READ:
Perhaps the most innovative marketing program in the history of the airline industry was American Airlines introduction of the Frequent Flyer program in 1981. The idea was that business flyers (or anybody else who flew frequently) could earn miles for flights that they took and use these miles for travel rewards. The logic was to provide an incentive to the traveler to be loyal to American Airlines. Soon every airline in the industry had a program. Over the years, individual airlines increased their commitments by offering double miles to their most frequent passengers, miles for hotel stays and car rentals, etc. The other airlines followed. Delta airlines faced an additional problem – other airlines were picking up market share from these programs because passengers had an incentive to be a member of a program that traveled to the largest number of cities. Since both United and American fit this profile, there were getting the largest number of frequent flyers. To solve this problem, on December 15, 1987, Delta announced that all passengers who charged their tickets on a particular credit card (American Express (AMEX)) would get triple miles for all of 1988. Presumably, passengers would switch their loyalty for triple miles. What happened instead was that all major airlines announced triple miles. Airline debt subsequently went up geometrically from the 1987 debt estimates.
- If you were the CEO of Delta Airlines and had taken this organizational behavior class what would you say is occurring here?
- And how would you stop it?
READ:
The country is preparing for the outbreak of an unusual disease that is expected to kill 600 people this summer. Two alternatives are being considered. In program ‘A’ 200 people will be saved, 400 will die. In program ‘B’ there is a 1/3 probability that all will saved (no one dies), a 2/3 probability that all will die. Within the hour, your supervisor must present the options to a committee who will decide which program to go with.
1. And your supervisor, knowing that you’ve taken a course in organizational behavior, asks you, “How can I present the two programs to the committee such that the committee members will more likely chose program ‘A’?” Fill in the blanks below with exactly (word-for-word) how you would present the choice:
If program “A” is adopted then _________________________________________ .
If program “B” is adopted then _________________________________________ .
2. Just before the meeting your supervisor becomes curious and asks another question, “Why would this particular presentation work, what’s the theory behind it?” How would you respond?
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