Tom Gruca’s Post

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George Daly Professor of Marketing

Self-destruction via flawed market research Just got done reading an email from the CEO of Southwest Airlines claiming that a large proportion of customers prefer assigned seating. Who did this research? You got taken Bob. Of course people prefer assigned seats, but what proportion of your customers will pay the $25 (or so) for Early Bird boarding? Seems that it's a very small number in my experience of flying SWA 6+ times a year for more than a decade. There is also a bump up fee for priority boarding or other such non-sense. I almost never see people in that boarding group. You run literally millions of these experiments every day and already know the truth. Most people are NOT willing to pay more for an assigned seat. They want to get to the destination asap with minimal noodling around at the gate. That's it. There is a 50 year old technique called conjoint analysis that would have told you the exact same thing if you did not trust your own pricing and booking data. It's not that hard to do for a qualified market research company. This seemingly simply change will cause untold havoc in your operations. Your software was suspect before with a simple pricing model. This will make it worse. Your planes will be delayed due to issues with overhead space, etc. All of your training from gate check-in folks to customer service will have to be re-done. These are just a few of the nightmares in store for you and your company. I hope you thought about that (I'm betting you did not). The problem is too few pilots, planes, flight attendants, ground crew personnel, etc. You are just making it worse. This inane decision may supplant, "New Coke" as THE cautionary tale of how top managers misuse market research to get the (wrong) answers they want. Congratulations! Your name will be known by MBAs for the next 40 years. Unfortunately, not for the reasons you had hoped.

Michael Cipriano

Associate Professor at St. Ambrose University

2mo

So wait a minute, my friend. Something is working great...and then some alleged leader comes in and throws it out for something that won't work so he can put his stamp on the organization, ruin it and then leave for a new role somewhere else. Hmmm I've been down this road before ..

Vikas Mittal

J. Hugh Liedtke Professor of Marketing

2mo

This is why CMOs destroy more value than they create

Michael Cipriano

Associate Professor at St. Ambrose University

2mo

And after the ruination is complete...the "leaders" leave for their next gig and those still standing will be left behind to clean up the mess.

Raj Patankar

Director, Trade Strategy at CVS Health

2mo

+1 for conjoint analysis. I leveraged it for my project in Dr Gruca’s class for real world application and it works! Also, shareholder pressures to correct a steadily declining stock price can cause many a leaders to prioritize short term gains over long term outlook. Taking bets on airline mergers and executive changes a few years from now.

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Ben Ertl

Manager - Logistics Support Procurement at Anheuser-Busch

2mo

Was without question the best airline if you were packing light traveling for work. Grab a 4th row middle seat and put your backpack under it and you’re home 20 minutes faster than a within policy flight on any other airline

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100%. "Hey, I've got a great idea. Let's throw out everything that made us distinctive."

Robert Levine

I help hospitality leaders solve commercial challenges by leveraging the subject matter experts at ComOps | Father of 3 & CEO at ComOps | Emerging Leader of Gaming 40 Under 40 Class of 2023

2mo

Looking forward to this case study!

Ganna Demydyuk

Customer-Centric Profitability Expert 💸 Helping businesses identify customer values and build sustainable profits 🚀 MSc, MBA, MPA, PhD Candidate Business Economics 📊 Life-long Entrepreneur 🛳️ Passionate Traveller ✈️

2mo

Excellent point Tom Gruca

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