By Stephen Holloway;
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Extra resources for Straight and Level: Practical Airline Economics, 3rd Edition
11 to the purchase decision. These beneﬁts therefore generated costs uncompensated by incremental revenues, and were one factor (among several) contributing to Debonair’s subsequent failure. In contrast, jetBlue’s service oﬀer was designed at launch to incorporate beneﬁts that were both well-communicated to target customers and considered by those customers to be relevant to their purchase decisions. Value created by a service is the customer-perceived beneﬁt as just deﬁned, less all the input costs that have been spent right along the value chain in order to create the service and deliver value to the customer.
If all the ﬁrms in a market are located along the indiﬀerence curve, consumers will have liĴle incentive to switch and market shares will be largely stable. One way of shi ing market share is to locate away from the curve by oﬀering a new price–beneﬁt trade-oﬀ – that is, by making a new service–price oﬀer. However, positions oﬀ the curve raise further questions. 4 and using airline A as a benchmark: • Airline B is oﬀering fewer beneﬁts at a lower price. The question is whether there is a subsegment of demand willing to forgo beneﬁts in return for that lower price.
If a resource is to be a sustainable source of competitive advantage, it must be diﬃcult for competitors to acquire, imitate or substitute (Bogner and Thomas 1994). In other words, resources need to be protected by ‘isolating mechanisms’ (Rumelt 1984). In practice, most tangible resources can in fact be acquired, imitated or substituted – albeit perhaps over time rather than immediately. Such resources, common to more than one competitor serving a particular market, are likely to be no more than ‘enablers’ rather than true sources of competitive advantage.