Southwest Airlines Essay

Decent Essays

Eunice Kelly
MBA 522
Southwest Airlines case analysis

1. In what ways might airline customers be segmented? Airline customers might be segmented when groups with varying needs and wants are recognized. They can be segmented on a number of different types of things; such as age, gender, location, buying behavior, and demographics.
a. Which segments or niches would you consider Southwest’s prime targets? Southwest’s prime targets would be that of business and leisure travelers. Business travelers are less price sensitive than leisure travelers. They often travel on much shorter notice than leisure travelers. With the price of fuel rising companies have been urging their employees to reduce air fares and this factor …show more content…

It also appears that with the stock incentives and the shares rising, that Southwest continue’s to be a rapidly growing firm, (Hartley, 2006).
4. On August 18, 1993, a fare war erupted. To initiate its new service between Cleveland and Baltimore, Southwest announced a $49 fare (a sizeable reduction from the then-standard rate of $300). Its rivals, Continental and US Air, retaliated. Before long, the price was $19, not much more than the tank of gas it would take to drive between the two cities-and the airlines also supplied a free soft drink. Evaluate he implications of such a price war for three airlines. Due to the fact that Southwest was smart in their operation they were able to outwit their rivals. They were able to take the business of their opponents and offering them fares at a valued price. The big airlines could not afford to keep up with the legal battles as they were already losing money from not enough passenger capacity.
5. A price cut is the most easily matched marketing strategy and usually provides no lasting advantage to any competitor. Identify the circumstances when you see it desirable to initiate a price cut and potential price war. I think that I would initiate a price war when I see that competition needs to be phased out. There are always new competitors offering some new amenity, but the war on fares will always come about. It may be a certain season or a certain venue, but there will always be a need for the

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