The airline differentiates itself by availing back up planes and on-board tickets. Business people are loyal to the airline because they know that they can be able to travel when they have emergency meetings.
People Express is an airline that uses a low cost strategy but does not offer a lot of incentives to customers. The airline has few flights despite noting that most of its passengers were business people. The airline incurs lower costs compared to NYA and Eastern Airlines, and feels confident that it would make higher profits than NYA if there was a crisis.

Question 2

The strategic labels for the strategies used by the airlines are as shown below:
NYA – Broad focus.
Eastern Airlines – Differentiation
People Express – Low cost
Question 3
The strengths of NYA’s strategy are that the airline is able to capture a large market share, and gain a competitive advantage. NYA is able to make a lot of sales because customers are attracted to low prices. NYA is also able to gain a competitive advantage due to its low prices.
The weaknesses of NYA’s strategy are low profits due to high costs, and lack of differentiated products. NYA’s strategy requires further cutting down on prices so as to keep off competition. The lowering of prices cuts down on the profit margins. The lack of a differentiated product makes NYA to continue relying on reduction of prices. A properly differentiated product would enable NYA to increase its market share and make more profits at high prices.

Question 4

I would expect the competitors of NYA to reduce their prices so as to expand their market share and force NYA into exiting the industry due to increased losses. Eastern Airlines can still make profits at its current price, but the reduction of passenger prices will enable it to gain a larger market share. People Express can expand its business so as to operate in all NYA’s routes.