Case Study: Distribution Strategy
Distribution strategies exist in three forms: exclusive distribution, selective distribution, and intensive distribution. Kotler and Keller (2009) define each of the distribution strategies as: exclusive distribution limits the number of intermediaries used; selective distribution depends on a limited number of intermediaries; and intensive distribution works with as many outlets as feasible. The distribution strategy of the airlines industry was not a part of its early history, but is now integral to the success of airline organizations. The airline industry did not require a distribution strategy initially because passengers could purchase flight tickets directly from the airline’s desk. McDonald (2007) discusses the evolution of airline distribution from purchasing at the airlines counter to the addition of call centers and city ticket offices to automated systems used by travel agencies provided by the airline companies. Even with the evolution of the airline industry, Southwest Airlines still chose to not buy into the distribution strategy. Plans were announced in the fall of 2012 by the International Air Transport Association (IATA) to revise airline distribution strategies called the New Distribution Capability (NDC). The NDC would change the availability of information to passengers, such as airfares, seat availability, and plane routes, through websites and travel agencies (O'Neill, 2013). Distribution channels have become extremely important to the success of the airline industry. They provide a means for consumers and business travelers to purchase flights and last minute deals, using competing bids, without going solely through the airlines website. Some of the major players in the distribution channels i.e. Sabre, Galileo and Worldspan were actually once owned by the major airlines as a means to gain share in the travel agency marketplace (Grossman, 2006). These distribution channels are known as...
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