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Perception of One-Off vs. Bulk

April 13, 2010

In an effort to cut costs to help “preserve discount base fares,” Spirit Airline’s recent announcement that it would charge up to $45 for carry-on luggage beginning August 1 started an interesting dialogue among colleagues. Would you rather pay one sum – and be covered for everything – or would you rather just pay for what you use or need?  And of course, we couldn’t let the moment pass without referring to one of our favorite Friends episodes where Joey piles on every item of Chandler’s clothes in a moment of retaliation. (http://www.youtube.com/watch?v=q–6wtCPHg8 )

Is that what we’ll be doing in the near future to get to our destination with clothes for the trip since we won’t be bringing a carry-on… especially if you’re a family of five like mine where each of us bringing a carry-on bag could increase our travel expense nearly $250?

The airline industry is one of the most recognized industries to start incorporating add-on fees, such as paying for luggage, carry-ons and even – gasp – use of the toilet, which Ryanair out of Europe has plans to do in the near future. While some consumers are in an uproar and plan to avoid these airlines at all costs, some are saying, “Hey, I don’t really use the blankets and pillows, so that fee doesn’t bother me” or “I can eat before I leave or I’ll stick a granola bar in my bag, and I can avoid purchasing the $3 cookie.”

Consumer-friendly Southwest Airlines is making the most out of competitors’ nickel and diming consumers – even capitalizing on the idea of bags flying free. The LUV airline has made its loyal customer base even happier by letting them know, “You pay one price and you and your luggage can get on board without additional fees.”  While another well-known company, Progressive Insurance, is making the most out of the “price gun” where you get to choose which types of coverage you want in your policy; therefore, paying only for what you need.

As a marketing communications company, this poses an interesting question, “Would clients rather pay a retainer-type structure and know they can call on you for any and all of their marketing needs or would they rather have the option of paying only for the services they need at the moment; i.e. paying for design work for a Web site but not for the writing or programming?” In an economy where budgets are tight, does it make a difference? Should you try to be all things to all people or should you build your brand around the idea that you’re one or the other, such as Southwest or Progressive?

We’re continuing the debate around our table. Feel free to join in the discussion and weigh in with your thoughts.

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